by Stuart FinlaysonIT departments and suppliers will have to
refocus their operations to succeed in today's turbulent economic
conditions.
That was the blunt message from leading analyst Martin Butler at
his company's symposium, "Unlock value, technology and the bottom
line", this week.
The conference focused on two key themes, the way organisations are
placing greater emphasis on the return on investment of their IT
spending and the way vendors must respond if they are to convince
potential customers of the benefits of investing in new
technology.
Martin Butler, chairman and founder of the analyst group, spoke to
CW360.com about the implications that the shift in IT spending
habits posed for the industry.
"There are two areas of expenditure materialising now. The first,
the traditional one, is spending on IT in an effort to reduce
costs.
"That is an area where there will be a tightening of belts because
many managers do not believe they can use IT terribly effectively
for that purpose.
"The second area, where there seems to be a lot of growth, is in
collaborative processes between organisations, so people are
spending money on systems that meet very specific business needs
for themselves and their trading partners.
"Consultants may do well out of this, but I think packaged software
vendors are in for a hard time."
Butler thought the era when companies purchased an enterprise
resource planning or a customer relationship management package to
address generic problems was nearing an end. There was, he said,
very little return on investment from those routes.
"We are seeing a move from generic, across-the-board applications
to very specific vertical applications that address a particular
industry need, which I think will continue," said Butler.
"Where in the past the IT department drove things forward, we are
now seeing specific investments in areas of companies where they
want to address a particular business problem. That requires the
business managers to be involved."
This approach has a profound impact on traditional IT departments.
Many businesses, and departments within businesses, are looking at
outsourcing and partnerships. This creates an environment with
several players fighting for IT implementation contracts, rather
than one body within the organisation assuming they will get the
work, Butler argued.
"Collaborative projects involve a technology partner who is taking
part of the risk and will take part of the profits should the
venture be successful. The IT departments will have to start
operating in that kind of way," said Butler, "becoming more
commercially minded and less driven by technology."
This approach can overcome inter-departmental politics, he said,
and lead to more successful ventures.
Butler also predicted a slowdown in the pace of technological
development, as users increasingly question the need for constant
upgrades.
"In the past three or four years there has been an orgy of new
technology, but the issues that most organisations have to address
are not that complex, so it doesn't require complex technology to
make the adjustments," Butler told CW360.com.
"The technology is already there. What isn't there is the link
between the business need and the technology implementation. That
is all that has to be put in place.
"We are entering an era where the growth will be in the
understanding of how businesses use information for their own
advantage, rather than how they use technology, because the truth
is, unless you understand the information used in the business, the
technology spend is largely a waste of money."