IT pricing models will adapt for recession, analysts predict


IT pricing models will adapt for recession, analysts predict

Warwick Ashford

Pricing models for IT and related services are likely to change in the coming year as buyers put pressure on suppliers to help insulate against economic recession, analysts have predicted.

According to Colin Tyler, partner at OC&C Strategy Consultants, there will be a shift towards pricing models in which the risk is shared between suppliers and customers, and prices are based on the business value delivered by the project.

Tyler also predicts a shake-up in the IT market with a marked separation developing between companies as the

credit crunch sifts out suppliers less able to deliver value.

He warned that IT suppliers that have had high growth rates in the recent past might not necessarily prove to be the most resilient in an economic downturn as organisations seek to drive down the costs of basic IT services.

"The gap between the winners and losers will be more dramatic than in the past, with successful businesses likely to be those who can deliver fundamental, scalable and reliable technologies that generate business value rather than simply reducing operating costs," he said.

Other winners will include those suppliers that can help organisations improve productivity and reduce running costs through improving the efficiency of their own workforce, which typically represents a major part of company costs.

This will include things like workflow optimisation that can deliver a rapid return on investment.

Tyler said buying decisions are also likely to move away from individuals like the chief technology and information officers to committee-based decisions, with chief executives and business managers having a greater influence on IT spending.

"This approach will force companies to give more thought to the business benefits of projects and encourage dialogue between IT and other parts of the organisation," he said.

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