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Opportunity out of crisis for IT
Monday, 15th March 2010“It's fallen off a cliff. Not only has the economy slowed down a lot, but people have really changed their habits like I haven't seen,” legendary investor Warren Buffett said of the US economy last year.
Changing habits have been very apparent in information technology. Not only is there cost pressure on IT but organisations are looking very closely at type and scale of the IT projects they implement.
Research by US advisory firm The Hackett Group suggests there will be ongoing growth in IT budgets but at significantly slower rates. After surveying US corporates, Hackett estimated annual IT budget growth of just 1.3 percent from 2009 to 2011, compared to an historical average of 5.3 percent increases. The Gartner Group are less optimistic, saying 2010 IT budgets in the Asia-Pacific region will drop by 3.1 percent year-on-year.
Twin pressures lie behind these trends. The key driver of course is the 2009 recession, which devastated some sectors and put most under strain, forcing cost cutting right across the corporate IT landscape. Staff were shed, vendor contracts renegotiated, maintenance delayed and projects postponed or even terminated.
The other main pressure is a growing awareness of the cost of failure in IT projects. As recession forced companies to bring out the cost microscope, corporate consciousness has also been raised about the potential negative impact these projects can have on growth and profitability.
US software expert Roger Sessions, visiting New Zealand recently, estimated that the cost of failed IT projects could be in the billions of dollars annually for New Zealand alone.
“The United States is losing almost as much money per year to IT failure as it did to the financial meltdown. However, the financial meltdown was presumably a one-time affair. The cost of IT failure is paid year after year, with no end in sight.”
Sessions says the impact of failed projects is much wider than typically appreciated. The simple financial cost of replacing an IT system that isn’t working is just one aspect of it.
Over the life of a poorly performing system, there is also the disruption to day-to-day business, the loss of revenue, the potential cost to customers and ultimately loss of market share.
The effect of not understanding these costs clearly, is that organisations will sometimes pour good money after bad as they try and fix the problem. Add to that the internal and public embarrassment of admitting failure, and the recipe for IT disaster is there.
Complexity is at the root of the issue, says Sessions. Large enterprise IT projects run by huge vendors can quickly grow in size and complexity to a point where it is difficult for management to conceptualise the whole system, and monitor its effectiveness.
Sessions believes effective IT in the future will be more about smaller vendors building and implementing manageable solutions. System scope can be clearly understood and the costs, complexity and timeframe of a project don’t get out of hand.
At Datasouth we are seeing more and more customers move away from huge, monolithic IT implementations to a more flexible, modular approach to building systems. Basing applications on broadly accepted and used platforms like Microsoft .NET and SQL Server gives organisations the flexibility to build smaller applications that can be later extended or modified. Using a services-oriented architecture means your applications can be connected to other systems over time.
Deployment flexibility means scaling to meet demand is not an issue. You can start hosting a smaller application in-house and then shift to a datacentre as it grows. Alternatively you can simply integrate the appropriate cloud-based applications into your existing IT infrastructure. And as a layer over the top you can use tools like MS Excel and SharePoint to extract, crunch and present data to everyone in the organisation.
At Datasouth we’re excited about this new era of simplicity in IT. We specialise in the provision of technology solutions that assist organisations in enhancing their business by improved information flow and productivity. As an organisation that has been providing advice to government and corporate clients for over fifteen years, we can advise, design and implement solutions that truly provide a competitive edge and reduced cost structures.
To better understand how we may help you to drive your business forward, please contact Datasouth to discuss your specific requirements.
