IT spending likely to fall 5.2% worldwide, says Gartner

The worldwide IT spending is on pace to decline 5.2 percent this year. However, the IT industry will return to growth in 2010, with IT spending forecast to total $3.3 trillion, a 3.3 percent increase from 2009, according to research firm Gartner. In Asia Pacific, IT spending is expected to grow by five percent to reach $515.6 billion in 2010.

Peter Sondergaard, Senior Vice President at Gartner and Global Head of Research, said that this represented a fast V-shaped recovery for IT spending in the region. Emerging regions will resume strong growth, he said. By 2012, the accelerated IT spending and culturally different approach to IT in Asia will directly influence product features, service structures and the overall IT industry.

However, growth varies considerably by country, vertical market and IT sector. Sondergaard said that while software would post the strongest growth in Asia Pacific, telecommunications still represented the largest area of IT investment.

In Australia, the five-year outlook for enterprise IT spending is a compound annual growth rate of 1.3 percent, with total IT spending by Australian businesses to reach Australian dollar 56.4 billion by 2013. The vertical sectors with the highest IT spending growth would be communications (3.2 percent), healthcare (2.6 percent) and utilities (2.3 percent). While IT spending will increase next year, Gartner cautioned IT leaders not to be overly optimistic.

"While the IT industry will return to growth in 2010, the market will not recover to 2008 revenue levels before 2012," said Sondergaard. 2010 is about balancing the focus on cost, risk, and growth. For more than 50 percent of Chief Information Officers the IT budget will be zero percent or less in growth terms. It will only slowly improve in 2011, he added.

Sondergaard said that the three most-searched terms by Gartner clients on gartner.com provide some clues as to the priorities of IT leaders around the world. Cost remained the most-searched term during 2009, although it peaked in May, followed by cloud computing. "Next year will be the year when cloud computing moves from the discovery phase to small pilots, as part of organizations' desire to move from owned to shared IT," he said.

The third most-searched terms on gartner.com were business applications such as enterprise resource planning (ERP) and customer relationship management (CRM). "We believe that 2010 will see increased focus on optimization of business processes linked to software applications, what we call application overhaul. That is what will drive growth in the software segment," Sondergaard said.

Agencies

Is Open Source Really Open?

Open source software in the traditional sense means software whose source code is freely available and modifiable. (Yes, we know there are versions of software that are only pseudo open source where the source is available, but not for free. Or the source code is available, but not modifiable, etc). In our opinion, most businesses should not, and will not, care if a software is open source. Even if they have control over the source code, they might not have the technical capability to solve a particular problem or implement a particular feature.

So, there will be certain software that will work 'out of the box' with the features you would want, while others like ERP, CRM or BI systems need to be highly customised as per the nature of business. However, you can hire talent to modify an open source software as per your requirements. For example, if you are using a popular PHP application, the source code is available and can be freely modified by in-house talent at a reasonable cost. This would entirely depend on the type of application and the expertise available including its price.

Understand your business requirements

The very first step that any business needs to figure out is what they plan to achieve by implementing a particular open-source solution. Ask yourself, "How will I make my work cheaper/faster/easier using this tool? What business objective will this tool facilitate?" For, every IT solution entails direct and indirect costs. For example, before you deploy any ERP, CRM or BI solution or migrate your existing solution, you should have clear and quantifiable objectives that should be met. Will this CRM software help me better understand and, in turn, serve my customers? Will this ERP solution help me reduce inventories? Will it facilitate better warehouse management? Will the BI solution help me gain more insights about my products and services that I don't already know? Is it worth the time, effort and price?

How do I facilitate the implementation?

If you have identified a unified communication solution or a ERP, CRM or a BI solution, you should know what features you would require the most. Do you require features like collaboration? How much control is required? What is the level of security that you would expect? You should evaluate all offerings (open source or not/paid or free) based on the above set of requirements. Next you must hunt for all possible offerings so that you can compare multiple solutions and their pros and cons.

Open source DOES NOT always mean free

It is a common misconception that open source software is free. While many software follow that norm, it is not a rule. You might have to spend on certain open source software. Also, there are training and support costs associated with open source software as well.

While it might not be very difficult to learn a shiny new open source browser, you cannot say the same about a content management or a ERP/CRM system. For example, for a particular open source software that is not popular, the availability of support will be lower and support costs will be higher as a general rule. Also, open-source projects such as Firefox, Thunderbird, Apache, etc are well-established. Using a well-established software ensures long-term support for the software in terms of features, bugs and security patches. There are a lot of open source software that started with a bang and lost steam over a period of time. Also, commercial and non-open source software may be good in terms of providing better support as those companies are legally required to do so. Also, you can install a low cost/free open source solution and buy support from many commercial vendors.

Conclusion

Having considered the above-mentioned points, perform an in-depth research before deciding on which solution to adopt.

CXOtoday

Is CRM by SaaS cheaper for corporates?

Organisations are experiencing project savings of 25 to 40 per cent by deploying CRM applications in software as a service (SaaS) mode l, according to Gartner Inc.

Gartner said that its clients were making these savings from reduced application expense and lower implementation costs.

Much of the savings that organisations are making is a result of a lesser dependence on large external service providers (ESPs), which typically help businesses improve customer processes as part of the CRM engagement but which play less of a role when SaaS is involved.

Among the top 100 SaaS deployments in 2007 and 2008, fewer than 10 per cent involved a large system integrator or an external enterprise business consulting team. This would indicate that the role of ESPs in designing, measuring and driving CRM process improvements will diminish at enterprises deploying SaaS solutions for CRM through 2012.

"Due to the increasing use of SaaS for CRM, ESPs -- which include business consulting and system integration services -- will have less influence on CRM processes as SaaS accelerates," said Michael Maoz, vice president and distinguished analyst at Gartner. "This could result in an erosion of customer satisfaction among large enterprises that invest in SaaS solutions unless they invest their own resources to measure and manage long-term CRM process improvements."

Gartner expects a similar drop in customer experience scores from midsize businesses. They're a stronger target for SaaS offerings, and they rarely use ESPs for business consulting skills.
Maoz said that many projects that involve complex customer service contact centers are reported to be "on hold" until better references are available from the large enterprise application vendors that are in the process of releasing a new generation of their products.

However, he said that SaaS is the deployment model of choice for an increasing number of projects. Gartner predicts that all forms of SaaS-delivered customer service applications in the call center will grow by more than 20 per cent per year through 2012, and this will deliver significant savings. By 2012, 30 per cent of new customer service and support application investments will be through the SaaS model.

Because SaaS applications lack sophistication in BPM and process design, and due to the absence of ESPs offering business process advice, the growing spread of SaaS CRM applications threatens CRM efforts.

"There will be significant savings in infrastructure and resource costs in migrating to SaaS, but to put that money to work in customer process improvements, careful performance measurement of 'before' and 'after' project spending will need to be performed," Maoz said. "If this does not happen, then the savings will be shortsighted, as they will not improve the relationship with the end customer."

In a difficult economic climate, it stands to reason that many businesses will make similar choices and choose not to measure the benefits of the SaaS model. Gartner's advice to organisations deploying SaaS for CRM is to ask the software solution provider for its CRM process credentials and those of its ESP partners.