For those curious about tech spending...just came from a Wall Street CIO conference...
General IT/Software Spending:
* The one area of software interest that appeared to be consistent across all of the CIOs was what one of them called "informatics" and what we have called optimization based apps internally. They all said they have their core software infrastructure in place (ERP, CRM, SCM, etc.). Those apps manage the basic process for capturing data. Now they are looking to solutions which will take advantage of the data in those systems to optimize the business, bring visibility to allow people to make better decisions, streamline processes, and get information directly to the business decision makers.
* The CIOs were concerned that prices for technology have come down so far in the last few years, that the likelihood of additional, significant pricing declines is low. More importantly, some had started to find that pricing pressure had been so severe that vendors were bidding jobs below cost but then couldn't deliver after the fact. As a result, cios are looking not just at price when selecting vendors but also focus on service and delivery capabilities.
One interesting statistic on IT pricing/costs presented by a Fortune 50 Manufacturer CIO: their IT spend per user has dropped 8+% per year since 2000 without degrading service. They think of that metric as IT productivity which is a key metric they use to run the business w/in IT. Another had a similar statistic: the company is 30-40% bigger than it was in 2000, but the IT spend is the same.
* The overall tone was less positive than the research note from the Financial House that hosted the event. The cios' said that business-driven projects (ie revenue or product focused rather than simply cost focused) are starting to get approved again. However, this is
driven by the fact that much of the cost savings have been accomplished. Also, the CIOs cautioned that while those projects may be indicative of slight easing of spending controls, any additional spending will likely go towards additional internal (or contracted) development staff rather than spending on packaged software.
* Hardware capacity (storage, servers, etc) utilization is much higher than it was a couple of years ago (~3-6 month cushion on average vs. 1-2 year). But, again, they cautioned that one should not read this to mean that all the extra capacity has been "burned off" and now enterprises are going back to spending on capacity.
Instead, systems are better so IT shops can run closer to capacity with higher utilization without worrying about
getting caught by a spike. More generally, none of the CIOs could see a catalyst that would make them re-accelerate spending in any material way. |
