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Where Will the IT Dollar Be Spent in 2003?

Where Will the IT Dollar Be Spent in 2003?

Analysts and suppliers are all predicting a big upturn in tech spending during 2003, which is good news for the industry as a whole. It is certainly welcome news for software vendors and developers, who have been hit hard over the past year. It's also good news for the economy as a whole because new tech spending should spur jobs and thus spur spending. However there is still a huge question that is in need of an answer: Where will those IT dollars be spent, and who will control the purse strings?

Clearly services addressing security will be high on the list, but what about more pure infrastructure plays? In the wake of September 11th, IT spending beyond whatever is absolutely necessary has come to a grinding halt. Now, many organizations are looking at themselves and asking, "Where's the pain," or rather, "where does it hurt the most?" As the purse strings begin to loosen, IT departments wait with bated breath.

However, before they can even begin to assess the list of potential answers, they know that they will have to prove which pain is the most critical so it can be tended to first. The most effective method of proof will lie in one very simple concept: return on investment. ROI has become the way of life for IT departments. In the not-too-distant past ROI was often ignored, and many companies suffered extraordinary consequences as a result. In the next wave of spending, more attention than ever before will focus on ROI.

Projects that have extended ROI are going to be scrutinized at the CXO level very carefully. CRM and ERP systems are still going to be tough sells, considering the operational impact during implementation and the extended time frames for material payback to be realized. There will be some who go down this road, but not before making sure they understand where it is going to take them.

Business process improvement will be the guiding light for the next wave of IT spending. The days of experimental implementations are over. No longer will you hear, "Lets go with it and see what happens." There have been some amazing figures bandied around about the percentage of software that has been sold and delivered but that goes unused, sitting on the shelf. Shelfware will soon become a relic of the past as well.

I say this because a well-managed ROI process should always be an ongoing one in which decisions are studied over time in order to better understand what a successful implementation looks like. If a project is revisited with any frequency, the measurable results will impact how future decisions are made. Something sitting on the shelf provides a zero return, and these days it won't be able to hide in IT development budgets. Gone are the days of opening a storage closet and marveling at the shrink-wrapped ideas that never came to be.

The ROI revolution is taking root in an unexpected place, however. Technology vendors are facing increased competition, and they are responding by becoming better partners with their customers. It has gone beyond lip service and preferred terms. Every day more and more suppliers are becoming integral parts of the process to justify the purchase of their products.

As business accepts the practice of opening itself up to suggestions from multiple vendors, it provides an insight into its own operations that can be learned no other way than by seeing things through different eyes. Vendor competitions are becoming more revealing than ever because both sides have taken a more direct approach with one another. It's no longer just about a customer saying "prove it does what you say it does." Vendors are responding by saying, "Sure, no problem. But first let me make sure I really understand what you want it to do and why you want to do that in the first place."

IT negotiations have become more defined because now we are forced to fill in blanks that we allowed to pass by in the past. Ongoing ROI studies are going to make sure that those negotiations include all aspects of the benefit and risk to the bottom line.

The way that technology is purchased has fundamentally changed - and this change is going to create opportunities for innovation. While sales have lagged many IT suppliers have continued to labor away, refining what was bleeding-edge before the downturn. That technology is now mature and ready for prime time. As spending increases and the newer technology is adopted, business needs will continue to change, and the next wave of newer, better, and faster will begin to rise.

More Stories By Jim Martin

Jim Martin has worked in the system integration and communications industry for the past 15 years. Working on design and implementation teams, he has been instrumental in deploying Web-based mission-critical systems.

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