Insider Business – Tech crunch

How has the recession changed the way companies invest in IT?

Paul Sparkes, product director, Iris
This recession has highlighted the need for real information. Being able to make
decisions quickly is crucial. Organisations that employ a large number of people
need to be able to understand where their time is being spent and ensure that
they are being used on projects that are bringing money through the door.

Customers want to take advantage of an off-the-shelf system but, at the same
time, they want flexibility. There are some providers who have a very clear
strategy towards a standardised product and there are others where the whole
business model is based around a high level of revenue being generated from
professional services and tailorisation.

If people were to focus on getting more use out of what they already have by
looking at their own processes, I believe they would save more money than if
they cut their costs by a few percentage points.

Look at projects you implemented in the last 18 months. See what you can get
out of those projects and actually finish it off to the last 10% to get the most
out of software you’ve already invested in.

Are companies right to reduce the amount they spend on IT?

Kirstin Gillon, technical manager, IT Faculty, ICAEW
There is a lot of historic evidence to show that investing in a recession can be
a useful thing to do; you can come out of it stronger than competitors. Simply
shutting down investment is probably not the right thing to do. In practice most
IT budgets are largely spent on the operational side making the IT run.

You don’t get the value and the return from simply implementing a piece of
technology. It is about how you use it and how you integrate it into the
business. It is about the business and IT working together, and how the
technology can create value, reduce operational costs, give more service to
customers and increase revenue.

Also it isn’t simply about getting the lowest cost in the short term, but how
you can get value over the course of the contract.

Is there a feeling that IT hasn’t delivered on its promises?

David Elton, IT and change management specialist, PA Consulting

I think it is right to say that business may not have delivered the value
expected from IT and there is an opportunity to get more value from investments.
Take something simple like voice over IP. VoIP represents a potential great cost
saving, where a company has people working remotely. But what happens? People
carry on using mobile phones, so you haven’t actually got the cost savings, but
you’ve taken on the new cost of the VoIP. It’s potentially an enormous benefit,
but the business change hasn’t taken place around it.

Businesses underestimate the energy hump in creating change. You have to
really understand the behavioural change that has got to take place and ask is
this technology really going to work for them. And then push it in. If it works,
keep going. But if you keep on having to push, maybe you haven’t got it quite

There is always opportunity to discuss pricing with a supplier, particularly
where there is a renewal of contract taking place. Especially with outsourced
services, the level of trust between customer and supplier to some extent
determines the cost of the relationship. Looking at sourcing contracts is a good
thing to do, particularly if there is an opportunity to retender.

How has the downturn affected the way companies are spending money on

Jerry Norton, managing director, financial services, Logica

I think there is a maturity issue in IT. It is a relatively young industry and
the process by which you do IT, the industrialisation if you like, is only a
relatively recent topic.

It is quite right that people should renegotiate contracts as vendors will
have lower costs of production because they have moved it offshore themselves or
because they have lowered their cost of production. But the danger is, if you
squeeze it too tightly, you then get this horrible change control battle across
the boundary between the supplier and the customer. The perfect world is where
you get good value for the end customer, but where supplier and customer are
working together with a common goal.

For larger organisations, smarter procurement is clearly a route ­ making
sure you do the same thing in country A and country B or department X and
department Y Many organisations haven’t done that. If you centralise, you
clearly get a benefit. Many of the larger companies that I deal with now use
procurement experts to buy IT. Should they have been doing that two years ago? I
think the answer is yes. The current conditions have helped them concentrate
minds on that.

Chaired by Rachel Fielding

Related reading