The maturing use of IT

For the last two decades, businesses have been operating with the assumption that to become more competitive, ever more amounts must be spent on Information Technology. This was promoted, of course, by those who sell such infrastructure, and the associated support services.

Unfortunately, the assumption was generally wrong.

While most companies’ IT budgets became ever larger, the promised benefits commensurate with the amounts spent never materialized. Sure, documents were prettier, with fancy layouts and font choices, but overall workers were about as productive as they’ve always been — time which could have been saved with word processors is instead used to word-smith and tweak the layout of documents to perfection.

Databases have enabled much better situational awareness, but their costs have often sky-rocketed as the systems are developed for a particular solution. Particularly with large projects, database systems’ costs can spiral out of control. The UK and California have seen some spectacular IT failures, with projects being canceled after consuming hundreds of millions of dollars in development costs.

Even at the low end, the promise of IT has not materialized to the levels expected, while the costs continue to climb. With processing power doubling every 18 months, while hardware prices drop quarter to quarter, consumers have been led to believe they need to update their “kit” ever year or two. “I just bought this, and it’s already outdated” is a common complaint heard from PC owners.

Software is another area of concern. The “upgrade treadmill” has encouraged, or in some cases forced, users to buy new versions of their software in order to stay current and compatible with other users. Interestingly, although the production costs of software are extremely low, prices have not followed the general downward trend of hardware. In fact, in areas with low competition, prices have actually increased.

Starting two years ago, the pattern of IT started to change. According to the Giga Information Group, overall IT spending dropped by 6% in 2001, with a remarkable 20% drop in spending on computers and other equipment. Users finally realized that their computers were already powerful enough to get the job done. Spending in 2002 is expected to be flat, with another drop in hardware procurement.

Related to this, in these tough economic times, is the overall view of an organization’s IT budget. In addition getting away from automatic hardware upgrades, the contracts involved with software procurement are being reviewed much more closely. Performance clauses are being introduced, such that if the software doesn’t perform to specification, it is the responsibility of the supplier to make things right, not the consumer to pay for upgrade after upgrade which will “fix the problems — promise”.

Another area of increased interest to organizations, both big and small, is interoperability. One way that software producers have forced never ending upgrades on their users is to change the file formats produced by their software to be incompatible with older versions of their and other software. Microsoft have been the worst for this, with every version of Word, for example, having a different file format. Thus people were forced to upgrade in order to read documents sent to them by users using a newer version of the product.

This has been a driving force behind the decisions of many governments in foreign countries to move away from Microsoft products. How can a country be sovereign, the thinking goes, when they, and their people, are dependent on a US based company to access their own data and documents?

Sun Microsystems, with their Star Office / Open Office suite, offer an alternative. In addition to reading and writing Microsoft formats, the products also have their own format which is fully documented. The users have the assurance of having access to their data, and Sun gets to inflict damage upon Microsoft’s bottom line (a hobby of Sun’s). Because Open Office is Open Source, its users are assured of perpetual access to the product, no matter what happens to the producer.

Sun, Red Hat and Xinian, among others, are about to go even further than just the word processor. Each are working on, and will release within a quarter, a full Linux based desktop solution which can replace a Windows environment. Having made a serious dent in the server space (Linux deployments were the only area of IT to increase in 2000), the desktop is the next battle ground.

For small and medium sized organizations, these trends are worth watching closely. Certainly, the suggestion by suppliers for upgrading, yet again, complete computer systems should be resisted. True productivity increases will often be greater, per dollar spent, when IT budgets are focused on small incremental upgrades like extra memory, larger and better monitors, or training for end users.

Software upgrades should be examined closely before committing additional resources. Find out exactly how the new versions will help you and your users, or if instead they simply help the software producer in booking ever more revenue.

No manager would ever imagine replacing their vehicles, plant or employees every year or two. There is now little reason to do so with IT infrastructure, either, despite what the suppliers might tell you.

Published in the Victoria Business Examiner.