FT.com / Technology - Where do IT vendors think business’s focus should be?

FT.com / Technology - Where do IT vendors think business’s focus should be?

Where do IT vendors think business’s focus should be?
By Alan Cane

Published: December 5 2007 04:40 | Last updated: December 5 2007 04:40

Vendors large and small believe that many – perhaps most – large organisations are capable of making big improvements in their use of IT.

They believe several technologies that had promised much in the past without necessarily delivering have now developed to the point where they can be used, for example, to re-engineer legacy applications or control data centres remotely.

These possibilities could be prejudiced, however, by factors including a deteriorating financial climate, which could place extra pressure on strained budgets, and a tenacious if mistaken belief among some managers that IT represents a cost rather than a source of innovation. These could hamper willingness to invest in new technologies.

In its 2007 global IT survey, however, published today, the consultancy Accenture found a close relationship between IT innovation, execution and productivity. “Those organisations that keep their IT investment steady in good and bad times have progressed most in using IT to transform the way they do business,” it says, arguing that organisations that are most advanced in adopting new mobility, collaboration and insight technologies performed better than their slower contemporaries across a range of benchmarks.

It found, for example, that the majority of what it describes as “high performers” – companies that excel in both innovation and execution – have shed most of their legacy systems and are investigating innovations such as software as a service and service-oriented architectures, which, it suggests, may lead to organisations owning only the software they have developed themselves to seek competitive advantage.

Vendors are aware that the “green agenda” is weighing heavily on CIO’s minds and pockets, although most seem more prepared to pay lip service to reducing their carbon footprint than actually doing anything about it.

A survey carried out by the software giant Symantec concluded that improving sustainability and meeting “green” policies set out at corporate level were not high priorities for IT departments in Europe. CIOs were driven to adopt green policies – improving energy efficiency, cutting cooling costs – in their data centres for operational rather than altruistic goals.

Only one in seven, Symantec found, had successfully implemented a green data centre. European organisations, however, were ahead of the US in adopting green policies.

John Hughman, senior technology analyst at the consultancy Ernst & Young, warns of the consequences of the explosion in IT usage and subsequent growth in data, which has put heavy pressures on the data centre.

The lifecycle costs of running a data centre now exceed the initial capital expenditure and a significant proportion of these costs can be attributed to power use – about half the budget goes on cooling.

Organisations must invest in virtualisation, running several operating systems and/or applications on a single machine, he says, to reduce the number of physical machines, pointing out that most servers only run at about 20 per cent utilisation.

He also calls for the relationship between data centre budgets and the cost of powering them to be made explicit. “It is unusual for CIOs to own this cost and therefore few are incentivised to help reduce it,” he says.

Most vendors think the pressure to “go green” will intensify and force change. Joe Hemming, chief executive of computing services group LogicaCMG, expects to be asked to undertake projects to help companies reduce their carbon footprint: “Whether this is through smart metering of energy use, green supply chains or the outsourcing of functions to low carbon environments such as India, this will characterise the year ahead.”

Mark Pearce, head of product marketing for the US-based networking group Enterasys agrees that top of the list for most CIOs will be managing down operational costs, data centre space and environmental impact.

“All three are going to drive virtualisation up the strategic agenda,” he says, adding the warning: “The CIO must not allow his team to rush into virtualisation without due diligence on key issues such as security. Virtualisation impacts a number of other disciplines and to allow a headlong rush into this area could prove extremely costly if done in isolation.”

Some vendors, however, think the IT department still has to win its corporate spurs on a decidedly difficult battlefield.

Steve Gedney, managing director of Borland’s UK operations sees next year as a tipping point. “Put simply, 2008 is the year when CIOs have to prove IT really can work with the business to transform processes and benefit the organisations they serve.”

“This year has seen new levels of large-scale IT project failure with organisations still working in silos using disconnected business and IT processes. The priority for CIOs in 2008 is to drive change to improve this situation,” he said, arguing for better IT metrics so that performance can be measured and improvements demonstrated.

Cisco, the company whose routers underpin much of the traffic on the internet, has for some years been expanding its presence in videoconferencing, in the belief that collaboration will be high up the CIO agenda.

According to Nick Earle of the company’s European markets division, business video will be the next big thing, as executives seek ways to collaborate without enlarging their carbon footprint.

“Some of the latest virtual conferencing technologies make the meeting experience almost as good as being face-to-face without the hassle of travelling. That is why I believe collaboration, enabled by business video, will top the IT agenda in 2008.”

Better communications are also high on the list for the networking group ntl:Telewest. Stephen Beynon, managing director of its business division, says he expects continued strong demand for ethernet services. “We expect this trend to continue in 2008, especially as users evolve beyond point-to-point and move to virtual private networks (VPNs). Ethernet VPNs are more complicated, which will see more customers seeking increased control over, and visibility of, the performance of their network.”

That, he thinks, is the job of the network provider, with simplicity and transparency the key.

Finding ways to cut costs so as to free resources for innovation is also expected to occupy the CIO’s attention.

Mirapoint of the US provides a simple example of where cost-savings can be madein the realm of e-mail. Commercial offerings are costly and should be limited to knowledge workers. It supplies staff with low collaboration needs with a simple e-mail appliance that cuts costs by half.

According to Alan Elliot, the company’s head of marketing, for every 10,000 employees who are shifted to the Mirapoint systems the company saves $1m a year: “This money can be spent on new technologies instead of an expensive e-mail platform,” he says.

Copyright The Financial Times Limited 2007