Feeds

IT spending: the Y2K effect, Mark II

Options are not pretty

  • alert
  • submit to reddit

Internet Security Threat Report 2014

A few years into their IT systems cycles, businesses are looking at the next development stage. Many companies are reluctant to upgrade again, often with good reason, but changes in the market mean that they would be likely to gain more valuable benefits than previously.

In the run-up to Y2K, ERP-related sales rocketed, the industry went into overdrive, and IT budgets spiraled as companies sought to meet the unmovable deadline. Now, with most systems three to five years into their cycle, organizations are starting to think about the next development stage, either voluntarily or in response to the support deadlines recently issued by vendors such as SAP and Oracle.

But what they see when they start examining their options is not pretty. Research by BASDA CEO Dennis Keeling shows that pre-Y2K, license costs accounted for only 20% of the cost of an ERP project, while the majority 80% was spent on capital costs related to IT equipment and external consultancy, as well as internal staff costs associated with implementation, customization and training.

Today the license costs figure is down to a mere 10%, meaning that 90% of the budget for a multimillion-dollar ERP project is consumed by implementation costs, and within that the bulk is spent on consultancy. That factor, set against the background of previous overrunning, under-performing projects, means that companies are rightly reluctant to undertake upgrades.

Often there is no compelling reason for change, and plenty in favor of the status quo. For organizations with a stable, functioning system that are in a position to lock down development activities, this is an option, especially given the availability of extended maintenance contracts. Despite the resulting hike in annual maintenance charges, it can be an economically viable and practical option for a short period.

However, the upgrade landscape has changed and there is a chance that the higher proportion of consultancy costs may bring more valuable benefits than previously, because where it was then spent on force-fitting internal processes to rigid systems, today the effort is centered on integration, linking and extending systems.

© datamonitor logo

Datamonitor is offering Reg readers some of its technology research FOC. Check it out here.

Internet Security Threat Report 2014

More from The Register

next story
Docker's app containers are coming to Windows Server, says Microsoft
MS chases app deployment speeds already enjoyed by Linux devs
IBM storage revenues sink: 'We are disappointed,' says CEO
Time to put the storage biz up for sale?
'Hmm, why CAN'T I run a water pipe through that rack of media servers?'
Leaving Las Vegas for Armenia kludging and Dubai dune bashing
Facebook slurps 'paste sites' for STOLEN passwords, sprinkles on hash and salt
Zuck's ad empire DOESN'T see details in plain text. Phew!
Windows 10: Forget Cloudobile, put Security and Privacy First
But - dammit - It would be insane to say 'don't collect, because NSA'
Symantec backs out of Backup Exec: Plans to can appliance in Jan
Will still provide support to existing customers
VMware's tool to harden virtual networks: a spreadsheet
NSX security guide lands in intriguing format
prev story

Whitepapers

Forging a new future with identity relationship management
Learn about ForgeRock's next generation IRM platform and how it is designed to empower CEOS's and enterprises to engage with consumers.
Cloud and hybrid-cloud data protection for VMware
Learn how quick and easy it is to configure backups and perform restores for VMware environments.
Three 1TB solid state scorchers up for grabs
Big SSDs can be expensive but think big and think free because you could be the lucky winner of one of three 1TB Samsung SSD 840 EVO drives that we’re giving away worth over £300 apiece.
Reg Reader Research: SaaS based Email and Office Productivity Tools
Read this Reg reader report which provides advice and guidance for SMBs towards the use of SaaS based email and Office productivity tools.
Security for virtualized datacentres
Legacy security solutions are inefficient due to the architectural differences between physical and virtual environments.