Feeds

IT spending: the Y2K effect, Mark II

Options are not pretty

  • alert
  • submit to reddit

Gartner critical capabilities for enterprise endpoint backup

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.

Secure remote control for conventional and virtual desktops

More from The Register

next story
The Return of BSOD: Does ANYONE trust Microsoft patches?
Sysadmins, you're either fighting fires or seen as incompetents now
Microsoft: Azure isn't ready for biz-critical apps … yet
Microsoft will move its own IT to the cloud to avoid $200m server bill
Oracle reveals 32-core, 10 BEEELLION-transistor SPARC M7
New chip scales to 1024 cores, 8192 threads 64 TB RAM, at speeds over 3.6GHz
US regulators OK sale of IBM's x86 server biz to Lenovo
Now all that remains is for gov't offices to ban the boxes
Object storage bods Exablox: RAID is dead, baby. RAID is dead
Bring your own disks to its object appliances
Nimble's latest mutants GORGE themselves on unlucky forerunners
Crossing Sandy Bridges without stopping for breath
prev story

Whitepapers

Implementing global e-invoicing with guaranteed legal certainty
Explaining the role local tax compliance plays in successful supply chain management and e-business and how leading global brands are addressing this.
Top 10 endpoint backup mistakes
Avoid the ten endpoint backup mistakes to ensure that your critical corporate data is protected and end user productivity is improved.
Top 8 considerations to enable and simplify mobility
In this whitepaper learn how to successfully add mobile capabilities simply and cost effectively.
Rethinking backup and recovery in the modern data center
Combining intelligence, operational analytics, and automation to enable efficient, data-driven IT organizations using the HP ABR approach.
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.