A new way to smarten up your IT spending

Companies are reluctant to invest in new technology right now, unless they can see fast returns. And who can blame them?

The economic uncertainty could continue into next year – many companies are shedding jobs and terrorist activity is undermining commerce and travel.

IT spending strategies are clearly changing, and taking into account the need to do business in a more ‘connected’ and fat-free way while demanding short-term returns. A glance back through IT history shows how spending has shifted from hardware to software and services. In 1975, the widespread commercial adoption of mainframes drove IT spending as IBM set the new standard for business computing.

The mass adoption of desktop computing drove the next peak in 1984, and in 1990 Microsoft rose to dominate the desktop software market. In 1998 companies threw millions of pounds at enterprise resource planning systems from the likes of SAP and Baan.

Today, technology firms have caught on to the fact that IT managers have less to spend and are trying to maximise their assets.

Professional service companies are one group trying to talk the market up by offering ‘solutions’ based around integrating supply chain and back office systems with the web, or using an extranet to trade and collaborate with partners. And if a firm can integrate and automate disparate systems such as supply chain, customer relationship management, procurement and order tracking, the cost gains can be profound, as Cisco and Dell, to name but two, have found. Mobile internet devices can aid this IT strategy by speeding up business transactions.

On another tack, since firms are no longer investing as much in high-spec hardware, managed services are appearing allowing companies to hire broadband links to applications ranging from human resources to video conferencing.

These can cut implementation costs out of the equation because they are accessed via the web.

Thirdly, companies are starting to take seriously the idea of cheap or free software alternatives to Microsoft. For example, Sun has put its stamp of approval on an open source office suite called StarOffice, which is compatible with Microsoft Office and is absolutely free.

Linux has the backing of IBM, which has put it on its iSeries (formerly AS/400) servers. In fact, IBM now offers no less than 2,500 Linux business applications.So, the economic upturn is not dependent on Windows XP – as Microsoft might have you believe – but on your being smarter with what you already have.

Arif Mohamed is News Editor of IT Week