Insider Business - Tech crunch

How has the recession changed the way companies invest in IT?

Paul Sparkes, product director, Iris
This recession has highlighted the need for real information. Being able to make decisions quickly is crucial. Organisations that employ a large number of people need to be able to understand where their time is being spent and ensure that they are being used on projects that are bringing money through the door.

Customers want to take advantage of an off-the-shelf system but, at the same time, they want flexibility. There are some providers who have a very clear strategy towards a standardised product and there are others where the whole business model is based around a high level of revenue being generated from professional services and tailorisation.

If people were to focus on getting more use out of what they already have by looking at their own processes, I believe they would save more money than if they cut their costs by a few percentage points.

Look at projects you implemented in the last 18 months. See what you can get out of those projects and actually finish it off to the last 10% to get the most out of software you’ve already invested in.

Are companies right to reduce the amount they spend on IT?

Kirstin Gillon, technical manager, IT Faculty, ICAEW
There is a lot of historic evidence to show that investing in a recession can be a useful thing to do; you can come out of it stronger than competitors. Simply shutting down investment is probably not the right thing to do. In practice most IT budgets are largely spent on the operational side making the IT run.

You don’t get the value and the return from simply implementing a piece of technology. It is about how you use it and how you integrate it into the business. It is about the business and IT working together, and how the technology can create value, reduce operational costs, give more service to customers and increase revenue.

Also it isn’t simply about getting the lowest cost in the short term, but how you can get value over the course of the contract.

Is there a feeling that IT hasn’t delivered on its promises?

David Elton, IT and change management specialist, PA Consulting Group
I think it is right to say that business may not have delivered the value expected from IT and there is an opportunity to get more value from investments. Take something simple like voice over IP. VoIP represents a potential great cost saving, where a company has people working remotely. But what happens? People carry on using mobile phones, so you haven’t actually got the cost savings, but you’ve taken on the new cost of the VoIP. It’s potentially an enormous benefit, but the business change hasn’t taken place around it.

Businesses underestimate the energy hump in creating change. You have to really understand the behavioural change that has got to take place and ask is this technology really going to work for them. And then push it in. If it works, keep going. But if you keep on having to push, maybe you haven’t got it quite right.

There is always opportunity to discuss pricing with a supplier, particularly where there is a renewal of contract taking place. Especially with outsourced services, the level of trust between customer and supplier to some extent determines the cost of the relationship. Looking at sourcing contracts is a good thing to do, particularly if there is an opportunity to retender.

How has the downturn affected the way companies are spending money on technology?

Jerry Norton, managing director, financial services, Logica
I think there is a maturity issue in IT. It is a relatively young industry and the process by which you do IT, the industrialisation if you like, is only a relatively recent topic.

It is quite right that people should renegotiate contracts as vendors will have lower costs of production because they have moved it offshore themselves or because they have lowered their cost of production. But the danger is, if you squeeze it too tightly, you then get this horrible change control battle across the boundary between the supplier and the customer. The perfect world is where you get good value for the end customer, but where supplier and customer are working together with a common goal.

For larger organisations, smarter procurement is clearly a route ­ making sure you do the same thing in country A and country B or department X and department Y Many organisations haven’t done that. If you centralise, you clearly get a benefit. Many of the larger companies that I deal with now use procurement experts to buy IT. Should they have been doing that two years ago? I think the answer is yes. The current conditions have helped them concentrate minds on that.

Chaired by Rachel Fielding

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