FREE DM Review Site Registration!
Sign-up today and access DM Review on the Web!

Your FREE registration entitles you to:
FREE email newsletters

FREE access to all DM Review content

FREE access to web seminars, resource portals, our white paper library and more!

   

Saugatech Research - Key Trend for 2006: Tactically Strategic Investments Continue

Saugatuck research of user executive groups indicates that tactical priorities have a significant lead when it comes to IT investments. When asked about their IT investment for 2005 and 2006, executives name tactical, short-term investments, driven by immediate requirements more than twice as often as they do larger investments that result in longer-term changes in infrastructure, business configuration and operations. Figure 1 illustrates the top five IT spending priorities for 2006:

  • Applications integration
  • Security software and services
  • Business intelligence (BI)
  • Business performance management (BPM)
  • Service-oriented architectures (SOA)

Figure 1: Key Trends

In-depth interviews throught Q405 with IT, business and finance executives indicate that even those investments that would seem to be classified as strategic (and would in the past require massive spend and implementation) are now being pursued through incremental investments according to business-led planning. As an example: SOA, possibly the most "strategic" of these top five investments, is being accomplished through proof-of-concept or "beach-head" type investments that focus on a specific aspect of the business (often narrowly defined), prior to wider adoption throughout other parts of the firm.

What's driving this shift? An increased focus on business process improvement, including compliance and efficiency investments - both of which tend to be short-term tactics that can incrementally improve enterprise-wide business operations, rather than making investments that will result in long-term structural changes. (A key exception is strategic IT investment associated with compliance requirements. Compliance is both a tactical, near-term investment as well as a strategic investment that can alter business structure and operations.)

Market Impact

User focus on efficiency improvements will drive vendors to deliver more offerings at less cost, increasing commoditization of IT and increasing user choices. Commoditization in turn will help drive the growth of process-specific, vertical-specific services that enable user firms to jettison even more IT overhead. Outsourcing will shift beyond traditional ITO and current BPO to process-focused services that deliver increased business efficiencies and capabilities by blending process, business knowledge and IT on demand.

As a result, Saugatuck expects to see growth in business services providers (BSPs) that combine software with market/vertical-specific business process intellectual property and services, further increasing user choices and enabling improved business efficiencies through tactical, non-core investments.

For vendors, marketing and sales efforts that lead with efficiency, cost control and tactical IT and business improvements are likely to gain the most attention. But to close sales, vendors will need to supply customers with tactically strategic IT investment roadmaps that demonstrate how, when and where incremental IT investments result in strategic growth.

For more information, please contact http://www.saugatech.com/.


Saugatuck Technology is a strategic advisor to senior executives, leading information technology vendors and investors, providing strategy consulting, custom research and (C-level targeted) thought-leadership research programs focused on emerging technologies, key business/IT challenges and effective management strategies. Please visit their Web site at www.saugatech.com.

For more information on related topics, visit the following channels:



Industry Vendors