IT Spending

Working for a large software company on enterprise software, I’m always interested in articles about IT spending, like
this one from McKinsey, “How IT spending is changing”

Among other interesting comments:

Although IT customers also want to improve their software, they are wary of big-bang packaged applications–purchases that are just now rolling off accrual budgets. This time around, CIOs are shunning expensive panaceas, especially large-scale customer relationship management (CRM) systems. Many tech executives lost face (or jobs) when the promised benefits didn’t materialize, often because the technology demanded difficult-to-realize changes in processes and in employee behavior. Even worse than buying packaged applications, CIOs told us, was buying applications and then customizing them, for this strategy made it necessary to reinvest in customization with each subsequent upgrade.

CIOs now favor narrower, more-targeted, less-ambitious improvements that mitigate the risk of organizational rejection. Custom software that closely adheres to a company’s existing processes (and therefore requires little or no process change) is popular, and so is software developed for a specific industry.

I always kick around the idea of “boutique programmers”: the idea that instead of buying off the shelf stuff, you’d just hire programmers to code your applications. This is really just selfish thinking on my part. If this kind of model was in effect, there’d be more jobs for programmers (like me) than if we pooled together into products (as we do now), and tried to take out competing products (…as we do now).
Maybe there’s some connection between this style of software development and DIY-IT.

Anyhow, along those lines, the article says:

The third-party services market could feel the pinch, however. Many companies, spurred by lower IT salaries after the economic slowdown, hired talent and brought IT development in-house. These new hires often support and develop the more-customized applications that today’s IT budgets favor. But this move could boomerang on companies in the future: The absence of vendor support could reduce economies of scale and push up costs. Offshoring in less-expensive labor markets could, of course, offset them.

And then this Kreskining:

We expect that large tech players, whose sales teams have good access to clients, will become the centers of gravity. In the past, hardware vendors often had to strike deals with software companies to gain access to their clients. Now the balance may be shifting in the other direction. In either case, smaller players will need to make alliances with the market leaders, not least because customers say that they want to deal with fewer vendors.