In 2011 Computer Economics, Inc. published a report on trends in technology that profiled organization IT solutions as investment strategies. The following is a statistical review of the major characteristics grouped into three categories: A) those experiencing the most investment activity, B) those with most interesting results, and C) those that are almost compulsory for doing business.
A) Group that is experiencing the most investment activity:
#1: ERP: The rate of investment in Enterprise Resource Planning pushes it to the top of this list of 15 technologies that businesses invest in even though it has the poorest risk to reward ratio. ERP strategies reach positive ROI and break even (BE) for about half of the companies that adopt them but total cost of ownership (TCO) frequently exceeds original budget estimates. This is a very mature business technology that remains a mandatory tool for large enterprises, but difficult to forecast as an expense. In comparison to other strategies, it must be considered high risk, and rewards in terms of ROI and BE are only classified as moderate.
#2: CRM: Customer Relationship Management strategies are currently experiencing high rates of investment. CRM has ROI and BE numbers similar to ERP, but CRM hits better TCO points because the actual costs of adoption meet original budget estimates for approximately 70% of the companies that invest. CRM can be classified as having moderate risk with moderate rewards.
#3: BI: Business Intelligence systems are experiencing very high rates of investment. BI systems have several capabilities but commonly use analysis tools to query internal databases and develop predictions for competition decisions. BI has equivalent TCO numbers to CRM, with slightly better BE points than most other technologies. BI can be classified as having only moderate risk with high rewards.
#4: Enterprise Collaboration: Identifying financial rewards in collaborations systems is a difficult proposition, but this has not slowed the rate of investment in these technologies. Enterprise Collaboration systems meet what could be referred to as the TCO standard for business technology, where actual costs are consistent with original budget estimates in 70% of cases. BE points are good, but ROI for this technology is lower with only a third of businesses getting the expected returns. Enterprise Collaboration systems should be classified as moderate in risk and moderate in financial reward.
#5: Mobile Applications: Less than half of businesses have adopted Mobile Apps, but Mobile Apps are one of only two technologies that have a higher pace of investment percentage than adoption percentage, signifying a very fast growth rate. Mobile Apps are positioned right in the center of the graph for risk and reward; a true bull’s-eye of moderation on both axis. This is not to be confused with average; the average position on the scatter chart for the whole group of technologies is closer to where the border between low and moderate risk intersects the border between moderate and high reward, so Mobile Apps are not quite as safe as the average strategy on this list.
B) Group with most interesting results:
#6: Unified Communications: UC can deliver any type of communication via real-time methods, i.e. chat, whiteboarding, voice, forwarding, video, etc., by combining a whole set of technologies into a consistent interface. UC’s value comes from its ability to integrate real time communications with delayed delivery communications, but it reaches the enterprise bottom line by integrating communications into the business process cluster. UC has great ROI numbers with two thirds of companies that adopt experiencing positive returns, putting it well into the high reward classification. Meanwhile risk is a little better than average, at low to moderate. Ultimately, and perhaps obviously, a typical UC solution from a provider such as Sprint for example, is more expensive than a traditional on-premise PBX system and voice package. But when the cost is weighed against significant gains in productivity, the scale tips toward adoption of these steadily improving technologies, which explains why the market is expanding and predicted (ABI Research) to “reach 2.3 billion by 2016.”
#7: Desktop Virtualization: Not to be confused with server virtualization (v12n), Desktop Virtualization is the arrangement where your hardware is on your desk, but most of “your” software is accessed over a network, or online. Desktop Virtualization systems are almost guaranteed to come in under budget, thus providing a great reward ratio. In most cases this type of operation also improves security, which reduces risk, giving an indirect bonus to the reward ratio as well.
#8: SaaS: Software as a Service has the best financial profile for low risk and high reward, of all technologies available. Its costs are very predictable, with 80% of businesses reporting that TCO met original budget estimates, and that nine out of ten businesses hit BE or saw positive ROI within two years.
#9: PaaS: Platform as a Service is a less mature technology than IaaS, or any other technology on this list. Almost no companies have implemented this true cloud environment, and few are considering doing so. However, risk of exceeding TCO estimates with PaaS is only moderate while rewards so far have been high.
#10: IaaS: Infrastructure as a Service is the purest form of the Cloud trinity. Companies are experiencing lower than average BE times, but predicting the TCO is easy and since ROI is acceptable, IaaS can be classified as low risk with high reward.
#11: SCM: The percentage of companies adopting Supply Chain Management is lower than I had expected. I forget that many industries have no use for either the planning or execution systems available within SCM. However, for the companies that have adopted it, which is about a third of the business economy, it has been a highly rewarding strategy because ROI for SCM is excellent, while risk is moderate. In the future, Cloud technologies should help with some of the challenges businesses currently face with implementing SCM strategies.
#12: Tablets: As a technology, tablets are economical but as a business strategy they are the second most expensive in terms of exceeding estimates for cost of ownership. Meanwhile reward has been measured as a flat line, not even getting off the floor.
#13: Legacy System Renewal: Not all companies have legacy systems, but as time marches on, the legacy renewal decision catches up to everyone. The question of whether to fix up existing equipment or to buy new can be a tough one to answer accurately. Upgrading to new equipment may seem like a no brainer, but it can be a gamble, take Microsoft Vista for example. Legacy system renewal is ultimately moderately risky, and moderately rewarding.
C) Group that is almost compulsory for doing business.
#14: Windows 7: Over three fourths of companies have already or plan to adopt Windows 7. It is one of those technologies that are almost a mandatory cost of doing business. Whether a large enterprise or mom and pop shop, Windows 7 gives at least moderate rewards with low risk.
#15: HRMS: Human Resource Management Systems are a very mature technology. HMRS has been around for a while and three quarters of businesses use some form of software to control employee information; obviously for large labor forces it is basically a necessity. Risk is in the low end of the moderate range and reward is in the high corner of the moderate range.