Four technologies stand out this year as having strong investment profiles: server virtualization, storage virtualization, unified communications, and cloud computing, according to the Computer Economics Technology Trends and IT Management Best Practices 2009/2010.
“I think organizations are definitely pulling back on large system replacement projects in favor of more incremental changes that have quicker payback and smaller investment levels, which is why we see things like virtualization that can be done in an incremental fashion and has immediate payback,” said Frank Scavo, CE’s president.
These technologies present low potential risk and high potential reward, according to the study, which is based on a survey of more than 200 IT organizations. The survey asked organizations about their ROI and TCO experience with various technologies. Server virtualization, the fastest-growing area of IT investment in the study, ranked No.1 in terms of potential reward. It had the highest percentage of organizations achieving positive or break-even ROI on the technology. Cloud computing ranked No.1 in offering low risk. It had the highest percentage of organizations that come in at, or under budget on implementation and ongoing support costs over a two-year period.
“(Virtualization) is … leading the way. No surprise there,” said Scavo. “Here’s a surprise: the one in the other extreme, the low-adoption, low-growth (quadrant): Cloud computing. There’s a lot of interest in Cloud computing but if you look at how many companies are actually practicing anything Cloud computing―it’s pretty low; and how many are currently investing, it’s pretty low,” said Scavo.
According Scavo, 48% of organizations show no activity in Cloud, 42% are researching or piloting the technology. Only 5% have the technology in place and only 3% are increasing their investment. “So, there’s potential for great explosion for this approach in the future but right now it’s actual in-place adoption is very minimal.”
Investments in unified communications and storage virtualization are at more moderate levels, but the risk/reward analysis shows that organizations are also having success with these technologies. “Only 22% of organizations show no activity relative to UC,” said Scavo. “So, it’s nudging towards the increasing growth part of the first chart. It certainly shows there’s some movement. As VoIP becomes established in the enterprise the next logical step is to unify the communication based on that platform.”
The study raises concerns about one area of technology investment: business intelligence (BI) software. Current investment activity in BI is very high, indicating some organizations must be reaping high rewards. Yet the study indicates BI has a poor risk/reward profile. Many organizations are struggling with the risks associated with cost overruns, expanding projects, and hard to define benefits, the study concluded.
BI is in the high-adoption, high-growth quadrant because end users are always asking for more once they get a taste of what BI has to offer. “From an ROI/TCO standpoint BI shares the same problems of ERP and CRM, which is that it is in the high-risk, low-reward quadrant,” continued Scavo. “BI is a sink hole for IT man-hours. It’s very easy for BI projects to suffer scope creep; unlimited requests from users and business units for support; and can be a very, very labor intensive and cost intensive initiative.”
In addition to the risk/reward analysis, the study provides current adoption levels, current investment activity, and economic experience for 13 technologies: ERP, CRM, BI, SOA, server virtualization, storage virtualization, desktop virtualization, SaaS, Cloud computing, VoIP, unified communications, social networking, and Green IT.
The report also presents adoption trend and practice level data for 10 specific IT management best practices: IT steering committees, IT change control board, IT balanced scorecard, benchmarking IT Spending and Staffing, IT Infrastructure Library (ITIL), project management office (PMO), IT security policy compliance audits, disaster recovery plan testing, contribution to open source development projects, and IT Staff telecommuting.
This data is best used to compare your company’s practices with your peers, said Scavo. “It’s a way of taking your temperature … ”
Four practices fall cleanly in the high-adoption/high-practice quadrant. IT steering committees, IT change control boards, disaster recovery plan testing, and IT security policy compliance audits. The majority of organizations have adopted these practices and tend to fully engage with them. However, the use of IT steering committees stands out as being at high-adoption level and high-practice level. More than two-thirds of organizations have IT steering committees and more than two-thirds of those claim to be fully utilizing them.
“The recession has put a greater spotlight on those technologies that show a higher risk from a cost standpoint,” said Scavo in conclusion. “So, anything involving cross-functional processes or depending on the collaboration or cooperation of users are projects that have a higher risk of cost overruns and those are coming into sharper focus because of this recession.”