Business Management

Joe Baguley (Europe) - The New Definition of 'Return on Investment'

IT vendors have taken a fair bit of criticism over the past few years. Expensive solutions, long-term contracts, license renewal fees, and hardware maintenance are some of the grumblings that have been voiced. This hasn't done much good for the industry's reputation, or indeed supplier trust.

The catalyst in changing the traditional customer/vendor relationship was the economic crisis, as IT departments were forced to cut budgets and carefully scrutinise long and short-term implementations alike. ‘Doing more with less' was, and very much still is, the mantra for many IT departments and organisations today. The pressure is on for CIOs to ensure everyday business needs are being met, with current IT infrastructures in place, while also investing time and resource into innovation in order to prepare for business longevity. Did I mention balancing this all by making a saving too?

Measuring the success of an IT implementation has always been intrinsically linked to return on investment (ROI). This is still very much the case today, however, the timeframe in which customers expect to see a return has shortened drastically due to the need to demonstrate value and savings at every level possible.
The days when implementing technology showed value over three years has now disappeared altogether. This is what IT leaders have traditionally sought. Vendors are now being asked to show real potential for savings, and quickly, as CIOs are looking to get more out of their investments.

Today, vendors are expected to show progress within six months or less into a project. This no doubt has alarm bells ringing for the more traditional suppliers who will need to rethink their own business processes and roll-out strategies.
For example, before Quest acquired Volcker Informatik, a privately held German Identity and Access Management software company in July 2010, we used to see them at events walking around with badges that said "four months". They were ahead of the game as the products - which now form part of the QuestOne Identity Solution - could be deployed and the customer would see value four months in or less. After validating this with their customers we knew we were on to a good thing.

The change in mindset has also been prompted by the wide availability of cloud services. With much shorter and cost-efficient contracts that provide greater visibility into the ROI of activities, the benefits of cloud are very appealing to IT leaders who have got their eye on cost metrics. Cloud computing enables the IT department to get more insight into the cost of computing, which can in many cases be charged by the hour and only for the capacity that you actually use. This is also forcing uncomfortable comparisons against their existing systems.

CIOs have got a choice; either they buy new software or tune-up what they already have. The answer is in most cases the latter and it is here a trusted partnership between the customer and vendor is imperative. True innovation increasingly comes from the creative use of existing capital, with some vendors standing out by being clear about what is achievable in a given timeframe and demonstrate early on the savings that have been made. The days of three year projects with the first nine months dedicated to a bunch of consultants ‘scoping' are numbered. Technology is moving faster than ever before and agility is key.


By Joe Baguley, Chief Technologist (Europe, the Middle-East and Africa) at Quest Software


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