techslog

Here’s the background. Gartner recently issued two separate reports that question the reputation of IT as a major contributor to corporate success. The first report determined that 80 percent of what companies spend on IT doesn’t directly contribute to business growth or enhance competitive advantage, and is therefore “expendable.” The second report pointed out that IT is seen as a waster of electrical power – a perception that would have been impossible in the heyday of the dot-com years.

In the first study, Gartner’s research indicated that at least two-thirds of all IT spending is just to sustain the business rather than to change or transform the business. In most companies, the investments allocated to do new things and to change the business were typically no more than 20 percent. Even worse, the investment in innovations which could transform the business turned out to be even less.

If that’s true (and it probably is), it could spell bad news for software sales, because the purchase of software has always been based on the idea that innovation provides competitive advantage. If C-level executives start believing that IT expenditures simply allow their companies to “run in place,” there’s a strong likelihood that IT groups could experience budget cuts that would damage future software sales.

Gartner IT Backlash article

In the second study, Gartner discovered a growing perception that IT centers waste electricity. Turns out that the benefits IT equipment provide to companies are outweighed by its power consumption. Gartner said two factors in this controversy are particularly visible to policymakers; the direct issue of electronic waste and the potential impact - caused by the electricity that computers consume - on global warming.

According to Gartner chief of research Steve Prentice, “Technology's clean and friendly ‘weightless economy’ image is being challenged by its growing environmental footprint…IT also has to face mounting concerns over spiraling electrical power consumption.” Now, that’s a pretty big change in perception from the 1990s, when IT was universally perceived as a surefire investment with extraordinary ROI.

In other words, if you think selling software is hard today compared to the dot-com days, it’s likely to become even more difficult in years to come. It is therefore in your best interest to help your customer contacts in the IT group better position themselves and better target their software investments. Gartner recommends three approaches:

Intelligent Reinvestment. When IT leaders save money, encourage your contacts to immediately tag that application area for future investment in order to achieve a particular strategic business goal. In other words, don’t think that merely cutting costs will be enough to justify future investment.
Seize the Day. You should help your IT contacts identify key business initiatives and provide them with the expertise they’ll need to achieve them.
Make the Connection. Always make sure the value that your software provides to the customer is measured, discussed, and managed – not in discrete project packets such as return on investment (ROI), but with an eye on linking and integrating the technological past, present, and future for your enterprise.
In short, you must help your IT customers demonstrate that the IT organization is managing its assets well and helping the business provide more effective oversight and allocation of IT resources.