What if — just what if — IT budgets really loosen up this year,and companies dare to make a software purchase or two? Onething is sure: CIOs will be on the spot. IT executives will be expectedto hit a home run with each purchase, matching it to theoverall strategic vision of the enterprise. There will be no tolerance for the embarrassing software spending excesses of years past.
While the heat may be on, CIOs also are in a very favorable negotiatingposition. “All CIOs are from Missouri these days,” Scott Anderson,director of Sun Microsystems’ Siebel alliance, told CRM Buyer Magazine. “They want to see benefits and cost savings, and they want to leverageexisting hardware and software infrastructures.”
How can the savvy — and skeptical — CIO prepare for the next round ofenterprise application spending?
Choose Open Standards
A CIO can choose the right application category, select the bestvendor, negotiate a sweet deal and still be left with deploymentcosts that soar through the roof. A lack of standardization is part ofthe problem, said Anderson, who, because he works for Sun,understandably leans toward the J2EE side of the Java-.NET platformdebate.
“Typically, CIOs don’t want to have multiple application serversaround,” he said, adding that this will position Javaextremely well in the marketplace as enterprises pick and chooseapplications to fill well-defined gaps in their portfolios. A slewof analysts have made the same point: Running an IT operation isexponentially less expensive when applications can share data.
Ron Rose, CIO of Priceline.com, told CRM Buyer that this was a primarymotivator for his company’s purchase of several Kana applications.Their ability to extend the workflow andattach to a variety of databases was key. “With more dynamicbusinesses,” he explained, “the openness and modularity of theunderlying system are very important.”
Dig Out of the Version Hole
Sometimes the best “new” purchase is already on a company’s shelf.When examining the library of software accumulated during the IT spending boom of the late ’90s, CIOs should consider not only how to leverage it, but also how to upgrade it, advises Deloitte Consulting partner Mark Peacock.
“If the software was still shrink-wrapped when budgets got slashed,” hetold CRM Buyer, “it may be behind a version.” In such a case, herecommends that IT execs go back to the vendor and request anupgrade to the current version — which often will include a number offeatures on the CIO’s wish list. This is a good way toget new functionality at little or no cost.
“A lot of software companies,” said Peacock, “especially the pointsolutions, are dying to negotiate low-cost version upgrades so they cantrumpet the win when the application goes live.”
This thrifty approach not only gets a new application up and running,but also avoids the potentially ugly scenario of having to write off aninvestment in expensive software that was never even used.
Complete the Feedback Loop
When it comes to e-commerce and CRM purchases, companies should focus on closing gaps in the feedback loop, says Aberdeen Group research director Guy Creese. “Web analytics, personalization, search and content management, taken together, make a complete feedback loopthat optimizes the customer-enterprise conversation,” he told CRM Buyer.
In many cases, because a company already has several of these applications inplace, closing just one gap can result in immediate, substantialbenefit with very little investment. For example, if a company cananalyze search data and discover why a large percentage ofcustomers leave an e-commerce site without finding the product theywant to buy, then a small investment can pay for itself many times over,and very quickly.
In years past, Web analytics, personalization, search andcontent management typically have remained isolated in various departments.Take the hypothetical case of an IT group that undertakesa Web analytics project to better project how many Web servers itneeds. Later, marketing wants the same data to understand who is visiting thecompany’s site and why, but the information is invisible, inaccessible or otherwise unusable because the project was contained within IT.
Now there is tremendous interest in closing that feedback loop so thatknowledge can be leveraged across the enterprise. “Vendors tell methat they walk into sales presentations and see the CIO, the vicepresident of marketing, an executive from customersupport and a whole host of others,” Creese said.
And he recommendsthat enterprises continue to push that trend by tasking interdepartmentalcommittees to carry out the software evaluation and selection process. Thatapproach, he maintains, is likely to produce more bang for the CRM buck.