Service ethos is reshaping IT procurement

IDG News Service — Wed, 15 Oct 2008 15:32:24 -0700

One of Gartner's best analysts, Barbara Gomolski, says in a press release Wednesday that IT delivery models have to change, essentially by weakening the grip of fixed costs and embracing variable costs.

Nearly two pounds in every three pounds spent is currently invested in fixed costs and that has to change, she adds.

That's right on the money. Software as a service is already leading the way of course and can only benefit from the current economic malaise/meltdown/freeze/recession/depression/post-apocalypse scene of desolation (delete as appropriate). The new name of the game will be spread payments, low capex, little spikiness and no shocks. The big enterprise software firms know this but are so heavily vested in the old model of upfront spend followed by annual maintenance fee that they have to move at glacial speed. This is partly plain old greed but also to educate financial analysts and make sure that when the time to give a bear hug to rentware comes, they can continue to have a fat multiple on their market caps.

But it's not just software. Telepresence videoconferencing rooms are very attractive now to companies wanting to slash travel spend but they won't get to critical mass until vendors have the gumption to provide them as services and lower the initial investment required. Also, it's way overdue but companies should be looking very carefully at leasing rather than purchasing PCs.

The service ethos is changing the fundamental economics of IT procurement and everybody needs to get on this horse.

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Service ethos is reshaping IT procurement