Innovation Imperative in a Tough Economy
By Sam Sliman
President, Optimal Solutions Integration, Inc.
Despite today’s rough economy, recent IT spending forecasts are far from bleak. To be sure, the spendthrift ways of the late 1990s are not likely to return anytime soon, but leading companies understand that under investing in technology – particularly during lean times – can erode profits and cost market share.
Forrester recently raised its forecast for 2008 U.S. IT spending growth to 5.4 percent, two points higher than its May prediction of 3.4 percent. Forrester anticipates a U.S. IT spending growth rate of 6.1 percent for 2009.
According to Gartner, the outlook for global IT spending remains positive for 2008 and beyond. Gartner pegs worldwide IT spending for 2008 at $3.4 trillion, an increase of 8 percent from 2007. Worldwide software spending is on pace for the strongest growth rate in 2008 at more than 10 percent, according to Gartner, which ranks IT services spending a close second with more than 9.4 percent growth.
The current turmoil on Wall Street and the sad state of the nation’s financial services industry will no doubt force a heightened prudence on corporate IT spending across a broad spectrum of industries, but as Gartner analyst Kathryn Hale points out, “Businesses are still investing in improvements to internal processes aimed at reducing costs, while often maintaining some of the prior interest in innovation.”
IT spending to reduce costs and improve core processes is always in favor. The trick, particularly during an economic downturn, is knowing precisely where and when to invest. SAP ERP 6.0 and the SOA-enabled NetWeaver platform make both of these questions easier than ever for CIOs to answer.
First, the cost savings from consolidating and standardizing all enterprise applications on SAP ERP 6.0 are tangible, measurable and significant, with money saved on hardware and software and reduced administration and maintenance costs topping the list.
Equally important is SAP’s game-changing practice of upgrading its ERP platform via optional enhancement packages, a delivery option made possible by the SOA-ready NetWeaver platform.
In essence, by keeping the core of SAP ERP 6.0 stable through 2010 and issuing upgrades by way of optional enhancement packages, SAP provides CIOs a predictable cost for running and maintaining core enterprise systems while at the same time freeing them to make strategic, cost-efficient edge innovations that satisfy their most vital and pressing business needs.
Not all IT projects are created equal. Current economic forces make spending to save an absolute necessity. Globalization and increasing competition make spending to sustain a competitive edge absolutely unavoidable. In tough times, CIOs must be able to prioritize IT initiatives in a fiscally responsible manner that that doesn’t sacrifice or compromise immediate operational requirements or long-term business goals.
The general availability of SAP ERP 6.0 in conjunction with the issuance of optional enhancement packages delivers the innovation CIOs can utilize today to keep up with the speed of change, while at the same time providing the flexibility CIOs need to place additional, less time-sensitive initiatives on roadmaps that extend several years into the future.
Since its successful transition to the NetWeaver platform and the introduction of its innovative upgrade strategy, SAP has delivered more than 600 new capabilities, 97 enterprise composite applications (xApps) and 1,500 enterprise services. Moving forward, SAP will continue to add to this repository of tools for driving edge innovations.
With this innovative model, SAP ensures CIOs realize maximum value for every IT dollar. And with the ever-present possibility of IT dollars becoming harder to come by, the time for reaping the benefits of SAP ERP 6.0, the SOA-ready NetWeaver platform and optional enhancement packages has never been better.
