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SaaS has become vogue of late for two reasons. First, IT executives saw this as a way to quickly grow the scale of the IT environment or as way to add capacity on-demand during peak usage periods. Second, smaller businesses are looking to SaaS as a way to augment (or even have) IT staff and automation in the absence of adequate IT resources. Some of the known advantages of SaaS are lower up-front costs, better potential scalability and automated upgrades. Disadvantages include lack of flexibility and customization. However, with the changing economic climate, more IT departments are seeing if they can use SaaS as a way to maintain functionality in the presence of decreasing IT budgets.
Experton Group believes SaaS can be a lower-cost alternative to scaling infrastructure to meet growing application demands. SaaS can also be helpful in a decreasing market, especially when it is used as part of a long-term IT cost savings initiative. However, before counting the money saved from SaaS, IT executives need to understand the disadvantages as well as the advantages of SaaS in order to be able to use it to help the business. Since SaaS applications tend not to be very customizable, their use is best with commoditized non-critical internal facing applications. In addition, SaaS has its best success with applications that do not already have a lot of committed infrastructure, with is more likely to be the case with new business applications.
Experton Group believes many small and medium business that are already pressed with staff budgets, hard to find talent, and increasing economic pressures are going to find the best TCO benefits to using SaaS applications. IT executives need to develop a SaaS transformation plan that targets the appropriate applications, infrastructure and personnel to optimize IT resources and maximize the benefit to the business. Special attention needs to be focused on any potential security issues, with a dedicated person or persons to interface with the service vendor to ensure the company's application performance, availability, and service objectives are being met.
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The current economic climate will have a significant impact on how corporations view outsourcing. Experton Group expects that the value aspect that was previously touted will be replaced with a myopic view of how outsourcing can be used to save money. There will be a preference for outsourcing relationships that can be easily established and the cost benefits rapidly justified. While this is not a strategic view, Experton Group believes the budget pressure many companies will be facing will force a more pragmatic, near-term view. All focus will be on how companies can avoid spending money; outsourcing will be used where it can be demonstrated to directly contribute to this goal.
One of the main areas where outsourcing will be able to contribute is in consolidation efforts. Companies will be in the process of more aggressively consolidating applications, data, servers, storage, and data centers. Outsourcers that can act as the data center consolidation point will be well positioned in some circumstances to help with this consolidation.
Data center management and operations will continue to attract outsourcing interest, especially where the service provider can demonstrate cost savings as a result of them taking over operations. IT executives should look at typical staffing ratios, and assess the cost per managed device against their own ratios to determine whether they will save money in the process.
Many companies and executives in the Middle East are still not comfortable with the idea of having the “IT systems” outside of the country or people not on premise which is in strong contrast to the majority of the European and US counter partners. This will slow-down the overall development of the outsourcing market in the Middle East and the maturity of the services offered.
Experton Group predicts that offshoring will experience a very bumpy 2009, as companies wrestle with the balance of saving money through offshoring versus keeping IT talent in house and on shore. Outsourcers will make the most gains in areas of application-level outsourcing where the company can provide commoditized services without needing to extensively customize the application environment. India will continue to dominate application development and help desk work, while business process outsourcing is still in its beginnings in the Middle East.
Experton Group strongly recommends building a roadmap of an overall sourcing strategy for the next 3-5 years including an internal and external readiness and value assessment.
Experton Group believes executives could reduce their cost of doing business if they treated vendor management as a strategic business process with measurable key performance indicators (KPIs). Unfortunately, in many organizations the staff is not dedicated or effective, business units have the final say on vendor selection, or the contracts are not transparent. These conditions result in process flaws that allow the vendors to get the upper hand and/or enterprises settling for less than optimum deals, while overspending on the process.
Many vendor management organizations (VMO) treat the procurement process transactionally. This is a very narrow view of deal making. Regardless of whether the deals are commodity or strategic, the procurement staff must view the deals holistically and examine them from life cycle management and relationship bases. This requires the team be proactively addressing each of the deals and determining the best approach for product or service acquisition.
Executives should make vendor management a strategic business process with measurable metrics and allow the organization to effectively and efficiently pursue its mission. Experton Group believes executives can reduce their procurement costs by up to 40 percent by making vendor management a strategic business process and enabling a VMO to operate without contract preconditions. Additional gains can be achieved through contract consistency, transparency and better quality of services. Executives should establish a clear charter and mission for a vendor management organization with quantifiable metrics and then enable the unit to pursue its objectives without line of business interference. The VMO, in turn, needs to develop and execute a consistent procurement process that effectively and efficiently addresses the entire procurement life cycle rather than a process that treats deals on a reactive transactional basis.
Experton Group has swiftly reacted to the changed market environment and has provided through its Research Notes, Workshops, and Assessments, many insights in how to deal from an IT Management perspective with a recession and has developed specialized offerings. Based on many years of experience when many western countries went through a recession and zero or negative growth, as well as experiencing major re-shifts in industries, Experton Group Advisor have tons of experience how to help IT management to prevail.
Therefore we also updated the EWU program and added topics, which are extremely important when you are dealing with a recession or a major cost crunch in your company, to the content of the Executive Winter University for Dubai on February 1-5, 2009:
Additional topics which are covered under the main umbrella "How to run IT in a recession period":
Value Guarantee: Those topics will save your company millions and are an excellent pay-back for the time and money invested. Actually if you are going back after those 5 intensive days and you follow the advices and recommendations from the University (e.g. cost free Risk & Reward deals) and you don’t get the tuition back at least 5-fold within the next 6 month Experton Group will refund you the paid fee. This is our value guarantee.
Top Level Speakers: Our speakers have in average over 25 years of experience and have been Vice Presidents or Senior Vice Presidents in companies like Gartner, Forrester, META, IDC, Microsoft, etc or have had Executive and CIO positions in large organizations. Speakers for the event are: Dr. Andreas Winklhofer, Dr. Kenn Walters, Dr. Friedrich Froeschl (ex-Siemens CIO), Luis Praxmarer, Andreas Zilch, Christophe Toulemonde, Tibor Loncsar (ex-CIO MOL)), Ash Pal, Fernando Fernandez, and several more.
Networking: One very important aspect is also networking and sharing the experience with other people. We have provided enough time during lunch and joined evening sessions for casual small talk but also group discussions. In addition we provide many one-to-one sessions with our Advisor in order to make those 5 days to a personal coaching, advisory, and experience session with a fantastic return for you and your company.
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