The Software Spending ShiftBusiness managers, not IT, will fuel the next wave of software purchasesContinued from Page 1 My guess is that tapping this potential, rather than authorizing vast new capital expenditures on enterprise software, explains why the doom-and-gloom crowd sees a poor market for spending growth. IT managers have a metaphorical gun to their heads: increase spending, and senior management will pull the trigger. Justify the CostBut spend some time with line-of-business managers, which I've done recently, and the story is different. Business managers also have a gun to their heads, with a difference: profit-and-loss responsibility. These managers, unlike their IT counterparts, work in profit centers, while IT labors on the overhead side of the aisle. That means that line of business can do something that IT can't: cost-justify new software expenditures with respect to the bottom line. It isn't easy or pretty, these managers tell me, but it's possible as long as the basics are there: a return on investment that increases the black ink or staves off the red. At the end of the day, while their IT managers are being told to tow the line, the line-of-business managers are more and more often buying software that meets the very practical, and somewhat revolutionary, requirement that it make or save money for the corporation. One of the problems for the software market, from a business standpoint, is that this new buying power isn't nearly as powerful as the old IT buying power that everyone got used to in the Y2K and e-business era. Not yet. Whereas IT could — and did — buy multimillion dollar, multiyear IT infrastructure projects that yielded big-bang results (or not), line of business can only buy systems that cost significantly less and yield significantly smaller and more cost-justifiable results (or else). But if software vendors are successful in delivering software that addresses this very real world of profit and loss, what's starting as a small shift in buying patterns could herald a major revolution. Two things are right with this scenario: First, the software customer is no longer buying unnecessary or unjustifiable software just because it fits into the trend du jour. This new customer will, most of the time, only buy software that actually works and fits a specific need. Shelfware, to the business manager, is like unused inventory gathering dust. In other words, it's a capital (pun intended) offense. The second benefit is that this shift in buying is forcing software vendors to do what should have been done a long time ago: Look at software as it relates to business needs, not technological innovation. That means demonstrating return on investment, ensuring leveraged value, making integration with the existing infrastructure fast and easy, and making sure that all the stakeholders — the company, its partners, and its customers — have something positive to show for their software investment. Business-Value SpendingDoes this mean that IT is out of the loop forever? No way. But it does mean you may see fewer and fewer jumbo infrastructure projects and more and more focused, business-oriented applications in the hands of users who can make a difference to a company's bottom line. You may also see fewer frustrated executives wondering why they're spending so much money on software without seeing a commensurate result. And, if business value — in the hands of business managers — is reinjected into the software development mindset, then I think the industry will be in line for a much-needed revolution. And some of that doom and gloom might be replaced by a little turnaround. How big a turnaround depends on a lot of things. But one thing is certain: Business management is increasingly in the driver's seat when it comes to software spending. And that's the best news to hit the industry in a long time. Joshua Greenbaum [josh@eaconsult.com] is a principal at Enterprise Applications Consulting. He researches enterprise apps and e-business.
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