The Innovation Spend

Can SOA boost the "Innovation Spend"? That's the question that came to mind when I read Vinnie Mirchandani's recent piece at SandHill.com .  Most IT budgets, he explains, are overwhelmingly about the "Utility Spend."

The Utility Spend is "Infrastructure product introduced over 18 months ago, and any Software or Services offerings introduced over 3 years ago. Most vendor investments in these products should have been recouped...Most incumbent vendors provide Utility support. They need to find ways to reduce their portion of the budget by 50 to 70% over the next few years."

The Innovation Spend, as he explains it, "is often beta quality implementations of emerging technology, content rationalization or process delivery - somewhat risky, but nothing like the $ 100m write-offs of the past. And those with huge business payback for the buck. Yesterday, it was rolling out RFID tags and PDAs to mobile sales forces and WI-FI campuses. Today, it varies from more sophisticated tools to capture knowledge from aging workforces to predictive data mining to BPO in a number of areas. Tomorrow, biometrics and grid computing. Note - this tactical, but high payback Innovation, not that over-hyped concept - Strategic Advantage through technology."

The promise is that SOA will eliminate much of today's conventional utility spending, radically collapsing the cost of integration as well as application and infrastructure maintenance (not to mention license costs). That may free us up to put more money into the innovations and processes and initiatives that truly differentiate us.