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Compliance and cash to dominate 2005

Senior management will start to demand more concrete demonstrations of cash benefits from their IT departments in 2005, according to Butler Group
Written by Andy McCue, Contributor
IT director priorities for 2005 will be dominated by compliance regulations and the need to demonstrate real value in a continuing environment of cost restraint, according to analysts' predictions.

Other, more familiar, themes will also be near the top of IT bosses' 'to do' lists including security, outsourcing, supplier consolidation and mobile working.

Butler Group claims senior management have become intolerant of frequent cost overruns and large investments that do not demonstrate tangible returns. Tim Jennings, research director at Butler Group, said IT governance and better use of metrics will be key to measuring and quantifying benefits.

"The key one for me is measuring IT value," he said. "Very few companies can quantify or articulate the value of IT. Companies are very bad at measuring the actuality after the project has been deployed. But the measurement solutions themselves also need better metrics built into them."

Cost restraint is a continuing theme and businesses need to significantly reduce their IT maintenance costs and consolidate the number of suppliers they use, according to Jennings.

"Typically the average company is spending 80 to 90 per cent of their IT budget on keeping the lights on. They need to be spending closer to 50/50."

Security again remains a key priority for IT bosses but Butler Group predicts a subtle shift away from technical security to broader "information security" issues.

"We have been very good at electronic security but poor at information security. Companies pay little regard to email systems. 2005 is about information security rather than IT security – email management, policy management," said Jennings.

Outsourcing – and particularly business process outsourcing - and the cost savings it promises will also be high on the agenda for next year. One new trend Butler Group predicts is that more and more small and medium-sized businesses, not just large organisations, will go down this route.

In the compliance arena Butler Group claims there is too much emphasis by businesses on simply archiving and storing information at the expense of retrieval.

Looking at the IT vendor market for next year, Butler Group's main prediction is that it will be a make or break year for Sun, which needs to spend its spare cash on key strategic acquisitions.

"Sun has made progress this year but it is a company that is easily distracted," said Jennings. "If Sun doesn't do something and do it quickly it will become a second tier player."

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