Corporate technology: To spend or not to spend?

How do you make the call on investing in new technology versus maintaining the status quo?

Every January, analyst firms deliver their IT spending predictions for the year. While the last couple of years have been a bit grim, this year is looking up with technology spending slated to grow between 5%-7% according to Forrester and Gartner.

It’s clear that technology investment is becoming a priority again even for customers looking to recover lost ground from the tough few past years in the recession— at the same time it can create an internal minefield for IT leaders. Senior executives regularly ask IT to clamp down on spending and make do with what they already own. This means some companies are using technologies that are multiple generations old.

Beating the auto industry blues
During the recession, the automotive industry and its suppliers and partners was one of the hardest hit sectors across the globe. In 2009, a major customer in auto manufacturing was going through massive changes as the company navigated bankruptcy proceedings, which resulted in the formation of a new company with new owners. Like many customers during this time, the company had delayed a desktop refresh, choosing to stay on Windows XP and avoid the cost and disruption of upgrading. 

By the summer of 2010, most of the company’s employees were still using Office 2003. A typical action during a time of business restructuring would be to suppress IT deployments, yet the company executives chose to do the opposite. Wanting to transition away from Lotus Notes and move toward cloud-based technologies, an aggressive companywide adoption of Exchange 2010 and Outlook 2010 was completed. The company deployed nearly 30,000 seats in just two months!  That’s a bold move for a company in its position, some might say.
 
Why did they do it? The execs told us that they felt that by upgrading, it would achieve greater productivity gains than by staying on older technology.  An economic impact study of Microsoft Office 2010, conducted by Forrester, agrees. The study found a payback period of five months and a net productivity gain of $1,483 per information worker over three years. That’s millions of dollars of savings for a midsize to large company.

The company also knew that its workers were craving a modern software experience. Employee demand became a significant driver for its rapid deployment. If people are able to work faster, collaborate more easily and produce better documents with technology they actually want to use, a company is more likely to achieve bottom-line benefits from its investment.

Designing the most innovative technology strategy for your organization against budget constraints and business goals is no easy feat -- and I don't pretend to have the answers. But I will make the case for keeping your workforce on current technologies, whenever possible.

A 2011 Forrester Consulting study of 240 IT leaders in Europe and North America found that those businesses using the latest productivity software say they are more effective at integrating across teams with collaboration, document management, business intelligence and other applications. Participants reported that new software made it easier to manage the cost of software implementation, integration with applications, remote access and security.

Despite these benefits, lately I’ve heard some CIOs tell me that their entry-level and mid-level workers don't need the latest tools. This observation always leaves me scratching my head. These information workers, after all, are the ones producing most of the documents that trickle up to the top of the organization for decision-making. Shouldn't they have the right tools to help them work with maximum efficiency and impact?

Whether you use Microsoft technology or not, consider what current technology can do for your people -- and the possible impact of maintaining older systems. The answer may not be as cut and dried as it seems. Maybe you can’t afford not to upgrade.

--Takeshi Numoto, Corporate Vice President, Office