“Too many companies are not paying attention to the underlying infrastructure,” Andy Mullins declares.
And he should know. The Candle Corporation boss has seen so many twists and turns in the IT industry he’d be hard pressed to remember them all.
Mullins said that one of the major challenges presented to IT organisations was to avoid tendencies to “over commit and under deliver” projects where high expectations were set but time and cost targets were missed or, even worse, the project failed to deliver its specified outcomes all together.
“To look at the underlying infrastructure correctly takes time and costs money in the first cycle,” he said, “but following projects will be quicker and more successful because you can manage applications closely in the live environment to ensure they are delivering results on time. That in turn has a knock-on effect for cost concerns because a project that delivers on time has an increased probability of doing it within budget.”
Being able to deliver outcomes successfully within time and cost parameters, together with the ability to produce regular and detailed progress reports for customers along the way, had never been more important, Mullins said.
“It is not getting any easier to sell to IT departments because they are under more scrutiny,” he said. “We have gone from a period of rapid growth to one of slow growth and are now in a market where smaller budgets are being imposed. More ROI calculations are being made and that is creating a whole new market dynamic where IT investment has to be linked directly to business outcomes.
“This is the new way IT is operating globally, it has been going on for a couple of years now and if anything it will get tighter rather than looser.”
He said vendors were changing the patterns of releasing new products and resellers had to adjust the way they sell.
“Margins are falling and there is less profit because customers are buying smaller projects,” he said. “They want to prove something is going to work so they introduce new equipment in several stages.
Resellers are forced to adjust sales teams to handle projects that are a quarter of the size of previous deals and although the same profitability is there over time it is not available in the short-term.
“On the plus side, this dynamic still creates opportunities for companies that have earned the right to be considered a trusted business partner.”
Rising costs are just as dangerous as falling margins and Mullins said resellers were being forced to work harder and take greater risks than ever before to differentiate themselves from competitors.
“As a reseller you often relied on major brands to create a market in the past but now you have to increase the value of what you sell or distribute,” he said. “This is driving up costs in the channel and players are leaving the market or being acquired to operate on a different scale.”
Although Mullins saw the tight IT budgets as a new reality that would not go away, he pointed to Linux and Web services as areas of development that were trying to tackle costs on a broad scale.
He said Candle used Web services and Simple Object Access Protocol (SOAP) in its technology but no major players had really put Web services into products at the moment. The technology would not be accepted in the market place until that happened.
Despite the note of caution, Mullins said that IBM’s WebSphere and Microsoft’s .Net were becoming an accepted way of building applications. Web services would be pervasive in three years.