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2005 predictions for ROI, open source, CRM and more

SearchCIO's ROI and IT investment expert, Rebecca Wettemann, offers her predictions of the IT market for the coming year.

Rebecca Wettemann
BI heats up the ERP market.
With ERP vendors clamoring for customers, adding value to their platforms will be the carrot that they hope lures in new customers. As business intelligence (BI) first emerged as a solution for wrestling data out of ERP systems, ERP vendors will move to reclaim lost ground and offer expanded BI capabilities to provide one stop shopping. The result will be a shake-up with the current pure play vendors, and some interesting dynamics as BI vendors and their ERP partners learn some new steps in the "co-opetition" dance.

Maintenance fees become the next battlefield.
The merger activity in the software market is based on buying new customer bases and adding more lucrative maintenance fees to the vendor's coffers. Discounting among competitors is already fierce, but those maintenance fees aren't being reduced much. That will change as customers are tired of paying for upgrades they may never need, licenses they rarely use, and will now get tougher on negotiating fees. Vendors don't want to give up the attractive profit margin, but they may have little choice if customers have no qualms to turn to competitors for a better price.

Hosted CRM is reconsidered.
Although the hosted model works in some situations, if it's simply a static sales management system it can quickly reach a break even point. Companies will begin to reconsider the ongoing cost of hosted CRM agreements and look at hybrid and other models that they can use in maturity without paying for in perpetuity.

E-commerce is the new "hosted CRM."
More and more companies will look to outsource their e-tail channel instead of maintaining and updating costly on-premise e-commerce and catalog applications.

Open source marches on.
Not yet on the desktop, but despite a healthy investment by Microsoft in "independent" analyst white papers, open source continues to gain ground in the minds and infrastructures of IT managers.

Consolidating for savings.
Companies are undergoing infrastructure audits to identify and clean out redundant or unnecessary IT assets. They are looking at ways to standardize systems across the company and will spend to replace disparate systems with a single unified system. The payoff can be substantial with big hit returns from system retirement, and attractive ongoing returns through lower IT support costs. The payoffs will be big for systems auditing and analysis tool providers as well.

Seeking savings doesn't necessarily mean outsourcing, however. With the true costs of outsourcing being presented as a contrast to the projected returns that drove IT outsourcing's growth, companies are finding the benefits less than stellar. While some aspects of outsourcing tasks can be viewed as IT piece work, separating the business context from applications development results in the same classic disconnect that most companies are trying to avoid. Managing the relationship with the offshore provider can also eat into the potential savings, as does training, bug fixing, and ongoing project communication costs with the programming team. It's not just a simple case of comparing the hourly wage of the local versus the remote IT worker.

SPAM explodes.
Until Microsoft gets better at keeping it out, those clever spammers will keep sending it out.

Wireless piggybacking and piggyhacking become commonplace.
We're headed back to the good old days of cell phones, when you needed different phones for coverage in different areas. Expect a new round of software apps that help road warriors share the wireless wealth -- whether they know it or not.

Sarbanes-Oxley and other compliance regulations drive investment in content and records management.
Although these decisions are being made cautiously, they are being made -- and will result in revenues for software and services vendors in 2005.

RFID hangovers.
The morning after, we often have regrets -- like getting tagged, for instance. It will still take us some time to get tags right; after all, it's not about cost, it's about reliability.

Rebecca Wettemann is a founding partner of Nucleus Research where she is responsible for development and execution of Nucleus' quantitative research approach. Wettemann has written and presented extensively on the topics of ROI and total cost of ownership (TCO), collaborative and knowledge technologies, customer relationship management (CRM), enterprise applications, and the business impact of technology.

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