2016 has been an interesting year in regards to IT. Money was spent on IT in predictable areas, but the year itself felt a bit differently than previous years. In what ways? As always, organizations are spending money on their IT needs, but they are being much more prudent about it. And frankly, I don’t blame them. 2016 was a year of making sure that money was cautiously spent and when it was spent, ensuring that value was realized on those investments. That is what we’ve seen.
And you know what? I think it’s a good thing. When organizations are a bit more careful and concerned about their IT spend it means they are concerned with and demanding value from their investments. It means not just spending for spending sake. By demanding value, their partners (solution and services providers like us) are forced to step up and provide it. If as a partner you don’t have a strong value proposition and differentiator, then believe me, your customers will notice, and they might question why the work with you. They look to work with partners that provide value (value as defined by their needs) and I feel we are in a buyers’ market for IT solutions and services.
There are a lot of areas this year where we’ve seen customers focused. Below is a list of the areas that I’ve seen. By no means an exhaustive list, but will give you a flavor of what we’ve seen this year. A big theme is value. I could write and entire blog post on each of these—some I have in the past and some I will in 2017—so here is my high level list of three of them.
No surprise here. I feel that 2016 is a year in which customers are truly putting plans in place for moving to the cloud. Even customers that years ago told us they would never move the cloud are evaluating, developing strategies, and asking for help in their move to the cloud. And I don’t mean SaaS here—everyone’s doing that to some degree—but IaaS and PaaS. Customers are asking what applications and workloads to move and where to start. We see the focus on newly developed apps that are being written specifically for the cloud and then focusing on moving legacy workloads and apps at a later date.
Operational Efficiencies and Realized Value
Firms spend heavily when it comes to IT. It makes sense, as businesses are so integrated and dependent upon it. Organizations are concerned around the value of their investments, and they are right to do so. Every year IT managers ask for a lot of money to spend on IT. That investment needs to pay off. So this year we see customers asking the question: has my investment paid off? Does what I’ve invested in show true value to the business or I am no better off than previous years? Are my resources trained and up to speed to support these new environments? Is my ecosystem of partners there to support me when I need? And on top of it all: how can I save money?
Gone are the times when it was acceptable for a firm to spend heavily on a new IT project (technology, software, etc.) only to see much less value realized when it’s actually implemented. People are fired over that today. Customers are demanding that their investments provide real value.
Spending less on Infrastructure and more on Software and Services
To compliment and augment my point above, we see firms spending more on services and software, then on the underlying infrastructure technology over the past year. And it’s no surprise. Gartner says that firms will spend almost 6 times as much on services versus infrastructure technology and almost 3 times as much on software versus infrastructure technology. Gartner’s study can be found here. This shows that customers are truly concerned about making sure that their technology investments are driving value. If not, then why spend so much on the services and software associated with it?
This trend will continue. IT is and always has been tools to help a firm do what they do better. If IT doesn’t do that, they why invest it in it? Firms are sending a lot of money to ensure that IT helps them be better at their core business function and rethinking their spending if it doesn’t.
What does this mean for you?
What does this mean for you and your IT spending in 2017 and beyond? It means your strong partners stand already to ensure you get the most out of your investments in IT. That spending money makes sense, but do it prudently and be cautious to ensure you are receiving value, as defined by you and your firm. And that value needs to be tangible, not theoretical. As you adopt your cloud, security, operations, support, and resource, initiatives, engage your partners to help you realize that value. Good partners have seen this over and over at similar firms to yours and can help.
So 2016 was an interesting year. We’ve seen it focused upon how to drive and squeeze the most value possible out of investments—in the technology, software and services dollars spent. IT is continually tasked in helping firms make money versus just being an operational function. This will continue to evolve as well. The move (race, crawl, whatever you want to call it) towards the cloud will continue to change the dynamics of how we all do things. Firms will redefine their operational versus capital budget needs for IT, have the need to repurpose their people who focused upon infrastructure towards other areas, and continue to figure out how to provide more value when spending the same or less money. As I said earlier, it’s all a very good thing overall and made for an exciting 2016 and makes for an even more exciting 2017.
There are so many other areas to discuss which I will do in future posts, but these are some of the things I’ve seen this year.
Wishing you IT and overall success in 2017.