Software buying decisions are getting tougher, according to research from market analyst Gartner.
A paper released last month found that IT managers struggle to influence decisions within a more rigid budget environment. "The business confidence in real IT value is at an all time low, holding new purchases while companies determine how to get more use [out] of what they already had," the research states.
Gartner found that IT managers struggle as CFOs "continue to slash and burn IT budgets". "Justifying IT projects with business units, the renegotiation of existing contract terms, identifying the financially sound and vulnerable vendors, and extending project/product life cycles to weather the economic storm are the issues that are keeping people awake at night," the authors argue.
Gartner predicts that through to 2004 low business confidence in the value of IT will continue to restrict new license sales for all software markets.
Daniel McHugh, research analyst for IT trends in Asia Pacific at Gartner, believes that CIOs and IT managers have been influenced by factors such as some vendors changing their licensing structure, because it can increase the total amount of money that they need to spend.
McHugh estimates that most larger enterprises would assess the ongoing costs of software licenses on a yearly basis, although would generally be signed into agreements for longer periods of time. Issues considered each year would include how much software had been deployed, and the charges which the company had incurred during this timeframe.
The market analyst's annual Baseline study, which looks at IT spending initiatives and intended spending intentions from a sample of management respondents - including CIOs, CEOs and CFOs - found some interesting trends. While the external cost of software made up 14 percent of respondent's IT budgets in 2002, this was predicted to increase by only one percent in their 2003 budget.
According to McHugh, the market analyst was seeing companies looking at alternatives to the major international vendors when making their software buying decisions. "Certainly at the moment [we're] seeing a lot of awareness and interest at looking at those alternatives," he said.
But McHugh added that although open source options often were attractive to enterprises because they were a lot cheaper up front, there was also the ongoing support to consider.
A respondent to last week's IT Manager poll about the time and resources IT departments spend managing software needs spoke of his experiences. Brad Boundy, IT manager at Sporting Wheelies and Disabled Association, said he had been watching the Linux/Windows positions for some time.
Boundy said it had a small network, with about 30 Windows PCs running Office 97 and Windows 95. One of the issues he said the organisation was facing was that it can see this could cause problems when the new Microsoft Office software is released next year, due to what Boundy sees as limited backward compatibility with newly created documents. "We have also experienced some difficulty integrating new hardware into the Windows 95 platform, and this will only get worse as time goes on," Boundy said.
Boundy said the organisation was currently evaluating Red Hat 8.0 and Open Office as alternatives, because of the costs associated with software upgrades to the products it was currently running.
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