Market Trends: software

Some software vendors have muddied the cost-benefit argument for software with highly questionable RoI studies. Despite this, there are many software projects where there are very clear cost benefits. The right software properly applied really can help user organisations to save money.

Server and storage virtualisation are good examples of a project that can produce considerable savings. They do this because they make far better use of server capacity so enabling a reduction in servers and even entire data centres. This type of project is therefore highly likely to get the go-ahead from management provided the costs are reasonable. Many business applications also produce savings, for example by increasing process efficiency. However, this is an area where business cases are very complex and poorly represented by simplistic RoI studies.

Governance, risk and compliance (GRC) remains a big area for concern in organisations of all sizes. Indeed the overall area is very much ‘job never done' . Financial services is the most obvious area where there is a lot of government and public scrutiny, and it would be reasonable to expect more to emerge from the aftermath of Northern Rock' s difficulties.

However, there are plenty of other areas where there are mounting demands for businesses to be able to document their processes. It is not enough to be doing the right thing, management has to be able to document that it took the right action, so that even if things do go wrong, it can limit the legal fall-out and avoid charges in the press of negligence.

GRC initiatives lead to some software purchases, but software is no panacea. Indeed, the main solution is good management practices. Software works best when used to enforce these good practices and then record and archive the evidence that they have been followed.

Most users want to keep on current (or nearly current) versions of the software. Software vendors use their maintenance policy to drive upgrades for recalcitrant customers. ‘Mainstream maintenance' is generally available for around three to five years at the standard rate (around 20% of the full-price licence cost). As products go beyond the ‘mainstream' period, maintenance gets progressively more expensive as the versions get further out date. Eventually maintenance becomes available only on a custom basis, and updates/fixes to the software have to be specially developed at extra cost.