While StatsCan might be declaring the end of the recession in Canada, IT shops are still going to be in “survival mode” for a little while longer, especially when it comes to application management.
A new report from Enterprise Management Associates Inc. on Tuesday indicates that IT departments have all but surrendered their strategic abilities when it comes to application investment and have spent much of the last 12 months making tactical moves aimed mostly at coping with budget cuts.
During November, the Boulder, Colo.-based research firm polled IT leaders at 150 U.S. organizations, with about 40 per cent coming from companies with more than US$1 billion in revenue. Another 30 per cent of surveyed companies came from organizations between $100 million and $1 billion in revenue, which the majority of these large enterprises with offices around the world, including Canada.
Julie Craig, a research director covering applications for EMA, said that 55 per cent of respondents cited cost reduction as a top pain point driving these tactical investments. Security and governance concerns ranked second, with the need to adjust for staffing and budget cuts coming in third.
“This is a departure from prior surveys, which showed business alignment and customer satisfaction as higher on the list,” she said.
In terms of the top challenge related to app management, close to 30 per cent of respondents cited “intermittent problems with no obvious cause or solution.” Craig indicated that this number could continue to rise with many IT departments facing integration problems due to scattered application investment.
The shift away from long-term, strategic application investments, she added, has also led to increasingly unrealistic ROI expectations. According to the report, half of respondents are expecting to recoup all of their investment within 12 months of an app project.
“If you’re a company that’s expecting a 12-month ROI, the best bet is to talk to vendors’ existing customers prior to investment to make sure this is reasonable,” Craig said. In most cases, she added, companies will not be able to make back 100 per cent of their investment for at least 24 months.
The most positive trend to come out of the report is the rise of cloud computing and software-as-a-service adoption levels, which increased 14 per cent from EMA’s 2008 survey. Craig said that 44 per cent of surveyed organizations are not using SaaS vendors to deliver some enterprise apps, with Google Inc. and Amazon.com Inc. leading the way as popular choices.
While cloud computing could certainly help make apps easier to manage and lead to more tactical investments, 74 per cent of survey respondents still say that in-house custom apps dominate their IT environment.
Of course, one of the major reasons for the mixed response to cloud computing is the reliability concerns such a move can bring, which some industry observers believe will offset any good it delivers to the application management realm.
“Why is the conversation always when? Why are we not asking why?” Melissa Woo, director of cyber infrastructure and network and operations services at the University of Wisconsin-Milwaukee, said earlier this month. “Gartner has cloud computing at the peak of inflated expectations on its hype cycle.”
Woo noted recent reports of outages by large providers should grab attention.
At the beginning of the month, cloud provider Rackspace reported its third outage since June. In October, Microsoft Corp. reported it lost the data stored by users of T-Mobile Inc.’s Sidekick service before eventually recovering most of the data. And Google Apps service has had numerous outages that have frustrated users so much that Google developed a Google Apps Status Dashboard and pumps updates to users via RSS.
“And what about the privacy risks, security risks? Where is that data being stored? Where is research data being stored? How do you handle identity and access management, what happens if the cloud service falls out from under you?” Woo added.
– With files from John Fontana, NetworkWorld U.S.
