Before I get to that - a word about the report: it's a meaty 101 pages, intended to provide customers with a year-over-year understanding of which technologies have staying power, and which have fallen down somewhere in the hype cycle. The report accomplishes this by looking at fourteen tech trend areas, from the angle of adoption rates, investment activity and customer experiences in each.
Of the fourteen tech initiatives, eight fall into the category of business systems, and seven fall into the infrastructure grouping. Enterprise systems covered include ERP, CRM, supply chain management, human capital management, data warehouse/BI, mobile applications, and social business/collaboration systems. Infrastructure technologies include software as a service (SaaS), infrastructure as a service (IaaS), platform as a service (PaaS), and several more.
That's a lot of tech data to digest, and I couldn't get into all of it here. But I was able to get Scavo's clarifications on the data that jumped out at me (if you're interested in the full report, here is a link to pricing as well as 16 free downloadable pages. Computer Economics has also issued a short commentary on the infrastructure side of the report, Unified Communications, IaaS, and Desktop Virtualization Show Best Risk-Reward for 2015 - worth a look for its risk/reward highlights).
Making sense of ERP and cloud adoption rates
My eyes were immediately drawn to the IT Maturity Analysis on page 5, a graphic that contrasts investment and adoption levels across the survey categories:
I was surprised to see ERP as a high adoption/high investment area - not so much by the adoption side, but by the level of continued investment. I asked Scavo if this could be explained by ERP becoming a platform for next gen analytics and apps. Scavo responded:
For most organizations, ERP has become a cost of doing business, which explains the high adoption rate. The high investment rate comes from the fact that ERP systems need continual investment on an ongoing basis, especially as organizations look to build new analytics applications and mobile applications on top of them. So, year after year, ERP usually comes out on top in terms of adoption and investment trends.
Given all the market share battles in the cloud HCM segment, I asked Scavo why HCM was showing a fairly lukewarm investment level. Scavo:
About half of our survey respondents have implemented HCM, but only about one fifth of organizations are making new investments in HCM. So, if you think about it, it means organizations are making new investments in HCM about once every two or three years. It’s not a bad outcome, really. But it’s lower compared to, say, ERP and CRM.
When you consider the hypefest surrounding IaaS, the low levels of investment charted above were also a bit unexpected. This one surprised Scavo also, though he had a reasonable explanation on how SaaS will ultimately drive IaaS investments:
I continue to be puzzled by the low levels of adoption and investment in public cloud IaaS, compared to other technologies. On the one hand, SaaS applications show very healthy adoption and investment rates. But that has not spilled over into general interest in IaaS. Adoption is increasing, year over year, but most of the interest in IaaS is for disaster recovery, archival storage, and to support internal software development and testing.
Ultimately, I think SaaS is a gateway drug to IaaS. As organizations get comfortable with and continue to see the benefits of public cloud SaaS, that will spill over into interest in public cloud infrastructure. And you’ll see it expand more into production systems. The economics of IaaS are just too good not to spur increased adoption.
SaaS adoption - across company sizes
At first glance, this figure on SaaS adoption raised questions:
I thought the percentage for "no activity" was high and the implementation number was low. But Scavo put my reactions in context. He argues that with 60 percent of companies either already adopting (57percent) or implementing SaaS (4 percent), that the SaaS adoption levels are pretty strong:
Actually, the adoption level for SaaS is pretty healthy, at about half of all survey respondents. If that still seems low, remember that we are surveying a broad sample of organizations worldwide, from high tech to old line manufacturers to public sector organizations. So, if you are thinking about Silicon Valley, or, say, professional services firms, yes, the adoption rate will be much higher. But there are a lot of companies out there that have not made that transition.
Or, there may be some small departmental SaaS applications in place that the IT organization doesn’t consider part of their portfolio. By the way, the most popular SaaS application, according to our survey is collaboration or file sharing, followed by CRM and web-based email and calendaring.
Here's the graphic on Saas adoption and investment levels by company size:
While SaaS adoption rates seemed pretty high across companies sizes, there is variation in actual investment, with large enterprises more SaaS-cautious investment wise, which makes sense. I asked Scavo if these results are shifting from year to year:
Those results are consistent with our previous year’s report. Small and midsize firms are a little more flexible when it comes to SaaS. But actually if you look at the overall adoption rate, 47% of large organizations have SaaS applications in their portfolio—about the same level as small organizations. So really, in terms of adoption, large companies are not lagging behind.
Takeaways for enterprise buyers
Given there was far more data than anyone could parse in one piece, I asked Scavo for his overall view for customers. Mobile investment stood out:
It’s always interesting to compare year over year. For example, as you might expect, mobility is a top area for new investment. Tablet computers are right up there with ERP in terms of market adoption and investment levels now. And mobile apps investment continues at a very high rate, which is pushing up overall adoption levels. Take up of mobile apps are not at the point where they approach ERP or CRM levels, but if this keeps up, they will reach that level in a few more years.
Any trends enterprise buyers should pay particular attention to?
Year after year, our tech trends study shows that business applications such as ERP, CRM, and supply chain management have worse risk/reward ratios than straight infrastructure technologies, such as unified communications and desktop virtualization. The reason is that to successfully implement business applications, you need the support and cooperation of the entire organization. Those are not projects that are entirely within the control of the IT organization
One thing I took from this survey is that the typical talk about "investment in cloud" being hot and "legacy spending" and "back office spending" being cut is a simplistic, and perhaps outmoded, way of thinking about enterprise budgets. It seems clear that mobile, cloud and communications investments are being driven by a different view of the enterprise - one where anticipating market trends quickly and providing consumption on the device of choice carries weight.
What we might call "ERP" doesn't really resemble the closed transactional system of that past (though compliance and regulatory reporting remain core functions for many). Same way that CRM is no longer primarily viewed as an administrative module for managing call centers and other touchpoints - it's about using that data to delivering a personalized customer experience.
From what I can tell - and this is my view, not necessarily Scavo's - all these investments are leading in the same digital direction. In that context, upgrading an ERP sytem (or moving it to the cloud) might well fuel the mobile app investments and so forth. With that in mind, instead of "cloud is hot, and ERP is not," it might be better to think about IT investments as either cost control or growth drivers (or sometimes both), but all in the interests of building a digital business platform.
Still, it's helpful to be able to separate out these trends and analyze their growth year to year (It should be noted that the sample size is not huge, at 245 organizations - 61 percent from North America - but the participants were carefully qualified). I suspect Scavo is right that IaaS will pick up on the back of SaaS - though it may prove difficult in the years to come to separate out PaaS and IaaS as different budget line items. Time will tell.
Image credits: Report graphics provided by express permission of Computer Economics, all rights reserved. Feature image - Business man with binoculars. © Kurhan - Fotolia.com
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