Manufacturers are failing to exploit falling prices in products and services that should accompany the commoditisation of IT, according to analyst Gartner.
The organisation claims that in 2007, 25% of IT spending was on unnecessary and redundant customisation, and says that although this will decline, it will remain at least at 10% overspending right through to 2010.
The need to move faster and at lower cost is driving a shift from ‘integration’ activities toward greater interoperability and interchangeability, says Brian Gammage, vice president and Gartner Fellow, with the result that many IT product and services markets are becoming commoditised – likening the development to the industrial revolutions of mechanization and electrification.
“No IT product or service is fully commoditised today, as there is still some cost in switching suppliers – but many are commoditising and some are at a relatively advanced state, such as desktop PCs,” he explains. “As products and services do commoditise, prices should fall, but, conversely, for most enterprises, one of the biggest impacts of commoditisation is overspending.”
Gammage warns that without some fundamental changes in the approach to managing devices and data, IT budgets will rise. “There is no way to solve the cost of IT management by evolving costs downward,” he insists. “Instead, organisations need to find new and different ways of being able to scale infrastructure without scaling labour costs, if they are to take advantage of this metamorphosis of IT.”
He agrees that the shift from buying and building IT to accessing IT as a service, is not new, but the trend is set to accelerate as traditional delivery models are augmented by a range of alternative delivery models that rely on a combination of technology and business advances. Increasingly, he says, these are being used both internally and externally to deliver scalable IT software and hardware functions.
“Already, more and more tools and applications, such as Office software, e-mail and CRM, are being served from centres, and we can expect the range of applications and services available to grow,” says David Mitchell Smith, vice president and another Gartner Fellow.
“Why pay to build it and maintain it, if you can buy it in at a fraction of the price? Achieving the requisite cost advantages will take time and scale, but it will be feasible for many of the applications we use today.”
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