Feb 18, 2010

The Art that is Spend...

Many CPOs might be in a better position to talk about their spending powers now than they were six months back. And boy did it suck!! You would know that if you were reading SCM Blog. Last year alone, Gartner reported a 5.2% decline in IT spending alone. Forrester found an average of 55% of companies (with over 1000 employees each) in Europe and the US planned to spend less on telecom. More so, with the President of the US wanting to freeze government spending, things tend to look gloomy. And yet, they’re much much better than they’ve been in the last year.

 

Like always, spending is inventoriesa leading indicator for a company’s health in the current market, mainly because it replicates a company’s general position relative to its outlook of the economy as a whole. Now, with spending set to grow as the economy trudges to a recovery in 2010, we will need a savior. The general mood in companies is to keep expenses low. Yet, companies have to spend if they’re going to sell anything this year what with inventories going to an all time low towards the end of 2009. The ‘savior’ we’re talking about here, is going to help us be able to spend while still managing to maintain efficiencies.

 

Today, I see that savior as being SaaS companies. After bearing the brunt of the recession when the first companies to get cut off were purchasing departments and the like, they know the need to optimize their solutions in order to deliver value to companies post-recession is of prime importance. And companies are looking to them to deliver the goods too. inventory_spending 

The picture above shows the type of changes overall IT and software spending have undergone since 2000. If history is any indication, we’re going to have a renewed focus on careful spending that exploits synergies and delivers efficiencies.

Software as a service continues to build momentum in the supply management market because the line-of-business buyer can realize the following benefits:

  • Faster time to value
  • Avoidance of IT expenses
  • No separate maintenance fees
        • Pay-for-use model

Source: AMR Research

It is my firm belief that the SaaS model that delivers the most value from a TCO point of view for purchasing organizations, while maximizing the effect of their efficiencies will be the most successful. Pricing, for SaaS companies continues to move towards the ‘Subscription’ model. This will continue to be the case for the years to come simply because of the freedom of choice given to customers.

Feb 18, 2010

The Art that is Spend...

Many CPOs might be in a better position to talk about their spending powers now than they were six months back. And boy did it suck!! You would know that if you were reading SCM Blog. Last year alone, Gartner reported a 5.2% decline in IT spending alone. Forrester found an average of 55% of companies (with over 1000 employees each) in Europe and the US planned to spend less on telecom. More so, with the President of the US wanting to freeze government spending, things tend to look gloomy. And yet, they’re much much better than they’ve been in the last year.

 

Like always, spending is inventoriesa leading indicator for a company’s health in the current market, mainly because it replicates a company’s general position relative to its outlook of the economy as a whole. Now, with spending set to grow as the economy trudges to a recovery in 2010, we will need a savior. The general mood in companies is to keep expenses low. Yet, companies have to spend if they’re going to sell anything this year what with inventories going to an all time low towards the end of 2009. The ‘savior’ we’re talking about here, is going to help us be able to spend while still managing to maintain efficiencies.

 

Today, I see that savior as being SaaS companies. After bearing the brunt of the recession when the first companies to get cut off were purchasing departments and the like, they know the need to optimize their solutions in order to deliver value to companies post-recession is of prime importance. And companies are looking to them to deliver the goods too. inventory_spending 

The picture above shows the type of changes overall IT and software spending have undergone since 2000. If history is any indication, we’re going to have a renewed focus on careful spending that exploits synergies and delivers efficiencies.

Software as a service continues to build momentum in the supply management market because the line-of-business buyer can realize the following benefits:

  • Faster time to value
  • Avoidance of IT expenses
  • No separate maintenance fees
        • Pay-for-use model

Source: AMR Research

It is my firm belief that the SaaS model that delivers the most value from a TCO point of view for purchasing organizations, while maximizing the effect of their efficiencies will be the most successful. Pricing, for SaaS companies continues to move towards the ‘Subscription’ model. This will continue to be the case for the years to come simply because of the freedom of choice given to customers.