Beyond the cost of computing by clivel98


									 QUOCIRCA RESEARCH SUMMARY                                                                                November 2003

                                      Beyond the Cost of Computing
                                         IT Investment Decision Making in the Real World
Contacts:                         •    Suppliers are becoming increasingly out of sync with Corporate buyers on
                                       the subject of financial Return on Investment (ROI)
Clive Longbottom                       Value propositions from IT suppliers are becoming increasingly more skewed
Quocirca Ltd                           towards financial Return on Investment. Yet only 40% of organisations
Tel +44 118 948 3360                   consistently incorporate ROI calculations into their business cases. For the rest, it          is optional. Contrary to popular belief amongst the supplier community, corporate
                                       buyers are not slaves to prescriptive spreadsheet driven decision-making.
                                  •    The need for 6 month payback is a myth
                                       Those organisations that do make ROI calculations generally expect payback
                                       periods of between 18 months and 2 years. The need for 6 month payback on
                                       investments is a myth and the obsession with such short-term thinking by many IT
                                       suppliers is likely to harm their credibility with IT decision makers who think
                                       more maturely and realistically.
                                  •    Over three quarters of companies incorporate non-financial elements into
                                       their business cases for IT investment
                                       Whether drivers such as ROI and Total Cost of Ownership (TCO) are considered
                                       or not, the vast majority of organisations incorporate non-financial drivers into
                                       their business cases. This is true for all types of IT investment from big-ticket
                                       enterprise applications to commodity hardware and operating systems.
                                  •    Non-financial drivers are more important than financial drivers for many
                                       key investment categories
RESEARCH NOTE:                         Non-financial drivers are ranked higher than financial drivers in areas such as
The information                        Customer Relationship Management (CRM), Employee Relationship
contained in this report               Management (ERM), Server Based Computing (SBC) and Wireless Applications.
is based upon extracts                 Furthermore, despite the marketing decibels and press column inches associated
from seven independent                 with Linux and “Low Cost Computing”, the same is also true of hardware and
primary research studies               operating systems.
completed by Quocirca             •    Organisations are often willing to relax investment criteria in emerging
in September and                       technology areas that are considered strategic
October 2003.
                                       Almost a third of organisations are willing to relax the rules to allow early
                                       investment in strategic new areas such as wireless where benefits are not yet fully
                                       understood. Experience gathered during pilots and initial rollouts is then used to
                                       construct the business case for broader commitment and deployment.
                                  •    Suppliers need to get smarter about constructing and articulating more
                                       complete value propositions
                                       Many suppliers have fallen into the trap of putting too much emphasis on the cost
                                       of IT. Whilst cost is an important consideration when choosing between solutions,
                                       suppliers would be able to engage much more effectively if they built Total Value
                                       Propositions (TVPs) based on a balanced view across all of the investment drivers
                                       that matter – both financial and non-financial.

    An independent report by Quocirca Ltd based on primary
    research completed in September and October 2003.

    Copyright 2003 Quocirca Ltd
Quocirca Executive Summary                                                                                                                                Page 2

Introduction                                                       As an example of this, Figure 1 illustrates some of the KPIs
                                                                   measured in relation to Customer Relationship Management
The last three years have been tough. Tough for IT                 (CRM).
departments whose budgets have been squeezed in response
to the economic downturn. Tough for the IT suppliers whose         Figure 1
businesses depend directly on those budgets.                       KPIs measured in relation to Customer Relationship Management (CRM)

Not surprisingly, this has resulted in a high degree of focus                                  0%   10%   20%     30%      40%   50%   60%   70%   80%   90%   100%

on the issue of costs. Many companies, quite rightly, have
started to examine all aspects of their IT infrastructure to        Customer Satisfaction

identify areas of waste or extravagance. The control of costs
has thus become an ongoing thread that runs right the way           Revenue per Customer

through the IT planning and management process.
In response to this, many IT suppliers have reworked their             Turnover/Retention
value propositions to major on cost saving as a core benefit
of their offering. Terms such as "low-cost computing" are in          Value or Profitability
vogue and IT sales people now routinely make use of Total
Cost of Ownership (TCO) models to demonstrate how much
money they can save their prospective customer.                      Source QNB Intelligence
                                                                                                                Measured     Not Measured

                                                                      Study A, Sep 03, n=150

Even if the creation of business value remains the core of the
supplier’s proposition, they often try to translate all benefits   The important point to note here is that we have two financial
into a Euro amount in an attempt to demonstrate a solid            and two non-financial KPIs. Furthermore, one of the non-
financial Return on Investment (ROI). Taking this further, it      financial measurements, customer satisfaction, appears at the
has become common to hear suppliers talking of six-month           top of the list. Why is this when it is really profit that
ROI payback periods being mandatory for significant                ultimately concerns most businesses?
investments to be approved.
                                                                   The key is to understand cause and effect. Ongoing customer
Against this background, newcomers to the industry could be        satisfaction, for example, drives loyalty and repeat business.
forgiven for thinking that all IT related decision-making is       Failure to satisfy leads to loss of customers and the need to
now simply a case of comparing Euros invested with Euros           replace them, which in turn has a negative impact on
saved or created in the short term.                                revenue, cost and profitability.
In this report, we challenge this notion based on feedback         This cause and effect takes place over a period of time in the
from over 2,500 corporate decision makers and other IT             real world, i.e. it could be weeks or months before a
professionals gathered during the execution of seven major         customer satisfaction issue developed into customer retention
primary research studies completed in September and                problem with the associated impacts on financial
October 2003. We then go on to consider some of the                performance. Measuring financial performance alone is
practicalities of making a sound business case in today’s          therefore inadequate for effective business management as by
commercial climate.                                                the time a problem surfaced, it would be too late to fix it.
                                                                   In some cases, it is possible to make calculations on the
                                                                   relationship between a non-financial cause and a financial
Business Performance Measurement                                   effect. Consider the following example in relation to the loss
Before getting into IT decision making and business cases, it      of a customer:
is worth reviewing how businesses commonly measure their              Average revenue per customer per month = 10 Euros
performance and success.                                              Time to acquire a new customer = 2 months
Many would argue that the only true measurement of success            Lost revenue = 10 Euros * 2 months = 20 Euros
is shareholder value. The obvious problem here is that the            Marketing costs to acquire new customer = 50 Euros
characteristics of today’s financial markets can cause this           Negative impact on profitability = 20 + 50 = 70 Euros
measurement to fluctuate significantly according to external       This can clearly be helpful in the estimation of financial ROI,
factors that are completely beyond the control of the              as we will look at later. However, in the context of this
organisation.                                                      example, a parameter that is difficult to tie down is the
Even if this were not the case, it is impractical to relate the    number of customers affected, which will vary depending on
many day-to-day decisions involved in running a business to        the nature and severity of the issue, effectiveness of the
the stock price and shareholder value. Business managers           remedial action and so on. There is also the question of
therefore have to track indicators that reflect financial and      which customers are affected, e.g. it could be that a particular
operational performance a bit closer to home. This allows          issue leads to desertion of high value customers more than
them to assess situations, whether during planning or              lower value ones, in which case the impact would be much
execution, and measure the direct impact of their decisions        higher than estimated by a generic calculation based on
objectively.                                                       averages.

Many senior management teams use a few Key Performance             For these types of reason, it is therefore necessary to monitor
Indicators (KPIs) to track overall business performance.           many non-financial KPIs in their own right without relying
Considered together, these provide a coherent picture of the       on notional conversion to monetary impact, which can so
health or otherwise of the business in a particular area.          often be inaccurate and misleading. This is common practice,
                                                                   which is often overlooked by suppliers who assume that all

Beyond the Cost of Computing, November 2003
Quocirca Executive Summary                                                                                                                                                                                                        Page 3

benefits of a proposed investment must be expressed in                                                                     This illustrates clearly that whilst cost is always an important
monetary terms to be taken seriously.                                                                                      consideration, it is overridden by critical requirements such
                                                                                                                           as reliability, security and performance. This remains true,
                                                                                                                           albeit to a lesser degree, with platform investments for non-
                                                                                                                           critical systems (Figure 4).
The Role of Financial and Non-Financial
                                                                                                                           Figure 4
Drivers in IT Investment Decision Making                                                                                   When selecting a new technology platform (i.e. hardware and operating
                                                                                                                           system combination) or upgrading an existing one for a NON-CRITICAL
The role of non-financial drivers in decision making can be                                                                application - what are the most important factors?
seen from Figure 2, which illustrates the relative importance
                                                                                                                                                                              0%    10%   20%   30%   40%   50%     60%   70%   80%   90% 100%
of considerations in connection with CRM investments.
                                                                                                                           Reliability & resilience - ability to meet SLAs
Figure 2
Drivers for investment in Customer Relationship Management (CRM)
                                                        0%   10% 20% 30% 40% 50% 60% 70% 80% 90% 100%
                                                                                                                                               Total Cost of Acquistion
                    Keeping existing customers
                                                                                                                                         Ease of systems management
                        Winning new customers
                                                                                                                                         Total ongoing operational cost
       Retaining the most profitable customers
  Improving customer service levels to sustain                                                                                                       Ease of integration
            market share & position
                            Grow sales revenues                                                                                                         Skills Availability

            Selling more to existing customers                                                                                Source QNB Intelligence
                                                                                                                                                                                           Crucial      Important     Not an issue
                                                                                                                               Study B, Sep 03, n=90
     Responding faster and more effectively to
                  market changes
Optimising the value of our customer base and
                    brand.                                                                                                 These findings tell us that organisations will always consider
                      Reducing operating costs                                                                             cost, but only after they have satisfied themselves on the
                                                                                                                           issues that really matter in terms of achieving the overall
  Source QNB Intelligence
                                                             Highest = 5       Very High = 4
                                                                                                                           business objectives. Cost therefore tends to play more of a
   Study A, Sep 03, n=150
                                                                                                                           role in choosing between alternative equivalent options rather
                                                                                                                           than when determining whether to proceed with an overall
Within this list, we see a whole range of different drivers,                                                               project or initiative.
both financial and non-financial. Consistent with the KPIs we
discussed earlier, customer retention is at the top of the list,                                                           Of course there are some types of investment where cost
confirming that impact on non-financial KPIs is indeed taken                                                               reduction is a major business objective, as in the case of
seriously by corporates when making investment decisions.                                                                  Supply Chain Management (SCM), for example (Figure 5).
Top line financial drivers associated with revenue are                                                                     Figure 5

embedded in the middle of the list. This is not a reflection of                                                            Drivers for Investment in Supply Chain Management (SCM)
the importance of revenue per se, but of the cause and effect                                                                                                                  0%    10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

logic that tends to push the revenue considerations below the
                                                                                                                                               Operating cost reductions
more directly addressable non–financial drivers that underpin
them.                                                                                                                       Enhancement of manufacturing and delivery

Our CRM example here also provides an important lesson for                                                                               Customer Service Improvement
suppliers majoring purely on cost, which is often low down
the list of considerations, if not at the bottom as in this case.                                                                                    Customer Retention

Some would argue that the gravitation of cost to the bottom                                                                             Improved Employee Productivity
of the list reflects the level at which decisions are considered
in the CRM space. CRM is not just about technology                                                                                          Enhanced shareholder value

investment so it is natural for higher-level business orientated
                                                                                                                                                                                          Highest = 5     Very High = 4
considerations to take precedent. However, we see similar                                                                     Source QNB Intelligence
                                                                                                                               Study C, Sep 03, n=150
behaviour in connection with IT platform investments for
business critical systems (Figure 3).
                                                                                                                           Again, however, we need to be careful about the context in
Figure 3                                                                                                                   which costs are important. In this case, the operational cost
When selecting a new technology platform (i.e. hardware and operating                                                      reductions organisations are looking for from SCM related
system combination) or upgrading an existing one for a MISSION                                                             investments are at a business operations level rather than at
CRITICAL application - what are the most important factors?
                                                                                                                           the IT systems level. In the greater scheme of things, the
                                                   0%   10%    20%    30%      40%   50%   60%    70%   80%     90% 100%
                                                                                                                           system costs are likely to be overshadowed by costs of
Reliability & resilience - ability to meet SLAs
                                                                                                                           transportation, inventory, manufacturing, etc.
                                                                                                                           In addition, the non-financial drivers are still there and when
                                                                                                                           aggregated, almost certainly have a higher overall impact on
                          Ease of integration                                                                              the decision.
                             Skills Availability
                                                                                                                           This example makes sense when we consider the rationale
              Ease of systems management
                                                                                                                           for investing in heavyweight Enterprise Resource Planning
                    Total Cost of Acquistion                                                                               (ERP) systems such as SAP. Whilst it is common for
              Total ongoing operational cost                                                                               organisations to question the overall financial payback from
                                                                                                                           the huge sums spent on ERP implementations, the simple
  Source QNB Intelligence                                            Crucial     Important       Not an issue
   Study B, Sep 03, n=90                                                                                                   fact is that many of them had aged or broken systems before

Beyond the Cost of Computing, November 2003
Quocirca Executive Summary                                                                                                                                                                                    Page 4

that could no longer support the business. The choice was to                                                           Figure 9

either replace these or cease trading. This kind of driver is                                                          Drivers for investment in Mobile and Wireless

known as a “business imperative”.                                                                                                                                       0%   5% 10% 15% 20% 25% 30% 35% 40% 45% 50%

                                                                                                                            Faster and better service to customers
Organisations faced with this kind of driver really have no
choice but to invest. Apart from broken or highly stressed                                                                Empowerment of field workers at point of
existing systems, business imperatives might come in the                                                                                 action

form of regulatory requirements, new competition, merger                                                                   More flexible and efficient field resource
and acquisition activity, etc. Calculating ROI, TCO or the
                                                                                                                             Better and more up-to-date visibility of
impact on non-financial KPIs is immaterial to the decision on                                                                         business operations
whether or not to proceed. That’s not to say that such                                                                 Elimination of paperwork and administration
calculations do not have a place, however, as they can be                                                                                overhead

useful for comparing the merits of one possible solution or                                                               Make more effective use of ERP and CRM
supplier to another. We just need to understand the level at                                                                             systems

which drivers are working.
                                                                                                                         Source QNB Intelligence                               Highest = 5   Very High = 4
                                                                                                                          Study G, Oct 03, n=190
Other examples of the interplay between financial and non-
financial drivers for different types of IT investment are
                                                                                                                       In all of the above cases, we can see that IT suppliers who
illustrated in Figures 6 to 9.
                                                                                                                       build value propositions purely on the financial component
Figure 6                                                                                                               are failing to address the bulk of the issues considered by
Drivers for investment in Grid or Utility based computing                                                              prospective customers when deciding how to spend their
                                                        0%     10%    20%      30%     40%    50%       60%    70%     valuable IT budget.
                                        Lower Costs

        Improved Flexibility and rapid response
                                                                                                                       Decision Making Mechanics
                                   Greater resilience                                                                  The way in which IT investment decisions are made varies
      Access to scarce skills and resources not
                                                                                                                       between individual organisations depending upon the
                 otherwise available                                                                                   business, cultural and political climate that exists.
  Adds value to existing technology investment
                                                                                                                       Nevertheless, we can see from Figure 10 that construction of
                                                                                                                       a formal business case is a usual part of the process for the
       Simplicity - fewer components to manage                                                                         majority of companies.
                                                                                                                       Figure 10
  Source QNB Intelligence                                    Major   Significant     Useful                            As a general rule, do you construct a formal business case to support
   Study D, Sep 03, n=300
                                                                                                                       significant IT investment decisions?

Figure 7                                                                                                                                   0%           10%              20%             30%            40%      50%

Drivers for Server Based Computing (SBC)
                                                    0%        10%    20%     30%     40%   50%    60%    70%    80%

   Deploying new/updated applications quickly

    Keeping users up-to-date with applications                                                                                  Usually
          Safeguarding data from loss or abuse
           Delivering new functionality to users
         Extending the life of existing IT assets

          Ensuring good application availability
  Delivering responsive, effective tech support
                                                                                                                       Rarely or Never
 Reducing development and deployment costs

       Helping users improve their productivity
              Reducing technical support costs                                                                           Source QNB Intelligence
 Reducing capital expenditure on IT equipment                                                                             Study G, Oct 03, n=190

          Reducing overall IT operational costs

                                                              Highest (=5)    Very High (=4)
                                                                                                                       Calculating ROI is also common practice, albeit to a lesser
  Source QNB Intelligence
  Study E, Oct 03, n=1624                                                                                              extent (Figure 11).
                                                                                                                       Figure 11
Figure 8
                                                                                                                       As a general rule - do you calculate a financial return on investment
Drivers for investment in Employee Relationship Management (ERM)                                                       (ROI) before making an IT investment decision?

                              0%    10%    20%    30%         40%    50%      60%      70%       80%     90%    100%
                                                                                                                                           0%           10%              20%             30%            40%      50%

           Impact on staff
             retention                                                                                                            Always

    Impact On Customer
     Service & Retention
 Adaptability & Flexibility
  of the whole business

              Profitability                                                                                                Sometimes

  Impact On Productivity
         & Costs
                                                                                                                       Rarely or Never
  Impact on shareholder

                                                                                                                         Source QNB Intelligence
  Source QNB Intelligence                                            High     Medium                                      Study G, Oct 03, n=190
   Study F, Sep 03, n=150

Beyond the Cost of Computing, November 2003
Quocirca Executive Summary                                                                                                                                              Page 5

Figure 11 also illustrates, however, that most organisations                still real, however, so capturing and incorporating them into
are not a slave to ROI, which is optional in 60% of cases. We               the business case is important.
also have to remember that financial calculations are often
used as a basis for selecting between suppliers and solutions               There are then investments that are considered to be strategic
rather than for justifying a project per se.                                for which the rules are relaxed. Again, wireless is an
                                                                            example. A significant number of organisations feel it
Nevertheless, the widespread use of ROI calculation begs the                important to gain experience of wireless on the basis that it
question of how quickly companies are generally looking for                 will become a major thread running through many IT
a payback. In this respect, contrary to the sales and marketing             activities. The special treatment by some of wireless as an
presentations of many IT suppliers, payback periods of 6                    example of an emerging strategic area for investment is
months or less are not necessary. This is simply unrealistic in             illustrated in Figures 14 and 15.
context of most corporate environments and the majority do                  Figure 14
not expect it (Figure 12).                                                  When making business cases, are wireless related investments
                                                                            treated any differently to other IT investments?
Figure 12
What ROI or payback period do you expect to achieve on IT investments?                 0%            10%         20%            30%           40%           50%            60%

              0%              10%         20%           30%           40%

  6 months

 12 months
 18 months

    2 years
                                                                            Not sure
    3 Years

Don't Know                                                                    Source QNB Intelligence
                                                                               Study G, Oct 03, n=190

  Source QNB Intelligence
   Study G, Oct 03, n=190
                                                                            Figure 15
                                                                            If wireless investments are treated differently, how are they different?

The expected payback period is getting shorter, however,
                                                                                                     0%    10%         20%       30%         40%     50%      60%          70%
compared to the typical 3 years in the 1990’s. The
expectation today is generally within the 18 month to 1 year                      Wireless is
range.                                                                        significant so less
                                                                              strict at this point
The other lesson from Figure 12 is that almost a third of
                                                                            Wireless pays back
organisations have no standard payback period, reinforcing                  differently so more
the conclusion that the market is not driven by prescriptive                   focus on non-
                                                                             financial benefits
spreadsheet decision making.
Consistent with the importance of non-financial drivers                            Other (Please
illustrated previously, over three quarters of organisations
attempt to incorporate quantitative assessments of such
drivers into their business cases (Figure 13).                                Source QNB Intelligence
                                                                               Study G, Oct 03, n=190

Figure 13
Do you ever attempt to rate the value of or otherwise quantify non-         Finally, it worth considering how organisations use pilots and
financial benefits?
                                                                            initial rollouts to firm up their assessment of intangible
                         0%   10%   20%         30%   40%     50%     60%
                                                                            benefits before mass deployment. Behaviour and opinions
Yes - this is a usual                                                       from the early wireless market are again useful to explore the
part of our process                                                         significance of this. Figure 16, for example, illustrates
                                                                            companies that have learned from initial activity are much
     Yes - but it is a
                                                                            more likely to deal with subsequent investments differently.
                                                                            Figure 16
No - but it would be                                                        When making business cases, are wireless related investments
  useful to do so                                                           treated any differently to other IT investments?

                                                                                              0%     5%    10%     15%         20%     25%     30%    35%         40%     45%
   No - not relevant

  Source QNB Intelligence                                                      Experienced
   Study G, Oct 03, n=190                                                       companies

Quantitative non-financial KPIs are relatively easy to deal
with in this respect, but there are some drivers that are
difficult to express numerically, let alone financially.                      Inexperienced
Empowerment of field workers at the point of action,
improved decision making capability and better business
visibility are common examples often cited in relation to
mobile technology investments. Such intangible benefits are                                                              Yes

Beyond the Cost of Computing, November 2003
Quocirca Executive Summary                                                                                                                                    Page 6

This different treatment reflects a greater understanding and                                         Discussion and Conclusions
appreciation of some of the intangible benefits (Figures 17 to
19).                                                                                                  In the tough economic climate that exists today, it is tempting
                                                                                                      to fall into a defensive mindset and dwell too much on cost
Figure 17
How important are the following drivers when making business cases
                                                                                                      and not enough on value. The research presented here,
for wireless investments? : Empowerment of field workers at point of                                  however, suggests that the emphasis on IT costs, sometimes
action                                                                                                to the exclusion of all other factors, originates from the
                0%   10%       20%       30%    40%       50%     60%        70%   80%   90%   100%
                                                                                                      supplier community and is not echoed in the minds of those
  companies                                                                                           The truth, according to respondents in the 7 studies reported
                                                                                                      here, is that cost reduction and other financial considerations
                                                                                                      represent just part of the overall equation when it comes to IT
                                                                                                      investment decisions. The creation of business value in the
Inexperienced                                                                                         form of non-financial or intangible benefits is often
                                                                                                      considered to be more important.
                                                                                                      The upshot is that there is currently a mismatch between the
                                                                                                      benefits articulated in many supplier value propositions and
                           Highest = 5    Very High = 4    Significant = 3
                                                                                                      the issues that really matter to corporates. Examples of this
                                                                                                      are widespread. We see security vendors trying to justify
Figure 18                                                                                             anti-spam solutions on the basis of a calculation that
How important are the following drivers when making business cases                                    multiplies the 5 seconds it takes to delete an unwanted
for wireless investments? : Better and more up-to-date visibility of
business operations
                                                                                                      message by the average hourly rate of an employee. We see
                                                                                                      wireless vendors performing similar dubious calculations
                0%   10%       20%       30%    40%       50%     60%        70%   80%   90%   100%
                                                                                                      based on cost of time saved each day via mobile email or the
                                                                                                      difference in price between a hotel dial-up and a GPRS
 Experienced                                                                                          connection.
                                                                                                      Calculations like this often miss the point of why
                                                                                                      organisations are investing in such solutions. Anti-spam is
                                                                                                      more about avoiding disruption, distraction and the blocking
                                                                                                      of free and responsive communication than it is about
  companies                                                                                           financial cost saving. Wireless is about improving the
                                                                                                      effectiveness of employees, achieving better business
                                                                                                      visibility and creating the ability to make decisions in a faster
                           Highest = 5    Very High = 4    Significant = 3                            and more informed manner. Trying to reduce everything to a
                                                                                                      set of calculations on a spreadsheet can be irrelevant and
Figure 19                                                                                             sometimes even misleading.
How important are the following drivers when making business cases
for wireless investments? : Faster and better service to customers                                    None of this means we can put cost totally to one side.
                                                                                                      Moving from one extreme to the other is equally counter-
                0%   10%       20%       30%    40%       50%     60%        70%   80%   90%   100%
                                                                                                      productive. Factors like acquisition costs and total cost of
                                                                                                      ownership are still important considerations that particularly
 Experienced                                                                                          come into play when choosing between alternative suppliers
                                                                                                      and solutions. Vendors therefore still need to make sure their
                                                                                                      offerings are financially competitive.
                                                                                                      What’s required from the supplier community is more
Inexperienced                                                                                         balance and the creation of Total Value Propositions (TVPs)
                                                                                                      that move beyond financial ROI and TCO to embrace the
                                                                                                      myriad of other considerations used by corporate decision
                                                                                                      makers when assessing IT investment proposals.
                           Highest = 5    Very High = 4    Significant = 3

Unfortunately, suppliers that are too hung up on the cost
argument do not always help prospective customers
understand the nature and importance of intangible benefits.
Too often, the customer is left to figure these out through                                           Acknowledgements
practical experience during pilots.
                                                                                                      We would like to thank Oracle, Sun Microsystems, EDS,
If suppliers took such benefits more seriously, there would be                                        Citrix, Neoware and Morgan Stanley for funding the various
more cross fertilisation of ideas in emerging technology areas                                        primary research studies from which intelligence was drawn
between customers with experience and organisations yet to                                            when putting this report together.
take their first steps in a particular area.
                                                                                                      Above all, we would like to thank the 2654 respondents who
The example given here is wireless but the same is true of                                            contributed their time so generously towards a better
Grid computing, Thin Client Devices and a number of other                                             understanding of how IT suppliers and their customers may
areas examined through Qucirca research.                                                              work together more effectively.

Beyond the Cost of Computing, November 2003
Quocirca Executive Summary                                                                                                      Page 7

Sources of Intelligence
Quocirca Ltd conducted all of the research used in this document on an independent and objective basis. Intelligence relating to IT
decision making has been drawn selectively from seven separate studies completed in September or October 2003. A brief overview
of these studies is provided in the following table.

    Identifier   Topic                                         Geographic                 Number of                   Completed
                                                               Scope                     Respondents

    Study A      Customer Relationship Management              Pan-European         150 (Telephone based)             Sep 2003
                 strategies, activity and progress

    Study B      IT Platform Investment Priorities             United Kingdom        90 (Telephone based)             Sep 2003

    Study C      Supply Chain Management strategies,           Pan-European         150 (Telephone based)             Sep 2003
                 activity and progress

    Study D      Grid and Utility Based Computing              Pan-European         300 (Telephone based)             Oct 2003

     Study E     Server Based and Thin Client Computing        USA & Europe            1640 (Web based)               Oct 2003
                 strategies, activity and progress

     Study F     Employee Relationship Management              Pan-European         150 (Telephone based)             Sep 2003
                 strategies, activity and progress

    Study G      Wireless Data strategies, activity and        Pan-European         190 (Telephone based)             Sep 2003

The identifier for the relevant study is indicated within footnotes on charts presented in this report. As the information used here only
represents a minor part of the intelligence gathered, readers may be interested in the full reports relating to the individual studies.
These are available for Studies A, C, D, E and F and copies may be requested on

Beyond the Cost of Computing, November 2003
Quocirca Executive Summary                                                                                                  Page 8

                                                 About Quocirca
Quocirca is a company that carries out world-wide perceptional research and analysis covering the business impact of information
technology and communications (ITC). Its analyst team is made up of real-world practitioners with first hand experience of ITC
delivery who continuously research and track the industry in the following key areas:

    •    Business Process Evolution and Enablement
    •    Enterprise Applications and Integration
    •    Communications, Collaboration and Mobility
    •    Infrastructure and IT Systems Management
    •    Utility Computing and Delivery of IT as a Service
    •    IT Delivery Channels and Practices
    •    IT Investment Activity, Behaviour and Planning
    •    Public sector technology adoption and issues

Through researching perceptions, Quocirca uncovers the real hurdles to technology adoption – the personal and political aspects of a
company’s environment and the pressures of the need for demonstrable business value in any implementation. This capability to
uncover and report back on the end-user perceptions in the market enables Quocirca to advise on the realities of technology
adoption, not the promises.
Quocirca research is always pragmatic, business orientated and conducted in the context of the bigger picture. ITC has the ability to
transform businesses and the processes that drive them, but often fails to do so. Quocirca’s mission is to help organisations improve
their success rate in process enablement through the adoption of the correct technologies at the correct time.
Quocirca has a pro-active primary research programme, regularly polling users, purchasers and resellers of ITC products and
services on the issues of the day. Over time, Quocirca has built a picture of long term investment trends, providing invaluable
information for the whole of the ITC community.
Quocirca works with global and local providers of ITC products and services to help them deliver on the promise that ITC holds for
business. Quocirca’s clients include Oracle, Microsoft, IBM, Dell, T-Mobile, Vodafone, EMC, Symantec and Cisco, along with
other large and medium sized vendors, service providers and more specialist firms.
Sponsorship of specific studies by such organisations allows much of Quocirca’s research to be placed into the public domain.
Quocirca’s independent culture and the real-world experience of Quocirca’s analysts, however, ensure that our research and analysis
is always objective, accurate, actionable and challenging.
Quocirca reports are freely available to everyone and may be requested via
Quocirca Ltd
Mountbatten House
United Kingdom
Tel +44 1753 754 838

Beyond the Cost of Computing, November 2003

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