IT Spending Emphasizes Safe Bets, Short-term Gains
Insurance Experts' Forum, July 27, 2010
As insurance enterprises and companies across the board watch key markets and the economy in general for solid signs that a recovery is imminent, IT spending seems to be in a holding pattern, but according to some recent research, a few technologies are emerging as winners in the current environment.
The Computer Economics (CE) Technology Trends 2010/2011 study shows that Windows 7, desktop virtualization and unified communications (UC) are set to make substantial gains over current adoption levels in the coming year. Each of these technologies has a substantial number of current investors compared to the percentage that have the technology in place. Windows 7 adoption is primed to make the most substantial gains.
While only 3% of IT organizations had the technology in place at the beginning of the year, 31% of organizations included funds in 2010 spending plans to begin or expand their migration to Windows 7, the survey of 210 IT organizations found. According to a CE spokesperson, 39 of the companies surveyed were in insurance, banking or financial services.
In a related finding, the study found organizations are also embracing desktop virtualization. About 15% of IT organizations have the technology in place today, but 29% are currently investing in the technology.
“Companies are having a very positive economic experience with early implementations and many are finding deployment costs are less than expected,” said John Longwell, VP of research for CE.
According to an article on Yahoo! Finance, unified communications solutions and/or services offer voice, messaging, presence, mobility and conferencing capabilities that can be accessed and managed through a single interface. The purpose of UC is to improve user productivity and streamline office communications. While 27% of organizations have adopted unified communications solutions, 40% are investing in UC solutions in their current fiscal year, notes CE.
For the insurance and financial services space, these trends make perfect sense. Microsoft Windows 7 has proven to be a solid winner in the marketplace, and figures to be the platform of choice for many in the years to come. It seems logical to conclude that many products will be developed by vendors to leverage the Windows 7 platform, thus migration to that technology seems like a safe bet—especially for insurers and others who are ripping out legacy systems and replacing them with more current technology.
As noted above, desktop virtualization seems likely to yield strong economic benefits, making the technology an easy sell in a continuing economic malaise. With a disproportionate amount of emphasis being placed on ROI in insurance circles in particular, virtualization also represents a relatively low-risk/high-reward strategy.
Unified communications technology offers two significant benefits. First, it allows enterprises to shrink many communications areas into a single cost center, thereby yielding better cost control and easier oversight. Secondly, the improvements in user productivity should translate into higher efficiency at a relatively low cost. Again, adoption of this technology is a decision that has few, if any, significant risks.
The message of the research, says CE, seems to be that IT executives are willing to invest in technologies that deliver solid economic returns while requiring low upfront investments. IT organizations also seem willing to open the purse strings for investments deemed necessary, such as ERP systems and desktop upgrades, despite the prospect for limited returns.
There is little appetite, however, for making big bets on emerging technologies with uncertain economic benefits, notes CE.
On the other hand, a company that bets a wad on an emerging technology and wins will find itself in a commanding competitive position somewhere down the road. The question is whether anyone in our industry will have the intestinal fortitude to take such a risk.
Ara C. Trembly (www.aratremblytechnology.com) is the founder of Ara Trembly, The Tech Consultant, and a longtime observer of technology in insurance and financial services.
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