IT risk burden must be shared

SA businesses can no longer afford to base their investments in IT applications and solutions on faith and the hope that supplier promises will materialise.

That's the view of Bill Hoggarth, MD of the local subsidiary of the global SAS Institute. He maintains that SA companies are increasingly following their international peers in insisting that application and solution providers share the investment risk of their customers.

"Businesses have no choice," he says.

"Their continued search for competitive advantage or market differentiators has taken on a new urgency in the face of a global economy on the brink of recession. But businesses have learned - and for many it was an expensive lesson - that IT applications such as CRM and ERP, along with data warehousing, data mining and the like, are not the silver bullets they were once touted to be.

"Indeed, the bottom-line benefits delivered by successful operational implementations of these applications have been largely disappointing. And any competitive advantage they once offered in terms of enabling best practice in day-to-day operations is rapidly being eroded by the widespread adoption of the technologies by competitors," he adds.

According to Hoggarth, what these operational applications have done is enable businesses to generate, capture and store unprecedented quantities of raw data. In fact, he maintains, businesses are drowning in data.

"The key to business advantage today is being able to convert that raw data into actionable intelligence on which vital business decisions can be based," he adds.

"This is precisely what vendors of operational applications claim to provide. The issue facing potential buyers of these claims is - do they? What happens if they don't? How many businesses can afford to pay a significant sum of money on a system which may - or may not - deliver business advantage?" he asks.

Hoggarth believes the time has come for software vendors to put their money where their mouths are and to share the risk of the cost of the application.

"This has been a foundation principle within SAS for the past 26 years. SAS users don't have to pay a licence fee for the software implemented; they can pay a fee based on the measurable value they receive from its use.

"SAS's shared risk philosophy has seen the company develop a massive base of intensely loyal customers around the world. In South Africa, this shared risk approach coupled with our ability to transform current raw data into the kind of up-to-the-minute intelligence on which strategic business decisions can be based, resulted in SAS South Africa shrugging off the 'doom and gloom' which pervaded the SA IT sector in 2001 by recording record growth," he concludes.