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Tech Departments Want Online Software  [ The Wall Street Journal ]
February 6, 2008 08:53 PM
"Tech Departments Want Online Software"

Information-technology departments at midsize companies say their top goal for the next year is cutting costs, according to a new study. One way they’ll do this: by turning to software that workers access over the Internet.

The study (registration required), by AMR Research, examined tech trends at companies with between 100 and 999 employees. IT leaders at these companies said their top goals for 2008 are cost savings, consolidating tech equipment and software (which is a fancier way of saying cost savings), and using technology to make the business run more efficiently.

At the same time, these companies said they’re buying “enterprise resource planning,” or ERP, software, the big systems that companies use to manage everything from finance to human resources to customer relationships. According to AMR, companies are turning to these systems because they want to do more with fewer systems: Within three years, 43% of companies surveyed would like to have just one system they can use for everything.

Any worker who has lived through an ERP project knows that deploying this software takes a lot of time and costs a lot of money – it’s certainly often not consistent with controlling costs. In fact, that’s one of the biggest frustrations the IT heads have. A few weeks ago, we wrote an article that looked at consolidation in the software industry and how businesses now have fewer choices when they want to buy business software. Privately, many tech leaders told us that they were fed up with the large tech companies that remain and that they couldn’t wait until there was an alternative.

Several had an alternative in mind: “software as a service” that workers access software through a Web browser over the Internet rather than on tech equipment their companies own and operate. It looks like 2008 may be the year a shift to software as a service starts to happen. A whopping 39% of companies with 500 to 999 employees said this was their preferred model for buying software–by far the largest of any model.