CRM and outsourcing are overrated: Gartner

Companies are realising the most overrated areas of IT are CRM and outsourcing, according to Gartner chairman and chief executive Michael Fleisher.

Speaking in Australia yesterday, Fleisher said CRM implementations have failed because projects lacked sound strategic planning.

He said IS outsourcing has also proven a costly failure to users because they focused too heavily on generating initial cost savings, rather than utilising it to get their business focused on core competencies for long-term efficiency.

Sharing his observations from talks with CXOs in the post-September 11 period, Fleisher said: "There is no business person in the world who is not extremely worried about IT in their business."

Against a sceptical backdrop in the corporate sector, IT leaders have never been more cautious of the impact of technology to their bottom line. "In 2001, companies everywhere felt they were sliding down a terrible deep slope and that they had no control."

Meanwhile, most top 10 economies in the world - including the US and Japan - are in their worst state in 30 years, said Fleisher.

Feeding the downturn to some extent was politicians' naivete. In their quest for optimism, they believed the global economy would turn for the better this year, Fleisher said, adding that governments were perhaps too focused on forward-thinking than on concrete proof-points of business health, like profit, which characterised management thinking.

Stressing he did not purport to have the answer to the IT sector's malaise, he said: "Even if revenues grow to some extent [this year], it's clear we won't see the levels of growth we saw five to 10 years ago."

He was also quick to point out: "While stock prices have grown over the last four months - driven by shareholder speculation over economic growth - companies aren't reporting higher [profit] levels than they did in '99."

However, Australia is defying a souring global economic climate, and is less likely than ailing regional neigbours to face an uphill battle over the next year, according to Fleisher.

Bob Hayward, Gartner senior vice president of research Asia Pacific, agreed, saying Australia was the most mature IT market in the region.

Hayward cited factors like a weak Australian dollar (strengthening the value of exports); a level playing field in the IT sector fostered by a microcosm of vendors from the US and Europe competing in very open conditions here, and a predisposition among businesses from emerging powerhouses like China to adopt Australian technologies.

According to Fleisher, organisations are seeking closer insight into what other businesses are doing to ride out rocky economic conditions.

Indeed, consulting makes up just over a quarter of Gartner's total global revenue ($US950 million), and worldwide that side of the firm's business is growing, he said. "Companies are interested in benchmarking their IT assets to assess the return on their investments, and also want to know how they compare with competitors on their technology challenges."

CIOs in particular are looking for good examples of successful technology implementations, said Fleisher, noting Federal Express and Dell were classic cases in point.

Those companies prospered through technology because management applied to its IT plans the "top three" strategies learned at business school, he said. While those organisations chose different IT strategies, they focused on what they were good at: low cost and high-value production. They re-engineered their business processes to match their core strengths, and from there determined what they needed to deploy and make their technology a success.

For now, Fleisher believes the good news is that intense scrutiny over the importance of IT to the bottom line has bred a generation of CIOs more astute than five years ago in judging IT's strategic value.

But while CIOs were once good prey for some of the best marketers in the world - those from IT companies - Fleisher said a good portion of that game is over.

Despite selling enormous amounts of hardware, software and services a lot of clients didn't need Fleisher said customers are now demanding to see an ROI on every tech investment.

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