We have now come to the end of that cycle, and the pundits tell us that the Internet ande-commerce offer the magic solution. With the hardware component of IT budgets dropping because of falling hardware prices, most of the world's spending for IT in the next technology cycle will be for software and software-related costs. Unfortunately, migration, conversion, integration and maintenance will absorb most of all software costs if the current, wasteful practices are allowed to continue. Executives looking for competitive advantage won't be satisfied with only a fraction of their total software budget being deployed for profitable value creation. U.S. executives need rapid innovation, not expensive preservation of what is becoming an increasingly costly relic.
Executives have three options.
First, they can continue on the current course of escalating computer budgets and painfully extracting value-creating applications from whatever funding is left over from maintaining the systems now in place. Second, they can find outsourcers that will act as custodians of the junk pile. Third, they can find technically capable innovators to come up with technologically advanced solutions at radically lower prices than a firm could on its own. The third option is in reach. Clearly, there's money to be found in managing softwarelibraries for modernization if you can set up a clever way to manage that transition.