There is one dominating mantra inside the world of enterprise IT spending…

DO MORE WITH LESS

Way back during the 1965-2000 period the mantra was quite different: The mantra at that point was

SPEND MORE ON INFO TECH BECAUSE IT IS REALLY IMPORTANT

During the 1965-2000 period folks spent 3x economic growth rates on IT. There is an IDC stat suggesting that from 1965 to 2000 the percent of non-real estate cap ex spent on IT skyrocketed from 15% to 50%. We all spent more and more and more on IT inside of the enterprise… until we didn’t.

The pace of the push back on tech after the Internet Bubble Burst was shocking. Spending went from politically correct to politically incorrect fast enough to make heads spin. Those folks ascribing SPEND MORE after the cut off date were fired. Others learned. SPEND MORE went to DO MORE WITH LESS.

Big deals dried up and never came back with anything approaching the drama of 1998-1999. Multi-year ERP deals in the hundreds of millions disappeared never to return.

The eB2B electronic exchanges that were hyped by investment banks and were trumpeted by every CEO who had a pulse immediately fell on their face to never be talked about again.

So What?

Great question.

For one thing, we do not see any return to the SPEND MORE ON TECH in the enterprise anytime soon. We do not hear even a peep of such. In our change model of “thoughts” as a lead indicator of “ideas” and “ideas” as a lead indicator of “action” we don’t see even a glimpse of the thought that companies should SPEND MORE ON IT. The DO MORE WITH LESS mantra is well set.

So… all the IDC and Goldman Sachs surveys that say tech spending in the enterprise will be picking up or slowing down in the next such and such period of time is a waste. All the over analysis of IBM and SAP quarterly reports lamely attempting to identify the BIG new spending move up or down is a waste of time as well. Utter waste. Until the mantra of DO MORE WITH LESS is for whatever one day altered we can rest comfortable that IT spend will grow approximately 3-5% in aggregate and not be worth thinking about.

We do care about WHAT folks will buy or not buy that is different from before and here is also where the DO MORE WITH LESS mantra comes in quite handy for us to remember.

Each and every year until the DO MORE WITH LESS IS ONE DAY REPLACED the folks who are responsible for IT spending will need to offer a sacrificial lamb to the gods or in this case the folks who run the joint – their bosses. Gotta make the boss love you, huh?

Each and every year the same phenomenon plays out.

Back in 2000, the change that reflected DO MORE WITH LESS was the ROI calculator. Everything suddenly had to have a positive ROI in order to gain funding! Yes, IT people were told to calculate ROI for almost everything under the sun. This was new. This was a fancy way of the CFO saying: STOP SPENDING. ROI calculators are generally absolutely horrendous tools. For starters the idea of an organization as nothing more than isolated ROI calculations is bizarre. Next, the idea that you can calculate ROI for more than a modest amount of IT spend is just a hallucination. What is the ROI in a PC? Good luck. Buying a new server? What is the ROI. So be it. ROI calculations fed the gods.

Next: Then it was looking like a tough guy by negotiating service contracts with software companies. Money saver. Never been done before. Oh… and how about linux to the server. Big money saver. Previously if linux was found in the data center it was claimed to be an accident that had been corrected. Suddenly linux was spreading into a full fledged open source movement of all kinds. Saved money. DO MORE WITH LESS.

More recently we have seen the idea of virtualization begin to take hold. Virtualization offers higher utilization on assets such as servers thus reducing cost. In the old days like 2000 no one thought virtualization would amount to much of anything based on the assumption that IT admins would continue to hug and hold and NOT share the IT resources in their narrow space. After realizing they might get fired if they don’t get behind the new sacrificial lamb the CIOs have begun to share and quit hugging their own servers as if they were, well, their own servers.

The software as a service model is a reflection of DO MORE WITH LESS. Small-medium businesses are drawn to the Salesforce.com model in part because the upfront costs of spending on licenses disappears.

Outsourcing to India? DO MORE WITH LESS.

More recently… the popularity of re-centralizing servers into fewer data center locations had grown considerably. Why? Saves money. DO MORE WITH LESS. Fewer admins. Easier ability to roll out and upgrade new apps.

So what? Well it ain’t over…

Well we can look for companies set up to take advantage with the new mantra: Indian offshore outsourcers. Virtualization specialists like VM Ware. Linux plays like Red Hat perhaps.

But we could also look for derivative plays… for instance…

The major rationale for companies like Riverbed and F5 to exist is to counteract the trend toward recentralizing servers into fewer data centers. DO MORE WITH LESS created a fresh problem to solve that these companies are helping to solve. Application Acceleration and WAN Traffic Optimization. Fewer data centers means that more people in your network or company are further from the data center BUT these folks also expect that their response time when asking for data when hitting a return key will get faster and faster and faster. Riverbed and F5 accelerate traffic in a fashion that overcomes the evolving server recentralization.

Research in Motion’s Blackberry – The Blackberry has not only become a fan favorite of CIOs because the company has amassed all the major reference points of success thanks to great service and support and security but is also a fan favorite of CFOs because it does so much in nurturing extreme mobility (perhaps mantra number 2 in the enterprise) but also does so much with very very very little cost! What a hero. Pound for pound or dollar for dollar the Blackberry may be adding the most value of any dollar spent in many enterprises. The cost is trinkets inside an IT budget. The impact is dramatic.

Where will all this go in the future?

Hard to know but there will be more sacrificial lambs.

Recently, we had a few thoughts after HP committed to reduce power consumption in their products and in their company by 20% only to be trumped by IBM’s 80% pledge. Thought à Idea à Action is kicking in. Here the companies DO MORE WITH LESS – huge cost savings – and the POLITICAL CORRCTNESS OF GREEN come together. Doing well by doing good. Double bottom line investing finally happens. Doing the right thing for the environment and for their business as reflected in the products that they offer. By making their products more power efficient they can become on code with the dramatically rising “green” trend AND they can be on code with DO MORE WITH LESS.

They look sensitive to global environmental issue thus appeasing the Greenpeace pressure as well as fostering their emerging sensitivities as to their own cultures.
They make their businesses more relevant in the future by having sellable products.
They save a LOT of money now!!!

When Green meets IT spend and DO MORE WITH LESS we may also get an even more rapid increase in mobile workers who are in the office less (they don’t need as much office space – watch for the reversal of the empty office phenomenon!)… all in sync with DO MORE WITH LESS.

The gods will continue to demand new sacrificial lambs from their heads of IT… what might happen? Core user facing computing may come under scrutiny. Will the trend toward dumb terminals (I mean thin client computing) grow saving large chunks of money on apps and maintenance? At some point most likely. What about linux to the desktop? Sure… across time it is a likely outcome.

How about Google apps or such? Door is opening. No longer would Google-apps seem difficult to adapt to by the ever more tech savvy user base. Lots of money to save.

What if companies such as Pepsi wanted to save even more money and feel even better about themselves by announcing that they would make their computer assets live 50% longer than is currently the norm?

All sorts of possibilities. We often see folks rambling around aiming to assess one product at a time, prisoner of Gartner reports and such with lines that go up and to the right with 98% certainty but never gaining conviction as to which products will reeeeaaallly take off because they have little context of the world in which the spending itself is done.

DO MORE WITH LESS is the most significant guide we know for assessing these changes in the enterprise.