What if -- just what if -- IT budgets really loosen up this year, and companies dare to make a software purchase or two? One thing is sure: CIOs will be on the spot. IT executives will be expected to hit a home run with each purchase, matching it to the overall strategic vision of the enterprise. There will be no tolerance for the embarrassing software spending excesses of years past.
While the heat may be on, CIOs also are in a very favorable negotiating
position. "All CIOs are from Missouri these days," Scott Anderson,
director of Sun Microsystems' (Nasdaq: JAVA) 
Siebel alliance, told CRM Buyer Magazine. "They want to see benefits and cost savings, and they want to leverage
existing hardware and software infrastructures."
How can the savvy -- and skeptical -- CIO prepare for the next round of enterprise application spending?
Choose Open Standards
A CIO can choose the right application category, select the best vendor, negotiate a sweet deal and still be left with deployment costs that soar through the roof. A lack of standardization is part of the problem, said Anderson, who, because he works for Sun, understandably leans toward the J2EE side of the Java-.NET platform debate.
"Typically, CIOs don't want to have multiple application servers
around," he said, adding that this will position Java
extremely well in the marketplace as enterprises pick and choose
applications to fill well-defined gaps in their portfolios. A slew
of analysts have made the same point: Running an IT operation is
exponentially less expensive when applications can share data.
Ron Rose, CIO 
of Priceline.com, told CRM Buyer that this was a primary
motivator for his company's purchase of several Kana applications.
Their ability to extend the workflow and
attach to a variety of databases was key. "With more dynamic
businesses," he explained, "the openness and modularity of the
underlying system are very important."
Dig Out of the Version Hole
Sometimes the best "new" purchase is already on a company's shelf. When examining the library of software accumulated during the IT spending boom of the late '90s, CIOs should consider not only how to leverage it, but also how to upgrade it, advises Deloitte Consulting partner Mark Peacock.
"If the software was still shrink-wrapped when budgets got slashed," he told CRM Buyer, "it may be behind a version." In such a case, he recommends that IT execs go back to the vendor and request an upgrade to the current version -- which often will include a number of features on the CIO's wish list. This is a good way to get new functionality at little or no cost.
"A lot of software companies," said Peacock, "especially the point solutions, are dying to negotiate low-cost version upgrades so they can trumpet the win when the application goes live."
This thrifty approach not only gets a new application up and running, but also avoids the potentially ugly scenario of having to write off an investment in expensive software that was never even used.
Complete the Feedback Loop
When it comes to e-commerce and CRM purchases, companies should focus on closing gaps in the feedback loop, says Aberdeen Group research director Guy Creese. "Web analytics, personalization, search and content management , taken together, make a complete feedback loop
that optimizes the customer-enterprise conversation," he told CRM Buyer.
In many cases, because a company already has several of these applications in place, closing just one gap can result in immediate, substantial benefit with very little investment. For example, if a company can analyze search data and discover why a large percentage of customers leave an e-commerce site without finding the product they want to buy, then a small investment can pay for itself many times over, and very quickly.
In years past, Web analytics, personalization, search and content management typically have remained isolated in various departments. Take the hypothetical case of an IT group that undertakes a Web analytics project to better project how many Web servers it needs. Later, marketing wants the same data to understand who is visiting the company's site and why, but the information is invisible, inaccessible or otherwise unusable because the project was contained within IT.
Now there is tremendous interest in closing that feedback loop so that
knowledge can be leveraged across the enterprise . "Vendors tell me
that they walk into sales presentations and see the CIO, the vice
president of marketing , an executive from customer
support and a whole host of others," Creese said.
And he recommends
that enterprises continue to push that trend by tasking interdepartmental
committees to carry out the software evaluation and selection process. That
approach, he maintains, is likely to produce more bang for the CRM buck.
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