Summary of META Group’s Weekly Research Meeting

Caveat emptor: The PC purchasing shell game
Procurement administrators are pressuring vendors to provide ‘pricing mechanisms’ that continuously ensure good PC prices (e.g. a consistent discount off list price). Unfortunately, these methods rarely ensure the best ‘street price’ and frequently conceal the real price. For example, RFP responses often provide price quotes for computers with configurations different from the machines that will actually be installed. In addition, PC vendors can narrowly define ‘standard’ equipment, pushing many purchases into the more expensive (>20 percent) non-standardised category. Moreover, PC buyers must be cautious of overly optimistic exchange rate estimates.

Bottom Line: PC prices have fallen precipitously (<$600 range) for some fully configured desktop models. PC buyers must be cautious of encapsulated RFP responses that highlight incredible prices, but hide terms.

Outsourcing the HR business process
Recent business process outsourcing (BPO) deals (International Paper with Exult, Avaya with Accenture) highlight a trend toward administrative BPO as a viable portfolio option for Global 2000 organisations. Combining elements of the application service provider and pure outsourcing business models, BPO vendors range from pure plays (e.g. Exult) to benefits outsourcers (e.g. Hewitt, Fidelity) to systems integrators (e.g. Accenture, EDS). Organisations should consider BPO provider selection in a partnership, rather than a vendor/buyer framework; strategic fit and long-term viability weigh more heavily than do price and solution differentiation. Although cost reduction (>10 percent long-term savings) is part of the value proposition, additional benefits include increased focus on core business processes and improved service levels.

Bottom Line: Clients should evaluate HR services individually; inefficient, infrastructure-challenged, and undifferentiated areas are the best candidates for outsourcing.

Information security: Don’t get too defensive
Our research indicates that while information security budgets have remained constant (or are even growing) despite IT budget cuts, the perception of companies on information security has changed. For the past 5 years, security programs have grown in importance and reach, driven by secure third-party access and privacy concerns. During 2001,we noted a shift toward more tactical projects, with increased emphasis on privacy/regulatory aspects (e.g. HIPAA, Gramm-Leach-Bliley). However, since September 11,many companies are understandably on the defensive and increasing security spending. This shift is a philosophical step backward, because defensive security programs have been ignored by revenue-generating business initiatives.

Bottom Line: Information security organisations must not place too much emphasis on defensive actions. When the business climate shifts again, a defensive posture will be pushed aside.

BPI versus EAI: The chicken before the egg?
Our research indicates that enterprise application integration (EAI) vendors are shifting their selling proposition from basic message brokering to business process integration (BPI). Although the ‘marketecture’ is impressive and the problem diagnosis correct, we caution clients that BPI will not be the integration silver bullet. Despite the great potential, BPI tool use will prove more challenging than exploiting traditional EAI. Furthermore, users will require clear application and infrastructure development processes, including handoffs and strong governance between traditional application development disciplines and BPI service development.

Bottom Line: Users should focus on digesting message broker fundamentals (e.g. adapters, canonical forms, organisation) while evaluating BPI benefits to prepare a phased technology acquisition and skill/process development strategy for the next 4-5 years.

For more information contact Sriram.Ramamoorthy@metagroup.com