Trend toward in-house enterprise development

Stan Beer
Thursday, 16 December 2004 03:00

IT Industry - Development

Enterprises are moving toward custom development and away from the wholesale implementation of enterprise applications packages such as SAP, PeopleSoft and Siebel, according to global technology consulting group, Capgemini.

Brad Freeman, head of technology consulting, Asia Pacific, at Capgemini, says the increased sophistication of the latest development tools makes custom development a viable alternative to packaged enterprise solutions in many cases. "The sophisticated tools that are now available means the choice between custom building an application and implementing a packaged solution is no longer as black and white as it used to be," says Freeman.

According to Freeman, not all packaged enterprise applications should be built in-house but in many cases it is the better option and no higher risk than implementing a high-end packaged solution. "You may say that building a custom solution is high risk but there have also been quite a few packaged enterprise solution disasters," says Freeman. "No one is suggesting that you should build a GL (general ledger) or AP (accounts payable) system. However, if you want to build a cut down CRM, maybe it's better than putting in a Siebel. CBA (Commonwealth Bank), for instance, is building a CRM internally."

Freeman predicts that the market will see more enterprises moving towards a mix of internal custom development and packaged solution. However, this will not necessarily lead to larger internal IT shops. He says, "The advent of offshore development, better tools and, as a consequence, better in-house productivity means there will not be a huge growth in IT headcount."

Another trend identified by Capgemini research is what it calls a huge disconnect between what vendors and the services industry are promoting and what customers want. Capgemini believes that end users are still looking to get the basics right, focusing on security and driving down storage costs for example, whereas vendors and services companies are pushing more sophisticated technologies such as mobility and business intelligence.

Freeman says, "All our research shows that CIOs generally have a conservative perspective. They want to get costs under control and their house in order. With organisations now open to the outside world, security is of paramount importance. However, the services industry is still trying to push RFID, mobile solutions, business intelligence and all that attractive stuff. CIOs just want to get the cost of their basic phone system in order rather than getting the latest mobile solution." According to Freeman, VoIP still does not figure highly on the radar of most CIOs, whereas technology providers continue to push it."

An area which is gaining greater acceptance among CIOs, however, is Open Source platforms, according to Freeman. He says, "Organisations are taking their legacy ERP environments off expensive Unix platforms and putting them on Open Source Intel platforms which has a lower total cost of ownership. They're still not doing the mission critical stuff but they can do things like basic back-office applications. The IBMs of the world are behind Open Source, so solutions will become more robust."

Freeman also says that it is only a matter of time before enterprise desktops move to Open Source, which make it "interesting" for Microsoft. He says, "Microsoft will have to respond by becoming part of the Open Source club and provide open access to its product."

On the subject of IT skills, Freeman says there is no conclusive evidence on which to judge whether there is or is not a shortage of IT skills. However, he says, Australia should have no problems on that score because it has the capability to retrain IT people and people from related disciplines such as engineering very quickly.