BRAM MEYERSON: Returns on major IT investments require application architects

Digital transformation, the mass dispersion of working locations and increased cybercrime risks have disrupted the provision of IT products and services and focused the mind of company executives on their IT infrastructure and software development.

This has resulted in an increased demand for the development of bespoke software, especially in emerging economies where products and services are being launched and existing applications modernised to meet unique opportunities and solve localised challenges.

According to technological research and consulting firm Gartner, global IT spending on enterprise software is expected to grow 11% to $671bn this year and IT services 7.9% — well ahead of the growth in spending on data centre systems (4.7%) and devices (3.3%). This perhaps reflects the trend evident on the ground — that companies are coming to realise that their competitive advantage lies in their ability to differentiate by using and applying software and innovation.

Every new idea over the past two years — and the pandemic has spurred many ­— has been driven by the innovative use of technology. This is not about good hardware and software, but the innovative and effective deployment and exploitation of software to rise above the competition. 

Difficult decisions 

Company IT budgets are generally divided into infrastructure, software and services, and while the infrastructure is a commodity to which fairly standard prices apply, the acquisition and development of software and services is more nuanced and tricky.

While demand for software development is increasing, it can be expensive, forcing CFOs and CIOs to make difficult decisions. This often results in inadequate provision for software projects, with the knock-on effect that systems don’t always provide the gains that were anticipated. 

Project pressures on CFOs and CIOs are immense, particularly when it comes to designing IT architecture and software solutions to enable their organisations to survive in a volatile environment, or to come up with new growth-producing solutions in a no-growth environment.

There is also huge pressure on CFOs to know and understand what is appropriate to spend on developing software platforms. This lack of understanding, coupled with distrust of development teams’ estimates and quotes, results in company executives being unsure of whether they are getting bang for their buck.

Software projects are also notoriously fraught with risk, and it is not uncommon for executive finance and technology leaders and their teams to face project delays, overrun budgets, shortfalls on quality targets or unusable products.

From an idea into reality

Despite the best intentions of application architects, software requirements are often loosely defined. Like construction projects, enterprise software architecture needs to be specified and scoped in great detail.

The architect who designs a building must convert the structural vision into the minutia of requirements to elevate it from an idea to reality. Architects will work closely with quantity surveyors, who play critical roles sizing, scoping, preparing cost quotations and managing these projects. Quantity surveyors measure and value work in progress, determine the value of variations and ensure the fair and equitable settlement of the cost of the project in accordance with the contract conditions.

The acquisition and rollout of software is no different, and independent software quantity surveyors or software economists are being used increasingly to advise CIOs, especially on multimillion dollar software implementations.

This enables companies to know the size, scope and scale to determine the project requirements and costs, and the risks and associated costs. It provides objective measures and standards not influenced by personal agendas and preferences, preventing many of the flawed stakeholder decisions that typically occur in IT projects and have a direct affect on project cost and risk.

It helps manage supplier and vendor costs effectively and brings critical advisory skills to the table that include finance and accounting, tax depreciation, replacement-cost estimation and even mediation and arbitration.

Huge opportunities

In SA and the rest of Africa, there has been significant and sometimes unique app development to meet the particular needs of the continent, such as financial services, logistics and delivery to remote areas and education. With a growing, increasingly urban, young population, Africa offers huge opportunities for software development in e-commerce, fintech, healthtech, edtech and logistics.

Recent projects we have been involved in include an app for the clean energy marketplace, where we were asked to value the platform to ensure the developer sold at the right price, and software that was developed to enable miners to claim compensation for their injuries, where the insurer who is acquiring the platform wants to ascertain its fair value. We recently advised a European bank on the effectiveness of software services provided externally, and mentored a software company to provide more objective quotations for its clients.

As SA’s economic growth remains slow, budget pressures have forced many companies to restrict software development, only to realise how far they have fallen behind the curve as their competitors surge ahead. At the same time, companies are increasingly cognisant of the return on investment of their software purchases. This makes it critical to make sure they use it productively.

IT is no longer about providing technology, but about how technology can be leveraged to support business strategy, expansion or just survival. Making sure that happens requires more than plugging in technology.

• Meyerson is founder and CEO of Quantimetrics.