Justifying Data Management Technology Expenditures

Lora Bentley spoke with Craig Carpenter, general counsel and marketing VP at information management technology provider Recommind. Carpenter said that now is a good time to look into data management tech -- first because companies are going to face more investigations and more fines in the future, and second, the economy is forcing vendors to become more aggressive, more creative with their pricing.

Bentley: There have been indications that the government is going to get more serious about antitrust investigations. You've said recent survey results show many companies still don't have a handle on their data. But the technology to properly "handle" that data is expensive, isn't it? Especially in this economic climate?
Carpenter: Actually, it's not a bad time for companies to make the investment because vendors are getting a lot more aggressive with their pricing. You can get the same tools now for cheaper than you could a year ago, and the tools have actually gotten a lot better. Vendors can't justify a product to a customer unless they can show the value... How is this going to help [the customer] make more money or save money?

It's actually a really good time because you have significant issues staring you in the face and you have vendors who are aggressive and hungry. And a lot of departments have gotten cut. They need to do more with less. They need the technology to help them fill the gaps left by their departing colleagues.

Bentley: True, but if companies can't afford -- if they're having to lay off employees, where do they find the money to purchase new technology?
Carpenter: It's a good question, and it's one that a lot of companies started asking about a year ago. In other words, my capital expenditure budget is gone or locked down and I can't touch it, so how am I going to do this?

Bentley: Exactly. And you tell them...?
Carpenter: For most of these guys, the operations expenditure budget is certainly also being scrutinized, but  companies have less of an ability to make that go away...

Typically, an enterprise software company charges x number of dollars per seat for particular software, and it's paid all up front. But what they can do is work with customers within the operating expenditure budget. Maybe they pay monthly, or quarterly, over the course of a year or two or whatever the case may be. Maybe they pay as they use it, kind of like a software-as-a-service model. The market is really pushing vendors, us included, in that direction because it's not just what the customers want, it's what they need.

Bentley: Even then, isn't it hard to justify?
Carpenter: Sure. You can't argue for these projects to get the green light from the operating expenditure budget unless you can show improvement from the top to bottom line.