A big push to cut costs via IT spending and automation is likely to put a squeeze on enterprise vendors with some companies pondering exit ramps from current suppliers. Can you write your own ERP and CRM systems using generative AI?

Those are some of the core themes that were surfaced on Constellation Research's January 2025, BT150 call. Ray Wang, Constellation Research CEO, noted that 2025 is going to be interesting from a technology spending perspective because the US government's push to cut costs has carried over to the enterprise.

In other words, enterprises are going to look for exponential efficiency and that's going to lead to some creative moves. One creative move that's being pondered is using generative AI to write applications on the fly. Items that surfaced on the BT150 call, which operates under Chatham House rules, include:

  • A tug of war between software vendors and customers. Enterprises need to drive down cost structure, but vendors are trying to jack up rates. AI and automation will play a big role in how this battle plays out. The enterprises that figure out how to rewrite core systems or relegate them to inexpensive plumbing will win.
  • Foundational systems are too expensive. Previously, the idea was to build on top of legacy ERP and CRM systems, but the foundational costs are too expensive. One enterprise has an internally built CRM tailored to its business because of costs. AI and low code means it's easier than ever to move off of established platforms to save money. "There's a tremendous opportunity for us to reset the table here," said one BT150 member.
  • Pegging the IT budget to a percentage of sales. One BT150 member noted that through the retirement of tech debt and using ServiceNow to integrate best-of-breed suppliers, the IT budget is now pegged to a bit more than 1% of sales from about 6%. Process automation is driving that optimization.
  • Invest in minimal amounts on IT and more on change management. Multiple BT150 members said that change management needs more investment if companies are going to transform and optimize.
  • Structure of technology budgets, spend and interface with the business leads is critical. Multiple BT150 members noted that it was critical to get the right IT model in place and sell it to other C-level executives to cut costs. One CxO described a model of layers that include management, operations, administrative and technology. Technology supports the other three and needs a plan to continually cut overhead.
  • AI model training portability. With AI being embedded everywhere, enterprises are realizing that the training is critical. There will be a push toward keep the training and moving the models. Enterprises don't want to be locked into a model.
  • The fires in Los Angeles County are going to surface issues with disaster recovery as infrastructure will need to be backed up and replaced. Disaster recovery strategy isn't the headliner now, but will be worth monitoring.

More from the BT150 calls:

 

Business Research Themes

Data to Decisions, Tech Optimization

Roles

Chief Information Officer

Tags

BT150, #transformation, #AI #artificialintelligence #machinelearning #ML #generativeAI