Sources of Productivity: Software for Making IT Pay Off

U.S. productivity grew 8.1% in the third quarter, the Labor Department told us last week. In the short term, that's great news for company profitability, but bad news for workers. In the medium term, though, higher productivity is good for both companies and workers, because if demand starts to grow, companies will still need to hire more workers to meet that demand. But where does increased productivity come from? The third post of this three-partseries focuses on software the helps IT consultants make clients more efficient.As I explained in the first installment of this series, application portfolio management (APM) is a consulting process that helps companies maximize their information technology spending.But the consulting firms that deliver APM need help with the service because it is very difficult to analyze exactly what applications do.

That's because these programs often consist of millions of lines of computer code that could take years to analyze. Many companies -- including UK-based Micro Focus and privately held SEEC and CAST -- produce software that helps analysts figure out what applications really do, making APM easier and more efficient.

I recently spoke with Jitendra Subramanyam, CAST's Director of Product Strategy and Research. He told me that APM companies use CAST's software to measure an application's performance, security, robustness, changeability, and transferability (e.g., how well or poorly documented it is).

Companies use SEEC's products for many different purposes, but one of the most interesting aspects is that SEEC enables companies to use the logic from their expensive mainframe-based applications on computer systems that cost less to operate. They do with software that can export business logic in a so-called legacy application, enabling the company to migrate that logic onto a lower-cost platform using a technology known as Services Oriented Architecture (SOA). SEEC founder Ravindra Koka told me that SEEC's SOA product can help companies lower their costs significantly.

Another key piece of SEEC's software helps companies to outsource production to lower cost locations, enabling them to maintain high quality even as they lower their costs. According to Koka, this can reduce expenses by as much as 50%. For example, Ken Powell, President of North American operations for Micro Focus, told me that his company has developed a product called Micro Focus APM solution (MFAS) which helps companies accomplish these important business goals.

A case in point is International Business Machines' (IBM) Global Services in Spain, which used MFAS to help a client with a complex outsourcing project. IBM Global Services used MFAS to handle application maintenance and development to help it satisfy client quality standards profitably.

Following the successful implementation MFAS, IBM Global Services expected its client to achieve a positive return on investment within 12 months. In the interim, MFAS provided IBMs' client the following benefits:

  • Shared relevant application knowledge with all staff, thereby reducing reliance on outside experts or outdated and absent documentation. his directly reduced the risk of using varied and unmonitored sources of information.
  • Assured that nothing was missed during application maintenance and development. This high level of quality improved user satisfaction and also enabled IBM to feel confident in its ability to satisfy its client performance standards -- known as service level agreements (SLAs).
These software tools are helping companies achieve big improvements in IT productivity. And those improvements could boost corporate profits, which may yield job growth in the future.

Peter Cohan has no financial interest in the securities mentioned. Meet Peter at The World Money Show Orlando, February 3-6, 2010 at The Gaylord Palms Resort.
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