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Hot In '97: Challenges Galore

By Bob Violino
Issue date: Jan. 6, 1997

CIOs will face daunting challenges in 1997. Fortunately, they'll have some useful tools and strategies to help them out. Part of any IS manager's job this year will be determining effective ways to use the Internet and intranets, finding skilled IS workers amid a worsening people shortage, countering growing threats to information security, and dealing with the year 2000 computer date-field problem . Here's a look at some of the technologies, services, and strategies that CIOs say will be especially hot in 1997.

Outsourcing
CIOs say third-party outsourcing --in which the primary service provider turns to subcontractors to handle specific operations such as help-desk services, application development, or network integration --is on the rise. And despite potential security risks, they say it often makes sense.

"If the prime contractor has adequate resources and staff to manage the [subcontractor], it's a more cost-effective way to go," says David Starr, CIO at entertainment and hospitality conglomerate ITT Corp. in New York. Starr says ITT outsources some of its IT development projects to Arthur Andersen, which uses Oracle, which in turn contracts with other companies for specific jobs.

ITT is also considering moving some of its PC LAN support functions to a service provider. "Sixty percent of our business is outside the U.S., so chances are the service provider will need to go to subcontractors for help" to support PC users, Starr says.

For many companies, "third-party outsourcing brings them more finely honed skills and higher specialization," says Ken Cutler, a VP and consultant at the MIS Training Institute in Framingham, Mass. But Cutler cautions that IS chiefs should be aware of potential risks, such as threats to information security, and should clarify liability issues before signing on. "You need contractual provisions that emphasize security responsibilities," he says.

Intranets
Talk to practically any CIO at a large U.S. company, and he or she will tell you that intranets, internal networks that use Web-based technology, are becoming increasingly important corporate tools. Intranets give employees organization-wide collaborative capabilities and access to human resources data such as benefits, company phone directories, business tools, and other information. They're also a good resource for managing IT assets such as PCs, LANs, and application software, and a quick, reliable way to distribute IT-related and other information to users over a single E-mail system.

Hewlett-Packard, for instance, operates a global intranet that reaches into virtually every area of the company. The Palo Alto, Calif., computer maker, which began operating its intranet in 1991, uses the network to help manage its 90,000 desktop PCs. VP and CIO Robert Walker says all HP users download new desktop applications from intranet servers, ensuring that PC configurations and software releases are uniform throughout the organization. Walker's IS department uses the network to remotely monitor Unix servers and to provide key IS updates and bulletins to users.

Other companies, such as publisher R.R. Donnelley & Sons Inc. in Chicago, use their intranets to consolidate disparate E-mail systems.

Online Training
The rush of new technology, combined with tight training budgets, is creating a training gap at many organizations. A growing number of companies are trying to close the gap by using online training, a less costly and often more convenient way to train managers and employees to work with operating systems, application software, and other IT resources.

Companies such as Lotus Development, Microsoft, Oracle, and Sun Microsystems offer customers classes over the Internet and commercial online services, and many other vendors may jump into the fray. International Data Corp., a Framingham, Mass., research firm, expects the market for online training tools and services to grow to $1.7 billion in 2000 from $92 million in 1996.

Vendors offering online training are creating an advisory board that includes training experts and 85 computer, communications, and systems-integration companies. The board will define standards for online delivery of education, says Bill Seawick, senior director of worldwide marketing at Oracle Education. Oracle's online training program went live on Dec. 5. The Microsoft Online Institute, which has a virtual campus, offers training and certification in Windows NT, Windows 95, networking technology, and other subjects.

Among the companies using or testing online training services are BT, Federal Express, Honeywell, Motorola, and Xerox. Pharmaceuticals company Bristol-Myers Squibb has hired Gartner Group Inc., a Stamford, Conn., IT advisory firm, to provide online training in SAP's R/3 client-server application suite for its employees.

Vendors are also developing intranet-based software that will let organizations create customized training programs to be offered over their internal networks. "Online training will never replace instructor-led training," says Seawick, "but it will certainly complement it."

Temporary Relief
A shortage of talented and experienced IS personnel is forcing many IS departments to hire temporary technical workers, and the trend is expected to grow this year. Companies that place temps who have high-tech expertise say certain types of workers--particularly people with skills in mainframe programming, database development, client-server, and just about anything having to do with the Internet and intranets--are in great demand.

The people shortage isn't the only reason for the rise in IT temps. "There's so much new technology being introduced, and some employers are deciding not to staff some IT positions with permanent workers because it can get very expensive to do the necessary training," says Susan Yule, a VP of the New England division of Eliassen Group, a temporary placement firm in Wakefield, Mass.

Instead, employers are bringing in hired guns to address a particular need in their IT departments until a project is completed. Some companies hire temps to help meet a short-term deadline or help out when full-time staffers are pulled away from their jobs to learn new skills, says Lance Thomas, president of Interim Technology, a high-tech placement firm in Chicago.

Yule says Eli assen Group saw its revenue increase by more than 50% from 1995 to 1996, and the company expects high growth to continue this year. The company, which has more than 300 clients nationwide, plans to open two new regional offices to meet demand.

HP CIO Walker says his company's use of IT temps reflects the IT business as a whole. "We try to hire the most skilled and experienced [IT] people full-time," he says. "But when we're not able to find people right away, we bring in temporary employees with the special expertise that we need."

Security Audits
Threats to information security continue to be a major concern at organizations, especially considering the emergence of intranets and aggressive moves to Internet-based services.

IS and security chiefs are finding that security audits--which expose weaknesses in corporate networks and detail potential financial losses from attacks--make management aware of the need for tighter security. Each of the Big Six accounting firm s offers information security services, including audits, and they are hiring more security experts in anticipation of expanded Internet-related security offerings in the coming year.

"This is a very busy area for us, and demand is going to go up, particularly with the rise in electronic commerce," says Andrew Toner, a principal consultant at Price Waterhouse LLP in New York.

Many companies do their own auditing to reduce their exposure to risk and prevent losses from security threats such as hacker attacks, viruses, and other malicious behavior. Corporate security advocates welcome the trend. "Auditors demand a [higher] level of security," making it easier to justify investment in security tools, says Dennis Saccente, manager of information security at the Human Resources Information Services subsidiary of Fiserv Inc. in Melville, N.Y. Fiserv provides payroll processing and other financial services to banks.

Audits will focus on more than just network-based vulnerabilities. Othe r security issues they will address include improving physical protection of hardware and the use of encryption software on portable computers. Theft of computers, components, peripherals, and telecommunications equipment is on the rise. Notebook computers are prime targets, with thieves often going after the data stored inside rather than the machines.

Year 2000 Solutions
While grappling with the year 2000 computer date-field prob- lem is nothing new, it will be as hot as ever in 1997--the year some experts consider to be make-or-break for implementing solutions.

Millions of lines of legacy Cobol code, most running on mainframes, must be rewritten so that systems and programs will continue the orderly sequence of date change after Dec. 31, 1999. CIOs who haven't yet planned how to deal with the problem had better figure it out--and soon.

"The next century is closing in on us, and those who don't realize the magnitude of this are going to have a major problem," say s Len Neuzil, first VP of IT at Options Clearing Corp., a Chicago clearinghouse for five major stock exchanges. Options Clearing is about 70% to 80% finished with rewriting computer code so that it is year 2000-compliant, Neuzil says.

Many organizations are nowhere near that point. A recent survey of 162 large U.S. companies by the Society for Information Management's year 2000 working group found that one-third haven't begun to deal with year 2000 compliance, and 40% plan no initiatives.

"Not all organizations will have major problems with year 2000, but for the majority, it's critical that they know exactly where they stand and have plans, schedules, and budgets in place early in 1997," says Leon Kappelman, associate professor of business computing at the University of North Texas in Dallas and co-chairman of SIM's year 2000 working group.

Help is available. Vendors are flooding the market with software, services, and consulting to help speed the conversion process. "It's an il lusion that only big mainframe users need to deal with this problem," says Kappelman. "Everything with a chip in it is on the table."

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