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August 23, 1999

More On The Edge

Companies are more aggressive than ever before in adopting and deploying leading-edge technology. The reason: fear of being left behind.

By Rick Whiting and Beth Davis

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t CUNA Mutual Group, a shift is under way regarding the company's willingness to adopt leading-edge technologies. CUNA Mutual, which provides financial services and insurance to credit unions and their 40 million members and manages $7.6 billion in assets, is about to go online with an object-oriented database that tracks customer information scattered across a wide range of data sources. The database, from Objectivity Inc., should let CUNA (Credit Union National Association) Mutual keep better track of customer records and provide salespeople with more information for cross-selling of services.

Object-oriented technology was considered "bleeding-edge" by executives at the Madison, Wis., company when it began to investigate data-management approaches two years ago. But object technology held the promise of opening data flow in a way that didn't otherwise seem possible. "It was quite a substantial departure for us," says Bob Ferderer, information and technology VP at CUNA Mutual. "We're pretty conservative. But that's changing."

Many companies are undergoing a similar transformation. In an InformationWeek Research survey of 300 IT managers conducted last month, almost half the respondents said their organizations had become more aggressive in the last 18 months toward adopting and deploying leading-edge information technologies, such as customer-relationship management and supply-chain software, electronic-commerce and enterprise portal systems, Java applications, knowledge management, and storage area networks.

Why the change? Topping the list of reasons are company efforts to boost profitability and return on investment, changing attitudes among senior management, and keeping up with rapid changes in technology, according to the survey. Other drivers include evolving business models, competitive pressures, and efforts to improve customer relationships or move into new markets.

For most companies, it's a combination of reasons. CUNA Mutual, for example, has concerns beyond improving sales and customer relationships. The company also wants to make sure it's equipped to compete in the era of electronic business. "Global technology changes are providing business opportunities and challenges that require us to make decisions faster and adopt new technologies more quickly," Ferderer says.

bar chart Companies that have been conservative regarding the adoption of leading-edge technologies appear to be under the most pressure to change. The survey grouped respondents into three categories-- leaders, average adopters, and laggards--based on responses regarding their adoption of and reliance on new technologies. Leaders, those that had implemented most of the leading-edge technologies on a list of 11, represented 22% of respondents; average adopters--more than half of respondents--had implemented few to several from the list (see chart, right).

About a quarter of the companies surveyed fell into the laggards group because they had adopted few or no leading-edge technologies. Still, even the laggards are undergoing transition--60% report that their companies have become more tolerant of leading-edge technologies within the past 18 months.

Adaptec Inc. is one of them. "In the past, we've been conservative," says Dolores Marciel, corporate procurement VP at Adaptec, which makes input/output components for computing systems. "We were a high-tech company with low-tech business processes." However, the need to remain competitive prompted Adaptec to implement an automated supply-chain management system. The market for such software is still young, and implementation requires a considerable investment--hundreds of thousands of dollars per application, in some cases.

In 1997, Adaptec realized that it faced a dilemma. The company relied on outside suppliers to provide semiconductors used in its products, which eliminated manufacturing costs associated with chip development. But Adaptec faced a competitive disadvantage by not having complete control of its supply chain: Competitors that made their chips had greater control over their supply chains and could potentially beat Adaptec to market.

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