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September 27, 1999

InformationWeek 500
IT Excellence

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On average, businesses had completed revisions and testing of 91% of the computer code that needed to be fixed by spring, up sharply from last year's 67%. Many have since completed their work. Last year, companies devoted an average 10% of their IT budgets to Y2K work; this year it's down to 7%.

As companies wrap up Y2K work, they're redirecting funds to a variety of other projects. Nearly half of IT executives say the majority of the money will go toward E-business applications. Others, though far fewer, say funds will go toward ERP, general business funds, CRM, building custom applications, and data mining.

Metropolitan Life Insurance Co. in New York is using some of its freed-up Y2K money for new application development, for E-commerce initiatives, and to prepare for its changeover to a publicly traded company. But Mike Ehrenzweig, VP of IT services, policy, and planning at the $27.1 billion insurer, says that even companies that have completed testing of computer code aren't really finished. Met Life completed testing by the end of June; it's now making sure plans are in place in case its business partners aren't ready, and to handle logistical problems or delays that may occur. "We got our act together; now our partners have to," says Ehrenzweig. "We want to be ready for any and all eventualities. We're not ready to relax--and we won't, at least through the first quarter of next year."

pie chart While IT executives view E-business as a huge opportunity, they say it's an equally big challenge.

In fact, managers put implementing E-business strategies at the top of the list of organizational challenges facing IT management teams this year. Other organizational challenges include keeping up with the pace of change, providing adequate support to end users, managing growth, integrating with business departments, negotiating favorable purchase and support agreements, and managing relationships with multiple vendors.

Managers also cite a number of challenges related to the ongoing shortage of skilled IT workers: retaining staff, increasing staff productivity, attracting new employees, and training. Even companies that are among the most innovative implementors of IT are struggling to find and keep talented people.

bar chart "That's been a very difficult issue, made even worse in recent years by the year 2000 problem," says Saenz of Wackenhut. He says his company has managed to keep its IT staff turnover at 5% or less. It did that by forming a strong partnership with senior executives in the human-resources department, instituting a bonus program that regularly rewards IT staffers for reaching milestones on projects, and creating a positive working environment.

"If people are happy doing what they're doing, they won't look for another job," Saenz says. "We keep people informed and get together every month to tell everyone about presentations we've made to the board of directors about IT, and to let them know what's going on with the company." It works both ways. Saenz also updates the board on efforts to keep IT staff turnover low, an indication, he says, of how important the issue is to the company's leaders and shareholders.

Alaska Airlines finds itself short of IT people, but that's at least partly because the airline is, by its own admission, "particular" about who it hires. "We need people who aren't just interested in and knowledgeable about technology, but who know how to solve problems specific to the airline industry," Reeder says. "Not everyone wants to do that." The company is ramping up training programs to help develop skills from within the organization, while focusing on retaining the employees it has.

bar chart As the competition for talented technology professionals rises, many InformationWeek 500 companies are boosting efforts to lure people with the skills they need--and retain them once they hire them. Three-quarters are using the Internet as a tool for collecting resum�s, up sharply from 57% last year; and about half are offering equity in their companies, up from 37% in 1998. In addition, more businesses are offering flexible hours, career opportunities, extensive training, signing bonuses, work-at-home programs, and online training or distance learning.

As if rising to the demands of E-business while struggling to find and keep staff weren't enough, there's a long list of other challenges cited by InformationWeek 500 companies. Staying innovative is one, sometimes made harder by budget limitations that keep IT departments from launching new projects. IT managers say they're also challenged by having to move traditional business processes to the Internet, a lack of IT savvy among senior business managers, and, to a lesser extent, mergers and acquisitions and unforeseen changes in market demand.

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