In fact, a new survey by InformationWeek Research indicates overall optimism for the new year. Most respondents expect IT spending to rise, their companies to grow, and the difficulty finding key IT skills to abate somewhat.

"There is huge pent-up, post-Y2K demand related to the digital economy--Web-site development, supply chains, and other E-business applications from brick-and-mortar and Internet startups," says Tom Willmott, CEO at research firm Aberdeen Group.

Indeed, InformationWeek Research's Outlook 2000 survey of 300 IT managers finds that while year 2000 fixes are becoming less of a priority--from the No. 4 technology priority in 1999 to No. 9 in the new year--IT will be plenty busy. The focus will be on E-business initiatives, and the products and technologies that support them. Web-development tools, Web server software, security products, and greater network bandwidth all rank high on the survey.

At the same time, IT executives will grapple with key business issues such as keeping up with the pace of change, retaining skilled staff members, improving customer service, simplifying business processes, and understanding and meeting customer needs. And they will do all this against the backdrop of transforming internal operations to support their new Web-related strategies.

For Bud Mathaisel, CIO at Solectron Corp., an $8 billion electronics manufacturing services company in Milpitas, Calif., the emphasis will be on aligning IT to meet new business goals and managing organizational change. Mathaisel, who joined Solectron in August from Ford Motor Co., where he was CIO, says IT departments will continue to be pressured by business units to develop and deploy more applications--and faster. This year, Mathaisel says, Solectron will begin to use accelerated application-development practices similar to those he used at Ford. Although he wouldn't elaborate on the kinds of applications Solectron will be developing, he says Ford was able to reduce application-development time from 14 months to about four months--and he hopes Solectron will see similar results.

Solectron and other companies are finding that Web-enabling applications on the front end is only half the story. This year, the more difficult challenge is to integrate them with back-end applications such as order management, data mining, and customer-relationship management, says Aberdeen Group's Willmott.

Leading-edge companies are already addressing many of these needs, but for other companies, the tasks are just beginning. E-commerce is the focus this year at Nicolet Biomedical Inc., a $100 million maker of neurological medical equipment in Madison, Wis. "We'll be taking baby steps to make some of our basic supplies available over the Web to our customers, to see what they want to buy online," says Brent Harry, the company's manager of technology. With complex medical equipment focused on a very specific niche, online buying that bypasses traditional sales channels is still an unfamiliar approach, he says.

In general, IT spending is likely to keep heading upward, Willmott says, because IT is seen as a critical tool for business transformation. Top management is rewarding IT departments with the budget to do the work.

With Y2K resources freed up, InformationWeek Research's survey shows, 62% of respondents expect their IT spending to increase this year, while only 12% expect it to decline. That's a jump in optimism from a year ago, when 54% predicted that total IT spending would rise--though it's not as high as the 65% who said two years ago that IT spending would rise. In some cases, there's new funding available, while at other companies, there's a shift in funds from Y2K budgets and into other projects. Either way, projects that were on hold last year will get some attention again.

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Illustration by Dave Plunkett