IT Must Create Products, Not Just Cut Costs - InformationWeek
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3/2/2011
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Chris Murphy
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IT Must Create Products, Not Just Cut Costs

Our Global CIO Survey reveals IT at the core of new products, business models, and innovation strategies. How does your organization stack up?

Collaboration Imperative

Of 14 project initiatives we asked about, two of them--increased server virtualization and improved information security--are far along the adoption curve, as at least 40% have major implementations in those technology areas and more than 25% plan a major initiative around one or the other this year.

A third major area, improving employee collaboration, shows huge interest, but it's much more a work in progress. Only 26% of survey respondents have a major project completed around collaboration, while 45% plan a major implementation this year, the highest percentage among our 14 categories. Asked to name just one priority that's the main opportunity for CIOs today, 18% choose increasing productivity through collaboration, a notable increase from 10% a year ago.

At Maple Leaf Foods, a $5 billion-a-year maker of branded food products, from bread to meat, the need for better collaboration spurred the company to do a massive PC refresh. A Microsoft shop, it upgraded to Windows 7, upgraded Office and SharePoint, and added OCS, including instant messaging and video capabilities. Eight months ago, Maple Leaf didn't have IM; today, employees dash off 400,000 IMs a month.

Another high priority for companies is upgrading desktop software or hardware--37% of survey respondents have plans for that next year, the second-highest priority for next year after collaboration. There might be some connection, as companies sometimes upgrade their PCs to improve the collaboration experience, as Maple Leaf Foods did. Or it might be nothing more than companies having to catch up after skimping on PC replacements during the past two years' recession.

Video apparently isn't a high priority when it comes to collaboration. Many companies have deployed videoconferencing--37% of survey respondents, fourth highest among the categories we presented. But only 12% plan a major implementation next year, the lowest of any technology, even though videoconferencing's supposed to be an emerging growth area. Compare that finding with ERP, for which 16% of respondents are planning a project next year. It's possible that many companies saw the need for videoconferencing and quickly embraced it, or they just don't see the need.

In terms of infrastructure, 32% of respondents plan to consolidate or cut their number of applications next year; 22% are re-architecting their data centers; and 25% have a major re-architected data center in place. That's a lot of change--more than half have reworked their data centers recently. Twenty-three percent expect to use more software as a service next year.

Put Maple Leaf Foods down in the consolidating apps camp, as it continues a four-year project to go from 30-plus ERP systems down to one instance of SAP. Yet Maple Leaf CIO Jeffrey Hutchinson isn't looking at this as a back-office, cost-cutting IT project. Business unit group presidents are expected to attend the company's weekly sponsor meetings about the project, and the entire company's united around using the SAP data to drive growth and process improvements. And it's doing so with "probably the most vanilla version of SAP you've ever seen," Hutchinson says. The CEO, in fact, must approve any significant modifications from the standard version.

Hutchinson cites several benefits of the transformation effort. It will allow for shared services in functions such as accounts payable, HR, and IS support. It will make it feasible to do data analytics, dashboards, and mobile links that today, with more than 30 ERP systems, are nearly impossible, since they would draw on so many data sources. Perhaps most important, Maple Leaf will let business units live with the basic system, and only then come back and add the features that are truly unique and valuable to their operations. "We didn't want to jam it down their throats," Hutchinson says.

survey chart: What are the primary ways your company plans to innovate?

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