The first year of any CIO's job can be challenging, but Kevin Kern's initiation at Computer Associates was nothing short of turbulent. As Kern enters his second year, he sees things calming down.

Kern has been part of a complete corporate makeover the company has been implementing in the wake of a lengthy government investigation into its accounting practices. Over the past 18 months, CA got a new chairman, president and chief executive, and CFO, along with Kern, who joined the company in March 2004. A significant portion of Kern's effort has been in implementing what he refers to as a "business transformation" of the company that has included revamping its IT platform.

"We do want to have better financial integrity, but the result of this transformation will be that IT will be significantly simplified," he says.

INSIDE INFORMATION TECHNOLOGY Average portion of 2005 revenue spent on IT 3.5% Companies spending more on IT this year than last 58% Buying directly from foreign suppliers 55% Centralizing control of IT operations in past 12 months 64% Bringing outsourced functions in-house in past 12 months 12%

Kern moved CA from a hodgepodge of applications, accumulated during 20 years of developing homegrown applications and integrating apps from numerous mergers and acquisitions, to a companywide SAP enterprise-resource-planning platform. As part of that effort, he rebuilt his IT team, dismissing about 100 workers and hiring 50 workers with SAP expertise. Kern was able to reduce IT costs by 15% compared with last year, and he will look to keep cutting the IT budget by 5% to 7% annually.

Intel hasn't gone through a management overhaul or a criminal probe, but its IT team has been engaged in an improvement program that last year let it reduce IT costs by 15%, despite an increase in the number of employees needing IT support and services from 80,000 to 91,000, says Marty Menard, director of platform capability in Intel's information services and technology group.

"Our focus is to make IT a competitive capability for Intel," Menard says. One program expanded communication with the creation of an official instant-messaging system. Intel has about 110,000 mailboxes within the company and handles about 4 million E-mails every day, Menard says. IM can be used instead of E-mails in many cases, can be deployed at less cost than E-mail, and doesn't need internal storage resources.

To date, about 50,000 Intel employees have IM. "If IT shops aren't proactive on IM, it will all be underground," Menard says. "Individual employees will be bringing in their own IM applications and loading them on their system, which will cause problems."

Ken LeBlanc, senior director of IT business operation and portfolio management for EMC Corp., says the internal focus for IT in the past several years has been "building trust and respect within the organization so that we move from business alignment to business partnership."

Part of the effort has been helping to integrate the IT functions of companies that EMC recently acquired, such as information-life-cycle-management specialist Legato Systems and virtualization software company VMware. "As a CIO or purchasing agent, you want to continue to do business, but you expect your experience to improve as a result of those mergers and acquisitions," LeBlanc says. "You want to receive one bill and not three separate invoices."

	I.T. BUDGET BREAKDOWN Hardware purchases IT services or outsourcing Research and development 20% 10% 7% Salaries and benefits Applications Everything else 34% 19% 10% Data: InformationWeek Research

Illustration By Paul Watson

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	INFORMATION TECHNOLOGY * ACS (Affiliated Computer Services Inc.)   Acxiom Corp.   Black Box Corp.   BMC Software Inc.   CGI Group Inc.   CMC Americas Inc.   CompuCom Systems Inc.   Computer Associates International Inc.   Compuware Corp.   Dell Inc.   Elite, a Thomson business * EMC Corp.   Gedas USA   Getronics   Hyperion Solutions Corp. * Intel Corp.   International Business Machines Corp.   Microsoft Corp.   NEC Solutions Inc.   Parametric Technology Corp.   PC Connection Inc. * Perot Systems Corp.   Quixtar Inc.   SAP America Inc. * SAS Institute Inc.   Science Application International Corp.   Siemens Business Services Inc.   Sun Microsystems Inc.   Sungard Data System Inc. * Sybase Inc. * 3Com Corp. * The Harris Corp.   Unisys Corp.   Western Digital Corp. * denotes a top 100 company