Outlook 2005: A Strong Foundation - InformationWeek

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12/29/2004
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Outlook 2005: A Strong Foundation

Companies will make the most of IT investments, aiming to boost information access, collaboration, and revenue.

OUTLOOK 2005If you've got it, flaunt it. And business-technology leaders have plenty of enterprise software, infrastructure, and networking bandwidth to flaunt, which is why 2005 is shaping up to be a year to leverage existing systems to gain a competitive edge.

Ogilvy and Mather Worldwide, the international ad agency, will invest heavily this year to tie together diverse global systems that manage purchasing rights of intellectual property, as well as production, postproduction, and video media, among other types of data. CIO and senior partner Atefeh Riazi characterizes 2005 as the year of middleware. Success will be spurred by linking systems and enhancing tools that let employees gain quick access to information they need. "We already invested in the infrastructure, the basic enterprise systems," Riazi says. "Where's my edge? It's quicker, better access to information that's accurate."

'We can't work in silos anymore,' Ogilvy and Mather CIO Atefeh Riazi says. Photo by Stan Kaady

"We can't work in silos anymore," Ogilvy and Mather CIO Atefeh Riazi says.

Photo by Stan Kaady
Long gone are the days of uncensored, massive IT investments in revolutionary business technologies that led to system sprawl without regard to how software and processes would interact across the company or the Internet. The downturn may have gotten IT spending under control, but as the economy improved, there hasn't been a corresponding jump in IT budgets. According to InformationWeek Research's Outlook for 2005 survey of 300 business-technology managers, part of our quarterly Priorities research series, IT spending at companies, as a percentage of revenue, is expected to be 8% in 2005. That's down 0.3 of a percentage point and the lowest since InformationWeek Research first asked about it in 2001.

The drop may be the result of a few factors. One thing that could be playing a role is that companies have put in place stringent frameworks to analyze projects for their impact on and value to the business. Nearly 60% of respondents say they have structures to assess the business risks of IT initiatives, and 74% say that senior IT and business executives are strongly aligned about IT spending priorities.

That all adds up to companies making sure they're wringing the maximum business value out of every investment. Sixty-three percent of respondents report they want better return on their IT capital investments, and even larger numbers say they're aiming at specific goals that generally require optimizing those assets, from organizing customer data (70%) to establishing processes that support real-time business (71%) to collaborating more with customers (67%). "There's a brand-new emphasis of the financial management of IT," says Tom Bugnitz, president of the Beta Group, an IT advisory firm. "CIOs are using the stuff already in place. They aren't inventing new stuff."


Maritz leverages its technology across multiple customers, CIO Gil Hoffman says. Photo by Bob Stefko

Maritz leverages its technology across multiple customers, CIO Gil Hoffman says.

Photo by Bob Stefko
Maritz Inc., a company with yearly sales of some $1.3 billion that provides employee-incentive programs, employee training, travel services, and customer-satisfaction market research, exemplifies the latest trends. Business-unit information officers cross over disciplines to promote collaboration--for instance, the manager charged with tech development of incentive products also directs travel programs. These overlaps in responsibilities encourage Maritz to employ the same technology across systems and businesses. Business and IT managers must present a business case to justify investment in a new system, and, CIO Gil Hoffman says, "we want to ensure we can leverage the technology over multiple customers." Those business plans will be reviewed quarterly, as well.

The focus this year will be helping clients, who access Maritz's various self-administered systems through an Internet portal, to exploit that existing technology. Hoffman's plan is to tie together data from a number of internal systems based on Microsoft's .Net environment and SQL Server database, and create diagnostic tools using software from Business Objects SA and Unica Corp. that customers can then access through the portal to mine data to suit their needs. For instance, clients could use the system to analyze the relationship between employee-performance and customer-satisfaction data.

The new tools may drive additional revenue opportunities for Maritz, too. For instance, if a Maritz customer discovers that the source of its own clients' dissatisfaction lies in their relationships with its employees, the company could enroll staff members in a Web-based training program Maritz offers and provide rewards to those workers through a Maritz-managed incentives program, which can be managed online, too. The reward could be a trip, which can be scheduled through another Maritz system.

Spending Aligned, pie chartTo do the work, Maritz will increase the size of its IT staff by 15% to 20%, mostly hiring application developers and project managers who know Microsoft's .Net technology, Hoffman says.

At Ogilvy and Mather, the focus is on improving support for globalization efforts, a top business goal for nearly half of the managers surveyed by InformationWeek Research. The agency, with offices worldwide, uses IT to bring together the work of far-flung employees who create images and words for advertising in traditional and new media. Ogilvy and Mather uses IBM's digital-asset-management system to manage intellectual property and Xinet Inc.'s workflow solutions for artwork; IBM's WebSphere middleware software is the key to linking disparate systems. "We can't work in silos anymore," Riazi says. "A looseness exists in today's organization; you have long virtual hallways with people no longer sitting down the hall from you."

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