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9/8/2010
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InformationWeek 500: IT Companies Lead The Way With Web Technologies

They're showing their customers the way with software as a service, wikis, blogs, and social networking.

Among the InformationWeek 500, companies in the IT sector lead the way in their use of Web technologies. Software as a service is used by 94% of them, compared with 75% across all industries. Some 88% of InformationWeek 500 companies are using wikis, blogs, and social networking for external collaboration, compared with 72% for the entire population. The trend continues for cloud computing (66% vs. 50%), hosted collaborative apps (62% vs. 55%), mashups (60% vs. 48%), and platform as a service (46% vs. 17%).

"Tech firms look to use themselves as case studies on how to help their customers move forward," says Zeus Kerravala, distinguished research fellow at the Yankee Group. "If they're not going to lead the industry, who will?"

Hewlett-Packard spent three years and about $1.7 billion overhauling its internal IT operations. The centerpiece of that effort was the consolidation of more than 85 internal data centers of 5,000 square feet or more, plus another 400 smaller facilities, to six energy-efficient data centers.

The transformation not only gave HP "a very high-performance, reliable, and available platform," says executive VP and CIO Randy Mott, but it also cut IT costs and let HP's IT organization deliver innovation faster. And, of course, it positioned the company "to highlight the HP portfolio of products to our customers," he says.

IT companies are also ahead of the broader InformationWeek 500 when it comes to using certain technologies to boost productivity. These include: new types of collaboration software (66% vs. 59%), business intelligence tools (58% vs. 53%), and unified communications (44% vs. 30%).

Within BI, investments in predictive analytics help IT vendors to better manage their inventory and supply chains, Kerravala says. "No vendor wants to get caught holding inventory, but you don't want product delays either," he says. "It creates quite a conundrum."

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IT companies in the InformationWeek 500 also are relatively advanced in their global IT strategies. A much larger percentage of them report expanding their IT operations and hiring outside of the U.S. (78% vs. 37%), making global support and development part of most IT workers' regular jobs (68% vs. 49%), and integrating IT workers with global business operations (60% vs. 44%). However, only half of the IT vendors we surveyed are doing offshore IT outsourcing, compared with 58% for all industries.

CIOs in IT companies are bullish when it comes to their IT budgets. Fifty-nine percent of them expect to spend more on IT this year than they did last year. Only 10% expect their IT budgets to decline this year, compared with 20% in all industries.

As with the broader InformationWeek 500, the higher IT spending can be attributed in part to the need to do upgrades that were postponed during the recession. "Y2K was the last time we saw a big upgrade cycle," Kerravala says. "I'd expect the age of equipment alone to drive spending."


Industry Snapshot: Information Technology

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