Outlook 2006: Confidence Is Up, Barely - InformationWeek

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Software // Enterprise Applications

Outlook 2006: Confidence Is Up, Barely

Businesses have ambitious tech projects planned for the months ahead. But many IT departments will have to pull them off with limited resources and flat budgets.

As business technologists arrive at work in the first days of 2006, there's an elevated sense of confidence about the months ahead, a feeling that business conditions generally bode well for IT projects on the drawing boards. But it's a cautious optimism that prevails, so modest in measure that it barely qualifies as optimism at all.

Motorcars International's investment in IT for 2006 is going

Motorcars International's investment in IT for 2006 is going "way, way up," IT director Comrie says.

Photo by Matthew Mahon
InformationWeek Research's Outlook 2006 survey, completed in December by 300 business-technology managers, reveals that salary increases, new hires, and bigger budgets are in store for some IT departments. But they're the lucky ones. Overall, the outlook is a continuation of the do-more-with-less theme that characterized 2005: managing many projects with limited resources amid high expectations. The top business priorities identified by InformationWeek readers sum up the atmosphere. The most-frequently cited is optimizing business processes, mentioned by 67% of survey respondents, followed by reducing the cost of IT operations, cited by 63%. In other words, efficiency and penny pinching are top of mind. The other top five priorities are updating security (62%), supporting real-time business information (59%), and boosting productivity (56%).

Those are the objectives, but what's the mood? InformationWeek's IT Confidence Index rose a mere 1.9% since we last measured it three months ago. That's the smallest quarterly increase in the five-year history of our index, which is a gauge of IT budgets, plans for technology projects, and business outlook. It's also 8.8% lower than where the index stood 12 months ago. At least the index stayed positive; it has plummeted by more than 10% a half-dozen times in five years.

IT professionals want to believe that economic trends are working in their favor. Forty-six percent of respondents have a positive outlook about the U.S. economy for the next three months, while 35% are neutral and 19% negative. Optimism may out- rank negativity, but respondents are less confident about the economy than they were a year ago, when 52% had a positive outlook for the first quarter of 2005.

IT spending is expected to increase at 46% of companies, by an average of 19%. Apparently, these are companies that need to do some serious investment in IT infrastructure or that need to accommodate growth or expansion. The top technology priori- ties heading into 2006 are Windows XP, cited by 73% of respondents, PCs (71%), and Windows servers (65%). Other high-priority items include network and systems management (56%), portals (53%), and storage area networks (50%).

Midnight Calls
Motorcars International AG, a Dallas dealer of high-end cars, is deploying a 3Com Corp. voice-over-IP system to better support its worldwide clientele. It's not unusual for the car dealer to get a phone call or E-mail at 2 a.m. from a wealthy Japanese customer love-struck by one of the $250,000, handmade Lamborghinis featured on its Web site. If a Motorcars International salesperson doesn't respond quickly, that big-ticket sale could go to one of the handful of other Lamborghini dealerships around the world.

Budget PerspectiveTo make sure that doesn't happen, the company is rolling out a VoIP system with five levels of technology-based safety nets, including unified messaging that can wake up sales managers--and even the company's IT director--at home. After all, some overseas sports-car aficionado might have his heart set on a sleek, very-limited-edition, $500,000 Saleen S-7.

"We want to close these deals before someone else gets them," says Ken Comrie, IT director of Motorcars International, which sold more than $2 billion in cars last year at its six dealerships, which also sell pre-owned Ferraris.

Motorcars International has plenty of company in wanting to improve customer service; 54% of the survey respondents say improving customer service is a business priority for the year ahead. It's worth noting, however, that customer service dropped in the overall ranking of business priorities, from third in our survey a year ago to seventh place in Outlook 2006. One explanation is that businesses are aiming for the same result in other ways. For example, better data security would be perceived by most customers as an overall improvement in the service they get. The other, more pessimistic, assessment is that attention to improving customer service has slipped relative to other concerns.

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