Future of IT: StrategyBy CIOinsight | Posted 12-14-2007
Future of IT: Strategy
Companies Slip Into Slowdown Mode
Spending on services, projects will be hit first; staff spending to follow at large companies. Economic worries, big budgets and suspicion about excessive IT spending will compel CIOs at many large companies to tighten their belts. Smaller companies are less concerned about IT costs and more optimistic about the economy and their own prospects. But if, as reported, banks have begun to hold back on extending credit to businesses, weaker companies will be forced to reduce costs too.
What will cash-strapped CIOs do? They will pressure IT vendors to drop costs by renegotiating contracts while threatening to reduce the number of approved suppliers. They will cut back on IT serviceswhich means insourcing will riseand projects unlikely to provide ROI. Many will review how costs and projects are managed inside their companies and IT organizations. Investments in technologies that help reduce costs, such as virtualization and business intelligence, will continue. Small and midsize companies will attempt to hold on to their IT staffs, despite their concerns about potential cutbacks. Only about a third of small and midsize companies contract with offshore IT outsourcers; two-thirds outsource domestically but say they save less money than hoped. Job losses are much more likely at larger companies. Larger firms are saving money by offshoring and using high salaries and bonuses to attract top IT talent, though not necessarily for the long term. Such companies will be quicker to cut payrolls and perks. Managing layoff fears is a task CIOs must focus on in 2008.
Next page: IT Focuses on E-Service...
IT Focuses on E
IT Focuses on E-Service...
Companies will strive to do an even better job of using the Web for customer service. IT executives are split on whether investments in Web-based customer service will significantly improve customer satisfaction. That's troublesome, because delivering better customer service is one of IT's top priorities. Good service is critical for retaining existing customersespecially important when the economy slows down, given the burden of acquiring new customers. And if high gas prices drive more consumers to buy online, Web site snafus can cost even more business. Expect to see IT organizations put more time and effort into improving customer service, especially over the Web. This will ensure that content management, data integration and tools that analyze data on Web site performance and interaction with customers will receive plenty of attention.
Next page: ...and Prepares for M-Commerce
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...and Prepares for M-Commerce">
...and Prepares for M-Commerce
Ubiquitous smart phones in the hands of time-pressed customers are too big an opportunity to ignore. The most desirable consumerson-the-go tech-savvy GenX consumers, well-to-do professionals and time-pressed working parentscarry with them wireless PDAs and cell phones that have the potential of making online shopping and service more convenient. IT will team up with their sales and marketing departments to figure out how to get customers to securely shop and bank while on the go, lest they lose sales and transaction fees to competitors.
Future of IT: Strategy - 4
Process Improvement Drives Technology Adoption">
Process Improvement Drives Technology Adoption
Modeling and managing processes with IT is the new nirvana. As in 2007, process improvement will be a top IT priority in 2008but due to the business climate it will more likely focus on improving productivity and service and reducing costs than on processes that add directly to revenues. Process and productivity improvement will drive much of the investment in new and emerging technologies in the near future. In particular, CIOs put great stock in business process modeling and management applications, the technology area CIOs ranked No. 1 when asked to name the most important technological developments five to 10 years from now, as well as the "technology most likely to provide business value" today. They hope it will enable companies to adjust or create complex, IT-dependent processes much more quickly and let them reap the benefits that much sooner.
Next page: The World Gets Flatter
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The World Gets Flatter">
The World Gets Flatter
Strong foreign economies and technical workforces present opportunities for growth, savings and technology. While low-cost foreign labor will continue to entice large American companies to offshore technical work, fast-growing economies in Asia, Russia and Latin America also present business opportunities. Many companies see a cheaper dollar opportunity as an incentive to do more business outside U.S. borders, selling to nouveau-middle-class consumers and fast-growing businesses in former developing nations. Indian, Chinese and Russian high-tech firmsoften led by American-educated MBAs and engineerswill penetrate the U.S. technology market. The IT world will continue to be a more multicultural world.