Editorial: January 2003

Ford Motor Co. has a problem. It’s not selling enough cars and trucks to turn a profit. And designing and producing the cars and trucks it does sell costs too much money. Part of the problem stems from the company’s abortive efforts to join the e-business bandwagon, as profiled in this month’s case study. The vision: Internet-connected cars built with parts purchased on B-to-B exchanges and sold on the Web. The reality: a retreat on virtually all these fronts, and a new concentration on cost-cutting and rationalizing IT through insourcing. Says Ford CIO Marv Adams: “We’ve recognized that the highest return on investment comes from technology that is deeply integrated into the core operating systems, practices and processes of the company.”

A somewhat different cost-cutting tactic is on display in our story on the new skunk works. The original notion of skunk works involved experimental units set up and funded for the express purpose of carrying on research in high-risk technologies without a strong likelihood that they would make it to the market any time soon. In a trend diametrically opposed to the old notion, companies are setting up small information technology testing labs for the purpose of meeting specific—and often pressing—business needs. In these labs, corporate business and technology managers work together to create, design and test IT solutions to business problems—and they don’t leave the lab unless they can be proven, in pilot, to save money and increase productivity for the company at large. While it might require spending a little money to save a little, these new proving grounds, at companies like Bell Canada, Webcor Builders and Yellow Corp., are netting real payoffs.

Both stories illustrate vividly the results of this month’s CIO Insight research, on IT spending: Spending will be down, if slightly, in 2003. Our respondents, all of them top IT executives, say they will continue to be deeply concerned with cost-saving and productivity measures this year. Of note is the fact that CIOs at larger companies tend to be more pessimistic about their firms’ prospects next year, and about the economy as a whole, than their brethren at smaller firms. This confirms a trend observed by other commentators on the economy and business—that small-company executives appear to be more optimistic because their ears are closer to the ground, to their markets and their customers. And the news they’re hearing is sounding better. Let’s hope they’re right.

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