Editorial: July 2002

According to a new study from Gartner Inc. and Morgan Stanley, U.S. companies spent $130 billion in the past two years on unnecessary software and other technology. Worldwide, the study says, companies waste as much as 20 percent of the $2.7 trillion spent annually on technology. The problem: It’s not implemented properly, making it work takes too long, and companies often spend too quickly without clear goals in mind.

In this month’s issue, we take a look at the push by companies to get back to technology basics—making existing projects pay off before new ones are launched. In many cases, the new conservatism is leading to yet another shake-up in the role of the CIO. Miffed by overspending that reaped few measurable business results, CEOs are again redrawing the role of the CIO, kicking him or her upstairs, downstairs or out the door. Gartner Vice President Marianne Broadbent calls the movement a “devolution,” or hollowing out, of the CIO’s role as corporate focus shifts increasingly to technology that can achieve quick results for the business bottom line—and to CIOs who understand business strategy.

The spending backlash coincides with increased pressure on businesses to give customers more bang for their buck. In “The Rise of the Real-Time Consumer“, technologist Charles Grantham, this month’s Expert Voice, says one enduring result of the communications revolution is that consumers want, increasingly, far more information from the businesses they deal with—online and off. Grantham, an author and lecturer at the University of California’s Haas School of Business, says that now, people don’t want just to buy a simple hammer. Now they want their purchases to be information-rich—to be offered a tutorial on how to use that hammer along with the opportunity to enroll in free classes about how to build a deck or a set of bookcases for the family room.

Union Pacific Railroad understands the need to adapt fully to new business technology demands. In this month’s Case Study, we look at how the railroad went from a loss of $600 million four years ago as well as a technology melt-down, to an overhaul of its strategy that includes a new initiative to become the standard in logistics and supply chain management for the railroad industry and freight customers.

The lessons? In the aftermath of the dot-com bust, the goal—more than ever—is not technology for its own sake, but for that which directly serves the business. With that comes a rare opportunity for CIOs to take the lead on translating tech spending into business results that endure—and to create careers with staying power.