Preliminary results from a membership survey by the Corporate Executive Board corroborate the finding that budgets will grow only slightly next year, partly because of the anemic recovery and partly as a balance to the catch-up spending this year. In 2012, growth in operating expenditures is forecast at 2.9% among the 178 survey respondents, all large firms with more than $1 billion in revenue. This is in stark contrast to an increase of 10% this year, Shah says. "There was a pent-up demand for IT, and now spending is returning to modest levels," he says.
The 'I' in IT
Joe Eng, CIO at JetBlue Airways, agrees that the tumultuous economic situation will cause companies to invest cautiously in IT. Companies such as JetBlue "will be conservative, building up cash balances and riding out the lack of certainty in the world markets," he says. "In the last couple of years, [JetBlue] made significant investments in technology, so we're now harvesting the benefits of those investments."
And when companies do spend on technology next year, those expenditures will be geared around projects that promise to grow revenues, increase productivity and produce short-term return on investment, Eng says. Shah agrees that the dollars will go toward information-driven projects, or what he calls the "I" in IT.
This includes customer-facing systems such as social media, marketing and Web applications; business intelligence (BI) and analytics; and collaboration and knowledge-sharing capabilities. As a group, these technologies will represent almost 36% of the project budget, in contrast with process automation systems, such as ERP and CRM, which will still represent about 33% of the budget.
In the airline business, for instance, a major focus will be around the digital experience offered to customers, including continuing to extend brands to social media channels such as Facebook and Twitter. "[JetBlue wants] to harness the relationship with the customer on an ongoing basis to increase customer loyalty and improve the customer experience," Eng says.
Guibord sees companies combining social media and predictive analytics to provide customers with more personalized experiences. "The Internet has changed everything -- we want it now, and we want it our way, and companies need to think about that in every service they create and infrastructure they build," he says.
This is often referred to as the "Sunday night/Monday morning syndrome," where people have grown to expect the same simplicity, functionality and personalization from all of their digital encounters as they get from using Google, Amazon and other popular websites. "Customers want personalized, specialized types of experiences, and companies are willing to spend money on that because it directly correlates to increased revenue and market share," Guibord adds.
These investments will extend to mobile channels as well. In the Computerworld Forecast survey, mobile projects were among the top three leading-edge projects that IT organizations are working on. "Customers all have smartphones and are always online, so there will be investments in that area," Eng says. And at Daymon, Beniwal says the company is increasingly looking to mobile devices, both to reduce costs and to increase its frontline insights into customer preferences.
For example, one of the services it provides to retailers is handing out free samples in stores, such as food items at major retailers. It plans to use mobile devices, most likely tablets, for some of the 15,000 employees who perform this service in seven countries, for both time tracking and recording of customer feedback on the samples. "In the past, we'd have to buy specialized devices, which were cost-prohibitive," Beniwal says. "Now, we can pay $300 to $400 for an Android or iPad. All these innovative devices are enabling people to do what they hadn't thought of before."
A BI Focus
Jay Leader, CIO at iRobot, similarly foresees a relatively tight budget for next year, especially compared with last year, when the company had a more aggressive outlook on the economy. In the past year, IT worked on upgrading and stabilizing the company's core business platforms, including moving to Oracle Release 12, expanding its ERP capability and working on product life-cycle management. In the past couple of years, it also fully virtualized its data center.
Now, Leader says, technology investments will be concentrated on BI and collaboration -- two areas that support iRobot's status as a growth company. "The nature of the work we do is: when brilliant people come together, magic happens. So we're working to put them together on a collaboration platform," he says. The company is working on a preliminary Microsoft SharePoint implementation, which it will expand in the coming year.