IT Gets Energized

As tech budgets edge up in 2012, IT leaders look to shift spending to new development while keeping an eagle eye on the bottom line.

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The BI focus will be to provide people with data they need from various applications, such as product quality, ERP and CRM systems, to develop a comprehensive view for company executives. "We're a growth company, so scalability and pace of growth is very important," says Leader. "We focus on what allows us to be scalable and leverage our assets, be they human or material, most effectively."

In Forrester's survey, increased use of BI and decision-support tools was the No. 2 technology priority among respondents, second only to consolidating the IT infrastructure. "BI has always been there, but it's growing in importance," Symons says. "The volume of data that organizations are capturing has increased significantly with more commerce going to the Web and social media technologies, and there's a need to take that data and translate it into information that can be used for better decision-making."

Beniwal says Daymon also plans to increase its BI investment, in the form of advanced analytics, which will build on its master data management initiative, especially in the areas of sales forecasting and supply-chain optimization and pricing.

A New Menu

For some companies, making these investments will require further reducing hardware and infrastructure costs, and to do that, some will likely use 2012 to consider new sourcing options. For instance, Daymon has already centralized some of its business processes and moved them to a new location in Kansas, using internal staff. It is also looking into hosted services, or the cloud, for non-data-intensive functions, such as project management and collaboration, as well as for systems that run out of the box, such as SQL Server.

"There is some data we can't take to the public cloud, such as information from our partners, so we'll start with private and slowly see which we'll take to the public cloud," Beniwal says.

"Cloud, SaaS and alternative sourcing models will become more mainstream in the years to come," Symons agrees. Over time, he sees CIOs increasingly becoming solution brokers or service orchestrators. "You've got a wide menu of alternative sourcing options today," he says. "CIOs need to become sourcing-agnostic -- for any business need, they should ask, 'What's the best way to fill that need?' It's only the really large organizations that have the scale where it might still make sense to host your own infrastructure."

While SaaS will remain a small percentage of overall IT expenditures next year, it will grow as a percentage of total IT operating expenditures, according to the Corporate Executive Board survey. SaaS will increase from 2% of the budget in 2011 to 2.6% in 2012. Meanwhile, infrastructure as a service will grow from 2.7% to 3.1%, and platform as a service will grow from 0.6% to 0.8%.

Still, Leader and some other CIOs say they will mainly continue with their traditional IT infrastructures with only small forays into the cloud. "There's nothing I've seen so far that tells me the cloud is more cost-effective," he says. "I'm cloud-weary and grizzled enough to see the hype cycle."

As expectations for IT delivery grow, challenges loom for IT organizations in 2012. "There is an enormous diversity of projects," Shah says. "Three years ago, there were maybe three or four flavors in the IT budget, but this year, it's more like Ben & Jerry's, with lots of flavors. And with that tremendous diversity comes a more complex portfolio, so it's driving IT folks to distraction as they struggle to keep up with the vaster scope."

This struggle is particularly apparent in healthcare, where organizations with flat budgets are called upon to balance regulatory mandates, new clinical and patient safety standards, government incentives for use of electronic health records (EHR), demands for efficiency improvements and other strategic initiatives.

"Within healthcare, reducing costs is a common theme," says Sue Schade, vice president and CIO at Brigham and Women's Hospital in Boston, who expects to see a slight increase in her budget in 2012. "At the same time, you can talk to any healthcare CIO in the country, and they'll tell you they're working on [Meaningful Use] and ICD-10," a new coding scheme for providing health services, as well as other new initiatives.

At Brigham and Women's, the IT organization is transitioning to voice over IP, extending its core applications to remote workers and improving desktop performance. The goal is to reduce costs, boost usability, integrate patient data and improve overall effectiveness. "As healthcare organizations become accountable care organizations under health reform, we cannot afford to have disparate clinical systems, and we need to do a better job of providing a seamless experience for patients and clinicians as they move through our various care locations," Schade says.

Clearly, while modest technology spending will likely characterize 2012, the focus will be on IT delivering competitive advantage and not suffering Draconian cost cuts. "There's a higher level of expectation on the IT organization," Guibord says. "We're getting to the point where the business is expecting them to come up with more elaborate ideas than in the past. Rather than cutting costs in IT, they are investing in IT so they can reduce costs in other places, improve the business and create competitive advantage."

Brandel is a Computerworld contributing writer. You can contact her at

Next: Juggling IT's social media roles

Copyright © 2011 IDG Communications, Inc.

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