Ready, set ... CIOs prepare to spend when the economy improves

CIOs are using the economic lull to figure out what investments they'll make when the economy picks up.

Even in the economic doldrums, CIOs are planning for better days. "We know we can't do it now, but we can plan now so when things get better we're ready to go," says Tony Romero, CIO at Mitsubishi Motor Sales of America Inc. in Cypress, Calif. "If you wait for things to get better, it can take you a year to plan, and you've wasted a year."

The plans that CIOs are drawing up focus on wireless technologies, Web portals, CRM, ERP, infrastructure improvements, skills upgrades and industry-specific business projects. Projects to upgrade security and meet regulatory requirements, which have gone forward despite the economy, will continue to be high priorities as well.

Better days may not be far off, says Barbara Gomolski, who tracks IT spending at Gartner Inc. "We're starting to see some signs of recovery," she says. "There's a lot of pent-up demand." She expects to see some growth in IT spending by early next year.

Even when that happens, no one anticipates a return to the free-spending atmosphere of the 1990s. "I expect that if/when an increase in IT spending comes, it will be conservative," says Greg Tranter, CIO at Allmerica Financial Corp. in Worcester, Mass. "Our strategy is to exercise focused discipline around technology spending, regardless of market conditions."

"I'm afraid this is the way of life forevermore," agrees Dennis Klinger, vice president for information management at Florida Power & Light Co. (FP&L) in Juno Beach. "We're going to have to squeeze every penny."

Wish Lists

But that's not stopping the flow of ideas. Romero has used the downturn to complete an IT assessment and develop a four-year road map with "big steps and baby steps" depending on economic conditions. He'll begin with a suppliers' portal for manufacturing, a single Web point of entry for Mitsubishi to collaborate with vendors. Then, he'll tackle new financial systems as the first module in an ERP system for manufacturing. "How fast we go depends on the size of the recovery," he says. For example, the back end of the supply portal may be connected at once or in stages, depending on how funds are flowing.

"Portals are very hot," says Gomolski. "Many big companies have accumulated all these different Web sites, and they're not using the same language, and they're not integrated," she explains. "They're trying to get a single [contact] point."

Fran Dramis' wish list spotlights CRM and infrastructure. "Upfront is customer care: customer acquisition, continuing to integrate our databases and products to help in the sales cycle," says the CIO at BellSouth Corp. in Atlanta. "Also, we would accelerate the rollout of new IP capabilities—the support system that helps us to run new networks. That would be 1A and 1B" on his priority list, he says.

Dramis adds that the economic slowdown gave the business and IT time to step back and recalibrate. "The reflective phase gave the business a chance to reassess its priorities, and that gave us a chance to update the road map, so we have a whole set of plans about what we would attack," he explains. As a result, he says, "when things loosen up the road map will flow even quicker."

Revamped Projects

Tom Murphy is already implementing his wish list. After the bottom fell out of the cruise business late in 2000, Royal Caribbean Cruises Ltd. in Miami mothballed a massive IT initiative called Leapfrog. The billion-dollar plan included CRM, supply chain and human resources projects as well as enhancements to on-ship technology. Now, CIO Murphy is working on a more conservative version called Jumpstart.

"Our industry had a speedy recovery, and we retracked our original Project Leapfrog into Jumpstart and defined a new strategy to take a more fiscally prudent approach," he says.

That approach targets the same general goals but breaks the execution into smaller, incremental chunks. It includes maintaining the current IT head count, supplemented by external resources such as San Diego-based outsourcer Science Applications International Corp., which Murphy has engaged to help with a Web site rebuild and the introduction of Java into the IT shop. He's also strictly prioritizing project work, enhancements and support.

Murphy has built an 18-month project pipeline including the Web overhaul, major database and data warehousing work and implementation of middleware for both ships and shore. "By implementing middleware, we're taking a component approach rather than the big-bang approach of Leapfrog," he says. That way, "the company is in position to increase or decrease the spigot" depending on business conditions.

Middleware and integration are high priorities for CIOs, Gomolski says. "They're trying to take advantage of all the technology they have and get it all working together."

Klinger's wish list at FP&L includes upgrading skills. "Right now, we're rifle-shooting—doing just-in-time training—and I would certainly want to grow training" if the budget improves, he says. He'd also like to use mobile and wireless technologies to enable technicians and engineers anywhere in a plant to get or report vital information.

Klinger is working with his business executives on a formal strategic plan for IT. "IT capital dollars compete with plant and marketing dollars, so we try to make it clear what the IT investment opportunity is, and that gets balanced against the overall opportunities," he explains.

Securing Compliance

After a slowdown in 2002, the IT shop at Documentum Inc. in Pleasanton, Calif., is going full steam this year, says CIO George Lin. One of his top priorities is harnessing IT to help the company comply with the Sarbanes-Oxley Act, a federal law that seeks to ensure the reliability of the financial statements of public companies. "This is the most urgent project all public companies have to work on," he says.

There's also a major renovation of the customer services Web site and major enhancements to the PeopleSoft Inc. ERP software, including a human resources module and financial upgrades. Lin says he has also been working on security and wireless technologies and leveraging IT to integrate acquired companies quickly.

One of the challenges for CIOs is keeping business managers enthusiastic about IT at a time when low budgets mean low visibility for IT. "That's very difficult," Romero says. He's kept the business interested by maintaining the most business-critical projects—call center systems for dealers—while delivering other small but appreciated projects such as a system to consolidate divisional financial reporting and analysis. "Those are things we can do with the resources in hand," he explains. "We look for quick hits to maintain awareness that IT is still here. And we keep the infrastructure going."

Allmerica's Tranter has used the lull to focus on in-house work such as implementing best practices in project management, service-level management, root-cause analysis, metrics, skills management and vendor management. "These initiatives got our staff, and consequently our leadership, charged up," he says.

But as much as anything, the process of refining the IT wish list keeps the business engaged. "We've got pent-up demand," Dramis says. "In a down cycle, you really have to prioritize projects, and the business helps, so we get even more business engagement than when money flows more easily."

Murphy agrees: "Now that we have the execs doing the IT priorities, believe me, they are very engaged!"

But although CIOs are eager to move ahead, some say the downturn has forced some needed introspection.

"The IT spending slowdown is a gift for CIOs," Lin says. "It helps us realize that sometimes the right thing to do is take a couple steps back and look at big picture."

In the boom days, he says, CIOs often lacked that perspective and the result was siloed projects with too little return on investment. "The slowdown taught CIOs to figure out the enterprise way to work the business issues; to help the business in a cross-functional, holistic way, not a siloed way," he says. "CIOs should use the slowdown to really build our input into the business. That will prepare us for the coming ramp-up."

Melymuka is a Computerworld contributing writer. Contact her at


Spending Plans: Now and Later

What are your priorities for 2003?

BASE: Survey of 620 CIOs

1. Security enhancement tools

2. Application integration/middleware/messaging

3. Enterprise portal deployment

4. Network infrastructure/management tools

5. Internal e-enabling infrastructure

6. Web design, development and content management tools

7. Storage management

8. CRM

9. Web services (internal and external)

10. XML-based processes/messaging

Source: Gartner Inc., Stamford, Conn., January 2003

What are the first software projects you'll fund when the economy improves?

BASE: Survey of 50 U.S. CIOs; multiple responses allowed.
CRM 20%
Security 20%
ERP 16%
Storage 16%
Application integration 14%
Corporate portals 14%
Supply chain management 14%
Business intelligence/data warehousing 12%
Analytic applications 10%

Source: Merrill Lynch & Co., New York, February 2003

Copyright © 2003 IDG Communications, Inc.

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