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By Kim S. Nash  |  Posted 2007-02-07 Print this article Print

Bigger technology budgets, plus savings from cutting infrastructure costs, mean CIOs have more money this year to make their mark.

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High-priority technologies

Among more mainstream companies, tech spending in four specific sectors —financial services, federal government, communications and manufacturing—reflects technology spending overall, according to Goldman Sachs.

And in those areas, the concept of using software as a service-—where end-user departments access central applications and servers when they need to, rather than setting up their own systems locally—appeals to CIOs looking for ways to save money and gain control of applications. Thirty-six of the 100 technology executives Goldman surveyed in October 2006 said they already run at least some software on a service basis. Another 16 will deploy the technology this year, with an additional 20 saying they will follow by the end of 2008.

Washington Mutual has experimented with the technology, according to Debora Horvath, CIO of the $22 billion Seattle bank. This year, Horvath plans to expand the project because she likes the simplified application maintenance; there are fewer versions of each piece of software in use.

On the other hand, there's Fluor Corp. The $13 billion industrial construction firm is entering the fifth year of a five-year streamlining plan. Server consolidations, increased outsourcing and collapsing the number of technology vendors it uses from dozens to five are key moves that have helped Fluor hack $80 million from its tech budget since 2002, says Ray Barnard, CIO at the Irving, Texas-based company.

Barnard declines to say what his overall budget was or is, but says that this year, he's spending on several projects. They include upgrading SAP financial, human-resources and sales applications from version 4.5 to version ECC 6.0. Fluor is also buying blade servers—thin computers that slide into racks—from Dell and IBM to replace traditional blocky hardware the size of bookshelves.

Security is one of Fluor's top priorities, Barnard says. He's upgrading or enhancing firewalls, identity authentication software, encryption tools for laptops and physical security devices such as cameras. Security amounts to 8% of Fluor's overall technology budget. It's a hefty portion and it has to be, he says.

Fluor, which builds sensitive structures such as power plants, bridges and chemical factories, is among the largest employers in Third World countries, according to Barnard. "Some of our biggest activities are in China, Russia, Saudi Arabia and Africa—places where you need big-time security wrapped around I.T," he says. "We're constantly under attack because people think we have blueprints for everything."

As for hiring staff, technology executives who said they plan to add people in the coming year warned it would be within strict boundaries.

American States Water will spend some of the 4% increase to its tech budget this year to pay the salary of the one and only one person the utility plans to hire in 2007: a second-in-command for head of technology David Hefler. "The board of directors felt there should be one for continuity," Hefler explains, should he leave the $236 million Southern California water company. He'll be looking for someone with experience in regulatory compliance and security. The emphasis would be on knowing how to protect data from internal and external malicious activity, and making sure security procedures are carried out, Hefler says.

Ruby Tuesday, which plans to increase its 130-member tech staff by 10%, wants several project managers. They will, for example, help plan and roll out wireless networks at the 950 restaurants in the chain.

Kodak will be looking for people who know SAP modules such as Business Warehouse. "Hiring is limited and specific, and that's been the case for the past several years," Kodak CIO VanGelder says.

Senior Writer
Kim has covered the business of technology for 14 years, doing investigative work and writing about legal issues in the industry, including Microsoft Corp.'s antitrust trial. She has won numerous awards and has a B.S. degree in journalism from Boston University.
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