Top 10 Technology Projects in '07
If there is any question that technology initiatives must respond to business needs, it is put to rest by what readers of this magazine say they're focusing on in 2007.
More than a third of those who took our top-projects survey say they are looking to do business process improvement. The next hottest areas, customer relationship management and business analytics, also require collaboration between information technologists and business people. Nowadays, businesses aren't funding anything whose return on investment they can't see.
"The projects we have scheduled for 2007 all answer a particular business need," says Gabrielle Wolfson, chief information officer of Spring Valley, N.Y.-based Par Pharmaceutical. "You're not going to implement technology for the sake of technology."
The unrelenting focus on ROI is leading companies to do more pilot projects and cut the number of risky big-bang initiatives they take on.
The ROI focus is also prompting companies to make better use of the systems they have in place. That's what the new push toward service-oriented architectures is all about. Indeed, while SOA itself doesn't appear on our list of the top 10 projects (it was the 12th-most-common project, cited by 12% of our readers), its principles of making better use of existing infrastructure and leveraging applications already in place are behind several of those that do, including Web services (No. 5 on our list) and enterprise systems planning (No. 9).
A total of 363 readers in I.T. and business management responded to Baseline's survey, which was conducted in January. For a look at their top priorities, turn the page.
#1: Business Process Management/Improvement">
Project #1: Business Process Management/Improvement
Participants: Usually a joint effort of I.T. and a business unit. In a few isolated instances, BPM initiatives do not involve any technologists.
Price tag: From $20,000 on the low end to tens of millions on the high end.
Time line: A department-level pilot could be started and finished in five days. An enterprisewide project could take several years.
The project area that technology managers put first this year is also the slipperiest. "BPM is one of those things that mean 20 different things to 10 different people," says Chris Curran, chief technology officer at Chicago-based Diamond Management & Technology Consultants. "It's a term that has popped up because of vendors."
What BPM projects boil down to are efforts to break down business functions, figure out better methods of executing them, and build technology systems in support of the new methods. The business functions undergoing evaluation are industry-specific, but some common ones include order-processing and getting a new employee up and running.
Of course, there are actual BPM tools. The toolsfrom companies like Oracle and BEA Systemshelp companies understand their existing business processes and design new ones. This is something companies have done manually for years, by having a business analyst define requirements and hand them off to a development team.
Some of the newer software tools can automatically generate code to run the improved business process. Canned code, however, only goes so far at big enterprises. So, while billions will be spent on BPM in 2007, look for the spending to be primarily on consultants and staff salaries, not software.
#2: Customer Relationship Management">
Project #2: Customer Relationship Management
Participants: Shared by technology and business units.
Price tag: Streamlining a process might cost as little as $50,000. A global CRM rollout at a big company could cost $50 million.
Time line: Payback usually comes in two to three years.
One measure of CRM's growing stature is that professional services firms like Deloitte, Infosys and IBM have been turning away prospective clients. "A lot of the vendors' professional practices are sold out," says Isher Kaila, who covers CRM for research firm Gartner. "This is a boom time."
Why now? There are a couple of reasons. Merger activity has put customers up for grabs in some industries. And then there's the impact of globalization and the Internet, two things that have put new power into customers' hands. Companies are doing whatever they can to keep customers in the fold, rather than risk losing them to a Web site that can provide the same service faster, cheaper or better.
Despite all the excitement, one in three CRM projects still fails, Gartner says. Aware of this, many companies are getting smarter about their tactics.
In particular, some are opting to do more prototyping and more pilots as proofs of concept. "Organizations are very shy about committing to multiyear, multilevel CRM road maps," Kaila says. CRM is now happening in "more bite-sized chunks."
Software-as-a-service offerings, including those from Salesforce.com, are another thing that is making CRM implementations simpler and improving ROI. For instance, Amicas, a Boston-based company that provides billing services for radiologists, is using its Salesforce.com system not just to track its business but to do customer satisfaction surveys. "The detail we can get back out of it is great," says Nancy Elliott, manager of client services for Amicas' financial group.
But companies shouldn't make the mistake of assuming that their initiatives are a success just because CRM has become easier. "Just because you can talk to more customers and engage more customers doesn't mean you can increase business value," Kaila points out. "At the end of the day, you have to drive profitability."
#3: Business Analytics/Business Intelligence">
Project #3: Business Analytics/Business Intelligence
Participants: I.T. extracts the data; business analyzes it.
Price tag: A big-company project could easily run into the millions.
Time line: From a few days to a year or more.
A lot of success in business is contingent on analyzing what's happening and formulating strategies about how to respond. Wouldn't it be great if we could transform the data at our companies into real information?
That is the promise of business analytics software, which sucks the data from a company's disparate systemsthe I.T. partand passes it on to business users for analysis.
It is no simple task. The data at many companies resides in systems that are 20 to 30 years old. The extract, transform and load process that does the initial work is far from infallible, even with the help of software from firms like Informatica, Cognos and Ab Initio.
Given the potential payoff, though, it's not surprising that companies keep tryingoften by limiting the scope of the projects they're taking on. For instance, Progressive Medical, a $150 million insurance-industry broker in Westerville, Ohio, expects this year to combine internal data with industry data to determine how it measures up in key categories such as processing time per claim and cost per claim. "We're also trying to provide a next-level reporting mechanism for our customers," allowing them to see for themselves how much they're saving by working with Progressive, says chief information officer Angelo Mazzocco.
The "think small" approach is also smart for big companies. Consultant Curran says a telecommunications company might see what it could learn about the success of a pricing plan by having "a couple of I.T. guys and biz guys" look at a few customers in one state. "You do a proof of concept before you build a multimillion-dollar project."
#4: Desktop/Laptop Upgrades">
Project #4: Desktop/Laptop Upgrades
Participants: I.T. sets the policies; business pays the freight.
Price tag: Varies with configuration. The decline in PC prices is being mitigated somewhat by the arrival of Microsoft's new Vista operating system.
The shift toward laptop computers will continue this year; IDC says that more than two of every five new computers bought by companies will be laptops, up from one in three in 2005.
The improved quality and ever-shrinking footprint of laptops themselves is one factor. Another is the increasing availability of wireless Internet service. Wireless local-area networks (the phenomenon enabled by WiFi) have given users a first taste of freedom; even more freedom is coming in the form of cellular wide-area service.
Companies like laptops because they extend the workday. "Let's say you leave the office at 5 p.m. to beat traffic," says IDC analyst Richard Shim. "If you have a desktop and you can't access e-mail, you're done for the day." That isn't the case with a worker who carries a laptop home with him.
Companies "want to make sure their users have the tools to be not only competitive but productive," Shim points out.
By contrast, many companies have slowed their purchases of desktops, and some manufacturers have seen their sales shrink. Still, the desktops that are getting bought tend to be very robust, particularly at companies that are upgrading to Vista, Microsoft's new operating system. That is mitigating the loss in revenue that desktop manufacturers are experiencing from any decline in unit shipments, Shim says.
#5: Web Services">
Project #5: Web Services
Participants: The CIO's A-team.
Price tag: Whatever it costs to employ six crackerjack software designers for the length of the project.
Time line: It's generally a year and a half before any sort of payback is realized. Break-even takes longer.
It is one of the most common flaws of big-company technology deployments: Applications get built for one business unit, but are unavailable to others. Or data can't be shared.
Technology silos may still be around, but Web services, including the messaging protocol SOAP (Simple Object Access Protocol), are linking them in a way that holds considerable promise.
To some extent, Web services are just the successors to the middleware connectors of old. Whereas companies once used proprietary software from vendors like Tibco and WebMethods to connect their heterogeneous systems, now they are doing it using standard protocols and approaches. "A lot of functionality is implemented in mainframes and other systems," says Vijay Tella, chief strategy officer of Oracle Fusion Middleware. "Companies want to move toward more modern applications that are easy to understand and change and get intelligence out of."
An even bigger payoff is coming through the creation of shared servicesapplications that exist within one department of a company that may now be made available to other departments.
For instance, a company may have a perfectly sound back-office process for taking orders. Web services can help the company use that process in new channels, such as an outsourced call center and on a Web site. "If you share this thing three times, you've given yourself a 2X savings," says Gartner analyst Dan Sholler. "That becomes a huge amount of leverage because people spend a lot of money on software."
Because Web services are so new, though, companies face some big challenges. One is finding developers who understand the model and can execute it. The other is organizational; the multi-business-unit nature of shared services means you "run into a whole mess of governance problems," Sholler says. To date, the earliest adopters have been in the financial services industry. This year, Sholler expects more government organizations to jump in.
#6: Disaster Planning/Recovery">
Project #6: Disaster Planning/Recovery
Participants: Senior business executives, up to and including the chief executive, usually have input. The board of directors often has oversight responsibility.
"Thinking big" was once an unambiguously positive thing in business. The last few years have brought the realization that big can sometimes be bad, too.
In the wake of the Sept. 11 terrorist attacks and Hurricane Katrina, enterprises have turned to companies like SunGard to prepare for the possibility not just of lost data but of even more frightening things. "What if telecommunications and the cellular infrastructure go down?" says Jon Oltsik, an information security analyst at the Enterprise Strategy Group. "What if people are killed? Who is the next in line?
"People are thinking through this in a lot more depth," he adds. "It's unfortunate, but it's necessary."
The services provided include plain vanilla office buildings, their uninhabited cubicles and empty conference rooms providing insurance against the unwanted day when a company's headquarters are rendered unusable by some catastrophe.
Financial institutions are the biggest consumers of disaster insurance, partly because of requirements imposed by regulatory agencies like the Securities and Exchange Commission and partly because they're prime targets for terrorists. Many financial institutions pay millions of dollars annually for disaster recovery services, Oltsik says.
#7: Intrusion Detection and Prevention">
Project #7: Intrusion Detection and Prevention
Participants: Managers from both the security and network teams.
Price tag: Hundreds of thousands to millions of dollars.
Time line: Ongoing.
Last year, it was a computer stolen from a Department of Veterans Affairs worker; this year, it was customer information pilfered from the T.J. Maxx retail chain. There always seems to be another computer break-in in the news.
Until recently, companies were focused mainly on shoring up their perimeterskeeping outsiders from hacking into their systems over the Internet. Many companies are still concerned about that. Progressive Medical CIO Mazzocco, for instance, recently brought in a set of consultants to do some intrusion testing. Their assignment: Try to break into Progressive's systems: "They were able to find some issues that we solved," Mazzocco says.
With their perimeters more secure, some companies are shifting their attention to internal threats, including viruses inadvertently introduced by a laptop user plugging back into the network, or good old-fashioned electronic vandalism from a disgruntled or simply mischievous employee.
When a company is lucky, such events fall into the realm of the merely embarrassing. In some cases, though, they can cost a company millions of dollars. "There's no shortage of breaches" and many causes, says security analyst Oltsik.
When they work well, security systems can help CIOs sleep better at night. But a security system, like a chemotherapy treatment, can be a blunt instrument, obstructing the good things along with the bad. As Oltsik puts it, "The last thing you want to do is shut down legit traffic, because it'll be your phone that rings."
#8: Server Upgrades">
Project #8: Server Upgrades
Participants: A routine task handled by the technology department.
The unglamorous business of upgrading servers is an every three- to five-year exercise for most companies, so it's not surprising to see it on the list of projects most often cited by I.T. managers.
For Progressive Medical's Mazzocco, the upgrade cycle came last year. The company spent about $150,000 replacing 20 servers that housed its accounting, CRM and Web systems. All together, Progressive has about 50 servers, running Windows, Unix and Linux.
While financial problems prompt some firms to keep their servers for more than five years, that was not the case at Progressive, which has been growing quickly and is trying to double productivity per employee. "This investment in new infrastructure will take us to the next level," Mazzocco says.
Moore's law, which predicts the rise in computing power, is still happening "at a good rate," Mazzocco adds. "We're seeing the cost per store and the cost per performance both decrease."
#9: Enterprise Systems Planning">
Project #9: Enterprise Systems Planning
Participants: The technical executives with the broadest view of a company's systems. Often, they'll get some assistance from the chief financial officer.
Price tag: High in terms of management time.
You hear it all the time, about companies that have grown through acquisition: They have a dozen database vendors. Or seven enterprise resource planning systems.
Enterprise systems planning is the discipline some companies apply to get a handle on their sprawling applications. It starts with defining business requirements, and then mapping the technologies the company already has against them.
"I was working with a company that had 25 different CRM systems," says Diamond Management's Curran. "The question I asked was, 'Do you have an opportunity to take it down from 25 to three? Then you'll have one support organization working on it instead of five.'"
Enterprise systems planning is part of what has to happen for a company to operate efficiently after a mergerand to have the leanness to avoid becoming a buyout target itself. The attention being paid it is no surprise.
#10: Financial reporting">
Project #10: Financial reporting
Participants: The place where the CIO's world intersects most closely with the CFO's.
Price tag: Most companies now spend about 5% of their I.T. budget on compliance.
At most organizations, particularly big public companies, Sarbanes-Oxley has focused attention on systems for financial reporting. The idea is to capture financial data rigorously and have a single view of it, so things are locked down if the Securities and Exchange Commission comes calling. "Everything ends up in Finance," says Par Pharmaceutical CIO Wolfson.
That may be true, but technologists' approaches to fulfilling their responsibilities in this area vary widely. While there are some CIOs who prefer to keep it simpledoing everything with financial software from SAP or PeopleSoftothers opt for a best-of-breed approach.
Wolfson, for instance, says she may use Hyperion as a financial data warehouse but turn to the analytical software company SAS for forecasting and other functions.