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You spent lean times cutting costs to the bone. Then compliance costs came along, and took big chunks out of your budget.
Finally, the money eased up, and smart CIOs spent last year leveraging every bit of technology they had, delivering top-notch services. So what's next for CIOs?
In 2006, the top CIO priority is clear: Gain competitive advantages with strategic IT. Alignment won't be enough; IT will need a sharp business edge. At the same time, CIOs will have to take security processes to the next level.
The catch -- of course -- is cash flow.
IT budgets have returned to a growth phase, but that growth is modest, an average of 2.5% to 3% over last year. In 2006, Gartner Inc. group vice president Mark McDonald said CIOs must "create business results without a significant up-front investment."
How? By using processes and information to extend a company's ability to attract, retain and grow customer relationships, McDonald said. "The bottom line is that IT is becoming more externally focused in 2006 than it has been in a while."
Laurie Orlov, vice president and principal at Cambridge, Mass.-based Forrester Research Inc., said IT staffs in 2006 will have to rethink technology as a customer service. "You might create a single view of customer billing, for example, which is something Verizon is working very hard on, so customers don't have to call 16 different 800 numbers in order to deal with different dimensions of their billing."
Best-laid plans, of course, require that macro-economic trends don't interfere. McDonald cites the obvious possible obstacles: rising energy costs, higher interests rates, terrorism -- and the threat of Avian bird flu. Even without a pandemic, CIOs burdened with new business demands will face another danger in 2006: If everyone's busy playing offense, who's on defense?
"We think that in 2006 CIOs are going to show more interest in enterprise risk management, as opposed to just information security," Orlov said. Enterprise risk management encompasses compliance regulations and intellectual property issues, in addition to information security.
Richard Entrup, CIO of Byram Healthcare Centers, is a real-world example of this. Entrup spent the better part of last year focusing on the Health Insurance Portability and Accountability Act. The $200 million company, located in White Plains, N.Y., delivers medical supplies and services to customers in their homes. Today Entrup is looking at "some very fancy" risk management products from Preventsys that will allow the company to address security more proactively. "This is rules-based security, so it's not just about ports and IP techie stuff; [it] lets you take your business polices, define them in English and apply the necessary security much faster," he said.
Even more exciting, Entrup said, is a real-time portal project. The company currently updates business data every 24 hours. "We're building a real-time portal that will allow managers to see what is going on in warehouses by product, by payer, by sales rep," said Entrup, who chose Web-based analytics software from Databeacon, a Cognos company. "What these BI [business intelligence] tools can do is unbelievable. If you can't measure, you cannot manage."Dave Thompson, vice president of information technology at Charlotte, N.C.-based Muzak LLC, a distributor of background music, is also embarking on a BI project. His department is building a one-stop intranet portal using Microsoft SharePoint technology so employees can access applications and information. "So now a salesman can log on and get to a dashboard of current sales, find info on products, see a sales campaign or get a competitive analysis of a deal by logging in," Thompson said.
He also plans to save money by spending money. "We'll be taking 25 and 30 servers and consolidating them into a half a rack, which should result in easier manageability and fewer points of failure," he said. That's going to change the way he does business with his CFO, he said. "Instead of going back to the CFO and saying I need another $150,000 for another storage array, I'm down to, say $40,000, because I have software to tell me what is used frequently and what's not being used at all."
At Harvard Business School, 2006 is all about CRM, said CIO Judy Stahl. One project will create "a corporate information system that will provide CRM-like functionality to all of the school's business units, as well as enable the faculty to easily search for and find information about the organizations with which the school partners," Stahl explained."This project will take several years to fully implement and to do it right," she said. "We need to focus our attention on tangible deliverables for our faculty and staff so they can experience the benefits of this type of system."