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CIO priorities for 2004

Ed Parry, News Editor

While children dream of sugarplums this time of year, CIOs have other visions dancing in their heads.

Roscoe Wasko, CIO of Rent-a-Center Inc., is wishing for a big data warehouse, along with the DBAs to get it up and running, and a sleigh full of new thin client devices to help salespeople do their jobs better.

Wasko is optimistic about getting what he wants in 2004 and, judging from some recent studies, he has reason to be upbeat.

Top CIO priorities for 2004

1. Security

2. Disaster recovery/business continuity

3. PC replacements

4. Existing application upgrades

4. Compliance with government regulations

Source: Forrester Research Inc.

2004 is looking like the year in which the economy may finally stir from its deep slumber, and CIOs may blow the layers of dust off their checkbooks. International Data Corp. is predicting

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that IT spending in the U.S. will be 6% to 8% higher -- maybe more -- than it was in 2003. Forrester Research of Cambridge, Mass., also has an optimistic outlook. Researchers there surveyed more than 800 North American firms and found that nearly a third will increase their IT spending in 2004. Forrester figured that increase would average less than 2%, but some analysts are more optimistic.

"The actual spending should be higher," said Andrew Bartels, who co-authored Forrester's study. He said that CIOs responded to the survey in the third quarter, when the economy was still dicey. "Profits are strong, and the prospects for a strong economy are a lot clearer now than they were three months ago."

If the economy keeps humming and profits keep rolling in, CIOs may be able to get what they want.

Security tops the list

According to Forrester, security investments are the leading IT priorities for 2004. That's the case at SAS Institute Inc. CIO Suzanne Gordon said that security occupies the top spot on the Cary, N.C., software firm's 2004 wish list.

"We've been able to minimize the impact [of worms and viruses] this year, but it's taken a lot of people time," she said. "We're hoping there aren't so many attacks or so much spam next year."

Wasko said that none of 2003's "greatest hits," such as Slammer or Sobig, hit his company, which is based in Plano, Texas, and has 2,500 stores in 50 states. Security investments are high priorities for him in 2004.

"We're looking to complement the policies we already have in place," he said.

For Tsvi Gal, CIO of Warner Music Group in New York, Web services and service-level management in heterogeneous environments, as well as digital rights management, rank in the upper tiers of his list. Gal said that security is certainly important and an ongoing investment, but when push comes to shove, and a firm must decide what to do with a dollar, security gets passed over.

"When people have to make a decision about whether to spend money on security or on the next application, the application usually wins out," he said.

"Security for us is more an issue of risk management than something you can put your hands on," Gal continued. Basically, Gal and company roll with it and try to be ready for whatever threats may be around the corner.

Likewise, SAS plans to be agile. Gordon said that SAS will have a rolling forecast and look at the budget every quarter, so if the company needs a weapon to combat a Blaster worm is needed, she can get it.

Not flirting with disaster

Gal, Gordon and Wasko all said that disaster recovery (DR) investments are high priorities, which is in keeping with Forrester's prediction that DR will be right behind security on the CIO shopping list.

Gal said that his company is moving from a model in which DR is considered an issue only for IT departments to one that gets business divisions involved.

The emphasis on DR and business continuity isn't only a CIO priority, according to Bob Doyle of Dallas-based RPD Global Consulting and a CIO for more than two decades, most recently with Fleming Companies.

"Boards want some kind of business continuity planning," he said. "Five or six years ago, CIOs couldn't get the board's attention. But these days, there are too many liabilities if you don't have the right procedures in place."

Rounding out Forrester's top five CIO priorities for 2004: upgrading existing applications and desktops ("business-as-usual investments" as Gal called them) and compliance with new laws, namely the Sarbanes-Oxley Act.

Forrester analyst Tom Pohlmann, who co-authored the CIO study, said that CIOs are more concerned with improving existing processes and documentation than buying compliance-related products. "Vendors like to say there's a huge demand," he said. "That may be, but CIOs aren't betting on them now."

"We have to do it, so we do it," Gal said. "It's not as big an investment as people may think. We're pretty bullish that we'll be OK."

Rent-a-Center's Wasko said that his company is getting everything in line to comply with Sarbanes-Oxley, but that it's not so much of an investment in IT infrastructure as it is an investment in time. "We've got the software for tracking, but compliance goes beyond IT," he said, referring to the other departments that must get their documentation in order.

Outsourcing in or out?

IT outsourcing, one of the hottest topics in 2003, finished closer to the bottom of the 2004 priority pile, with only 24% of respondents saying that they would be exploring outsourcing alternatives in 2004, and only 17% said that moving IT work offshore was of the utmost importance.

"It's mostly Fortune 500 companies that are doing it," said Forrester's Bartels. It hasn't really trickled down into midtier companies yet."

But those offshore findings puzzle Doyle. "I don't know anyone today who's not giving offshore services a look for applications," he said. Gal says his firm has pushed IT development offshore for years and will do more of it in the future.

"We're expanding to the Russian and Eastern European markets [Latvia, Romania, Lithuania]," he said. "They have pricing competitive with Indian pricing, and the quality work is the same -- if not better than in India." Gal's words bear out another Forrester finding -- that of the firms that already use offshore providers, 68% will send even more work overseas in 2004.

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