Throughout 2001, growth in the software and service
industry was basically flat with mergers, layoffs, and bankruptcies
littering the landscape. The tragedy of September 11 didn’t help
matters any either. In fact, the day’s events put a stop to any glimmer
of a recovery. The outlook for 2002 was more promising; however, we are
well into the year and are aware that the economic future may not be
any different. Except for a mighty few, the software market, in
general, has gone from bad to worse. Each year, The Standish Group
compiles the Top 10 Concerns of CIOs. Many of these concerns drive the
software market. This year’s Top 10 concerns are:
1. Disaster Management: CIOs
are getting increased pressure from presidents, CEOs, CFOs and other
corporate executives. Disaster Management is on the agenda for most
board meetings, and auditors, trade groups and government watchdog
agencies are carefully looking at corporate disaster recovery plans.
Funding for better disaster recovery solutions is being done through
off-budget allocation and canceling lower priority projects. Last year,
disaster recovery was not even on the list.
2. Security Management:
For the last two years security management has been in the third slot.
It is also linked closely to disaster recovery in the minds of
executives. “We never know if we are doing it right,” seemed to echo
the frustrations of CIOs as viruses, break-ins and internal mischief
hit many. CIOs plan to close as many entry points as possible, keep
their protection up-to-date, work on better intrusion detection and
beef up physical security.
3. Money Management: Last
year money management was the number one issue. CIOs are becoming more
conformable with smaller budgets and are either doing more with less or
just doing without. Many CIOs say they are negotiating to get better
deals from vendors. They complain about having no money to try new
things or experiment with new technology. All projects must have a hard
dollar ROI to get funded and this ROI needs to be less than 24 months.
4. Personnel Management:
Two years ago personnel management issues were number one, but this
issue has placed fourth both this year and last year. Getting and
keeping personnel is not the issue; the issue has become training and
having the skills needed to cover multiple activities. Specialization
is becoming a thing of the past and staff is now required to do more
types of activities. The money squeeze is causing training to be either
delayed or canceled. Older staff is retiring and replacement and
succession planning is coming to the forefront.
5. Project Management:
With controlled budgets and tight spending, one would assume that there
would be an ease of pressure to complete projects. That is not the
case. While there are now fewer and smaller projects, the timeframes
for the projects given the go-ahead are getting shorter and shorter. In
a lot cases this is good, because fast, small projects have a greater
chance of success. However, since there is lack of skilled resources it
compounds the issue of managing projects. This, of course, is coupled
with a multiple product mix with multiple upgrades. Most firms are
implementing software packages and/or small development projects. Very
few have big in-house development projects.
6. Network/Internet Management:
Wireless is on the top of the CIO’s gadget wish list. Some had on-going
wireless projects using PDAs, BlackBerries, and other wireless devices.
CIOs said that bandwidth is insatiable — the more they get the more
they use. While the number two issue in 2000 was eBusiness, it did not
show up on the list in 2001. This year, it has shown up again with
companies trying to complete and improve ongoing projects. Many had
internal employee web programs. Most were concerned with web access
7. Modernization Management: This is
a real worry for many CIOs. With decreased budgets they are very
concerned that they will not be able to properly maintain, upgrade and
replace current technologies and applications. The CIOs said they are
also faced with not being able to bring in new products that might
improve their infrastructure (or if brought in products they cannot
implement them appropriately) because training budgets have been cut.
Since many of their system components have multiple and conflicting
upgrade times, many CIOs were concerned about introducing new problems
into their environment because of these conflicts.
8. Integration Management: Linking
new and old applications together is a constant battle and for several
years integration management has been on the list of top ten concerns
for CIOs. These integration challenges have only increased since many
embarked on a server and database consolidation program. This issue is
coupled with the need to link partners and even competitors into an
9. Goals Management:
Managing expectations and aligning IT with the business has always been
an issue for the CIO. The problem has only been amplified with the
uncertainty of the business climate and the market upheaval. This
uncertainty causes the goals of the business to change – and some of
these changes can be a total reversal in direction. This brings about
what we are calling “Bi-Polar IT investment strategy.” The root cause
of this Bi-Polar IT investment strategy is the fact that company
executives do not know if the monies put into IT are costs or
investments. If CIOs could concretely point to returns of investments
then company executives could make better IT decisions.
10. Vendor Management:
Many CIOs are incensed with the strong-arm tactics used by software
vendors to get more revenue for their accounts. The CIOs are especially
unhappy with new pricing policies from the likes of Microsoft, Oracle
and PeopleSoft in particular. Iffy pricing policies are expected from
Computer Associates. Another concern dealt with the longevity of
software companies. They feel that no software company, even Microsoft,
is safe from extinction if the market turns.
With all this
negative talk, why not just pack up and move to Iowa and start a goat
cheese farm? The tragedies of today are the well springs of tomorrow.
Because this is the greatest industry in the world with $.5 trillion a
year in revenue. Because the potential is so vast and opportunities so
many that the future can only be bright. We are in the threshold of a
new software beginning – one that we have never seen before. The pain
of today will give way to make the industry stronger and even more
beneficial to mankind.
By Jim Johnson, Chairman, The Standish Group