CIOs still ruled by cost reduction

Cost reduction has again topped the list of chief information officers' priorities, but the channel remains the main source of acquisition of IT technology, according to IDC's annual Forecast for Management survey.

The research, presented at IDC Directions conference on Tuesday, found that 50 percent of corporations continue to source their IT product through the channel. At around 30 percent, vendors 'direct-to-market' share hadn't increased from the 2002 survey.

While the need to satisfy business requirements continued to outrank the need for technology innovation, IDC Program Manager, Peter Hind, the author of the report, said technologies which had taken a beating in the post dotcom era, such as e-business, were making a comeback.

Cost reduction, aligning business to IT, meeting user expectations and change management all featured in the top five CIO priorities. New hardware and software was number four, down from the second most important challenge in 2002.

Hind said companies were breathing life into technologies such as e-business and mobile computing as they came to recognize their business benefits.

Users were beginning to realize how e-business can deliver process efficiencies and streamline business, he said. Meanwhile, strategic use of the Internet was shifting away from advertising towards client support.

"It's a channel to reach the consumer," said Hind.

Corporate usage patterns showed cable and DSL services, supply chain management and mobile Internet as the strongest growing technologies used by companies last year.

The second most used technology, supply chain management, rebounded after showing the largest fall in usage in 2002. It jumped 78 percent. Mobile Internet usage grew 72 percent.

Hind said that 2002 was "the year broadband came of age in Australia."

Cable and DSL usage had grown 221 percent in that period. This was the "the biggest growth I've seen in eight years of doing the management survey," he said.

Looking ahead, tablet PCs were the top technology CIOs expected to use over the next 12 to 18 months, along with biometrics and VoIP.

Hind said the research found that Microsoft's pattern of desktop domination was continuing. Windows 2000 was the most used operating system on corporate desktops. This reflected the pattern of Windows releases taking about two-and-a-half years to supersede legacy versions.

He expected Windows XP to be the dominating OS by 2005.

According to the CIOs surveyed, Linux/Unix penetration was still small with less than two percent of companies using open source systems at the moment.

Fifty-three percent of CIOs had no intention of investigating or using the technology in the coming year. This was mostly due to lack of inhouse skills and available applications.

"Linux in some ways typifies what's been going on in ICT in the past 12 months," Hind said. "But the tide has turned." Pockets of growth in accepted areas such as CRM and supply chain management indicated that while the industry was "not seeing signs of major strategic development" it did still have "life in it."

This story, "CIOs still ruled by cost reduction" was originally published by ARNnet.

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