After the Thaw: Opportunities and Issues for IT in Technology Companies

Technology companies are feeling a thaw in the recent ice age in IT spending and are starting to plan again for growth. As a result, IT within these tech companies is exiting the retrenchment mode of the last three years and looking again at enhancement and expansion. Technology companies are defined as hardware and software vendors, including network gear, as well as telecommunications and related service providers. Excluded are IT services firms that specialize in consulting, such as systems integrators. The most hopeful sign for technology is a strengthening of IT spending overall. This, in turn, fuels business growth, which then creates demand for new and enhanced information systems and applications. Despite the positive signs, there won't be a return to the free-spending approach to IT infrastructure of tech companies during the 1990s. Rather, tech companies will expand their IT systems and capabilities conservatively and in close alignment with business results. The image that comes to mind for the relationship between the business and IT is the tango - intricate motions at close quarters.

The Tech Environment

The US Commerce Department reported that in the third quarter of 2003, spending on information processing equipment and software rose 15.4 percent, its highest growth rate since the fourth quarter of 2000. The figure was the second consecutive quarter over quarter increase as well. The most recent monthly poll by CIO magazine of readers also indicated that an uptick in IT spending is likely in 2004. The average budget increase in the survey was 6.4 percent (for the next 12 months), up from 4.5 percent in the prior month's survey.

However, since tech companies will remain conservative in the expansion of IT systems and capabilities, IT in tech won't be able to invest in capacity in anticipation of demand. Rather, it will have to build quickly to respond to demands for greater capacity. This means IT projects with payback periods of months. It means that low costs will still be the organizing principle for IT in tech.

Demand Side - Enterprise Portals

Beyond making intranets more productive and enabling employee-self service, portal technology can help IT in technology companies to better support customer and partner initiatives, and where better to start than with the tech sector? It is high time that portal technology providers and their high-tech compatriots put their money where their mouth is and make portals the centerpiece of their customer and partner sites.

Potential portal buyers should look beyond customer references and see how well their portal provider uses its own technology. Beyond this select group, other technology sector companies can benefit from the personalization, process and streamlined maintenance that portals offer. Technology customers should require a tour of tech vendor "portals" and look for true use of portal technology as an indicator of commitment to customer satisfaction.