Free spending in the IT department is a luxury of yesteryear. Let the Net help you cinch the belt a little tighter.

Much as we'd like to, we can't promise that the IT department's job is going to get any easier this year. "The free-spending days are well over," concludes Bruce Guptill, vice president of marketing for IT services company Tallán. On average, IT budgets are expected to be up just 8 percent this year, cooling off from last year's 12 percent growth rate, according to Morgan Stanley Dean Witter.

Tighter budgets mean it's more important than ever to back up vision with planning. In the past, companies worried more about the requirements of a specific software application than the health of their network. Not anymore. "An increasingly large percentage of customers are now viewing infrastructure as a foundation to support their e-business as a whole, rather than being technology-specific to an application," says Georges Khoury, general manager of integrated technology services for IBM Global Services.

Instead of simply buying enough servers to support the latest customer relationship management (CRM) app, focus on laying the technology foundation best suited to your company's overall needs. That means thinking in terms of centralised, companywide standards. Gone are the days of disparate initiatives, disconnected wide-area networks, and multiple databases.

Building infrastructure takes qualified help, of course, and even increased international-worker visa quotas are not expected to remedy the ongoing IT staffing shortfall. This worker deficit is now estimated to be as high as 800,000, according to a recent Morgan Stanley Dean Witter report. To make up for the lack of internal tech resources, many companies are increasingly turning to outsourcingââ,¬"but only for noncritical tasks like storage management. "Companies are not going to put critical functions outside unless they can find a supplier who is dependent, with proven experience," says Jim Graves, managing director of the Aberdeen Group. Graves highlights recent moves by both GM and Ford to turn over the management of their enormous data centres to Arthur Andersen, working with Compuware in GM's case and IBM in Ford's.

Common denominator

Long-term, it's a lot easier to have a single source of the truth. So using the Internet to centralise databases can keep everyone on the same page.

The e-business push continues and is one of the key drivers for businesses to standardise on a single database. Today it's not uncommon for one part of a company to use dozens of databases to do the same task around the globe. With Internet links becoming faster and more reliable, it's time to bring as much data together in one place as possible. Even so, companies are moving slowly: Only 20 percent of those surveyed have the majority of their data integrated across companywide applications, according to Zona Research. Peter Urban, senior analyst at AMR Research, points to Oracle as a prime example of the benefits of integration. Urban estimates that Oracle owes as much as US$100 million of its reported billion-dollar savings program to the dramatic consolidation in corporate data. The software maker boiled 70 financial databases down to just four, with a single database on the horizon.

While databases may not seem like the realm of your CEO, COO, or CFO, in this case they should be. Regional managers may feel coerced into giving up their existing systems when you roll out a data integration program. Urban stresses that strong leadership is necessaryââ,¬"-in Oracle's case, Larry Ellison demanded major improvements in the return on his technology dollar. "The French guy wanted his own database. The German guy wanted his own," Urban says. "But if they kept their own shop and maintained their own database, there was no way they were going to be able to return the money to Ellison. They were forced to go to a centralised system."

Settling on a single database platformââ,¬"-and depending on the size and complexity of your business that could mean Oracle, Informix, IBM, or a host of other solutionsââ,¬"-takes time. Even once you've selected an application you may need consulting help to pull together all of your data and cross-check it before it becomes part of the greater whole. Still, it's worth the work. "Long-term, it's a lot easier to have a single source of the truth," says Urban.

The move to consolidate company data is also driving businesses to adopt XML (Extensible Markup Language). This flexible open data standard makes it easy for all kinds of data to link and interrelate. For example, if both you and your supplier have data in XML format, a customer request from your system can be automatically checked against inventory status information from his system.

"People don't start out saying 'I want to do XML,' they start out with the idea that they want to integrate data in a large fashion, and they come to the conclusion that the way to do it is [XML]," explains Urban.

The specification for XML is readily available and applications like Microsoft Visual Studio and Lotus Domino can help you put it to work today. If you want to move your existing data to XML format, conversion specialists like TIBCO subsidiary Extensibility specialise in this burgeoning area.

The important thing to remember is that you don't have to wait for your current applications to support XML completely. You can migrate your data with a look toward the future. IT managers tell Martin Marshall, Zona Research managing director, that XML may cut internal application development time by 30 to 50 percent, an estimate he says is conservative. XML also means significantly reduced headaches in document management and conversion between coworkers and partners.

Last century's news

Due diligence is best done when it's due, but late is better than never. Now's the time to give those Y2K rush-job fixes a much-needed improvement.

While the Y2K scare may seem like a distant memory, your IT department may still be paying the consequences. For many companies, the threat of software meltdowns resulted in hasty solutions that plugged the gaps. Now is the time to give those rush-job systems a much-needed tune-up. "A lot of companies put in an ERP [enterprise resource planning] solution very quickly to replace their legacy systems... but in doing that they did not have the opportunity to ensure the integration to achieve the efficiency these packages [should] give them," says Tom Mangan, managing partner of Arthur Andersen Enterprise Technology Solutions.

Due diligence is best done when it's due, but late is better than never. While you give your ERP system a hard look, think about how you can further integrate your company's applications. Mangan expects many businesses to look to enterprise application integration (EAI) technologies, such as TIBCO ActiveEnterprise and webMethods Enterprise to help them connect CRM, ERP, and supply-chain systems.

EAI integrates business processes, making companies more nimble. Employees can do their jobs without having to open a half-dozen programs. "The real competitive weapon is speed," Mangan says. "To be able to do that, order management functionality has to be integrated with inventory, scheduling, service... all of that has to operate seamlessly."

The same holds true for your strategic partners. "[Customers] are trying to manage their supply chain strategically. They're trusting inventory in our hands," says Kevin Humphries, senior vice president of information technology for FedEx. To better serve its customers, the company knows the key is information.

That means giving its own employeesââ,¬"-wherever they may beââ,¬"-access to as much data as possible. "The key to our growth is the amount of information we are able to provide the field," Humphries says. To answer the challenge, FedEx is replacing its infamous tracking wands with powerful wireless Internet devices code-named PowerPads. FedEx won't discuss projected costs or anticipated savings of the PowerPad project, but considering the company's US$400 million annual IT capital budget and 136,000 employees, both costs and savings will be dramatic.

How to get your IT house in order

Your to-do list for getting your IT systems cleaned and polished.

Evaluate your infrastructure.
Integrating your business over the Internet is ultimately a network issue. Can your current setup run your software long enough to deliver the ROI that software makers promise? Your infrastructure should dictate the scope of your applications, not the other way around.

Optimise existing systems.
Before investing in new solutions, make sure that what you already have in place really works. Take a close look at cobbled-together Y2K fixes in your ERP system and e-commerce storefront.

Integrate, integrate, integrate.
Standardise on a single company database and also consider migrating to XML. Get your core systems in sync before worrying about integrating with partners and customers.

Outsource where it makes sense.
Look to outsource not just to cut costs, but also to boost efficiency and reduce the pressure of menial administration on your IT staff. But be smart about it and stick with commodity services, such as storage and email.

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