Heal Thyself, ITThe economic downturn gives IT a welcome opportunity for "in-house" innovationNecessity is the mother of invention: In these slack economic times, you'll have to pardon the recession in my originality as I make due with this cliched kernel of dark optimism. The woes of the world seem to raise only the fortunes of prognosticators adept at articulating the certainty of more gloom and doom ahead. "Controlled depression" was how one economist described it in The New York Times recently. The IT industry, after the fattest years it's ever known, is still adjusting to lean times that are starting to seem far from temporary. Yet, therein lies the mechanism of recovery. "Silicon Valley will never be the same," said Oracle CEO Larry Ellison to the Financial Times (Sept. 29, 2002). "Those who believe this is merely a cyclical downturn are mad. They cannot see what is happening in front of their eyes. Our industry is going to mature and as something matures, the rate of innovation does slow." The context of Ellison's comments was an article about a Financial Times survey showing that 30 of the "top Silicon Valley IT companies" had slashed spending on research and development during the first six months of 2002 by "an overall five percent." For the last few years, Ellison has been focused on a well-publicized objective to cut costs within Oracle through automation and streamlined business processes. Many may remember Ellison's billboard boast that his company saved "one-billion dollars" through internal use of its application software. Such a claim would now seem like frank necessity; for the leaders of Silicon Valley's IT solution providers, recent months have been a time without precedent. As markets mature, converge, consolidate, and generally adjust to a flat economy, the Oracles of the world are under tremendous pressure to lower their own TCO: that is, total cost of operation. If they're to deflate prices for customers — who are moving quickly to cut and consolidate themselves — they can't overlook any opportunities to bring down the costs of doing business. Excess baggage gets tossed. Cuts in R&D make everyone nervous: What will happen to the spirit of innovation? Will startups carry the torch? In high tech, limited R&D money must be spent on what will deliver in the near term — on what's highly plausible now more than ever. The focus in Silicon Valley and other IT solution vendor citadels now mimics that of strategic business leaders in other vertical industries. They all need efficiency and essentials: aligning development and investment with business objectives and near-term customer requirements. Make the infrastructure work. Stick to your knitting. Don't look too far ahead. And use data intelligence to rediscover what truly links strategic IT to critical business processes and overall profitability. Vendors and their customers are also both on the same page about what needs to be done to reduce the costs of the products themselves — and of the greater IT edifice they have jointly created over the last 30 or 40 years. Through advanced, perhaps embedded use of smart agents and automated data intelligence, products should be able to heal themselves. They must be able to find the most efficient, optimal means of serving business processes — and do it with far less human intervention than is required currently. "Rationalizing" the chaos of IT and the products it depends upon is a necessity if a concept like Web services is ever to take off. Cobbler's ChildrenAfter some pretty cosmic stuff during the go-go years of dot-com mania, a stretch of hardheaded thinking could serve all parties in the IT fiesta. Front office, line-of-business, and customer-facing applications have to intersect with critical enterprise infrastructure systems and databases somewhere — and that somewhere is usually IT. Unfortunately, through the fat years, IT was like the cobbler's children. Without proper means of examining efficiency and effectiveness in serving business processes and objectives, many IT shops lay exposed when the economy faltered. "Right now, 80 to 90 percent of IT budgets are already nondiscretionary," said Ken Klein, COO of Mercury Interactive. "The complexity of all the moving parts — and the 'silo-ization' of IT into the security group, the app development group, and so on — are making it very difficult for IT to close the gap between what the business requires and what IT can deliver." Mercury Interactive, which has enjoyed several successful runs as a vendor of software and service solutions that address the rather unglamorous necessities of application performance management, testing, and tuning, is "betting the company," in Klein's words, on the concept of "business technology optimization [BTO]." "This is the next big thing," Klein declared. BTO may never give sliced bread a run for its money, but it does address a huge opportunity: the chance to improve IT's ability to understand the complex array of applications it owns, take action to optimize their performance, and thereby reduce overall costs through efficiency. In early October, Mercury Interactive introduced the Optane BTO Suite and a key service partnership with Accenture. Rather than focus solely on discrete application performance tuning, Mercury Interactive is aiming Optane at business processes — and using software to help IT align performance with what's most critical to their success. Ultimately, the goal is to help IT tip the balance and allow room for more "discretionary" spending on strategic initiatives that help their businesses capture new markets and deliver higher customer value. With BTO as the broad thrust, many IT solution providers could finally focus on what's been neglected for quite some time: building IT's credibility as a voice in the halls of strategic business management. CIOs won't be perceived as simply asking corporate officers to throw more money at information technology. Here and NowIn my last column, I talked about how delivering self-service to customers is driving many IT initiatives. The other side of this coin is enabling existing systems to manage themselves. Several vendors, including IBM, are making progress in this area. Novell's recent "exteNd 4" release offers some impressive initiatives that will help customers maximize their investment in existing Novell systems, of which there are still many. I look forward to diving deeper into these topics in a future column. David Stodder [dstodder@cmp.com] is editorial director of Intelligent Enterprise.
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