InformationWeek 500: A Year Of Relentless Innovation

Sep 14, 2009 (08:09 PM EDT)

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It's the first half of 2009, and unemployment's rising to a 26-year high of 9.5%. Sound like the perfect time to launch an aggressive technology-driven product?

It was for Progressive Insurance, which kicked off its "Name Your Price" Web site tool, letting customers build their own insurance policies, starting with what they think they can afford. It was for Coca-Cola, which tested a prototype fountain drink dispenser IT developed over two years with the company's R&D team, letting consumers mix a variety of new flavors while aligning Coke with a select group of fast-food restaurants to analyze buying data and manage inventories better. And it was for CME Group, the world's largest derivatives exchange, which partnered with Brazil's top exchange to give traders electronic access to CME products, expanding CME's global presence.

InformationWeek Reports

There's a thread that runs through the companies at the top of this year's InformationWeek 500: relentless innovation. In the 21 years that we have ranked the nation's business technology leaders, none has provided as many obstacles to innovation as this past year, with its ferocious recession. This year's top InformationWeek 500 companies stand out for keeping the pressure on for new ideas that drive business results. In our ranking--and our company profiles, industry insights, and "great ideas" exchange--the InformationWeek 500 celebrates those with the vision and guts to keep innovating.

The top InformationWeek 500 companies also show how critical the CIO is to delivering boardroom-level strategic priorities, working with the CEO and business unit peers to push out new products, drive sales, and free up cash. The IT leaders at Cincinnati Children's Hospital are an example, as they delivered an online collaboration portal as a key part of the hospital's work with other hospitals to treat fetuses in the mother's womb. That ties directly to its strategy of differentiating itself by leading in niche areas of medical expertise.

Results With Less Money

Numbers gleaned from our rigorous InformationWeek 500 questionnaire tell part of the story behind the companies' strategies.

In IT spending, there's been a massive downshift in just a year. In 2008, 62% of InformationWeek 500 companies expected their IT spending to exceed 2007 levels. This year, just 37% do. The ranks expecting to cut spending more than doubled, from 20% to 42%. That's to be expected when revenue is down almost across the board. In fact, at 2.7% of revenue, IT spending across InformationWeek 500 companies is stable compared with last year.

chart: How does your company plan to innovate with technology in 2009? The most interesting data points usually are the ones that suggest divergent strategies--where there's no clear consensus around the best strategy. Surprisingly, that's the case when it comes to IT spurring new products and sales growth, which the majority of InformationWeek 500 companies don't see as a top priority.

That low priority isn't just a product of the recession. The percentage of companies that consider introducing IT-led products and services as a priority remains essentially unchanged this year from last, cited by 37%. Applying technology to produce a new revenue stream is a priority for just 14% of InformationWeek 500 companies. Nearly half of companies don't consider new products or revenue streams an IT priority.

Still, almost three out of 10 InformationWeek 500 companies have patented, trademarked, or copyrighted one or more of their IT or IT-driven processes or products in the past 12 months. Among the trademarks: a process improvement methodology, a converged networking architecture, and the IT infrastructure for local offices.

General Motors has patented an e-mail notification system that would draw on data from an actual vehicle and send a subscriber a message with the latest information, including any conditions requiring maintenance or repair. The Hartford insurance company has applied for patents on pure IT innovations--a system for load balancing and testing software and hardware, a dynamic file transfer and scheduling system, and a complaint-tracking system.

More predictably in a recession, however, the top priority for IT is improving business efficiency (60%) and cutting IT costs (47%).

chart: To whom does the CIO of your company report?

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The World Isn't Getting Flatter

As we saw last year, the great globalization of IT seems to have peaked. After booming from 2004 to 2006, offshore IT outsourcing leveled off the past couple of years, even among the largest companies. This year, 59% of InformationWeek 500 companies with more than $500 million in revenue do IT outsourcing with vendors outside the United States. Offshore business process outsourcing also is leveling off, with 37% of companies with more than $500 million saying they do it. Last year, 40% said they did offshore BPO. InformationWeek 500 companies may be doing more total business with offshore outsourcers, however.

And globalization remains central to the IT operations of many companies. Four of 10 companies say they're making global support and development a regular part of most IT jobs, and 38% say they're integrating more IT workers with global business operations such as purchasing and supply chain.

There are sharp divisions on two other high-level questions: Does your CIO wear more than the IT hat at your company? Who does the CIO report to? Forty-eight percent of CIOs at InformationWeek 500 companies don't have executive responsibility for an area outside of IT; the rest do, including 16% in charge of innovation. Forty-one percent of CIOs report to the CEO or president, 23% report to the CFO, and the rest to other executives.

Which technologies and strategies are yielding productivity gains? Collaboration and analytics software are cited most often among 14 choices. Almost six of 10 respondents to our questionnaire pick deploying collaboration software as a top productivity driver, while 46% cite deploying business intelligence tools. The next biggest driver, cited by a quarter of respondents, is more support for telecommuters and remote workers.

Almost as interesting is what doesn't make most IT leaders' lists of productivity boosters. Distributing smartphones is cited by just 12% of InformationWeek 500 companies. This finding suggests that smartphones, despite their consumer reach, remain a niche business tool--and makes innovators like Coca-Cola Enterprises look all the more impressive. The bottling company has been testing smartphones to deliver information to route drivers and other in-store employees. Beyond that, it has charted a broad enterprise mobility strategy, including making any application it mobilizes device-independent to avoid the inefficiency of repeated one-off projects. Perhaps mobile application development is the next frontier for many companies--just 15% cite it as a top productivity driver this year.

chart: What global IT strategies are in place in your organization? On the other end of the adoption spectrum are wikis and blogs, which we can stop calling emerging technology now that 78% of InformationWeek 500 companies use them to communicate with colleagues. That's fast uptake--two years ago, just over half used them internally. Only 42% of companies use wikis or blogs to collaborate with customers or suppliers, but that's up from 27% two years ago.

Web 2.0 Crackdown

Even as wikis go mainstream, the flicker of enthusiasm for letting employees use consumer apps, lit by Web 2.0 apps, may be burning out. Two years ago, a third of InformationWeek 500 companies encouraged consumer app use; now it's dipped to a fourth. Anecdotally, we're hearing about crackdowns on consumer Web apps, foremost Facebook and Twitter.

It's possible that's because the functionality people demanded--online collaboration, instant messaging, video interaction--is now available in enterprise software. More likely, enterprise use of consumer apps and other technologies has become so widespread that companies don't need to give it a nudge. Adoption among InformationWeek 500 companies of hosted apps such as calendars and spreadsheets stayed about the same, at 62%, and the use of mashups using enterprise data rose only slightly, to 42%.

No industry or geography dominates the InformationWeek 500. Manufacturing's the largest segment, at 11% of the group, followed by financial services, healthcare, and consulting and business services, each with 10%. Banks are the biggest IT spenders, and geographically, companies in the Northeast spend the most, 3.2% of revenue on average, compared with 2.3% in the South.

It's been brutal out there. This economy offered every excuse for an IT team to put real innovation on ice--just until things get a bit better. For those that didn't, here's to you.

chart: Which new web technologies are being adopted by your company?

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Selection Of The InformationWeek 500

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