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The strategy at J.P. Morgan Chase & Co. when it comes to IT spending is to shrink in order to grow.
It's not that overall IT spending will shrink in 2003, since those budget decisions are still to be made. But the financial-services company is committed to increasing the IT department's efficiency so that every year it can shrink operating costs, the 80% or more of the IT budget that goes to keeping everything running. Doing so frees up cash for innovation -- perhaps for technology or for other investment initiatives that can improve service, boost revenue, or cut costs.
It's an approach that reflects the three priorities cited most often by business-technology managers as they close out the year: improving customer service, optimizing business processes, and boosting productivity, according to InformationWeek Research's Priorities 4Q 2002 survey. IT departments must work to achieve the productivity gains and cost-cutting that are a way of life in manufacturing operations, says Ameet Patel, chief technology officer of J.P. Morgan Chase's LabMorgan, the E-finance and technology-development unit. "There are a lot of manual activities that haven't been automated that can be done in a down economy, which is fertile ground for change. You're really getting yourself ready for the next upturn."
IT departments everywhere are feeling that pressure to run their own operations more effectively. More than 80% of 300 managers surveyed listed getting better return on IT investments as a key business priority. A major initiative at Office Depot Inc. is to reduce the complexity and footprint of some its major applications, says CIO Patricia Morrison. The company also continues to drive out waste (including the waste of time, paper, and costs) through the use of store portals. Instead of store and district managers receiving "thousands of pages of paper reports" to read over the year, the managers access reports about performance of individual stores, products, and regions through the store portals every morning.
Another opportunity: Steelcase Inc. IT director Bob Krestakos says that because some projects have been tabled since the economy turned sour, IT now has time to dig into the complexities of telecom rate plans and software-licensing agreements.
Return to main story, "Running The Numbers."