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By Anne Chen  |  Posted 2003-08-18 Print this article Print

Although IT spending forecasts vary widely, analysts agree that enterprises are getting more bang for their buck—mainly by squeezing their suppliers and vendors for deep discounts and increased services and maintenance.

At Grainger, Ferrarell said he has been able to lower spending on items such as maintenance, software and hardware. How? The $4.8 billion distributor of business maintenance products negotiates aggressively for additional service and maintenance packages while pushing vendors to provide the best discounts possible, Ferrarell said. "There are a number of things that you can, if youre negotiating well, buy better, and weve really managed to do that," he said. "Our general strategy has been to push vendors to give discounts."

The economic impact of offshore outsourcing has been hotly debated, but some analysts say the practice is not as widespread as its detractors would have people believe. Only 29 percent of North American IT shops tap offshore service providers as a way to control costs, according to research company Forrester Research Inc. And only 9 percent of companies not yet working with an offshore provider will pursue this strategy in the coming year, according to Forrester.

Graingers Ferrarell said he has outsourced some application development to offshore companies to cut costs, but the company has found that it is more cost-effective to "in-source" tasks such as production support.

Tight IT budgeting means organizations are also working to finish the large enterprise projects they already have in the works.

At Cerner Corp., Eric Siley, director of technology of the companys Technology Transformation Group, said he will spend the latter half of this year deploying Microsoft Corp.s Office Live Communications server. Next year, the Kansas City, Mo., company will build on that communications platform by adding collaborative work-space technologies such as Microsoft SharePoint.

In addition, Siley said, Cerner will continue to extend its investments in front-office applications tied to the companys Siebel Systems Inc. customer relationship management implementation this year and into next year.

Tighter IT budgets are not keeping organizations from investing in new enterprise projects. The investments, however, are small. Forrester found that only one in five IT dollars goes toward new investments, excluding operations, maintenance and minor enhancements.

Cerners Siley, for one, is looking at implementing projects in small, manageable chunks: "We are breaking spending down into smaller, faster-moving projects, where we are able to respond to pressing business needs."

One technology area that continues to excite many enterprises is wireless. Grainger and Cerner, for example, are looking into the deployment of wireless technologies.

Cerner deployed wireless technologies this year and now has one of the largest wireless implementations in Kansas City, Siley said. As part of the wireless deployment, Cerner is purchasing laptops with integrated wireless capabilities.

Graingers Ferrarell said he has no problem spending money on projects and technology that will really cut costs and will differentiate the company from its competitors. Siley agreed, saying that in a time when CEOs have begun to question the value of IT, its these types of projects that will put those questions to rest.

"The days of multimillion-dollar spending binges are clearly over because no CEO is going to have the patience to wait for those kinds of never-ending projects to come through," Siley said. "These days, you either have a centralized IT group provide services to the business or be prepared to lose your IT dollars."

Senior Writer Anne Chen can be contacted at anne_chen@

As a senior writer for eWEEK Labs, Anne writes articles pertaining to IT professionals and the best practices for technology implementation. Anne covers the deployment issues and the business drivers related to technologies including databases, wireless, security and network operating systems. Anne joined eWeek in 1999 as a writer for eWeek's eBiz Strategies section before moving over to Labs in 2001. Prior to eWeek, she covered business and technology at the San Jose Mercury News and at the Contra Costa Times.

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