IT doing less development, more installation

Forget software development — corporate information technology groups are busy installing packaged business applications, integrating other off-the-shelf software and managing outside service providers. And when they’re doing new software development, you can bet it involves Internet technology.

Those are among the findings from a Meta Group Inc. survey of 426 U.S. companies.

Last year, corporate IT groups spent 33 per cent less time and money on traditional software development and maintenance. Outsourcing increased 42 per cent during that year, while work on packaged applications increased by a factor of three.

“One big theme we see is the metamorphosis of the IT organization from software developer to systems integrator,” said Howard Rubin, a Meta Group research fellow.

That’s the case at Akzo Nobel Inc., a chemical company in Chicago. “We are in the process of implementing packaged solutions like SAP to replace all of our homegrown software,” said Bram Reinders, information manager. “Our strategy is to use packages wherever possible.”

The shift to packaged software hasn’t necessarily meant less work for IT. Last year, the number of hours worked per year increased by almost two per cent. At the same time, IT staffers saw their training days drop from an average of 8.2 in 1997 to 7.4 last year.

Because of the Internet push, network and Internet staff continue to be hot hiring areas, but programmers are the hardest to recruit, the Meta survey showed.

At Akzo Nobel, most new development is primarily around the Internet, Reinders said. Spending on Internet technology at the company has doubled every year since 1996.

But overall, Meta found that IT budget growth is slowing. From 1997 to 1998, IT spending as a percentage of gross revenue grew by a mere 0.2 per cent. That compares with a 5.1 per cent increase from 1996 to 1997, Rubin said. Similarly, IT salary increases slowed last year to five per cent. At the same time, staff turnover — which had been increasing over the past few years — decreased by 0.5 per cent. “Opportunistic job-hopping appears to have leveled off,” Rubin said.

Jenni Lehman, an analyst at Gartner Group Inc. in Stamford, Conn., said turnover may have leveled off because many IT professionals are on year 2000 projects and have been offered incentives to complete the work.

“Like a wartime workforce, loyalty may have kicked in,” she said.

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