Information Technology: Consolidation Tops IT Vendors' To-Do ListsInformation Technology: Consolidation Tops IT Vendors' To-Do Lists

The people who manage technology at the biggest IT suppliers are preoccupied this year with mergers and acquisitions. Hewlett-Packard's IT department is still working overtime to meld systems after HP's $19 billion merger with Compaq last year, and PeopleSoft Inc. is two-thirds into a three-month plan to fuse its customer-support systems with those of J.D. Edwards & Co., which it bought for $1.8 billion in July.

At HP, cutting IT costs after the merger is the thrust of a three-year spending plan. "It has been a preoccupation," says John Buda, VP of IT strategy and planning. HP plans to spend 4% of revenue, about $2.3 billion, on IT this year. Of that, 72% goes to maintain apps, middleware, servers, and networks, Buda says; the remaining 28% is for innovation. That translates into new projects that can make the company more competitive. Within two years, HP wants to spend more than half its IT budget on new development.

At PeopleSoft, itself facing a $6.3 billion hostile buyout bid from Oracle, projects related to the J.D. Edwards acquisition have pushed down everything else on the to-do list, says senior VP and CIO David Thompson. By October, PeopleSoft wants to have common technical-support systems for all its customers. It's pushing ahead with revenue-generating projects such as hosting software for customers, as long as those initiatives don't drain merger-and-acquisition-related manpower. "People will blindly say, 'Let's delay these projects.' But if they use different resources, you can keep them going," Thompson says.

IT departments are also test beds for their companies' newest technologies. Sun Microsystems' IT staff found 90 top-priority bugs in Sun products within the past 2-1/2 years, senior VP and CIO Bill Howard says. Intel's IT shop was involved in testing the vendor's Centrino wireless-computing chips this year. It even had to untangle a crashed network at an Intel sales conference in Las Vegas. The culprit: an errant road crew for singer Tom Jones, who was performing at the same hotel. Says VP and CIO Doug Busch, "My team has gone from back-office support to troubleshooting stage shows."

INDUSTRY LEADERS Rank Company Revenue in millions Income (loss)
in millions IT
employees 35 Dell Inc. $35,404 $2,122 -- 39 Sun Microsystems Inc. $11,434 ($2,378) 2,048 48 Hewlett-Packard Co. $56,588 ($903) 10,000 82 Nortel Networks $10,560 ($3,585) 1,420 94 Intel Corp. $26,764 $3,177 7,300 123 Perot Systems $1,332 $78 7,500 129 ACS (Affiliated Computer Services Inc.) $3,900 -- -- 135 3Com Corp. $1,028 $284 191 141 EMC Corp. $5,438 ($119) 827 147 Unisys Corp. $5,607 $223 850 148 PeopleSoft Inc. $1,949 $183 312 160 BMC Software Inc. $1,327 $48 386 163 Computer Sciences Corp. $11,366 $440 39,000 170 Maxtor Corp. $3,780 ($334) 290 174 Compucom Systems Inc. $1,571 $19 123 202 Intuit Inc. $1,650 $343 479 208 Quixtar Inc. -- -- 350 224 Harris Corp. $1,876 $83 245 229 Imation Corp. $1,067 $75 162 236 Fidelity Information Services $8,900 -- 5,800 238 Quantum Corp. -- -- -- 243 Cisco Systems Inc. $18,900 $3,600 1,900 247 Electronic Data Systems Corp. $21,502 $1,116 75,000 249 Computer Associates International Inc. $3,116 ($267) 600 260 SAS Institute Inc. $1,180 -- 1,180 292 ViewSonic Corp. $1,000 -- 43 307 Oracle Corp. $9,475 $2,307 844 331 Silicon Graphics Inc. $1,341 ($46) 250 359 Western Digital Corp. $2,700 $200 270 395 Acer America Corp. -- -- -- 408 BV Solutions Group Inc. $1,974 . 340 429 Symbol Technologies $1,296 -- -- 439 Adobe Systems Inc. $1,320 $11 205 470 Storage Technology Corp. $2,040 $110 210 481 Compuware Corp. $1,375 $103 -- Financial data is from public sources and company supplied.
Revenue is for latest fiscal year.
Employee data is from information 500 qualifying survey.

SNAPSHOT INSIDE COMPANIES Average portion of revenue spent on IT 8% Average percentage of industry applications and business processes that have Web-based front ends 59% Companies with real-time business processes in place 71% HOW COMPANIES DIVIDE THEIR IT BUDGETS Hardware purchases 19% Services or outsourcing 13% Research and development 4% Salaries and benefits 31% Applications 18% Everything else 15% INDUSTRY FINANCIALS Average year-over-year revenue change 3% Average year-over-year net-income change -149% DATA: information RESEARCH
See year-over-year shifts in business-technology practices for this industry. Compare and contrast this year's data with last year's.

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