Our series on IT expenditure concentrates on the business
services sector, where firms are generating new business by using
single systems to monitor client data.
The UK's business services industry is set to spend £4.7bn in 2004,
up from £4.4bn in 2003, according to the latest Computer Weekly IT
Expenditure Report, produced by Kew Associates.
Although the size of this investment is dwarfed by other sectors,
such the public sector (£13bn) and financial services (£11.9bn),
business services sector technology spending now accounts for about
6.5% of total IT expenditure in the UK.
Rising IT investment within the diverse business services sector,
which includes professional and legal services, the accountancy
profession, real estate services and media businesses, will be
driven by the need to find new business. The challenge of sharing
data between scattered subsidiaries and compliance with industry
regulations will also drive investment.
The sector contains a marked spending disparity with small firms'
IT investment running at almost double the rate of investment in
all industry sectors, and enterprises with 5,000-plus employees
investing at half the rate of UK industry as a whole.
Accountancy services
The multibillion-dollar financial scandal of Enron and subsequent
collapse of the energy trading company's auditor Andersen sent
shockwaves through the accountancy profession.
In response to mounting concerns over auditor independence, the
"big four" accountancy firms have spun off their IT and management
consultancy practices.
This trend, coupled with industry regulations such as
Sarbanes-Oxley, has increased pres-sure on firms to use technology
to make better use of the information they hold on customers to
help generate new business.
Customer relationship management systems are of increasing
importance. "We are in the post-Enron world where restrictions
exist about the work professional services firms can do for audit
clients," said Gerry Penfold, partner in KPMG's information risk
management practice.
"We use CRM systems to track client contacts and business
development with people in different offices [and countries]
working on the same client."
Accountancy firms also faced the challenge of standardising CRM and
enterprise resource planning applications globally to make
information sharing more efficient and cut costs.
"There is a big benefit in the use of a single system across
offices, otherwise you have a tower of Babel scenario," said
Kathleen Klasnic, lead analyst within the enterprise networks
programme at analyst firm Datamonitor. "With the big accounting
firms having spun-off their consulting arms, they also need to
partition a lot of data to see what they can keep to comply with
data protection [rules]."
Other areas for IT investment at KPMG include specialist software
products to support services such as tax planning, risk assessment
and fraud investigation, and global databases that provide
reference material for staff, for example on audit rules and new
accounting regulations.
Mobile computing will be another priority. "[Our] professionals are
travelling an awful lot, so mobile and wireless computing is a big
area of investment for us," said Penfold. "All our partners in the
UK are using Blackberry devices."
Property services
The property industry has traditionally been something of a laggard
when it comes to investing in new technology, but the growth in
online property websites and the pressure to generate business
leads has raised the profile of IT within the sector.
For Owen Williams, head of IT at global property services firm
Knight Frank, two priorities will be using IT to support new
business opportunities and controlling the costs of IT
infrastructure. "It is an issue of balance and a debate about how
you get the most out of IT," he said.
Knight Frank is investing in mobile technology such as SMS
messaging and Bluetooth to use with clients, added Williams. The
company also wants to improve the internet and extranet connections
between its subsidiaries.
"The internet is an increasingly important medium for us and we
already use XML quite a lot for moving data between different
systems and various property sites," he said.
Legal services and media
Linking different offices through networking technology is one of
the main challenges facing the legal services sector. The media
sector meanwhile, has begun to invest in interactive television and
advertisements.
"Many law and accountancy firms have offices across the world and
want to access the same data about clients, monitor IT security and
comply with data protection regulations," said Datamonitor's
Klasnic.
Networks - local area, virtual private and wireless - are becoming
a widely used technology to link sites, she added.
With the explosion of news and information services available over
the internet, media IT investment will increasingly focus on
technology to distribute and charge for content (whether online or
through a broadcast medium).
IT will play a pivotal role in maintaining control over online
content (digital rights management) in the media sector and firms
will also invest in CRM software to help retain customers.
IT investment will also be driven by the growth of interactive
television and adverts, such as those on Sky and MTV, said Adrian
Drozd, an analyst in the enterprise networks programme at
Datamonitor. For example, viewers can click on a red on-screen
button to get more information about a product.
Manpower backs CRM for growth
Manpower, the recruitment, training and human resources company,
has installed customer relationship management software
incorporating artificial intelligence technology to help it match
the right candidate to the right job at the right time.
The software, from NCorp, is based on a web-services
architecture and helps Manpower consultants view client details and
match them to suitable job vacancies within minutes.
The previous system used by staff to place candidates was based
on a SQL server database and struggled to generate enough suitable
candidates from the search results, according to Manpower.
The software produces a shortlist of job candidates based on a
range of criteria including skills, experience, career goals,
interests and availability for work.
Manpower estimates that the system will deliver substantial
benefits when a worldwide roll-out to offices in 60 countries has
been completed.
Benefits include the speedier placement of candidates; 3,000
man-hours a day worldwide saved through improved employee
productivity; an easier method of identifying the "hot skills"
being demanded by clients; and a target of placing an additional
600,000 candidates in jobs worldwide as a result of the new
software.
How to buy the report
The Computer Weekly IT Expenditure Report, produced by Kew
Associates, analyses spending in 66 industry sectors covering 30
spend categories. These categories encompass a comprehensive range
of different types of hardware, software and services. A series of
reports is available containing varying levels of detail. Prices
start at £495. For more information, contact
Georgina Tucker at
Computer Weekly. Tele: 01895-632163
How the report was produced
Information on total IT spending is collected annually from more
than 60,000 UK IT budget holders on Computer Weekly's circulation
list. This is supplemented by more detailed IT spending information
from 5,000 budget holders surveyed each year. Additional
information is sourced from the Office for National Statistics and
the Treasury.