Editor's Note: Invest Now Or Later? There's No One Answer - InformationWeek

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3/29/2002
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Editor's Note: Invest Now Or Later? There's No One Answer

Three months ago, in the first issue of InformationWeek published this year, we asked a rhetorical question on the cover that many companies are still mulling: Save or spend? At a time when an uncertain economy wavers between promising macroeconomic data and uninspiring corporate financial results, it's hard to know just when to plop down more money on IT starts. Do you keep a tight rein on spending till things get unequivocally better? Or do you invest now to give your company a possible edge over more cautious competitors?

In this week's cover story "Revving Up", senior writer Steve Konicki reports that Toyota is taking the more aggressive tack. At a time when many other companies continue to hold the line on IT spending, Toyota has earmarked about $1 billion for software, hardware, and services centered on Dassault Systèmes' sophisticated applications suite for design collaboration, product life-cycle management, and production support. Toyota officials declined to talk to us about the ambitious undertaking, but some of the motivations--the need to develop products more quickly (pace of change), to target younger car buyers (customer centricity), to work smarter with partners and suppliers (collaborative business)--seem clear enough. There's growing demand for the company's vehicles in a highly competitive market. In February, Toyota's worldwide production rose more than 5% over the same period last year.

Toyota's project is interesting for many reasons. Besides being an eye-opening investment during cautious times, there's the possibility for innovation and efficiency via so-called converse engineering, where downstream manufacturing concerns help guide up-front design decisions. The Dassault software will also be used to help guide assembly-line processes on the manufacturing floor.

The decision on when, where, and how much to spend differs for each company. (For more on this subject, see Bob Evans' column "Answers Real Or Absurd".) Not every IT department is in a lockdown mode. At the beginning of the year, a third of the business-technology managers surveyed by InformationWeek Research indicated that IT spending would increase at their companies, while only 17% said it would decrease. The bulk said their IT budgets would be flat (see "Save Or Spend?" Jan. 7, p. 38).

So, what's your company's outlook? Are you still wringing out IT excesses? Ready to ramp up new tech projects? Maybe it's some of both. Let me know at the E-mail address below or in my discussion forum.

John Foley
Editor/Print
[email protected]

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