Execs share tips on 'investing' in bad times

BOSTON - American Express has continued to grow its investment in IT throughout the current economic downturn, resisting the temptation to retreat from new initiatives until the economy improves.

"Uncertainty makes business planning harder to do, even as it makes it more important," CEO Kenneth Chenault told an audience of IT executives last week at Forrester Research's annual Executive Strategy Forum.

The financial services firm over the last few years has worked to achieve economic flexibility through, among other tactics, broadening its product set, expanding distribution channels and improving operational efficiency - all through the use of technology. In particular, The Internet has helped it rework all of its processes, products and services, Chenault said.

Forrester Research has a term for companies like American Express that use technology to accelerate their recovery and try to distance themselves from less-bullish competitors: "stealth aggressors." Companies such as Wal-Mart, Procter & Gamble and Intel are making bold technology investments and driving to emerge from the recession as dominant, said George Colony, CEO of Forrester, in the conference's opening address.

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BOSTON - American Express has continued to grow its investment in IT throughout the current economic downturn, resisting the temptation to retreat from new initiatives until the economy improves.

"Uncertainty makes business planning harder to do, even as it makes it more important," CEO Kenneth Chenault told an audience of IT executives last week at Forrester Research's annual Executive Strategy Forum.

The financial services firm over the last few years has worked to achieve economic flexibility through, among other tactics, broadening its product set, expanding distribution channels and improving operational efficiency - all through the use of technology. In particular, The Internet has helped it rework all of its processes, products and services, Chenault said.

Forrester Research has a term for companies like American Express that use technology to accelerate their recovery and try to distance themselves from less-bullish competitors: "stealth aggressors." Companies such as Wal-Mart, Procter & Gamble and Intel are making bold technology investments and driving to emerge from the recession as dominant, said George Colony, CEO of Forrester, in the conference's opening address.

About 600 attendees turned out for the two-day event, which centered around a theme: The right application of technology will accelerate your recovery.

So what are the best technologies to apply now? Forrester identified four as critical to companies on the road to recovery:

• Web services, even though it is "vastly overhyped" and obscured "by the haze of .Net," Colony said.

• Sound customer-facing technologies that steer customers to the right channel - whether the Web, call center, retail store or catalog - at the right time to maximize satisfaction while keeping costs down.

• Organic IT, a Forrester term that describes a migration from monolithic, proprietary back-end systems to more flexible, modular systems that can be apportioned on demand.

• Adaptive supply networks that let companies adjust to accommodate changing market conditions and supplier demands.

These technologies correlate with exceptional financial performance, said Christopher Mines, group director at Forrester. Mines shared the results of a new survey showing the companies that spend the most money on IT aren't necessarily the ones achieving the most revenue and cash-flow growth.

Forrester looked at three variables - revenue growth, average return on investment and cash-flow growth - over a three-year period and compared each company's average with the industry average. It found that companies that spent the most on IT - about 4.5% of revenue - were outperformed by companies spending 3.3% of their revenue on IT. Those spending the least on IT - about 2.6% of revenue - turned in the lowest financial performance.

The study also showed the top performers are early Web services adopters, have made their supply-chain software and customer-focused software work for them, and are frugal when it comes to infrastructure expenditures.