Factory Orders Indicate SPEEDY TECH RECOVERY - semiconductor industry outlook - chief information officers - computer crime - News Briefs - Brief Article

Chief Executive, The, July, 2001 by Sonja Sherwood

WHAT DO COPIERS and cars have in common? Chip techology. It powers everybody's business from Xerox to Infiniti. So when a wired economy short-circuits, CEOs should know it's only a matter of time before tech Investment resumes, according to Gail Fosler, senior vice president and chief economist of New York City-based economic research organization The Conference Board.

"The fact is," says Fosler, "chip technology is in almost every product we buy. Information communications technology is crucial to almost every service delivery mechanism. It isn't independent of the economy.

"That's why we believe we'll see a much more favorable outlook in the tech sector by the end of the second quarter. Contrary to the general supposition that the turnaround will take a year, we think it will occur much faster, in part because of the speed of the adjustment we see taking place right now."

The Conference Board's prediction is based on inspection of the latest U.S. factory goods orders for new equipment. Fosler determined that new orders for computers, electronics, peripherals, and communications equipment are now "if not at the bottom, very near the bottom of the trough."

Although order rates in all tech sectors are now at levels not seen since the 1991 recession, virtually every sector is rapidly increasing its technology and communications capacity.

Fosler points to a rebound in the Index of Leading Economic Indicators and to evidence that inventories of electronics and communications equipment are falling faster than they have in 25 years.

"We're seeing a very unique, almost shock-level, adjustment taking place in the sector," says Fosler, who was previously chief economist for the Senate budget committee under three administrations from 1978-89. "But beyond this very serious short-term decline is a favorable long-term outlook."

According to Conference Board data, dollar investment in information technology is increasing by 14 percent on average per year, and comprises a $600-$700 billion industry that accounts for 7 percent of the U.S. economy, or close to one half of all business investment.

Rent-A-CIO

AN EXECUTIVE TECHNOLOGIST

A post is never easy to fill. Technologies can quickly outpace the capabilities of under-experienced information technology staff, while full-fledged CIOs may not be cost effective for a corporation at certain stages of its life cycle. The trick is to find highly qualified information officers willing to, well, temp.

A new venture called Tatum CIO Partners operates like a law firm for CIOs, hiring out its "partners" by retainer to firms looking for short-term, interim, or project-based information technology guidance.

Each CIO partner has more than 20 years' experience, including previous experience in a tech-oriented leadership position. Headquartered in Atlanta, GA, Tatum CIO currently has more than 30 partners in five cities who hail from such companies as CBS, EMI Music, Fortune Brands, RJR Nabsico, and Sony.

"What we sell is a CIO who already has the gold bar on his shoulders," says company Chairman Robert Potter.

"He can move into the management structure of any company and perform at a very high level. And in using the partnership, the client not only gains the intellectual capital of the incumbent partner, he gets access to the intellectual capital of the entire firm."

Cyber Crime REALITY CHECK

ANY CEO WHO THINKS network security is the IT guy's problem hasn't fielded angry calls from defrauded consumers who thought they could entrust their private information to Your Company inc.

Guess what. The cost of complacency is rising.

San Francisco-based Computer Security Institute recently released its sixth annual survey of 538 computer security practitioners in the U.S., conducted with participation from San Francisco's FBI Computer Intrusion Squad to determine the scope of cyber crime in the U.S.:

* 85 percent of respondents detected security breaches within the past 12 months.

* 64 percent suffered financial losses due to breaches.

* The 186 respondents willing to quantify their financial losses reported amounts totaling $377,828,700, compared to 249 respondents in 2000 whose losses totaled only $265,589,940. The most serious losses involved theft of proprietary information and financial fraud.

* 70 percent cited their Internet connection as a frequent point of attack, up from 59 percent in 2000, compared to only 31 percent who cited their internal systems.

* 36 percent reported the intrusions to law enforcement, up from 25 percent last year.

EXECUTIVES DON'T always walk the talk when it comes to relationships critical to business success, reports a new survey by accounting and consulting firm Andersen, Chicago, IL, and DYG Inc., a Danbury, CT, research firm.

DYG interviewed 467 corporate executives--of which 197 are CEOs--from US.-based publicly traded companies in a range of industries.

Survey results indicate a widespread disconnect between beliefs and behaviors. As the graph to the left demonstrates, executives rank their customers and employees highest in importance, yet these are the relationships they measure and manage least.