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CIOs See Spending Ahead

Interesting times. That's what the men and women working inside America's largest enterprise organizations have been living in for the past three years. Think cutbacks, management shuffles, mergers and acquisitions. Those and other factors have made for interesting times, for sure. But now, the rebounding economy has lifted the spirits of large corporations, many of which are posting their biggest profits in years and moving ahead with ambitious capital spending plans.

Take Hilton Hotels, one of the world's largest hotel chains. This year, the hospitality giant plans on increasing its IT spending by 2.2 percent or about $3.1 million, though not accounting for the elimination of a legacy property-management system. Its overall IT budget this year will be roughly $147 million. In relative terms, the spending hike on IT is aggressive when compared to many other companies. But it's one way Hilton has stayed ahead of the competition in an industry hard hit by the lingering impacts of the Sept. 11 terrorist attacks, which had a ripple effect on the travel industry.

Hilton CIO Tim Harvey says his company has consistently increased spending throughout the downturn, calculating that increased investments will likely put the hospitality giant in a better position to compete once the hospitality sector rebounds.

Among other things, Hilton is well into the deployment of an integrated customer-relationship application, called OnQ, to leverage its $4 billion acquisition of Promus Hotel, the franchise operator of such chains as Conrad, Doubletree, Embassy Suites, Hampton and Homewood Suites. Fueling spending this year is an ambitious CRM initiative, utilizing OnQ, designed to help improve customer loyalty, and various measures that aim to cut overall costs while maximizing revenue, Harvey says.

That's welcome news to the suppliers of Hilton and other enterprise companies like it. "Things are definitely starting to get better," says Julian Sparkes, the partner at Accenture who works with Hilton, Marriott and other major players in the travel industry. The reason is simple: Big business is getting down to business, especially where IT is concerned. Take Office Depot, for example. The company, which runs one of the world's largest e-business Web sites and operates a leading chain of office-supply superstores, is replacing its legacy systems with a new computing architecture and applications. That means lots of new hardware, software and implementation services. The goal: to become more efficient and provide better customer service. The effort ultimately will improve the way Office Depot conducts business with its customers, suppliers and partners.

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