Business Tech

The recession has forced IT executives to cut costs while trying to bring in quicker returns on investment, according to a study released Wednesday by AT&T.

For its "Road to Growth" study, AT&T spoke with 77 key IT executives from large global companies. Sixty-four percent said they're under pressure to focus on projects that bring in return on investment in half or less than half the time than in the past. As a result, two-thirds said this pressure has affected their IT budgets, strategies, and priorities.

One CIO said his company is looking at IT projects that deliver at least 100 percent ROI in 12 months--or else the project is cut.

With the recession still in force, companies are feeling the pinch to slash costs and boost sales. Toward that end, 87 percent of the IT execs questioned said that reducing operating costs was "extremely or very important." Improving collaboration with customers and partners was cited by 85 percent as "extremely or very important." And 83 percent cited enhancing workforce performance and productivity as "extremely or very important."

(Credit: AT&T)

The aggressive strategy is seen as prepping companies for an economic recovery next year. Most of the execs interviewed expect a recovery toward the middle or end of 2010. Their overall feeling is that the U.S. and China will be the first countries to bounce back from the recession.

Executives said that investing in business continuity and security could have the largest positive impact on growth as their companies get ready for an economic turnaround.

"U.S. companies are under added pressure to deliver, and IT investments are more critical than ever before," said Bill Archer, chief marketing officer at AT&T Business Solutions. "From the study, we expect U.S. companies to come out of the recession leaner and more agile. Technologies that cut cost, reduce redundancies and loss, and improve efficiencies top the priorities list."

The study was based on interviews with 47 IT executives in the U.S. and 30 in Europe representing global companies with annual sales of at least $1 billion. Interviewed were chief information officers, chief technology officers, and others with direct responsibility for IT budgets and strategy. The interviews were conducted between April 16 and June 19.

AT&T is expanding its cloud-computing efforts with its new Synaptic Storage as a Service offering for enterprise customers, announced Monday. The service will let business users save and access their data via laptops, smartphones, and other Web-enabled devices.

With cloud-based storage, businesses can tap into their data as a service without having to set up their own equipment. They pay a monthly fee for storage as they use it. AT&T plans to offer the service on a limited basis starting this month, with its eye on a larger rollout to its U.S. Internet data centers by the third quarter. Eventually the company plans to offer the service at its data centers in other parts of the globe.

"The demand for data storage continues to grow at a staggering rate, driven by companies' need for 24x7 access to business critical data," Roman Pacewicz, senior vice president of strategy and application services, AT&T Business Solutions, said in a statement. "AT&T Synaptic Storage helps enterprises get a handle on these increasingly complex storage environments, while controlling costs and improving service levels."

Enterprise storage giant EMC will provide the technology for AT&T Synaptic Storage, though both companies have agreed to co-develop and market the service. EMC will employ its Atmos technology, which uses policy-based management to control the data. Offsite business users can connect to the cloud through virtual private networks for secure access.

The cloud service is part of AT&T's effort to dive into new growth markets. The company recently announced lower earnings and sales for the first quarter of 2009, though results were higher than expected thanks to strong performance in its wireless segment with booming business from Apple iPhone subscribers.

AT&T joined the long list of companies laying off workers, announcing on Thursday that it would eliminate 12,000 jobs, or roughly 4 percent of its workforce.

The company cited economic pressures and a changing business mix as the reasons behind the cuts.

AT&T also said it plans to reduce its 2009 capital expenditures from 2008 levels. The company said it would issue more specific financial guidance in January, when it announces its fourth-quarter results.

It did say, however, that as a result of the layoffs, it would take a charge of approximately $600 million in the fourth quarter of 2008 to pay severance to affected employees.

The cuts will begin in December and continue throughout 2009, AT&T said in a release.

The company said it is continuing to add positions in wireless, video, and broadband units to meet customer demand.

Update, 8:32 a.m. PDT Tuesday: Makes note of actual AT&T announcement.

AT&T is joining the burgeoning field of cloud-computing service providers that offer networking and storage services, according to a report late Monday on The Wall Street Journal site.

Cloud computing, which has attracted such heavyweight players as Google, IBM, and Amazon.com, relieves companies of the burden of managing their own data centers. One of AT&T's first customers will be the U.S. Olympic Committee, which runs Teamusa.org and other Olympics Web sites, according to the newspaper. AT&T's services will help manage event videos and results as on the organization's sites as traffic spikes during the Beijing Olympic Games.

Another sector AT&T expects to benefit from with this service is e-commerce. Jim Paterson, a vice president of product development at AT&T, told the Journal online retailers could use the service to help manage spikes in shopping activity, such as the day after Thanksgiving.

However, while cloud computing is very attractive to large businesses, it also carries risks. Last month, Amazon's Simple Storage Service (S3) experienced an extended outage that cut off many companies from their data. Amazon offered an automatic credit to companies affected by the outage, but the outage highlighted the vulnerability posed by relying on a data center that companies don't have physical control of.

On Tuesday morning, AT&T officially announced the service, called AT&T Synaptic Hosting. The company said that it would have five regional gateways, or "super Internet data centers," for the utility computing service, located in Piscataway, N.J.; San Diego; Annapolis, Md.; Singapore; and Amsterdam.