By Paul McDougall. InformationWeek, sep 12, 2006 01:01 AM
Business services providers are spending a greater percentage of their revenue on business technology than most other vertical industries. That shouldn't be surprising: Service providers are buying technology not just to run their own businesses but to run parts of their customers' businesses. They spent an average of 3.9% of revenue on IT, according to our survey, lagging behind only the banking and financial services and telecom sectors.
Businesses and governments, particularly the federal government, are looking to hand more noncore back-office functions such as payroll processing and IT help to third parties, and they want the work done off-premises. They're not just looking to reduce costs or ease staffing burdens. They want process innovation that boosts the bottom line.
As a result, a majority of service providers, 70% by our count, are investing in service-oriented architecture technology to deliver that kind of innovation in the most efficient way possible. SOA can be used to seamlessly link functions like sales, sourcing, and manufacturing to create dynamic, interlinked processes within a company or through a supply chain. And that's without the need for multimillion-dollar application integration projects.
Overall, it's a good time to be in business services. Growth in IT services employment alone represented 10.4% of all new U.S. jobs in July. New technologies are making the work more profitable than ever.
Automatic Data Processing, No. 2 on the InformationWeek 500, was the top-ranked company in this industry.