Alinean Highlights Top 200 U.S. Companies Achieving the Greatest Return on IT (ROIT)

Frugal and Agile Companies Prevail in Third Annual Ranking

ORLANDO, Fla. (Oct. 5, 2005) — Alinean today announces its third annual ranking of the top 200 U.S. companies deriving the greatest value from IT investments (ROIT™) from more than 8,000 U.S. public companies studied. Due to rising energy prices and traditionally frugal IT investment, the energy industry shows up the strongest this year, owning 12 of the top 20 spots.

The ranking, published on SearchCIO.com as The SearchCIO 200, reveals that top-performing companies are consistently more frugal in their IT spending as a percentage of revenue, spending 2.8 percent where the average company spends 3.4 percent. These leaders have managed to reduce IT infrastructure Total Cost of Ownership (TCO) via consolidation, standardization, and best practices, while more carefully investing IT dollars in new projects that are likely to deliver a substantial return and competitive edge.

Of importance this year and following a continuing trend, these frugal leaders are ramping IT investments to capture opportunities presented by improving market conditions. 2003 leaders averaged a meager 0.8 percent of revenue spent on IT, while in 2004, spending jumped to 1.6 percent of revenue and in 2005, to 2.8 percent of revenue. Average performers and laggards maintained relatively consistent spending levels of 3.5 percent and 2.7 percent respectively over the same time frame. These findings demonstrate the trend for leaders to expand their IT investments, and illustrate the importance of agility in out-performing the competition. Leaders more easily and quickly increase spending when there’s an economic up-tick, and scale back when times are tough.

“The biggest shift we’re seeing this year is the dramatic increase in spending amongst the top performers as companies move from reducing costs to shifting investments to capture market share and facilitate growth,” said Tom Pisello, CEO and founder of Alinean.

The SearchCIO 200 ranking gives IT stakeholders an actionable benchmark to compare their own IT performance against that of the most effective public U.S. companies with annual revenue over $1 billion and 1,000 employees or more. To determine ROIT, Alinean compares company performance, measured by Stern Stewart’s Economic Value Add (EVA = net profit – cost of capital * (assets – liabilities)) metric, versus IT spending. This ratio highlights companies that are spending less compared to the shareholder value they are creating.

Alinean’s annual ranking identifies the top performers across ten vertical industry categories: consumer discretionary, consumer staples, energy, financials, healthcare, industrials, IT and telecom, legal and insurance, materials, transportation and auto/vehicle manufacturing, and one across-the-board ranking of top ROIT performers.

Alinean’s ROIT metric and other benchmarks in its PeerComparison™ – Enterprise v2.5 software are being used by a number of Fortune 500 companies and consulting companies to assess IT efficiency and effectiveness, set IT performance goals, and to understand how IT spending, TCO and trends stack up to peers. The software is supported by a database of over 20,000 worldwide corporations with financial data from Mergent and Stern Stewart, and IT spending and total cost of ownership (TCO) data from IDC and Alinean.

ROIT Leaders of the Pack
Because of the high pricing power and frugal IT spending, energy companies like PG&E Corp., Apache Corp., Devon Energy Corp., Murphy Oil Corp., and Burlington Resources Inc. top the charts this year, with ROIT performance that exceeds 2,000 percent. High flyers also include several leading financial services, healthcare, industrials, materials, and legal and insurance companies.

Nearly half of the companies that made last year’s Top 20 are repeat high-performers, and nearly 100 companies appearing on this year’s Top 200 list continue to invest wisely, making their third annual appearance.

Several larger companies, including GE, John Deere, Bank of America, Kellogg, General Motors, Microsoft and 3M have dropped off, making room for smaller and more agile companies like Nucor, Gilead Sciences, Equifax, Winnebago Industries and Autodesk.

“Consistently, it’s not how much is being spent, but what companies are spending on that matters most. Companies can clearly learn from these leaders how to be more agile, support key business initiatives, better align IT and business goals and projects, and invest more in innovation and less in ‘keeping the lights on’ operations,” said Tom Pisello, CEO and founder of Alinean.

More information on this year’s ranking and Alinean are available at http://searchcio.techtarget.com and www.alinean.com.

View The SearchCIO 200 at http://searchcio.techtarget.com/cio200/0,294738,sid19,00.html.

Top 20 U.S. Companies with Highest ROIT™ Across Industries
SearchCIO 200: http://searchcio.techtarget.com/cio200/0,294738,sid19,00.html
 

About SearchCIO.com
SearchCIO.com is a member of the TechTarget portfolio of IT management Web sites. 
TechTarget publishes integrated media that enable information-technology (IT) marketers to reach targeted communities of IT professionals and executives in all phases of the technology decision-making and purchase process. Through its industry-leading media and events, and its ROI-focused lead-generation and lead-management services, TechTarget helps IT marketers generate qualified sales leads, shorten sales cycles and grow revenues. Founded in late 1999, TechTarget has won dozens of awards for its innovation and industry leadership, including more than 25 awards for editorial excellence in the past three years alone. More information about TechTarget is available at www.techtarget.com.

About Alinean

Alinean develops software and solutions to streamline the B2B selling process with business value selling solutions – using ROI/TCO and business case analysis to prove and improve the value of solutions to prospects and customers. The company’s founding team pioneered the concept of interactive ROI and TCO software in 1994, developing award-winning solutions for leading B2B vendors and consultants. Its research methodologies and software tools are used by analyst firms and consultancies such as IDC and B2B leaders such as Oracle, HP, Dell, SAP, Microsoft, Symantec and IBM, and have helped justify billions of dollars in IT spending and derived value. For more information, visit www.alinean.com or call 407.382.0005.
 

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