BTO the next industry ‘wave’: Mercury

Business technology optimization (BTO) is about managing IT like a business and could well be the next big thing for a recovering IT industry, according to Mercury’s vice president of strategy, Zohar Gilad.

Speaking at Mercury Interactive’s 2004 Australian users conference in Melbourne yesterday, Gilad said that about two years ago, the company noticed a new wave coming and to meet that wave came up with a new strategy called business technology optimization. It is really about managing IT like a business and “since then we’ve been executing our new strategy”.

“Now the questions is, what is that wave?” he said. ‘It is not a technology wave so it’s not like a new gadget that is going to make things better, faster or cheaper; it’s really an IT transformation wave where the entire industry is re-engineered and transformed into something new.”

Gilad said the reason [why BTO is happening] is that IT is becoming probably the most important element in the knowledge-dependent industry.

“If you look at finance, insurance, transportation and more and more industries, [they] are becoming technology [dependent]. So IT is becoming more and more important,” he said. “As manufacturing was important during the industrial revolution, so IT is becoming in the knowledge-dependent industries and this is probably several orders of magnitude more impacting.”

To measure BTO, Gilad referred to economists’ use of productivity gains.

“One of the most interesting phenomena in the nineties was a consistent, higher-than-average productivity gain worldwide. It was between 1.5 and 2 percent which is way above the average,” he said. “This phenomenon is also continuing today. And this is why Alan Greenspan, chairman of the Federal Reserve in the US, said that ‘this productivity gain is attributed to the billions that have been invested in information technology’.

Although conceding that over the past few years there has been pressure on IT to cut costs, Gilad said that as the economy improves CIOs now have the opportunity to set their sights on the long term to help transform their organizations.

“When we came up with our BTO strategy we got a very interesting question – 'this is great but show us how to get there from here?' To start, look at where the pain is and where the gain is, and start with the process,” he said.

Is BTO set to become the next industry buzzword and standard offered by many vendors? “When we came up with BTO that was not our intention, but it seems to be getting traction. Certainly the Yankee Group has picked up on it and Gartner has talked to us about adopting BTO," Gilad said. "If you look at other companies I think some are trying to follow this by following the same path although they may not use the acronym BTO.”

Rodney Gedda is a guest of Mercury Interactive at its annual user conference in Melbourne

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