cent of their sales revenues; professional services and telecommunications followed with IT R&D budgets of 0.28 and 0.24 percent of sales revenues, respectively (Information Week, 1999). Food and beverage processing firms came in at the low end, with IT R&D expenditures of 0.05 percent of their projected sales (Information Week, 1999). The figures show that on average, even in the 500 most IT-intensive end-user organizations, less than 0.15 percent of sales revenues are devoted to IT R&D.
In short, most large end users who invest massively in developing and deploying IT systems fund only limited research, although they often do invest in developing custom applications for their own purposes. These are the companies most likely to benefit from attention to the research challenges inherent in IT applications (discussed in Chapter 3 and Chapter 5), yet they are the least likely to support research. The companies that do support research, mostly equipment suppliers, do not benefit directly from research on large-scale systems and applications and cannot be expected to assume the entire burden of supporting such work. Clearly, the industry as a whole underinvests in this type of research.
End users of IT focus almost exclusively on applied R&D. For example, a large hospital or health care system might conduct applied research to evaluate whether expert systems reduce the inappropriate use of medications and which system features are needed. Boeing employed approximately 150 workers (out of its total workforce of 231,000) in its computer science area in 1998 to develop systems to support aircraft manufacturing operations (e.g., tools for collaborative design of aircraft, advanced computer-aided design (CAD) technologies); to implement corporate information infrastructures; and to design systems for Boeing aircraft (e.g., onboard networks, entertainment systems).34 Online retailer Amazon.com spent $47 million to enhance the features, content, and functionality of its Web sites and transaction-processing systems and upgrade its systems and telecommunications infrastructure. 35 Merrill Lynch spent hundreds of millions of dollars to develop a new computing platform for its financial advisors and a Web-based interface that allows customers to access their accounts and company research, consult with their financial advisors, and conduct e-commerce. 36 The much smaller online investment firm, E*Trade, spent $33 million —13 percent of its total revenues—on technology development in 1998 to enhance its product offerings and maintain its Web site.
Such efforts can result in innovative technologies. Companies such as Aetna, Amazon.com, Citicorp, Merrill Lynch, and the Sabre Group (which processes airline reservations) have been awarded a handful of patents on inventions related to IT and related systems (Table 2.8).37 E*Trade has applied for a patent on its proprietary Stateless Architecture, which enables its Web site to handle more than 1 million visitors and place up to