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Follow, don't lead" appears to be the mantra of some CIOs when faced with pioneering IT developments, according to a survey of CIOs at 310 large companies that was conducted by global management consulting and technology services provider Accenture.
July 30, 2005
3 Min Read
Follow, don't lead" appears to be the mantra of some CIOs when faced with pioneering IT developments, according to a survey of CIOs at 310 large companies that was conducted by global management consulting and technology services provider Accenture. Fifty-five percent of the respondents say they prefer to sit back and wait while others absorb the costs and take the risks associated with emerging technologies.
Using IT to achieve more with less also is proving to be a challenge as survey respondents struggle to close the gap between company goals and results. Accenture refers to this disconnect as an austerity trap. Companies believe they can freeze or even cut IT budgets while maintaining the same level of service. The upshot: Businesses retain outmoded legacy systems instead of deploying new technologies, leading to higher maintenance costs and lost productivity as they focus on IT upkeep, repairs, and other unproductive practices instead of innovation. "Our study indicates that there's a significant difference in the level of investing versus maintaining between high- and low-performing IT companies," says Bob Suh, Accenture's chief technology strategist, who headed up the study. "Poor spending quality is characterized by a high percent of time spent on maintaining and fixing systems versus investing in productivity-driving change." Accenture estimates that a typical company spends 41% of its IT budget on managing existing operations and fixing preventable problems. Another 40% is allocated to enhancing existing infrastructure, integrating established systems, and building new infrastructure. Ten percent of IT dollars is devoted to the rollout of new systems and processes, while another 9% is spent on testing new technologies. How is your IT division bridging the gap between business expectations and cost containment and ongoing innovation? Helen D'Antoni
Senior Editor, Research
Pushed By Growth Which spending decisions are primarily based on growth? Growth is a major driver of IT spending decisions, according to Accenture's study. Nearly half of surveyed CIOs say spending decisions pertaining to the building of IT infrastructure are based on increased demand. Two in five execs say growth is behind investments that will enhance infrastructure. And a third say integration efforts are based on increased need.
Investment Payback What are the top five most-important benefits from investments in enterprise systems? Expectations run high when enterprise systems are infused with money. The most significant benefit is better management decision making, with nearly 80% of CIOs citing that as the most important payback. Improved productivity and better financial management also are vital for three-quarters of IT executives surveyed. For nearly 70%, systems investment must result in increased and improved flexibility of their IT infrastructure.
Payoff Expectations Which benefits from investments in enterprise systems are realized within 12 to 24 months? Accenture believes too many companies curb adoption of newer technologies when the earnings outlook is challenging. When money for enterprise systems is approved, typically CIOs don't expect to wait long for the investment to pay off--generally 12 to 24 months. The only exception, according to survey results, is the need for faster, more accurate financial translations; 56% of the CIOs surveyed expect those benefits within 12 months.
Management Decisions How does your company manage its key projects? A variety of strategies are used to ensure that key projects stay on track. About half of CIOs say tactics include managing by the numbers, coordinating with top-down directives, or putting someone in charge and holding that person accountable. Yet predominately, project administration is less of a formal affair. While key initiatives are actively monitored, changes are done on the fly when deemed necessary.
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