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The CIO And The Consumer Effect, Part 2

The problem with a tech savvy public is that its expectations concerning immediate and direct interaction have been raised, and that puts a burden on companies to be more connected electronically with their customers, partners, and employees. But companies are slow to accommodate that trend, much less exploit it, according to the results of a new survey by Accenture.

John Soat

January 25, 2008

5 Min Read

The problem with a tech savvy public is that its expectations concerning immediate and direct interaction have been raised, and that puts a burden on companies to be more connected electronically with their customers, partners, and employees. But companies are slow to accommodate that trend, much less exploit it, according to the results of a new survey by Accenture.The consulting firm polled approximately 300 CIOs from global Fortune 1000 companies, and came away with one significant theme:

Users -- including consumers, business customers and, in the case of government, citizens -- are demanding more because of their ever-increasing familiarity and comfort level with technology, an emerging phenomenon that Accenture has called "user-determined computing."

AKA the Consumer Effect.

Unfortunately, instead of accommodating customers and employees, companies are accommodating analysts and investors by implementing short-term technology upgrades, "superficial improvements in their IT systems rather than making fundamental changes to meet the growing demands of users," according to Accenture.

Here are a few of the results from Accenture's CIO survey, and perspective from Accenture's own CIO, Frank Modruson.

>> Only 35% of enterprises around the world are committing mobile applications to a major part of their business, and only a fraction look seriously at such collaborative tools such as Wikis for their knowledge workers.

"I'm not surprised," says Modruson. "It's amazing how many companies aren't doing this yet." For one thing, he says, many top execs aren't familiar with (translation: don't use) newer forms of electronic communication. Modruson met recently with the CEO of a large company who had never used IM or SMS texting. "I was like, you really need to start looking at this," he says. "This is the lifeblood of next-generation communication." That makes for a potential technology generation gap. "Kids today do not use e-mail," he says. "Kids are coming into the workforce and expecting to communicate this way."

Social networking is an example of a next-generation form of communication that has immediate appeal, demonstrable utility, and a relatively quick return on investment. Modruson says Accenture's internal social network, Peopleataccenture.com, was launched last fall and at this point 60,000 employees have updated their profiles and 10,000 uploaded their photos. "It didn't cost us a lot of money to put this in place," he says.

>> On average just 22% of customer interactions, 19% of supplier interactions, and 33% of employee interactions are conducted online and processed automatically.

"I find that shocking," says Modruson. "It means that that is mostly happening through older technologies, people on people." Information technology should have as its goal to facilitate direct interaction, helping customers, suppliers, and partners help themselves. "The promise of the dot-com world was that you would be able to do more and more online yourself," he says.

>> Only 11% of information-system interfaces focus on the customer.

That shows that most companies have not updated their systems "to be direct interfaces to customers and employees," Modruson says. As an example, Modruson points to the increasing acceptance of online banking. "Consumers today use that [kind of] technology at home to run their lives. But we haven't brought it into companies," he says. At Accenture, "any application we build, our focus is to put it on the Web," he says. With the appropriate security, customers and employees should be able to log into Accenture's applications directly. For examples, employees interact directly with internal apps like myscheduling.accenture.com and esupport.accenture.com. "Our goal is to have you do it yourself," he says.

>> Some 80% of organizations are failing to gather very detailed customer information and 84% are failing to make the information very accessible to decision makers and line staff.

"The majority [of companies] are not focused on customers," Modruson says. One of the primary reasons that more companies aren't orienting their IT systems and applications to customers is that most still spend a considerable amount of their technology dollars maintaining old applications. "Companies are largely bogged down maintaining existing systems," he says. "Companies are not investing in their future."

Companies need to freeze as much as possible of their existing IT spend, he says, drive down operational costs to free up money to invest in future applications. Most companies have depreciated their existing systems, which means the cost of older systems is near zero, "From a fiscal aspect that's attractive, but that leaves most companies burdened with systems that don't meet the needs of today."

Modruson's prescription for reorienting a company's approach to business technology sounds a great deal like that of Hewlett-Packard's CIO, Randy Mott, who advocates a radical overhaul of IT systems to achieve the most payback for a company's technology dollar. "Replace systems, change systems," Modruson says. At Accenture, he says, they've replaced the vast majority of their applications, so that now 300 applications make up their global application portfolio, he says, and the majority are only three to three and a half years old. That makes them "closer to the needs of today," Modruson says.

Modruson won't say what Accenture's IT budget is -- "We're a publicly traded company, we don't release that" -- but claims it's considerably lower than just a few years ago, and much more effective. "Our IT spend today in real dollars is about 20% lower than in 2001," he says, "but our investment budget is greater and our IT is better."

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