Voice of Our Readers: The 2006 Strategic Management Survey

We're not there yet. That's the upshot, for both user organizations and vendors, of our 2006 Strategic Management Survey. In this poll, readers tell us that information technology, while enabling critical business insight and smarter processes, also produces silos that can hobble companies trying to integrate information for a cross-functional, enterprise understanding of business performance, customer behavior and other key factors. The brave new world of service-oriented architecture (SOA) gets a qualified endorsement; security, software licensing and performance hold back faster adoption. And there's more.

Last September, we asked our readers to help us shine the spotlight on them—to find out what they thought about important trends in IT development, implementation and deployment. Like kids in a candy store, we took full advantage of the opportunity. We thank the 1,131 readers who provided answers that reveal much about the current effectiveness of strategically important business applications involving business intelligence (BI), content management, SOA, business process management (BPM), information integration and other related tools and platforms.

To kick off the New Year, we examine what the responses tell us about where things stand on the journey toward the realization of a more intelligent enterprise. In this article, I'll highlight the survey's insights into our readers' strategic IT management challenges. Editor Doug Henschen follows with a feature exploring what respondents' top 2006 technology spending and interest choices tell us about information access, analysis and other issues.

Business and IT: Get in Sync

Strategic business applications succeed when they advance business goals rather than let technology or human inertia impede them. Thus, Intelligent Enterprise readers are sensitive to obstacles in both management and IT that stand in the way of producing competitive advantage.

It turns out that a big obstacle is IT credibility. Roughly 47 percent agreed with the statement that "Some strategic business application projects have been halted or plans not approved because of an inability to quantify productivity and revenue benefits." BI projects in particular face a credibility problem. About 36 percent answered that BI technology "is incapable of performing all the functions we need."

The BI stack, which begins with user interfaces and extends down into analytics, data warehouses, integration middleware, databases, servers and storage, is still struggling to deliver on its promises. As the Listening Post at the bottom right shows, readers across the spectrum of IT spending (and about half the total of who responded) agree that workers in their organizations "frequently make poor decisions" due to a lack of useful information.

So, should organizations turn away from further BI investments? Hardly; what's needed is a clear vision of how information and supporting technologies work together to apply the right knowledge to the right problem. "The challenges facing us include effective data integration, implementations that span multiple hardware and software platforms, use of multiple BI tools and differences in architectures," says Steven Dempsey, senior technical specialist at Washington Mutual and a survey respondent. "We're dealing with these issues by establishing and adhering to standards, sharing best practices and providing superb infrastructure support."

One function in need of good information and analytics is IT itself—a topic we've been covering in recent issues. Organizations are increasingly implementing BI and performance management tools, often packaged inside other solutions, to improve accountability and align technology development and deployment more closely with business goals.

In his December column, "A Model for IT Governance," contributing editor Mark Smith noted that "CFOs now appear to be more involved in IT investments, and they're demanding results." CFOs have multiple priorities on their IT agendas, such as streamlining the financial closing process: but CFO leadership is growing largely because of the urgency to comply with regulations such as the Sarbanes-Oxley Act. While by no means shutting down new strategic business application deployment, our survey showed that the majority of organizations (65 percent) are exercising more caution in the face of confusing and unforgiving regulations. This urgency, plus CFO leadership generally, is pushing interest in running IT "like a business," with measures, metrics and reporting to back up this goal.

In 2006, expect to see more BI-like tools from the likes of BMC Software, Computer Associates, Compuware, Mercury, PlanView, Troux Technologies and others focused on IT governance and business systems (or applications) management. About 30 percent of respondents told us that improving the timeliness of information for IT performance management is a "big effort"—if not the "highest priority"—at their organizations. Only one quarter said that they have appropriate tools and measures in place right now.

Competency Centers: Integration as Strategy

Old technology rarely dies or even fades away. In most organizations, production systems keep on ticking and must be integrated with other systems. Integration woes bedevil everyone, leading many to ask as they try to deploy new systems: Is there a better way? How can we avoid repeating the same mistakes?

IT governance is gaining steam for the development of best practices—or adoption of industry standards such as the IT Infrastructure Library (ITIL). Organizations can't afford to waste time and resources in deploying systems; capitalizing on market opportunities depends on keeping IT efforts on track with business objectives. Gartner, the IT research and analysis giant, introduced the notion of "competency centers," which gather key internal business and IT people to develop best practices, improve the process of technology adoption and create support for cross-functional, enterprise initiatives—that is, ones that must cross the silos and fiefdoms, and, therefore, address people and process problems as much as technology challenges.

We asked readers if they're establishing competency centers (sometimes called "centers of excellence"). In several categories, the answer was a strong "yes." Integration competency centers are particularly popular for the tough, political job of setting common policies and methods of sharing data and integrating applications. Almost 46 percent have established one, while about 25 percent plan to do so. The Listening Post on the next page offers a breakout according to IT budget.

The survey revealed just about the same determination to create competency centers for data warehousing and customer intelligence as for governance and regulatory compliance, both areas that demand strong business/IT alignment. "Search, taxonomies and analysis" drew a 20 percent tally for established competency centers, while about 22 percent were planning to establish one. In 2006, search technology will garner attention, especially as IBM, Intel, Microsoft and SAP field solutions to compete in both consumer and enterprise markets. Competency centers will help organizations get beyond the inevitable hype and apply search as an entry into semantic integration, an emerging technology field that promises to help users draw knowledge from unstructured, incomplete and imperfect information.

Vendors: Time to Step Up

Readers aren't happy with vendors' efforts to solve integration problems; 62 percent overall indicated that vendors aren't doing enough (see the breakout by company size in the second Listening Post at right). About 43 percent said that recent enhancements to software products and applications aren't in sync with their business and IT requirements, and that they are therefore putting off upgrades. Just over 41 percent believe a shared legal responsibility should exist between their organizations and software vendors (or service providers) for when things go wrong. And nearly a third said that their more extensive product testing is forcing vendors to adapt to longer sales cycles.

Will vendors' long, lucrative ride on maintenance revenues come to an end any time soon? About a quarter of the respondents said they're reducing maintenance costs by canceling contracts with their original vendors and either outsourcing the work or contracting with cheaper third-party support firms. However, 46 percent said that they're not.

We wondered whether traditional licenses and maintenance arrangements present major obstacles to complete exploitation of SOA and the Internet generally. Nearly 35 percent said yes, while about 25 percent said no. And are readers moving toward subscription-based arrangements and away from standard up-front licensing? A little more than 32 percent said yes, but the same percentage said no.

Overall, SOA received a thumbs-up from 42 percent of respondents as their "template for the development, deployment and licensing of future applications and software tools." However, SOA has some challenges to overcome. About the same number cited security concerns as a key reason why they "restrict" SOA deployment and use of Web services. Nearly the same number of respondents called the technology immature, and 29 percent restrict their implementations because "it's not possible to couple Web services as loosely as software marketers and salespeople say you can."

Will customers' intentions with SOA eventually push more change in licensing relationships with vendors? It's too soon to tell, but interestingly, 40 percent of respondents said their organization "legally protects some business processes, analytic approaches and templates," and sees potential business opportunities in licensing these to partners. This result sheds light on how SOA integration with BPM might develop. Clearly, a good percentage of our readers will be looking for business opportunities in this fusion, not just better enterprise integration and efficiency.

Smarts in the Here and Now

"Real time" has become a rallying cry—and something of an IT imperative—in many organizations. We wanted to find out where readers are placing the most emphasis on "reducing information latency." Perhaps not surprisingly, about 40 percent are making a "big effort" toward speeding up the information flow to deal with fraud and security problems (12 percent called it their "highest priority"). Call center, customer service and sales support came in second, with 32 percent applying at least a "big effort." Regulatory and compliance issues came in with 31 percent, with the next highest percentage saying that end-of-quarter reporting required a big effort to cut down on information delays.

BI and data warehousing are often the target of "real-time" partisans, in part because their legacy is in a batch-oriented world dominated by historical reporting and strategic analysis of long-term trends. However, as performance management catches on, especially for operational users throughout enterprise, the desire for actionable information rises. Business activity monitoring (BAM) of the status of processes, transactions and other operations sits at the most "active" end of the scale right now.

We asked readers how they view themselves on the passive-to-active spectrum. The highest number (nearly 39 percent) said their strategy was to make BI more active as the technology matures. About 28 percent said they're currently deploying active BI features, especially for service and sales management, performance management and end-of-quarter business condition reporting. Less than 10 percent have employed BAM and other active BI features outside of their "passive" BI and data warehousing infrastructures.

"Faster, better, cheaper" remains the motto of the software industry generally and of most IT users: so, it wouldn't surprise us to see more readers embrace the real-time vision and edge toward the "active" end of the spectrum with BI and data warehousing. Once SOA security and performance challenges are overcome, BI Web services will hit the market and demand timely information and analysis. Even the passive world of strategic analysis will come to depend on speedy refreshes of information. Organizations will want instant visibility into transactions and processes so employees and/or systems can act quickly to seize opportunities or head off disaster.

Your survey answers have given us much to think about as we organize our coverage for 2006. The quest for strategic and competitive advantage comes with an unquenchable thirst for the best information and analysis—and for unique intelligence with which to improve business processes, customer relationships and profitability. Our quest remains to bring you insights that keep you moving forward and never falling back.