Amid the Downturn, Firms Look to Information Technology to Restore Strength
NEW YORK; Dec. 2, 2009 - A majority (72 percent) of business and information technology (IT) executives say their organizations place greater value on the IT function today than they did before the economic crisis. What’s more, they view IT as an important part of their economic recovery efforts, according to the findings of a global study released today by Accenture (NYSE: ACN) and produced in cooperation with the Economist Intelligence Unit (EIU).
Consequently, executives expect technology spending to increase in their organization either selectively (47 percent) or across the board (10 percent) in the next 12 months. Further, and perhaps surprisingly, non-IT executives appear even more bullish than those directly responsible for IT, as 61 percent anticipate technology spending boosts.
Confidence appears to be highest in the United Kingdom and Ireland, where 63 percent of respondents overall expect increased investment, with nearly as much momentum shown in the United States, Spain and Italy. The survey was conducted in the United States, United Kingdom, Ireland, Germany, France, Spain and Italy.
The need to invest in technology notwithstanding, the study also shows that companies will keep a close eye on the returns delivered by IT. Accordingly, the vast majority (81 percent) of executives across all geographies say they are under increased pressure to deliver projects that incorporate more flexibility than was previously required. In the United States, 87 percent of respondents agree with this statement, while in Europe this pressure is felt most acutely in France, the United Kingdom, and Ireland.
The survey of more than 550 executives highlights that cost savings and control remain a key driver when it comes to IT investment decisions. The respondents identified three measures as most effective in reducing the cost of implementing IT projects: Ensuring the stability and business relevance of project requirements; the replacement or rationalization of existing systems; and movement to open platforms.
“The results of the survey show that firms recognize the need to invest in technology to defend and accelerate their competitive position, even in difficult times, which has not always been the case in the past," said Keith Haviland, Accenture’s Global Managing Director for Systems Integration Consulting. "The turmoil over the last 18 months has underscored the need for further flexibility and scalability to stay ahead in business and drive agile business change."
In terms of specific areas of investment, IT leaders have a much clearer idea than their business counterparts with regard to priorities for new projects over the next year. By far the most pressing priorities of IT chiefs are for server virtualization and consolidation (44 percent), whereas business managers in general rank virtualization as important as customer relationships and service. While acknowledging the importance of customer relationships and service, IT chiefs are also expecting significant funding for e-business (32 percent) and service-oriented architecture (SOA) projects (31 percent).
Technology performance metrics and clearer definition of risks are also taking on greater importance. Over three-quarters of executives at global firms now use either financial, productivity or progress metrics to measure the performance and benefits of their technology investments. Additionally, 27 percent of IT executives now use a specific methodology or governance framework to assess the business impact of their IT investments. However, in around half of cases of those surveyed, metrics are still only partly implemented. In about one-third of the firms surveyed, metrics are still not being used at all.
"Just how indispensable IT has become to business survival and leadership is proven by the anticipated increase in investment over the next year, despite the challenging economic conditions," Haviland said. "While other operational budgets are being slashed, global firms look towards IT as a way to re-build strength. Far greater efficiencies and cost savings can be realized through automation across technologies, faster access to the benefits of emerging technologies such as SaaS and Open Source coupled with flexible frameworks of integrated tools and metrics to track returns on investment."
About the Study
To gauge how companies’ attitudes toward technology investment in different parts of the business have changed in response to the global financial and economic crisis and to explore how investment may evolve over the next 12 months, the Economist Intelligence Unit surveyed 557 senior executives from a wide range of industries in August and September 2009. The survey was conducted in the US, UK, Ireland, Germany, France, Spain and Italy. The survey sample was senior leaders, with 55% of respondents being C-level executives such as CIOs, CFOs and CEOs. Two-thirds of the respondents belong to an IT function, with the remainder executing other functional roles. All are knowledgeable about the technology investments being made in their part of the organization or the business overall. The companies surveyed cover a wide cross-section of industries. Fully 62% of them have annual global revenue of more than $500 million.
Accenture is a global management consulting, technology services and outsourcing company. Combining unparalleled experience, comprehensive capabilities across all industries and business functions, and extensive research on the world’s most successful companies, Accenture collaborates with clients to help them become high-performance businesses and governments. With approximately 177,000 people serving clients in more than 120 countries, the company generated net revenues of US$21.58 billion for the fiscal year ended Aug. 31, 2009. Its home page is www.accenture.com
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