At a time when Big Data and other cutting-edge information technology (IT) is being actively evaluated in boardrooms everywhere, 57% of senior finance executives at large and midsized North American companies say their companies are either “fair” or “poor” at ensuring that such “improve-the-business” IT projects are actually yielding expected financial returns. And almost none (3%) rate their companies as “excellent.” That’s according to a new survey of more than 150 senior finance executives by CFO Research in collaboration with AlixPartners, the global business-advisory firm.
survey also finds that more than two-thirds of financial executives (66%) give
their companies a “C” or “D” when it comes to measuring financial returns from
discretionary IT projects, such as Big Data ones, designed to improve or add to
a company’s business and profits. (Only 5% gave their companies an “A.”)
at the other end of the IT spectrum, the survey reveals that “keep-it-running”
IT costs – non-discretionary support and maintenance systems – are
cannibalizing funds available for business-improving IT. A plurality of
respondents (49%) estimates that, over the past two years, their company has
maintained approximately a 70-30 ratio of keep-it-running to
improve-the-business IT spending, and of that amount, a solid majority – 63% –
believes that their company’s spending is weighted too heavily toward
keep-it-running IT services, and that a greater share should be directed to
improve-the-business IT projects.
survey also shows that, despite massive IT investments in recent years,
companies aren’t getting enough of the kind of information they need to
successfully run and grow their businesses. In fact, no less than 71% of
the executives polled say their companies should have access to more robust
business information for the money spent on IT. In addition to desiring
more robust information on product profitability (cited by 42%) and customer
profitability (41%), there was also strong interest in having better access to
information about customer acquisition (33%), revenue (32%), price elasticity
(31%), customer attrition (29%) and promotions effectiveness (25%).
big reason companies are over-spending on IT or spending on it in the wrong
places, reports the survey, has to do with governance and discipline around IT
programs. For example, 72% of respondents said that factors other than a
carefully considered business case (e.g., internal politics, personal
persistence/willingness to be a “squeaky wheel”) influence the priority and
funding of “improve-the-business” IT projects much more often than they
should. Meanwhile, when asked who in their company should have a greater
voice in whether to fund such projects, 45% said sponsors from business or
functional units and 28% said the finance function. By contrast, when
asked who today is primarily responsible for deciding funding, just 14% said
business sponsors and only 7% said the finance function.
the same token, when it comes to “keep-it-running” IT spending, 62% of finance
executives say that kind of spending is currently either kept at the corporate
level (within the IT department) or only partially charged to business units,
neither of which is necessarily optimal for controlling such costs.
Moreover, more than two-thirds of those surveyed (66%) say that keep-it-running
and improve-the-business IT spending is budgeted together at their companies.
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