IT Investing for High Performance: A Global Survey of CIOs

We learned that the high performers spend significantly less time maintaining and fixing IT systems and significantly more time building new systems to improve business performance.

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IT is not merely a cost but a critical contributor to the business, focused on improving business value and performance. When it comes to managing IT, balancing the “cost reduction vs. value creation” equation is critical.

To help senior executives in this effort, Accenture surveyed more than 300 chief information officers to better understand the relationship between the real business value of IT investments and the impact IT has on achieving high performance.

About the Survey
Defined as the senior decision-making executives in the IT organization, 310 chief information officers participated in the survey. We deployed this global research initiative in 10 markets: the United States, United Kingdom, France, Germany, Italy, Argentina, Australia, Singapore, China and Japan (due to staggered field-research launch dates, responses from China and Japan are not reflected in the initial publication).

Field research for this survey began in January 2005. Participants were asked to fill out an online questionnaire and responses were gathered for this initial report until May 2005.

This survey was conducted on behalf of Accenture in the United States, United Kingdom, France, Germany and Italy by NOP World, a leading supplier of custom and syndicated research. In Australia and Singapore, the research was conducted between August and November 2004, with 100 CIOs participating in a research survey and a further 25 in roundtable discussions. To date, the IT Infrastructure specific findings of the Australian and Singaporean research have been released in a report, “Building a High Performance IT Infrastructure.”

The survey was conducted on behalf of Accenture in Argentina by D’Alessio IROL, a supplier of market research and management, marketing, media and human resources consulting. The survey is being conducted on behalf of Accenture in China and Japan by BPRI, a leading global research-based consultancy specializing in corporate reputation and branding, strategic B2B marketing, customer relationship management and internal motivation and communications.

Spending Is Not Investing
IT has unquestionably established itself as a force in the economy and equity markets. Global information technology and communications spending exceeds $2.8 trillion and accounts for nearly 7 percent of global gross domestic product (GDP). Just as investors have taken note of earnings quality, so too must we examine the quality of IT spending. Sustaining the right level of investing is critical to maintaining both business and IT productivity.

As the installed base of technology grows, IT spending surges have less to do with forward investing than with replacement cycles. We believe the IT investment surge in Q4 2000 resulted in an echo replacement cycle in Q3 and Q4 2003. This cycle was mainly driven by pent-up demand for equipment replacement and is now declining.

What the High Performers Do
Using 33 proprietary indicators, respondents to the Accenture survey were identified as having high, average or low-performing IT organizations. From the perspective of quality of spending, the high-performing IT organizations engaged in the following practices:

• High performers spend significantly less time maintaining and fixing systems and significantly more time building new systems.
  
  
• On average, high performers spent 50 percent more time building systems than low performers.
  
  
• High performers committed 43 percent of their new project budgets to boosting business productivity.

Why Aren’t More Organizations Investing?
We believe CIOs are ready to move forward and invest, but a couple of obstacles exist:

• The lack of predictability and execution.
• Lack of access to business performance metrics.
• Required spending on compliance.
• Insufficient belief in the need to take on the change.
• Current cost-cutting mindset.
  
  

Mastering the Five Facets of IT
Our survey focuses on five facets of IT that create business value. Each is substantial enough to merit investigation as a stand-alone subject. The “Five I’s” are interrelated, of course, and as we build up a body of comparative survey data, we are looking to capture the correlations of CIO responses between areas.

• Innovation: Fuels new growth.
  
  
• Industrialization: Creates new efficiencies and increases performance outcomes through standardized IT work processes.
  
  
• Integration: Bridges the gap between applications and technologies.
  
  
• Information: Arms an organization for better decision-making.
  
  
• Infrastructure: Standardizes, optimizes and secures the technology backbone.