And You Thought Y2K Was Grim

Pity the CIOs who report to CFOs these days. In its fourth annual survey devoted to technology issues, Financial Executives Intenational uncovered ...
Scott LeibsOctober 1, 2001

Pity the CIOs who report to CFOs these days; they must not be relishing the Monday-morning meeting. In its fourth annual survey devoted to technology issues, Financial Executives International (FEI) uncovered a bleak picture of reduced ambitions, confused direction, and general stagnation.

Even E-business, which has seemed relatively immune to spending cutbacks, was found to have lost some of its luster. Last year, “determining the appropriate use of E-commerce” was the top priority among the hundreds of senior-level financial executives who responded to the survey. This year, that mission drops to number seven, usurped by “identifying the appropriate level of technology investment.”

Fair enough. E-commerce requires investment, and times are tight. Besides, it may be that companies have moved so aggressively to develop their E-commerce strategies that many believe they have, in fact, determined the appropriate use.

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Whether the priority is to determine the right E-commerce investment or the right technology investment overall, companies seem hard-pressed to quantify it after the fact: 58 percent say they don’t effectively measure returns on technology investments.

Jerry Boltin, national practice director for business intelligence at Computer Sciences Corp., says that while companies may not be confident in their ability to measure the ROI of technology projects, they are putting all discretionary spending through various forms of formal analysis. “It may not be as sure as buying a bond at 7 percent,” he says, “but it does reflect a desire to make sure that every dollar counts.”

Those dollars are currently in shorter supply, as 41 percent of the respondents said they feel “significantly constrained” when it comes to buying or developing new applications. Short-term earnings goals, staff resource limitations, and the need to spend on maintenance and infrastructure were the top reasons cited for the constraint. That’s on a par with the most recent figures from Morgan Stanley Dean Witter, which polls approximately 200 CIOs each month on their technology spending plans. In August, MSDW found that Windows upgrades on desktop computers and servers were the top priorities, with E-commerce initiatives tying for third place with network upgrades and a move to the latest version of Microsoft Office software.

The FEI survey did find one area ripe for more spending: outsourcing. That’s consistent with CFO magazine’s own survey results, which found that companies are interested in a wide range of emerging options in this arena. The FEI survey anticipates double-digit growth in several forms of outsourcing, notably IT, production, and human resources.

Weighting Game

Finance executives rank their top IT issues.

  2001 2000 1999
Identifying the appropriate level of technology investment 61.2% 56.4% 60.0%
Prioritizing technology investments 55.3% 47.4% 73.3%
Identifying how IT can improve or influence business processes 53.3% 53.3% 53.3%
Establishing/maintaining effective dialogue between IT and users 53.1% 49.2% 46.7%
Using technology to drive business change 39.7% NA NA
Upgrading/replacing legacy systems 39.4% 48.3% 46.7%
Determining appropriate use of E-commerce 13.3% 58.4% 32.4%

E-Commerce E-Roding
How companies describe their involvement with E-commerce.

  2001 2000 1999
Conducting a significant amount of business (>50%) via E-commerce 8.4% 4.2% 6.2%
Conducting a moderate amount of business (20-50%) via E-commerce 14.4% 14.4% 17.7%
Piloting E-commerce applications on a small scale (<20%) 40.3% 51.5% 32.4%
Not currently involved but considering it 27.1% 24.0% 31.4%
No involvement and have no plans for it 9.8% 5.2% 12.3%

Sources: FEI; Computer Sciences Corp.