Technology

Survey: The Truth About Tech

We asked CFOs how they view IT. Their answer: Very carefully.
CFO StaffOctober 15, 2002

When we asked more than 250 CFOs whether they are devoting more time to IT issues these days, a resounding majority said yes. When we asked them whether their companies have gotten the expected ROI from technology investments, almost half said no or rarely. And when we asked about their views on economic recovery versus their own company’s future…well, their views may surprise you.

CFO magazine and Morgan Stanley surveyed 252 executives between July 30 and August 20. Respondents were primarily CFOs (34%), directors of finance (18%), controllers (15%), VPs of finance (13%), business managers (5%), CIOs or equivalents (6%), and senior executives (3%). Twenty percent work in manufacturing, 12% in service industries, 10% in finance/insurance, and the balance across a range of industry classifications. Two-thirds of respondents work at companies that employ 1,000 or more people. About half work at companies with at least $500 million in annual revenue, which we used as the dividing line between “large companies” and “small/midsize businesses.” Nearly half the respondents reported IT expenditures in 2001 of $5 million or more. Numbers may not always equal 100% or may show other slight discrepancies due to rounding.

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Large companies
Small/midsize businesses
Yes, significantly more 28%
20%
34%
Yes, moderately more 45%
53%
39%
No 27%
27%
27%

Have your technology expenditures produced the returns on investment you expected?

Large companies
Small/midsize businesses
Yes 14%
11%
17%
Usually 43%
41%
42%
Rarely 25%
25%
24%
No 19%
23%
17%

Do you believe your organization procured an excess of technology over the past three years relative to current needs?

Large companies
Small/midsize businesses
Yes 10%
9%
11%
Probably 14%
20%
8%
Not sure 3%
69%
80%
No 74%
4%
2%

Is your company consolidating the number of technology suppliers it uses?

Large companies
Small/midsize businesses
Yes 48%
60%
37%
No 44%
34%
54%
Not sure 8%
6%
9%

If yes, why? (multiple responses permitted)

Large companies
Small/midsize businesses
Reduce complexity of vendor management 59%
62%
57%
Reduce technical complexity of integration 58%
64%
50%
Leverage volume discounts 52%
53%
50%
Create more strategic partnerships 43%
46%
41%
Vendors offer more products,
facilitate1-stop shopping
23%
20%
30%
Other 3%
2%
5%

Is your company expending more effort to evaluate the financial viability of the vendors you use?
(Editor’s note: You can look into the working capital management of thousands of public companies with the CFO PeerMetrix interactive scorecards.)

Large companies
Small/midsize businesses
Yes 37%
41%
31%
No, we always did this 42%
37%
45%
No, we deal only with large vendors 15%
16%
17%
Not sure 7%
6%
7%

Do you plan to spend more on technology products and services in 2002 than in 2001?

Large companies
Small/midsize businesses
Yes 44%
40%
51%
No 49%
54%
45%
Uncertain 7%
6%
4%

Who is ultimately responsible for authorizing IT spending in your company?

Large companies
Small/midsize businesses
CEO 48%
42%
55%
CFO 28%
22%
33%
CIO 11%
20%
4%
CTO 4%
3%
4%
Business-unit
head(s)
9%
14%
3%

Has the ongoing news about the slow economy and the stock market decline caused you to reevaluate your technology budget/spending plans within the past month?

Large companies
Small/midsize businesses
Yes, will spend less than was budgeted at start of year 20%
27%
12%
Yes, will spend more slowly, adopt a
wait-and-see mode
19%
13%
23%
Yes, lowered the approval authority for
most employees; personally reviewing
more expenditures
5%
4%
8%
No change, but monitoring the situation
closely and evaluating whether to reduce
or delay spending
34%
41%
31%
No change to our original plan 18%
14%
20%
Yes, doing smaller deals 4%
2%
6%

If your company’s profit picture improved in the next three to six months would you increase your spending on IT over currently planned levels?

Large companies
Small/midsize businesses
Definitely 10%
6%
14%
Probably 29%
26%
36%
Probably not 51%
58%
42%
Definitely not 10%
6%
3%
Unsure 5%
4%
5%

Have you begun to assess your 2003 IT budget yet?

Large companies
Small/midsize businesses
Yes, as of now it’s likely to increase over 2002 30%
24%
36%
Yes, as of now it’s likely to remain flat compared with 2002: 39%
42%
32%
Yes, as of now it’s likely to decrease compared with 2002 11%
18%
6%
No, budget process has not begun 21%
16%
25%

Has the ongoing scrutiny of corporate governance and auditing issues translated into a more cautious capital-spending strategy for your company?

Large companies
Small/midsize businesses
Yes 22%
27%
19%
No 73%
65%
79%
Not sure 6%
8%
3%

What is your outlook on the current state of the U.S. economy?

Large companies
Small/midsize businesses
Positive 10%
7%
14%
Slightly positive 42%
43%
43%
Neutral 29%
29%
28%
Negative 18%
21%
16%

What is your current outlook on your company’s business prospects?

Large companies
Small/midsize businesses
Positive 39%
38%
42%
Slightly positive 37%
36%
38%
Neutral 15%
16%
14%
Negative 9%
10%
6%

When do you expect the economy to improve?

Large companies
Small/midsize businesses
3Q02 4%
4%
4%
4Q02 18%
17%
19%
1Q03 23%
23%
24%
2Q03 33%
33%
33%
3Q03 10%
9%
11%
4Q03 12%
14%
9%

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