Technology

IT Directions 2.0

Our annual survey of senior finance executives finds them bullish on the value of IT and prepared to raise budgets accordingly.
CFO StaffSeptember 15, 2003

Our second annual survey of CFOs and senior finance executives finds a surprising degree of optimism about technology, with companies not only prepared to spend more but also continuing to believe in IT as a source of strategic advantage. Given all the talk about IT as a “utility,” not to mention CFOs’ alleged tightfistedness (if not downright antipathy) regarding IT, the survey results suggest that finance leaders do in fact value technology and plan to invest accordingly. But there is room for improvement: CFOs are far from dazzled by the payback their companies have seen from IT, and many believe their companies have overbought. They are also strongly divided on the value of ROI analysis, and buying plans are highly varied, with no single technology qualifying as “hot.”

Results are based on the responses of 262 CFOs and senior finance executives polled during the latter half of July. Approximately half of the respondents work for small companies (under $100 million in sales), while one-quarter work for midsize firms ($100 million to $1 billion) and one-quarter work for large enterprises ($1 billion-plus). In some cases, results may be +/- 100% due to rounding.

Compared with one year ago, your current IT budget is:
Up 1% to 5%
 29%
Up 6% or more
 19%
Flat
 24%
Down 1% to 5%
 18%
Down 6% or more
 13%

Next year’s IT budget compared with this year’s will be:
Up 1% to 5%
 37%
Up 6% or more
 16%
Flat
 29%
Down 1% to 5%
 11%
Down 6% or more
 7%

Two questions of particular interst to us involved the role of IT in addressing new regulatory requirements, and the broader issue of IT as a perceived source of strategic differentiation. We found CFOs bearish on one, bullish on the other. They were also split on the issue of new and/or closer ties between finance and IT.

Drive Business Strategy and Growth

Drive Business Strategy and Growth

Learn how NetSuite Financial Management allows you to quickly and easily model what-if scenarios and generate reports.

Will the demands of Sarbanes-Oxley and/or other regulatory requirements affect your IT budget?
No, compliance does not hinge on IT
 40%
IT can play a part, but existing systems can be easily adapted
 23%
Yes, we’ll spend more on IT
 20%
Not sure
 13%
Current economic conditions rule out an IT solution
 4%

Going forward, will IT be a source of competitive advantage for your company?
Yes
 61%
No, but it never was
 23%
Not sure
 10%
No, current economic conditions limit what we can do
 5%
No, our IT priorities have changed, probably for good
 4%

In the past year, has your relationship with your CIO changed in any way?
No substantive change in our relationship
 48%
We work more closely together
 35%
Yes, now the CIO reports to me
 8%
Yes, now the CIO reports to another C-level executive
 6%
We work less closely together
 3%

In the past year, has continuing budgetary pressure prompted you to:

  • Delay purchases of new hardware/software: 57%
  • Create stronger ties between IT and finance: 43%
  • Reduce IT staff: 29%
  • Cancel/renegotiate some existing outsourcing contracts: 21%
  • Enter into new IT outsourcing arrangements: 18%
  • Establish IT governance or similar approval/oversight committees: 18%
  • Enter into business-process outsourcing arrangements (payroll, benefits, etc.): 16%
  • Lower dollar amount that requires senior-level sign-off: 16%
  • Expand current outsourcing arrangements: 14%
  • Lease hardware/software that was previously purchased: 11%
Have your IT expenditures produced the returns on investment you expected?
Yes
 40%
No
 35%
Not sure
 25%

Applying some sort of formal ROI analysis to IT investments is (multiple responses allowed):
Essential
 34%
Desirable
 32%
Moderately useful
 25%
In need of new thinking/methodologies
 21%
Overrated
 12%
Impossible
 6%
Over the past three years, has your organization procured an excess of technology relative to actual needs?
2002 Yes
 20%
No
 75%
Possibly/Not sure
 5%

2003 Yes
 10%
No
 74%
Possibly/Not sure
 16%
For each of the following, will you spend more, less, or the same in the next 12 months compared with the previous 12?
More Less Same Unsure
Computer security 55% 2% 41% 2%
Mobile computing 45% 6% 39% 10%
E-commerce initiatives involving consumers 43% 5% 37% 15%
Data-center hardware (including storage) 37% 17% 40% 6%
Business intelligence 34% 5% 51% 10%
IT consulting and/or systems integration 30% 20% 38% 12%
E-commerce initiatives involving business partners 29% 8% 44% 19%
CRM 28% 10% 42% 20%
IT outsourcing/offshoring 21% 16% 45% 18%
ERP 20% 14% 45% 21%
Desktop computers 19% 30% 49% 2%
E-mail/instant messenging/collaborative computing 19% 11% 51% 19%