Majority of IT and Business Plans Still Not Linked

Jan 29, 2004

Allen Bernard

Businesses that align information technology (IT) strategies with business strategies are significantly more likely to achieve a high return on IT investment, according to a new survey released Wednesday of senior financial officers conducted by Computer Sciences Corporation (CSC) and Financial Executives International (FEI).

"Only by linking IT and business strategy can companies really assess the ultimate ROI of information technology investments," said Rebecca Segal, vice president, Worldwide Services and Solutions Integration Strategies Research. "This survey is a wake-up call for financial executives to take action given the potential benefits to be gained."

The sixth annual Technology Issues for Financial Executives survey, looks the IT trends most critical for chief financial officers (CFOs) and other senior finance executives also found that only 10 % of companies achieve a high rate of return on investment for IT projects. Among those companies with a business-aligned IT plan, however, that percentage more than doubles to 24%.

Alignment Elusive

However, few organizations have such close alignment, since only seven-percent of respondents said they have an IT plan fully aligned with their corporate strategy. Roughly 30% of respondents reported at least some form of alignment between business and IT strategies, but the majority, 60%, lacked any such plan.

"Now, more than ever, there is a pressing need for executives to link IT spending to business strategy as opposed to previous history or industry averages," said Ed Mello, chief operating officer of CSC's Consulting Group. "Companies that are successful in connecting strategy with spend are best positioned to make smart business decisions -- whether they involve creating new business models, addressing escalating risk and security issues, or optimizing their extended enterprise."

Security Concerns Ongoing

Security also emerged in the report as a key concern for financial executives. More than half of respondents said that identifying the appropriate level of security for information and electronic applications was "very critical" to their organization.

When asked to rate their level of concern regarding various facets of information security, nearly all respondents said that growing dependence on computerized and automated systems was a "critical" or "important" concern. Roughly two thirds were "highly concerned" about industry standards and cost of compliance with new legislation such as Sarbanes-Oxley (SOX) and the Health Insurance Portability and Accountability Act (HIPAA). Half were highly concerned about growing IT security expenditures. But, just a third of respondents found terrorism against their companies a critical or important concern.

ERP Success

The survey also looked experiences with enterprise ERP implementations and such projects took longer than expected for more than 40% of respondents and cost more than expected for 55%. But, while ERP implementations are difficult, three out of four of those who completed an ERP implementation rated it a success.

"Because the survey encompasses senior financial executives from all major industries and organization sizes, it serves as an important IT benchmark for all CFOs," said Mello. "The CFO's perspective on technology is critical in that he or she often oversees the technology organization in addition to their primary responsibility of ensuring that all expenditures are in the best interest of shareholders."

The report surveyed 607 respondents, 84 percent of whom are the senior-most financial executive in their organization. Almost all respondents are from the United States and Canada.


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