57% of Finance Executives say their Companies are ‘Fair’ or ‘Poor’ at Ensuring Big Data and Similar IT Projects Yield Expected Returns
At a time when Big Data and other cutting-edge information technology (IT) is being actively evaluated in boardrooms everywhere, 57% of senior finance executives at large and midsized North American companies say their companies are either “fair” or “poor” at ensuring that such “improve-the-business” IT projects are actually yielding expected financial returns. And almost none (3%) rate their companies as “excellent.” That’s according to a new survey of more than 150 senior finance executives by CFO Research in collaboration with AlixPartners, the global business-advisory firm.
The survey also finds that more than two-thirds of financial executives (66%) give their companies a “C” or “D” when it comes to measuring financial returns from discretionary IT projects, such as Big Data ones, designed to improve or add to a company’s business and profits. (Only 5% gave their companies an “A.”)
Meanwhile, at the other end of the IT spectrum, the survey reveals that “keep-it-running” IT costs – non-discretionary support and maintenance systems – are cannibalizing funds available for business-improving IT. A plurality of respondents (49%) estimates that, over the past two years, their company has maintained approximately a 70-30 ratio of keep-it-running to improve-the-business IT spending, and of that amount, a solid majority – 63% – believes that their company’s spending is weighted too heavily toward keep-it-running IT services, and that a greater share should be directed to improve-the-business IT projects.
The survey also shows that, despite massive IT investments in recent years, companies aren’t getting enough of the kind of information they need to successfully run and grow their businesses. In fact, no less than 71% of the executives polled say their companies should have access to more robust business information for the money spent on IT. In addition to desiring more robust information on product profitability (cited by 42%) and customer profitability (41%), there was also strong interest in having better access to information about customer acquisition (33%), revenue (32%), price elasticity (31%), customer attrition (29%) and promotions effectiveness (25%).
One big reason companies are over-spending on IT or spending on it in the wrong places, reports the survey, has to do with governance and discipline around IT programs. For example, 72% of respondents said that factors other than a carefully considered business case (e.g., internal politics, personal persistence/willingness to be a “squeaky wheel”) influence the priority and funding of “improve-the-business” IT projects much more often than they should. Meanwhile, when asked who in their company should have a greater voice in whether to fund such projects, 45% said sponsors from business or functional units and 28% said the finance function. By contrast, when asked who today is primarily responsible for deciding funding, just 14% said business sponsors and only 7% said the finance function.
By the same token, when it comes to “keep-it-running” IT spending, 62% of finance executives say that kind of spending is currently either kept at the corporate level (within the IT department) or only partially charged to business units, neither of which is necessarily optimal for controlling such costs. Moreover, more than two-thirds of those surveyed (66%) say that keep-it-running and improve-the-business IT spending is budgeted together at their companies.
Fourteen percent of U.S. chief information officers (CIOs) surveyed recently plan to expand their IT teams in the second quarter of 2013, according to the just-released Robert Half Technology IT Hiring Forecast and Local Trend Report . In addition, 61 percent of CIOs said they will not be adding positions but will fill IT positions that open in the next three months. Twenty-two percent will not be hiring, even to fill an open position, and 2 percent expect to reduce their IT staffing levels.
Q2 IT Hiring Forecast
CIOs adding more staff to IT departments - 14%
CIOs planning to hire only for open IT roles - 61%
CIOs planning to put IT hiring plans on hold - 22%
CIOs planning to reduce their IT staff - 2%
The IT Hiring Forecast and Local Trend Report survey was developed by Robert Half Technology, a provider of information technology professionals on a project and full-time basis, and conducted by an independent research firm. The survey is based on more than 2,300 telephone interviews with CIOs from a random sample of U.S. companies in 23 major metro areas with 100 or more employees. Robert Half Technology is a leading provider of IT professionals on a project and full-time basis and has been tracking IT hiring activity in the United States since 1995.
Seventy percent of CIOs surveyed said it's somewhat or very challenging to find skilled IT professionals today. Respondents cited networking (16 percent), data/database management (13 percent) and applications development (12 percent) as the most challenging functional areas in which to recruit.
Confidence in Business Growth and IT Investments
The survey results suggest that CIOs are optimistic about their companies' growth and IT investments. Eighty-nine percent of CIOs reported being somewhat or very confident in their companies' prospects for growth in the second quarter of 2013.
Seventy-two percent of CIOs also said they were somewhat or very confident that their firms would invest in IT projects in the second quarter of 2013.
Skills in Demand
Among the technology executives surveyed, 51 percent said both network administration and database management are the skill sets in greatest demand within their IT department. Desktop support followed, with 48 percent of the response.
According to the new International Data Corporation (IDC) United States Black Book 4Q12, total IT spending on hardware, software, and IT services across all 15 enterprise industries is forecasted to grow by 6% in 2013, to approximately $474 Billion. Over the last quarter, the U.S economic outlook has been clouded with uncertainties surrounding the fiscal cliff, contracting G.D.P growth, and declining international trade owing to reduced economic activity in the Euro zone. IDC expects the U.S. economy to stabilize in the second half of 2013, leading to moderately strong IT spending growth.
Specific industries expected to grow at above-average rates for the coming year include healthcare, which is forecast to grow by more than 8% in 2013, due in part to the need to process and analyze increasing volumes of data from new clinical systems such as EHR. The professional services industry is also expected to grow more than 8%; a high correlation between overall corporate profitability and IT spending by professional services firms suggests robust spending within this industry as corporate profits are forecasted to improve.
IDC's United States Black Book: State IT Spending by Vertical Market is a quarterly analysis of the status and projected growth of the IT industry in 50 states, segmented by 15 vertical markets as well as 15 technologies across hardware, software, and services. The quarterly releases are provided as Microsoft Excel pivot tables that allow for customized views of the data. The current release offers IT spending forecasts for the 2011-2016 period.
Tech Spending Still Strong Despite Economic Volatility and Cannibalization from Mobile Devices and the Cloud
According to the new International Data Corporation (IDC) Worldwide Black Book Query Tool just released, IT spending remained broadly strong throughout a difficult end to 2012 as business confidence waned in the shadow of the "fiscal cliff’," economic growth declined in much of Europe, and economies in Asia struggled to cope with reduced exports. In spite of these headwinds, worldwide IT spending recorded annual growth of 5.9 percent in 2012 in constant currency terms, keeping pace with the 5.8 percent growth recorded in 2011. Total IT spending on hardware, software and IT services reached $2 trillion, while ICT spending (including telecom services) increased by 4.8 percent to $3.6 trillion.
Last year was difficult for U.S.-based IT suppliers, however, which were adversely affected by the strength of the dollar throughout most of the year. In U.S.-dollar terms, worldwide IT spending grew by just 3.3 percent. This marked a significant slowdown from the U.S. dollar growth rate of 9.5 percent recorded in 2011. In 2013, IT spending is expected to increase by 5.5 percent as businesses and consumers continue to invest in mobile devices, storage, networks and software applications.
While overall IT spending remained stable, 2012 was another difficult year for the PC industry, which recorded a 2 percent decline in annual revenues. Revenue declines were also recorded in servers, PC monitors and feature phones as cannibalization from tablets and smartphones continued to reshape the IT industry landscape. For the first time, spending on smartphones in 2012 exceeded PCs, reaching almost $300 billion, while PC spending declined to $233 billion.
The global economy has been volatile through the past 12 months, and this sense of uncertainty persisted into the first quarter of 2013. IDC expects the U.S. economy to stabilize in the second half of the year, driving IT spending growth of 5.5 percent. 2013 will be another tough year for Europe, however, where tech spending is expected to increase by just 2 percent as the Eurozone and UK struggle to shrug off the lingering debt crisis. Excluding mobile devices, growth in Europe will be less than 1 percent. Japan has meanwhile lost most of the post-reconstruction momentum that drove IT spending to increase by 4 percent in 2012, and will record IT growth of 0 percent this year.
IDC's Worldwide Black Book provides quarterly forecasts for IT spending in 54 countries around the world.
New Study Finds that Emotion is at the Heart of Effective Customer Service
In a world of ever changing customer expectations, global companies seeking ways to provide a differentiated customer experience should focus on the power of emotion. According to a new study by AchieveGlobal, a global workforce development firm, the emotional aspect of customer service is most critical, as one in three global respondents preferred being treated well over having their issues immediately resolved.
The global study, "Why Your Customers Stay or Stray: Insight From Global Customer Experience Research," further reveals that the behaviors most irritating to customers stem from detached emotional awareness and connection. Almost half (46 percent) of global respondents noted that being rude, short, nasty, unhelpful and impatient was the greatest customer service mistake that they have experienced. Using a canned script in dealing with issues (17 percent) and saying “no” or “I don’t know” (16 percent) also ranked amongst the top customer experience failures.
A negative customer experience not only threatens that particular sale, but also the reputation of the brand. Given the rising power of social media as a tool for brand advocacy, nearly 40 percent of respondents worldwide admitted to posting a negative review online after a poor customer experience. With so many retail and brand options available, customers are also quick to defect once they have been wronged, with half of respondents noting that they would try out a competitor after one bad experience and 93 percent defecting after three or fewer poor customer service experiences. As such, it is vital that organizations institute a culture of service supported by effective employee development programs around customer experience.