IT spend to decrease as boards lack faith in technology
Return on investment cited as number one reason for decrease in
investment
02 February, 2005. Although two-thirds of UK boards make room
for a chief information officer (CIO), disagreements over the
reliability of information and communications technology (ICT)
projects reign, according to the annual Telewest Business ICT spend
survey, conducted by the Economist Intelligence Unit.
This continued rift is affecting investments in technology with
just 43 per cent of senior executives planning to boost ICT budgets
in 2005, compared to 58 per cent in the previous 12 months, the
survey found.
Directors see value in ICT but want to see more measurable
return on investment. Twelve per cent of UK executives and a
quarter of business managers do not think that their ICT networks
are cost-effective, with only one in every five (19 per cent)
viewing their ICT programmes as “excellent”. Almost all (91 per
cent) of respondents believe their companies should require
budgetary justification prior to any IT spend.
One quarter of all CEOs believe business executives within their
organisation need to better understand technology. A great number
of CEOs (38 per cent) also believe that ICT in turn needs to
understand how business works better. Interestingly, half of all
CEOs said that they have or would like to have access to mobile
working solutions to help them with their hectic working lives that
often involves multiple sites. However, only 35 per cent of CIOs
made this a
top priority.
“Business and technology executives are still having trouble
agreeing on the success of ICT projects, but investments need to be
made to maintain competitive edge,” said John Cunningham , Director
of Business Services, Telewest Business. Two thirds (63 per cent)
of CEOs feel that technology usually underperforms against
expectations while almost the same number (61 per cent) of IT
experts, the CIOs, disagree.
“There’s a long way to go to consolidate the two parties, but
something that they can agree on is that ICT is instrumental in
improving customer service, a key driver for investment, and that
outsourcing is an option seriously worth examining,” he
continued.
Of the findings, Gareth Lofthouse for the Economist Intelligence
Unit commented, “CEOs are aware of the benefits of technology.
Naturally, CEOs and CFOs want to see plausible evidence that their
investments are increasing productivity and, ultimately,
profitability.”
Other key findings include:
- 80 per cent of respondents cited improving customer
relationships as their top priority, with 68 per cent seeing ICT as
important to achieve this goal
- Nearly two-thirds (60 per cent) of directors see ICT as
important as a means to lowering costs and maximising
efficiencies
- Only one-fifth (20 per cent) see ICT as a way to accelerate
time to market
- Companies plan to boost outsourcing budgets in the next
year
Telewest Business’ John Cunningham said that the move towards
managed services reflected a growing trend. “Companies are looking
to take advantage of areas of ICT where they may not have the
skills in house to implement by looking to outside service
providers. As the pressure to find skilled staff grows so this
trend will continue,” he concluded.