it investing for high performance a global survey of cios

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IT Investing for High Performance

A Global Survey of CIOs

March 2006 Ian Cassidy

Abundance of spending data, but what about performance?

Studies abound with IT spending data worldwide, by industry sector and by geography.

The major research firms continue to measure and report IT spending – a useful indicator of where the industry is headed.

What’s missing is the quality of the spending.

How is IT performing?How is IT performing today? How should it perform in the future?

This is the true indicator of the value of information technology, and its role in helping organizations perform at higher levels.

Accenture set out to study the drivers of performance in managing and executing IT

Base of 400+ online surveys in the U.S., UK, France, Germany, Italy, Argentina, China, Japan

Cross-section of all industries and government Fortune 1000 size organization and their equivalent Large government agencies at the national, regional and local levels CIO or the senior-most IT executive Field research began in early January 2005 Field research currently taking place in China and Japan Longitudinal research planned for 2006 and beyond

The High Performance IT research program

The survey asked CIOs to rate how their IT is performing today, and how it should perform in the future, against 33 proprietary indicators

1 2 3 4 5

TargetToday

Industrialization

Innovation

Information

Infrastructure

Integration

Basic Progressive Pioneering

3.35 3.95

Gap = .5

2.55 3.80Gap = 1.25

2.93 4.00Gap = 1.07

3.08 4.28

Gap = 1.20

2.75 4.10Gap = 1.35

Respondents cover all sectors and both clients and non-clients

n=235

19%

34% 14%

17%16%

Communications& High Tech

Financial Services

Government

Products

Resources

26%

74%

Client

Non-Client

20%

80%

US Europe

We segmented the respondents using the 33 indicators by high-, average- and low-performing IT organizations

Average Performers

74%

Low Performers

15%

High Performers

11%

Respondents were segmented based on current performance. IT organizations scoring an average of 4 or 5 (pioneering) across the indicators were categorized as “high-performing.” IT organizations scoring an average of 3 (progressive) were categorized as “average- performing.” Those scoring an average of 1 to 2 (basic) were categorized as “low-performing.”


Trends and Implications

Our results reveal five major findings that chart a path to higher levels of performance…but uncover obstacles along the way

1. Winning the battle on cost efficiency, but losing the war on performance

2. Why spending is not investing: looking at the quality of IT spending

3. More work in 2005 than money

4. How high performers differ from average performers

5. Getting it right: what we can learn from manufacturing

High-performing IT organizations differ from average - and low - performers

High performers:

Are more aggressive adopters of newer technology

Spend more time building and less time fixing systems

Manage to significantly more performance metrics

Drive more online transactions in customer, supplier and employee interactions.

Where is the money going and why?

Running

Fixing

Enhancing

Building

Integrating

Testing

Deploying

% of Budget

29%

12%

17%

14%

9%

9%

10%

High Performers

Low Performers

Primary Cost Driver

30%

5%

17%

18%

10%

10%

10%

32%

16%

14%

12%

7%

9%

10%

Age of systems (30%)

Errors (51%)

Growth (40%)

Growth (48%)

Growth (25%)

Errors (27%)

Growth (35%)

Time spent on applications

% of time spent on….

Organization spending too much or too little time on…

Organization planning to spend more or less time next year?

Primary driver (s) of cost

O G O

Too much

G

Too much

O

Too little

G

Too little

O

More

G

More

O

Less

G

Less

Overall Government

Running 29 36 33% 41% 7% 0% 12% 25% 30% 30% Age of systems (32%)

Age of systems (52%)

Fixing 12 11 51% 57% 2% 0% 9% 5% 45% 48% Errors (51%) Errors (48%)

Enhancing 18 16 14% 24% 38% 38% 46% 43% 14% 24% Growth (40%) Growth (43%)

Building 15 12 10% 5% 37% 55% 40% 45% 15% 10% Growth (48%) Growth (35%)

Integrating 10 8 19% 15% 25% 40% 35% 35% 12% 15% Growth (25%) Growth (45%)

Testing 10 8 8% 0% 41% 37% 38% 32% 7% 5% Errors (27%) Errors (42%)

Deploying 10 8 18% 21% 17% 0% 20% 16% 20% 21% Growth (35%) Growth (32%)

High performers manage with more performance metrics

68%62%

42%

61%

94%

53%

69%74%

15%21%

11%7%

54%

32%

23%29%29%

40%33%

24%

33%

56%

16%21%

0%10%20%30%40%50%60%70%80%90%

100%

Rank order ofapplicationsby technical

and businessfit

Root causesof execution

delays onprojects

Measure yourskills pyramid

Measureproductivitydifferences

betweenteams

Percent mypeople spendworking with

unclearrequirements

Total ITspend in my

entireorganizationon hardwareand software

Post mortemreviews ofprojects

Time mypeople spend

in delays inwaiting forbusinessdirection

High Performers Average Performers Low Performers

Amount of time my people spend in delays in waiting for business direction

Public Sector and Performance metrics

Not important / No access

Importance Access

1 2 3 4 5

Rank order of my applications by technical and business fit

= Government = Overall Average

Root causes of execution delays on projects

How I am leveraging scarce skills in my organization

Productivity differences between my people

Amount of time my people spend working on projects with unclear requirements

Total IT spend in my entire organization on hardware and software

Post mortem reviews of projects

G

O

Very important / Complete access

G

O

G

O

G

O

G

O

G

O

G

O

OG

G

O

High performers utilize a more rigorous, structured decision-making process

92 92

81 8176 76

69

4842

54

42

65

51

34

54

45

3138

31

52

11

29 29

20

35

20

11

29

17

67

0102030405060708090

100

We have adisciplinedprocess formaking on-

going projectdecisions

We activelymonitor

projects andmake

changesalong the way

We alwaysappoint

someone incharge of aproject andhold them

accountable

Projects areviewed as a

full time job forleaders

We manageby the

numbers

We maketradeoff

decisionsquickly

We quicklyidentify andrationalize

competing oroverlapping

projects

We manageby consensus

We alwaysreview pastprojects andlearn frommistakes

We manageby top down

directives

High Performers Average Performers Low Performers

High-performing IT organizations drive significantly higher online utilization levels

Percent of total CUSTOMER interactions that ARE online

Percent of total SUPPLIER interactions that ARE online

Percent of total EMPLOYEEinteractions that ARE online

High Performers

Average Performers

20%

15%

Low Performers 10%

High Performers

Average Performers

20%

15%

Low Performers 15%

High Performers

Average Performers

25%

20%

Low Performers 15%

33% more customer online transactions than average performers

33% more supplier online transactions than average performers

25% more employee online transactions than average performers

Public Sector and Online Utilisation

Percent of total CUSTOMER interactions that….

Percent of total SUPPLIER interactions that….

Percent of total EMPLOYEEinteractions that….

…COULD BE online

…ARE online

…COULD BE online

…ARE online

…COULD BE online

…ARE online

30%

15%

30%

15%

35%

15%

…COULD BE online

…ARE online

35%

…COULD BE online

…ARE online

40%

20%

…COULD BE online

…ARE online

30%

Overall Average

Government

Government

Government

15%

10%

Public Sector Industry Questions

0 22 44 34 0

To what extent do you have a centralized IT Asset Management program for hardware and software licenses?

All Hardware and Software inventoried and optimized

No Management of hardware and Software assets

Are privacy protection regulations and security constraints limiting your ability to integrate within your organization, share data across organizations orimplement effective business systems?

Yes, they are having a large impact

No, they are not having any impact

What governance processes are used to select IT Investments?

Thorough enterprise wide review with business owners

Opportunities are evaluated case by case as they come up during the year

How frequently is ROI calculated after a project is implemented and compared to the original business case?

AlwaysNever

6 31 41 16 6

16 9 16 31 28

22 38 19 22 0

1 2 3 4 5

Public Sector Industry Questions (Cont’d.)

3 16 66 160

To what extent do you value best practices from the private sector?

Extremely valuable, help guide our decisions

Not at all relevant

How effective are your current IT capabilities at meeting the objectives and mission of your agency?

Very effective, It is highly aligned with the program areas

Not at all effective 0 9 38 50 3

To what extent have you exposed business processes to external customers or suppliers for mission critical functions (i.e. beyond a pilot project)?

Widespread many external web services

None30 16 66 16

1 2 3 4 5


Breaking Out

Performance, not cost, must be the IT endgame

Adopt a “performance first” strategy

Speed, efficiency, quality is more valuable than cost

Take a lesson from the history of the U.S. automobile market

Adopt industrialization lessons learned by manufacturing

Without performance metrics, IT agendas will stall

First step is a change in mindset in the CIO’s office and line businesses

Monitor online interactions as an indicator of value to the business

Measure twice, cut once

Manage to better performance ratios

IT investment is not an event, but a way of life

Invest steadily, irrespective of earnings fluctuations or tax returns

Organizations that invest regularly, gain competitive advantage

For more information

www.accenture.com/ciosurvey

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