the state of business

The State of Business

TechWebTechWeb

October 2008

TechWeb The State of Top Business Trends October 2008

Overview

It has become increasingly clear that alignment between IT operations and strategic business priorities are critical to remaining competitive in today’s fast-paced, global and digital economy.

This TechWeb survey explored the emerging business priorities and challenges faced by organizations, and quantified how enterprise IT organizations are changing in response to key business trends in the global economy. It also provides some perspective on whether IT leadership is prepared for new challenges created by the financial crisis.

Toward that end, this report:o Identifies critical business and economic trends that are defining global corporate

strategies.o Assesses the impact these trends and strategies are having on the CIO function.

Top Business Trends


Methodology

Timing: In September 2008 TechWeb conducted an online study on current top business trends for Satyam. On September 24, TechWeb sent e-mail invitations to an Nth name sample asking recipients to participate in a brief survey.

Questionnaire: The questionnaire was developed by TechWeb and the sponsor company, Satyam.

Sample and Fielding: The sample was drawn from TechWeb’s database in North America. E-mails were sent to subscribers who had agreed to be contacted by TechWeb for research purposes, inviting them to participate in an online survey. An embedded URL directed respondents to the survey hosted by our Web survey host partner, SurveyGizmo.

Incentive: Those who completed the survey could opt in to enter a drawing to receive one 16GB Apple iPod Nano, valued at $199 from TechWeb. TechWeb research was responsible for all phases of programming the survey, as well as coding and analyzing the survey responses. These procedures were carried out in strict accordance with established market research practices.

Response: A total of 550 respondents completed the survey. Data is based on these 550 respondents unless otherwise noted. The total study base of 550 respondents yielded a margin of error of +/- 4.2 percent.

The State of

ERP

Top Business Trends


Conclusions

IT is becoming more strategic in its contribution to the enterprise’s efforts.

CEOs will be counting on IT to deliver innovative ideas and global execution, while putting in place the windows of visibility and risk controls that will prevent organizations from straying into dangerous business practices.

IT executives are thus being asked to possess business strategy acumen, financial management know-how, and change management skills, in addition to maintaining the highest levels of technical expertise.

Top Business Trends


The State of Business

STUDY FINDINGS


Majority Say IT Leadership Role Has Become More Strategic

An unintended consequence of the global economic problems is that they may further elevate the strategic role of IT in organizations, as the business looks to its technology platforms and processes to help drive efficiencies that save money and accelerate business activities that can affect customer loyalty.

An unintended consequence of the global economic problems is that they may further elevate the strategic role of IT in organizations, as the business looks to its technology platforms and processes to help drive efficiencies that save money and accelerate business activities that can affect customer loyalty.

How has the role of enterprise IT leadership changed in the last 12 months? How has the role of enterprise IT leadership changed in the last 12 months?

Multiple responses allowed

The position has become more strategic

The position has become more globally focused

The position has become more operational

The position remains largely unchanged

Other

55.9%

29.7%

23.7%

19.4%

1.0%


More CIOs Report to CEOs vs. 12 Months Ago

Backing up the assertion of over half the respondents, who said that the role of IT leader has become more strategic to their organizations in the last 12 months, is this finding: There is a slight increase from 2007 to 2008 in the number of CIOs that report directly to the CEOs, rather than through COOs or CFOs.

Backing up the assertion of over half the respondents, who said that the role of IT leader has become more strategic to their organizations in the last 12 months, is this finding: There is a slight increase from 2007 to 2008 in the number of CIOs that report directly to the CEOs, rather than through COOs or CFOs.

Twelve months ago, to which title did the IT leadership, including the CIO, at your company report?

Today, to whom does your IT leadership, including the CIO, report?

Twelve months ago, to which title did the IT leadership, including the CIO, at your company report?

Today, to whom does your IT leadership, including the CIO, report?


CEO

COO

CFO

Other

48.6%

22.1%

20.1%

19.2%

9.2%

50.3%

21.0%

9.5%12 months ago

Today


Consumers, Globalization Shape Shifting Business Priorities

The elevation in the status of IT leadership coincided with shifting priorities at the corporate level. Three-quarters of companies say their businesses are being influenced by changes taking place with their customers, and nearly 60 percent say they are becoming more global.

The elevation in the status of IT leadership coincided with shifting priorities at the corporate level. Three-quarters of companies say their businesses are being influenced by changes taking place with their customers, and nearly 60 percent say they are becoming more global.

Do you agree or disagree with these statements? Do you agree or disagree with these statements?

Looking ahead to 2009, our business will be more

influenced by consumers/customers.

Looking ahead to 2009, our business will be more

global.

The priorities of our business have shifted significantly in

the last 12 months.

Agree

Disagree

Don’t know

77%

58%

56%

19%

38%

42%

4%

4%

2%


Nearly 70% See IT Becoming More Centralized in the Coming Year

Growing globalization is one of the most important factors responsible for organizations revisiting the organizational structures that are currently in place. Centralization was deemed by respondents as the best way to manage the complexity of running far-flung operations.

Growing globalization is one of the most important factors responsible for organizations revisiting the organizational structures that are currently in place. Centralization was deemed by respondents as the best way to manage the complexity of running far-flung operations.

Looking ahead to 2009, which of the following statements best describes how your organization will be?

Looking ahead to 2009, which of the following statements best describes how your organization will be?

34.4%

33.3%

25.5%

6.8%

Highly centralized - All major decisions are determined by a headquarters with very little

regional or departmental autonomy

Somewhat centralized - Most major decisions are determined by a headquarters

with some regional or departmental input

Somewhat decentralized - Significant strategic and operational direction is set at

headquarters, but there is significant regional/departmental input into how to

execute initiatives

Highly decentralized - Basic standards are set at headquarters, but regional and/or

departmental offices have significant autonomy over implementation and program

execution

Single response allowed


Improving Customer Responsiveness and Reducing Costs Are of High Importance – But Risk Management Matters Too

The fact that 45 percent of respondents indicate that corporate risk management is a business imperative of “high importance” is interesting, given the backdrop of the financial crisis and the role lax risk management seems to have played there. This finding also clearly shows that issues like governance, compliance, security and other issues that address risk, are coming under the growing influence – if not control – of IT leadership.

The fact that 45 percent of respondents indicate that corporate risk management is a business imperative of “high importance” is interesting, given the backdrop of the financial crisis and the role lax risk management seems to have played there. This finding also clearly shows that issues like governance, compliance, security and other issues that address risk, are coming under the growing influence – if not control – of IT leadership.

How important are each of the following business imperatives in terms of priorities that your IT organization must support?

How important are each of the following business imperatives in terms of priorities that your IT organization must support?

Improving customer responsiveness

Reducing costs/improving TCO

Speeding product delivery/time to market

Ability to deploy/support employees anytime/anywhere

Improving the execution of business processes

Ensuring IT resource/budget for strategic business initiatives

Corporate risk management

More agile, streamlined integrated supply chains

Global/international expansion

Business integration due to M&A

64% 30% 6%

63% 32% 5%

57% 33% 10%

54% 36% 10%

50% 40% 10%

48% 44% 8%

45% 48% 7%

41% 36% 23%

38% 27% 35%

24% 40% 36%

High importance

Medium importance

Low importance


A focus on customer responsiveness and reducing costs makes it clear that companies have been considering the impact on their business of a recession that may lead to growing unemployment and less disposable income. In such circumstances, the need for their companies to reduce costs as much as they can and grow share as much as they can is critical.

A focus on customer responsiveness and reducing costs makes it clear that companies have been considering the impact on their business of a recession that may lead to growing unemployment and less disposable income. In such circumstances, the need for their companies to reduce costs as much as they can and grow share as much as they can is critical.

Of the items detailed in the previous question, which are your top three most important business imperatives in terms of priorities your IT

organization must support?

Of the items detailed in the previous question, which are your top three most important business imperatives in terms of priorities your IT

organization must support?

Three responses allowed – top three overall responses shown on this chart



Improving the execution of business processes

35.2%

35.0%

29.8%

Top Three Business Imperatives Center on Customer Responsiveness, Saving Money and Improving Business Processes


Nearly 70 percent of respondents rate IT-enabled transformation as being of high importance to their organization. They scored it at 4 or 5 on a 5-point scale.

Nearly 70 percent of respondents rate IT-enabled transformation as being of high importance to their organization. They scored it at 4 or 5 on a 5-point scale.

Two-Thirds Rate IT-Enabled Transformation as Important

Please rate the importance of IT-enabled transformation in your organization on a scale of 1 to 5, with 1 indicating

“low importance” and 5 indicating “high importance.”

Please rate the importance of IT-enabled transformation in your organization on a scale of 1 to 5, with 1 indicating

“low importance” and 5 indicating “high importance.”

1 - Low importance

0.9%

2

4.6%

3

26.6%

4

45.4%

5 - High importance

22.5%

68% said “4” or “5”


Most Important Imperatives to Enable Transformation Center on Improving Business Processes, Customer Responsiveness and TCO

These findings about business process execution indicate that there is increasing IT representation during initial discussions of business process design. Technology departments are not being asked to automate procedures that were developed without their input.

These findings about business process execution indicate that there is increasing IT representation during initial discussions of business process design. Technology departments are not being asked to automate procedures that were developed without their input.

Of the items discussed earlier, please select the three most important business imperatives in which IT must not only support transformation, but

also ENABLE TRANSFORMATION.

Of the items discussed earlier, please select the three most important business imperatives in which IT must not only support transformation, but

also ENABLE TRANSFORMATION.

Three responses allowed – top three overall responses shown on this chart



Improving the execution of business processes 34.2%

33.9%

31.9%


IT Investments Point to a Connected World

Looking ahead to next year, collaboration and mobile technology take top places on the business agenda. That’s not surprising. With businesses being more globalized, tools to enhance teamwork and enable an anytime-anywhere workplace take on new importance.

Looking ahead to next year, collaboration and mobile technology take top places on the business agenda. That’s not surprising. With businesses being more globalized, tools to enhance teamwork and enable an anytime-anywhere workplace take on new importance.

In which of the following technologies and services is your IT organization planning to invest in 2009 to support your business priorities and enable

transformation?

In which of the following technologies and services is your IT organization planning to invest in 2009 to support your business priorities and enable

transformation?


Collaboration technologies

Mobile devices

CRM technologies

Remote network access technologies

Unified communications

Regulatory compliance technologies & services

SOA implementation services

Business service mgmt. technologies & services

Business compliance technologies & services

Business process outsourcing services

Supply chain management

New WAN service providers

RFID

45.1%

43.4%

37.6%

32.6%

30.6%

27.3%

26.6%

22.9%

22.7%

20.5%

18.7%

15.6%

6.6%


A majority of respondents reported that executives will invest more resources in 2009 than in 2008 to fund innovation initiatives that do as much to contribute to the top line as to the bottom line.

A majority of respondents reported that executives will invest more resources in 2009 than in 2008 to fund innovation initiatives that do as much to contribute to the top line as to the bottom line.

Innovation Named Highly Important

How important is innovation to your organization on a scale of 1 to 5, with 1 indicating “low importance” and 5 indicating “high importance”?How important is innovation to your organization on a scale of 1 to 5, with 1 indicating “low importance” and 5 indicating “high importance”?

1 - Low importance

1.9%

2

7.1%

3

24.5%

4

35.7%

5 - High importance

30.8%

67% said “4” or “5”


Majority Allotted Less Than 20% of IT Budget to Innovation

In 2008 more than half the respondents dedicated 20 percent or less of their budgets to innovation initiatives.

In 2008 more than half the respondents dedicated 20 percent or less of their budgets to innovation initiatives.

In 2008, what percentage of your IT budget was dedicated to innovation (as opposed to maintenance of existing operations)?

In 2008, what percentage of your IT budget was dedicated to innovation (as opposed to maintenance of existing operations)?

Less than 1%3.7% 1% to 5%

13.7%

6% to 10%18.7%

11% to 15%13.5%

16% to 20%13.7%

21% to 25%10.2%

26% to 30%5.8%

More than 30%8.5%

Don’t know12.1%



Most Say % of IT Budget Dedicated to Innovation Will Increase

While respondents expect more focus on innovation this coming year than in 2008, they are cognizant that new economic realities could create unexpected cost-cutting conditions.

While respondents expect more focus on innovation this coming year than in 2008, they are cognizant that new economic realities could create unexpected cost-cutting conditions.

In 2009, how will the percentage of your IT budget that was dedicated to innovation change, compared to 2008?

In 2009, how will the percentage of your IT budget that was dedicated to innovation change, compared to 2008?

Increase by a little (by 1% to 5%)

27.9%

Increase moderately (by 6% to 10%)

26.2%

Increase substantially (by

11% to 15%)8.1%

Increase explosively (by 16% or more)

5.1%

Decrease7.6%

Will not change25.1%



Most Important Innovation Imperative Centers on Business Processes

IT will be held accountable to the business outcomes of re-engineered processes. For a growing number of IT professionals, the ability to demonstrate operational cost reductions and fresh revenue generation, as well as deliver differen-tiating capabilities are emerging as the new yardsticks of measure-ment.

IT will be held accountable to the business outcomes of re-engineered processes. For a growing number of IT professionals, the ability to demonstrate operational cost reductions and fresh revenue generation, as well as deliver differen-tiating capabilities are emerging as the new yardsticks of measure-ment.

On which of the following areas will your innovation initiatives focus?On which of the following areas will your innovation initiatives focus?


Business Process Mgmt.

Cross-Departmental Collaboration

CRM

Streamlined Project Mgmt.

Financial Mgmt.

Compliance Mgmt.

Supply Chain Mgmt.

Sourcing

Governance

Global Reserve Mgmt.

43.8%

42.5%

40.9%

32.2%

25.4%

23.0%

19.5%

16.6%

15.3%

6.5%


Business-technology leaders are not unprepared for the challenge wrought by the financial crisis. The generally shaky economic conditions of the past year led many executives early on to give cautious thought about their goals and how they would achieve them while saving costs during an economic slowdown.

Business-technology leaders are not unprepared for the challenge wrought by the financial crisis. The generally shaky economic conditions of the past year led many executives early on to give cautious thought about their goals and how they would achieve them while saving costs during an economic slowdown.

Most Agree IT Is Under More Cost Pressure Than a Year Ago

Please tell us whether you agree or disagree with this statement: Our IT operation is/will be under more cost pressure than it was

12 months ago.

Please tell us whether you agree or disagree with this statement: Our IT operation is/will be under more cost pressure than it was

12 months ago.

Strongly disagree -

2.2%

Disagree -

11.3%

Strongly agree -33.4%

Agree -

53.1%

Have you targeted savings because of cost pressure?Have you targeted savings because of cost pressure?

Yes68.5%

No20.9%

Don’t know10.6%



Reducing Costs Is Biggest Challenge for IT to Meet Its Objectives in ‘09

Big challenge

Moderate challenge

Not much of a challenge

at all

Reducing costs 52.6% 41.5% 5.9%

Achieving strategic advantage 48.9% 42.1% 9.0%

Optimizing business processes 47.8% 47.7% 4.5%

Maintaining a competitive edge 43.0% 44.6% 12.4%

Freeing-up resources for innovation initiatives

40.5% 45.2% 14.3%

Managing risk 26.6% 59.7% 13.7%

Optimizing asset utilization 26.0% 57.7% 16.3%

Supporting globalization 24.9% 34.1% 41.0%

Supporting mobility 19.3% 55.3% 25.4%

The fact that almost half of those surveyed (49 percent) consider “achieving strategic advantage,” and 43 percent consider “maintaining a competitive edge,” a big challenge to their IT departments, illustrates how much enterprises now depend upon their business technologists to conceive and enable the core strategies within their organizations..

The fact that almost half of those surveyed (49 percent) consider “achieving strategic advantage,” and 43 percent consider “maintaining a competitive edge,” a big challenge to their IT departments, illustrates how much enterprises now depend upon their business technologists to conceive and enable the core strategies within their organizations..

Please rate each of the following challenges for IT to meet its objectives through 2009.

Please rate each of the following challenges for IT to meet its objectives through 2009.

Single response per item


BP/IT Outsourcing Critical to Reducing Costs

While cost reduction is a key argument for BP/IT outsourcing, nearly 40 percent see an opportunity to free up resources for innovation, as well asconsider it an important tool in enabling business process optimization.

While cost reduction is a key argument for BP/IT outsourcing, nearly 40 percent see an opportunity to free up resources for innovation, as well asconsider it an important tool in enabling business process optimization.

Business process/IT outsourcing at our company will be critical over the next few months for …

Business process/IT outsourcing at our company will be critical over the next few months for …


Reducing costs

Freeing up resources for innovation initiatives

Optimizing business processes

Maintaining a competitive edge

Achieving strategic advantage

Managing risk

Optimizing asset utilization

Supporting globalization

None

54.9%

37.9%

36.4%

27.5%

27.1%

21.0%

20.8%

15.7%

1.3%

20.5%

Supporting mobility


More Business-Savvy IT Workers are Required

Nearly 70 percent of respondents see a need for more business acumen among IT staff.

Nearly 70 percent of respondents see a need for more business acumen among IT staff.

Have changing business imperatives in your organization created new types of IT skill-set requirements?

Have changing business imperatives in your organization created new types of IT skill-set requirements?

Yes, we need more business-savvy

workers34.7%

Yes, we need both more business- savvy workers, and IT employees with more cutting-edge programming skills

33.4%

No19.2%

Yes, we need IT employees with more cutting-

edge programming

skills12.7%



Majority Say IT Staff Budget Will Remain the Same; One-Quarter Report It Will Grow

While most respondents didn’t expect to have to make cuts around staffing at the time the survey was fielded, it is reasonable to assume that if credit markets do not work themselves out in a timely fashion, the respondents may experience some negative ramifications on overall IT spending plans — including spending on IT’s biggest cost, labor.

While most respondents didn’t expect to have to make cuts around staffing at the time the survey was fielded, it is reasonable to assume that if credit markets do not work themselves out in a timely fashion, the respondents may experience some negative ramifications on overall IT spending plans — including spending on IT’s biggest cost, labor.

In 2009, how will budget for your IT staff change?In 2009, how will budget for your IT staff change?

Remain the same53.0%

Grow25.8%

Shrink21.2%



RESPONDENT DEMOGRAPHICS

The State of Top Business Trends


Which of the following best describes your job function?

Which of the following best describes your job function?

Respondent Demographics:Job Function

Don’t know38%

IT management28.9%

Consultant5.0%

Executive IT management

(CIO, VP of IT) 18.8%

Executive corporate management (CEO, president, corp. VP)

12.7%

General corporate mgmt.

17.0%

Project manager5.4%

General corporate staff

3.4%IT staff4.5%

Other3.8%

Claire Meirowitz

The percentages add up to 99.5%--is that OK?


Respondent Demographics: Company Size

How many employees are in your organization in total?

How many employees are in your organization in total?

Less than 10015.4%

100 to 4999.8%

500 to 9996.8%

1,000 to 4,99925.5%

5,000 or more42.5%


Respondent Demographics: Industry

Health care and medical 10.4%Consulting and business services 8.8%Education 8.8%Financial services/Banking 8.8%Manufacturing and industrial (noncomputer) 7.2%IT vendors 7.0%Other 5.2%Financial services/Securities and investments 4.5%Government 4.3%Telecommunications and ISPs 3.9%Insurance and HMOs 3.6%Electronics 3.4%Media and entertainment 3.4%Financial services/Other 2.9%Financial services/Insurance 2.7%Retail and E-commerce 2.5%Logistics and transportation 2.2%Hospitality and travel 1.6%Construction and engineering 1.4%Automotive 1.1%Distribution 1.1%Food and beverage 1.1%Metals and natural resources 0.9%Real estate 0.9%Biotech, biomedical, and pharmaceutical 0.7%Nonprofit 0.7%Consumer goods 0.4%E-marketplace (portals or auction) 0.4%Energy and utilities 0.2%Utilities 0.2%

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