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Copyright © 2005 Accenture All Rights Reserved. Accenture, its logo, and High Performance Delivered are trademarks of Accenture.
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.”
Copyright © 2005 Accenture All Rights Reserved. Accenture, its logo, and High Performance Delivered are trademarks of Accenture.
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
Copyright © 2005 Accenture All Rights Reserved. Accenture, its logo, and High Performance Delivered are trademarks of Accenture.
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