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Survey of North American Chief Information Executives Summary—March 2004

Survey of North American Chief Information Executives Summary—March 2004

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Survey of North American Chief Information Executives

Summary—March 2004

2Copyright © 2004 Deloitte Development LLC. All rights reserved.Mpls • PRD-6033\CIO\19795.ppt

Overview

Objective: to understand the value, successes, and challenges in aligning IT with the rest of the business or agency.

Respondents: 200 IT executives from companies/agencies in manufacturing, financial services, consumer business and government with mean annual revenues of $1.8 billion

Methodology: Between October 28, 2003 and November 3, 2003, a total of 200 surveys and telephone interviews were conducted of IT leaders meeting the following criteria• Employed at companies with $500 million or more in annual revenue

• Director level and higher in an IT function

• Employed in one of the following industries: manufacturing (discrete and process); finance/banking/brokerage/insurance; consumer business; and government (federal, state, local)

The survey was conducted by Deloitte Consulting LLP and IDG Research Services Group.

3Copyright © 2004 Deloitte Development LLC. All rights reserved.Mpls • PRD-6033\CIO\19795.ppt

Overview

• “Business and IT Alignment” as defined for this survey includes:– IT strategy specifically developed to serve the corporate strategy

– IT spending explicitly planned and measured against corporate priorities

– IT operational goals matched to corporate business goals

– IT organization and governance specifically aligned with corporate structure/governance

– Relevant IT performance metrics expressed in terms relevant to and understood by the corporate executives (CEO, CFO, COO, VP Sales, etc.)

– IT internal operations and organization directed by a stated IT strategy

While both private sector and government entities participated in the survey, for simplicity, we will use the terms “business” and “corporate” throughout this report to refer to both commercial companies and government agencies.

4Copyright © 2004 Deloitte Development LLC. All rights reserved.Mpls • PRD-6033\CIO\19795.ppt

Contents

• Summary Results

• The Data

5Copyright © 2004 Deloitte Development LLC. All rights reserved.Mpls • PRD-6033\CIO\19795.ppt

Summary Results

The vast majority of IT executives agree that aligning business and IT is valuable …

96% of IT Executives predict that a “significant” or “moderate” positive bottom-line impact could be achieved in their businesses if an IT strategy were specifically developed to serve the corporate strategy

90% of IT Executives predict that a “significant” or “moderate” positive bottom-line impact could be achieved in their businesses if IT operational goals matched corporate business goals

90% of IT Executives predict that a “significant” or “moderate” positive bottom-line impact could be achieved in their businesses if IT spending were explicitly planned and measured against corporate priorities

89% of IT Executives predict that a “significant” or “moderate” positive bottom-line impact could be achieved in their businesses if IT operations and organization were aligned to a stated corporate strategy

6Copyright © 2004 Deloitte Development LLC. All rights reserved.Mpls • PRD-6033\CIO\19795.ppt

More than 90% say executive management plays a visible role in IT strategy development.

70% of IT Executives report that IT is part of the business executive team and plays a “strategic” role in the enterprise

Summary ResultsSurvey respondents report that IT and other business executives are working together to develop business and IT strategies and agendas …

7Copyright © 2004 Deloitte Development LLC. All rights reserved.Mpls • PRD-6033\CIO\19795.ppt

Summary Results

Yet survey responses reveal prevalent challenges in achieving business—IT alignment …

65% of IT Executives say “ineffective communication of business strategy and goals between business management and IT management” represents a “significant” or “moderate” challenge

49% of IT Executives say the “lack of a defined business strategy” is a “significant” or “moderate” challenge

63% of IT Executives say a prevailing culture that allows business units to make their own technology decisions is a “significant” or “moderate” challenge

55% of IT Executives cite “weak support from senior business management” as a “significant” or “moderate” challenge

8Copyright © 2004 Deloitte Development LLC. All rights reserved.Mpls • PRD-6033\CIO\19795.ppt

Summary ResultsDespite the challenges, executive teaming and focus on alignment is producing results …

42% report that their enterprises have been “extremely” or “very successful” in developing an effective IT organization/structure

42% report that their enterprises have been “extremely” or “very successful” in developing a correctly skilled IT organization

38% of IT executives report that their enterprises have been “extremely” or “very successful” in developing a correctly sized IT organization

9Copyright © 2004 Deloitte Development LLC. All rights reserved.Mpls • PRD-6033\CIO\19795.ppt

Summary Results

A small set of IT and business executives appear to be doing it right …

10% of the 200 respondents scored themselves as “extremely successful” in aligning IT and business strategies

*"Well-Aligned Companies" are defined as companies answering "5 - extremely successful" to question 11a (Overall, how successful has your company been in its work to align IT in each of the following areas: (a) IT strategy aligned with the corporate strategy) [= 10 percent of the 200 respondents]

… we call this set of respondents the “Well-Aligned Companies”*

10Copyright © 2004 Deloitte Development LLC. All rights reserved.Mpls • PRD-6033\CIO\19795.ppt

Summary ResultsA closer look at the “Well-Aligned Companies” in comparison to their less-aligned counterparts shows they were reaping the benefits of their alignment success …

The well-aligned are eight times more likely than other respondents to describe themselves as “extremely successful” in aligning IT and business operational goals

The well-aligned are five times more likely to describe themselves as “extremely successful” in aligning IT and business spending priorities

The well-aligned are three times more likely to say that executive management has the correct perception of IT value

The well-aligned are seven times more likely to say they have been “extremely successful” in achieving an effective IT organization structure and governance

11Copyright © 2004 Deloitte Development LLC. All rights reserved.Mpls • PRD-6033\CIO\19795.ppt

Summary Results

The next section—The Data—presents the survey responses.

Throughout the section we include select analyses of the differences between large and small companies, differences across industries, and examine how the successes, challenges, and agendas of the “strategically well-aligned” differ from their peers.

We believe in letting the facts speak for themselves, with only the most minimal commentary by way of perspective. However, we must warn you that the data presents some paradoxes—revealing in some cases, conflict between goals and priorities or conflict between intentions and actions, and in other cases conflict that can only be resolved through interpretation

We hope you’ll find Deloitte’s 2003 CIO survey interesting and useful.

We are pleased to announce the results of our recent IT alignment survey have been published in the March 15 issue of CIO Magazine.

Survey Authors:

Dean Nelson – [email protected] (212) 436 3265Paul Howley – [email protected] (617) 437 2343John Andrews – [email protected] (617) 437 3159Eileen Rubey – [email protected] (312) 374 2427Ken Horner – [email protected] (212) 618 4522Irwin Goverman – [email protected] (206) 838 6311Jean-Claude Aube – [email protected] (514) 390 1601Ann Senn – [email protected] (612) 397 4420

To order hard copies of this report, visit our firm's distribution center Web site and request item #4044. An electronic copy of this report, and other CIO Advisory Services collateral are available for downloading.

Sources for additional information

12

The DataIs Alignment valuable?

Is Alignment a priority?

Is anyone successfully aligning?

The success of the “Well-Aligned”

What are the barriers to Alignment?

How is Alignment measured?

With whom do IT executives align?

Is executive perception of IT Value accurate?

What is Executive Management’s Involvement in Developing IT Strategies?

What is the Role of the IT Department in the Organization?

13Copyright © 2004 Deloitte Development LLC. All rights reserved.Mpls • PRD-6033\CIO\19795.ppt

Significant Impact Moderate Impact

Is Alignment valuable?Absolutely! Survey results showed widespread agreement that there is tremendous value in aligning business and IT. Respondents generally indicated that they saw greater value in strategy and planning alignment than metrics and organizational alignment.

When respondents were asked to rate the degree of positive impact on their companies’ bottom line that could be achieved by aligning various areas or facets of business and IT, the vast majority reported “moderate” to “significant” (highest) positive impact to company earnings

Relevant IT performance metrics expressed in terms relevant to and understood by the corporate executives

IT organization and governance specifically aligned with corporate structure/governance

IT Operations and organization aligned to stated IT strategy

IT operational goals matched to corporate business goals

IT spending explicitly planned and measured against corporate priorities

IT strategy specifically developed to serve the corporate strategy

Predicted Impact of IT Alignment

86%

81%

89%

90%

90%

96%

Significant or Moderate Impact

14Copyright © 2004 Deloitte Development LLC. All rights reserved.Mpls • PRD-6033\CIO\19795.ppt

61%

35%

42%

48%

26%

32%

64%

61%

51%

47%

41%

41%

$500M to $2B More than $2B

Is Alignment valuable?In almost every instance, larger organizations believe alignment promises bigger impact on earnings.

% answering “significant” (highest) when predicting impact of various alignment efforts on company bottom line.

Relevant IT performance metrics expressed in terms relevant to and understood by the corporate executives

IT organization and governance specifically aligned with corporate structure/governance

IT operations and organization aligned to stated IT strategy

IT operational goals matched to corporate business goals

IT spending explicitly planned and measured against corporate priorities

IT strategy specifically developed to serve the corporate strategy

Predicted Impact of IT Alignment

15Copyright © 2004 Deloitte Development LLC. All rights reserved.Mpls • PRD-6033\CIO\19795.ppt

Predicted Impact of IT Alignment

69%

57%

57%

53%

39%

43%

49%

43%

43%

41%

31%

29%

73%

63%

58%

50%

42%

44%

58%

62%

58%

48%

34%

50%

Relevant IT performance metrics expressed in terms relevant to and understood by the corporate executives

IT organization and governance specifically aligned with corporate structure/governance

IT operations and organization aligned to stated IT strategy

IT operational goals matched to corporate business goals

IT spending explicitly planned and measured against corporate priorities

IT strategy specifically developed to serve the corporate strategy

Is Alignment valuable?

IT Executives in the financial services industry are considerably less bullish on alignment impact than their counterparts in Consumer Business and Manufacturing.

% answering “significant” (highest) when predicting impact of various alignment efforts on company bottom line.

Manufacturing Financial Services Consumer Business Government

16Copyright © 2004 Deloitte Development LLC. All rights reserved.Mpls • PRD-6033\CIO\19795.ppt

Is business and IT Alignment a priority?

While there was widespread agreement that business and alignment was valuable, survey responses indicated that “IT priorities” are more tactical in nature

When asked on an unaided basis to list their top three IT priorities, “Align IT with Business” could be found at number 33 on the list, with only 2% of respondents listing it in the top 3

Top I T Priorities

20%

18%

12%

10%

Security Cost reduction Consolidationissues

Managing/consolidating/upgrading theinfrastructure

17Copyright © 2004 Deloitte Development LLC. All rights reserved.Mpls • PRD-6033\CIO\19795.ppt

Is anyone successfully aligning?IT executives reported strong success at a strategy level—in aligning corporate strategies and IT operations to IT strategies—but reported lesser success at aligning operational agendas and activities.

Success with I T Alignment

Extremely Successful Very Successful

IT performance metrics aligned with corporate executive understanding

IT organization and governance aligned with corporate structure/governance

IT operational goals aligned with corporate business goals

IT spending aligned with corporate priorities

IT strategy aligned with the corporate strategy

IT operations and organization aligned to stated IT strategy

36%

42%

51%

52%

55%

57%

Significant or Moderate Impact

18Copyright © 2004 Deloitte Development LLC. All rights reserved.Mpls • PRD-6033\CIO\19795.ppt

Is anyone successfully aligning?Despite the complexities and bureaucracy assumed to be inherent in a larger organization, the IT executives from larger organizations report greater success in alignment.

% Rating “Extremely” or “Very” Successful

Success with IT Alignment

53%

47%

34%

38%

34%

23%

56%

57%

56%

54%

45%

41%

$500M to $2B More than $2B

IT performance metrics aligned with corporate executive understanding

IT organization and governance aligned with corporate structure/governance

IT operational goals aligned with corporate business goals

IT spending aligned with corporate priorities

IT strategy aligned with the corporate strategy

IT operations and organization aligned to stated IT strategy

19Copyright © 2004 Deloitte Development LLC. All rights reserved.Mpls • PRD-6033\CIO\19795.ppt

Is anyone successfully aligning?Although IT executives from some industries reported more success in particular areas than others, most industries appeared to trend the same direction.

% Rating “Extremely” or “Very” Successful

Success with IT Alignment

61%

55%

49%

49%

39%

35%

59%

59%

45%

49%

39%

33%

46%

48%

54%

50%

46%

38%

58%

56%

60%

54%

36%

42%

IT performance metrics aligned with corporate executive understanding

IT organization and governance aligned with corporate structure/governance

IT operational goals aligned with corporate business goals

IT spending aligned with corporate priorities

IT strategy aligned with the corporate strategy

IT operations and organization aligned to stated IT strategy

Manufacturing Financial Services Consumer Business Government

20Copyright © 2004 Deloitte Development LLC. All rights reserved.Mpls • PRD-6033\CIO\19795.ppt

Is anyone successfully aligning?Though most respondents believed alignment would produce measurable benefits, IT Executives generally reported moderate to modest results.

Success of IT Alignment Efforts in Achieving …

42% 42%38%

Correctly skilled I T department Effective I T organization structure/ governance

Correctly sized I T organization

Only a small minority of respondents believe they have been extremely successful these areas. In fact, only …

• 9% have been extremely successful in achieving a correctly skilled IT Department

• 7% have been extremely successful in achieving an effective IT organization structure / governance

• 10% have been extremely successful in achieving a correctly sized IT Department

% Rating “Extremely” or “Very” Successful

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IT executives from larger organizations reported only slightly better results than their counterparts.

Success of IT Alignment Efforts at Achieving …

49%

40% 40%

44% 43%

39%

Correctly skilled I T department Effective I T organization structure /governance

Correctly sized I T organization

$500M to $2B More than $2B

Is anyone successfully aligning?

% Rating “Extremely” or “Very” Successful

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Is anyone successfully aligning?Results differed somewhat across industries.

Success of IT Alignment Efforts at Achieving…

45%47%

43%43%

37%

43%

48%

42%

31%30%

40%

32%

Correctly skilled IT department Effective IT organization structure /governance

Correctly sized IT organization

% Rating “Extremely” or “Very” Successful

Manufacturing Financial Services Consumer Business Government

23Copyright © 2004 Deloitte Development LLC. All rights reserved.Mpls • PRD-6033\CIO\19795.ppt

Is anyone successfully aligning?

• Survey results show that 10% of IT Executives believe they have been extremely successful in aligning business and IT objectives. – For purposes of our analysis, we will call this 10% the “Well-Aligned

Companies”*

• When we isolate the responses from these 10%, we see there is a clear distinction between the “Well-Aligned Companies” and the “Less-Aligned Companies”

A small number of organizations reported significant success in the quest for IT Alignment.

"Well-Aligned Companies" are defined as companies answering "5—extremely successful" to question 11a (Overall, how successful has your company been in its work to align IT in each of the following areas: (a) IT strategy aligned with the corporate strategy) [= 10 percent of the 200 respondents]

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The Success of the “Well-Aligned”

35%

40%

40%

45%

50%

80%

2%

5%

4%

4%

7%

51%

Percentage of Respondents Saying Alignment Has Been "Extremely Successful" (scoring 5 on a 5 point scale)

Well-aligned companies (a) Less-aligned companies (b)

The distinction between well-aligned and less-aligned companies is striking when asked how successful they have been in various alignment efforts.

In every aspect, well-aligned companies believe they have been “extremely successful” six times to 12 times more often than less-aligned companies.

IT operational goals matched to corporate business goals

IT spending aligned with corporate priorities

IT operational goals aligned with corporate business goals

IT operations and organization aligned to stated IT strategy

IT organization and governance aligned with corporate structure/governance

IT performance metrics aligned with corporate executive understanding

25Copyright © 2004 Deloitte Development LLC. All rights reserved.Mpls • PRD-6033\CIO\19795.ppt

25%

30%

35%

7%

4%

7%

Percentage of Respondents Saying They Have Been "Extremely Successful" (scoring 5 on a 5 point scale)

Well-aligned companies (a) Less-aligned companies (b)

Correctly Sized IT Department

Effective IT Organization Structure/Governance

Correctly Skilled IT Department

The Success of the “Well-Aligned”Not surprisingly, the well-aligned companies are three to five times more likely to respond as “extremely successful” in developing a correctly sized IT department, an effective IT organization structure/governance, and a correctly skilled IT department.

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The Success of the “Well-Aligned”

55%

70%

70%

70%

75%

80%

36%

61%

54%

46%

37%

51%

Percentage of Respondents Saying Impact Would be Significant (ranking 4 on a scale from 1 to 4)

Well-aligned companies (a) Less-aligned companies (b)

Interestingly, the “Well-Aligned” companies had a different perspective on the value of business and IT alignment.

Predicted Impact of IT Alignment

In every instance, IT executives from the well-aligned companies have a more positive outlook on the impact of IT and business alignment activities.

IT operational goals matched to corporate business goals

IT organization and governance specifically aligned with corporate structure/governance

IT operations and organization aligned to stated IT strategy

IT spending explicitly planned and measured against corporate priorities

IT strategy specifically developed to serve the corporate strategy

Relevant IT performance metrics expressed in terms relevant to and understood by the corporate executives (CEO, CFO, COO, VP Sales, etc.)

27Copyright © 2004 Deloitte Development LLC. All rights reserved.Mpls • PRD-6033\CIO\19795.ppt

What are the barriers to Alignment?Respondents rated a variety of factors on the degree to which each poses a barrier to effective IT alignment at their companies. In general, governance and communication issues play a key role in blocking alignment.

Barriers to business and IT AlignmentTop 2 Boxes

% Rating …

Significant Challenge

Moderate Challenge

Lack of budget to allocate or apply to creating IT alignment in the company 65% 28% 37%

Ineffective communication of business strategy and goals between business management and IT management

65% 28% 37%

Autonomous culture—business units/divisions have traditionally made their own technology decisions

63% 29% 34%

Lack of awareness in company regarding formal IT value management and alignment

62% 24% 38%

Weak support from senior business management 55% 20% 36%

Lack of defined business strategy 49% 18% 31%

Weak support from IT management 39% 17% 22%

28Copyright © 2004 Deloitte Development LLC. All rights reserved.Mpls • PRD-6033\CIO\19795.ppt

What are the barriers to Alignment?Respondents cited ineffective communications, tight budgets, and autonomous cultures as the most common serious barriers. While top barriers remained the same for well-aligned and less well-aligned companies, well-aligned companies were far less inclined to cite weak support from business management, lack of a defined business strategy, or lack of awareness of IT value.

0%

5%

10%

15%

15%

20%

20%

25%

3%

21%

19%

24%

17%

28%

28%

30%

Well-aligned companies (a) Less-aligned companies (b)

Ineffective communication of business strategy and goals

Lack of budget to apply to creating IT Alignment

Autonomous culture within business units/divisions

Weak support from IT management

Lack of awareness of formal IT Value Management and Alignment

Lack of defined business strategy

Weak support from senior business management

Others

% Rating Barrier as having a “Significant Impact”

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What are the barriers to Alignment?Smaller companies are much more likely to cite weak support from senior business management and the lack of budget to allocate or apply to creating IT alignment in the company as barrier to IT alignment. Not surprisingly, larger companies are plagued by an autonomous culture and ineffective communication.

Barriers to IT Alignment

19%

26%

17%

17%

11%

4%

4%

28%

18%

21%

6%

8%

6%

4%

$500M to $2B More than $2B

Weak support from IT management

Lack of defined business strategy

Lack of awareness in company regarding formal IT Value Management and Alignment

Weak support from senior business management

Ineffective communication of business strategy and goals between business management and IT management

Lack of budget to allocate or apply to creating IT Alignment in the company

Autonomous culture—business units/divisions have traditionally made their own technology decisions

% Rating Barrier as the “Top Barrier to IT Alignment”

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What are the barriers to Alignment?The trend by industry shows some discernable differences.

Barriers to IT Alignment

31%

20%

12%

20%

6%

2%

4%

22%

27%

16%

4%

14%

8%

4%

23%

15%

33%

4%

6%

6%

4%

24%

30%

18%

10%

4%

2%

8%

Weak support from IT management

Lack of defined business strategy

Lack of awareness in company regarding formal IT Value Management and Alignment

Weak support from senior business management

Ineffective communication of business strategy and goals between business management and IT management

Lack of budget to allocate or apply to creating IT Alignment in the company

Autonomous culture—business units/divisions have traditionally made their own technology decisions

% Rating Barrier as the “Top Barrier to IT Alignment”

Manufacturing Financial Services Consumer Business Government

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How is Alignment measured?Measuring alignment appears to be a challenge. When asked how they measure the success of IT alignment, the most common response among IT Executives is “subjective senior executive assessment”.

Measurement of the Success of IT Alignment

66%

65%

54%

40%

32%

Metrics quantifying the return on IT investments judged within an IT portfolio of investments view

Metrics quantifying the return on IT investments judged within an overall business portfolio of investments view

Metrics quantifying IT ROI on individual projects and initiatives

Metrics quantifying IT spending against overall business activity

Subjective senior executive assessment

% Citing Measurement as a Manner in which IT Alignment is Measured

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5%

10%

40%

50%

55%

55%

75%

3%

3%

1%

31%

67%

38%

63%

54%

Well-aligned companies (a) Less-aligned companies (b)

How is Alignment measured?Well-aligned organizations are more likely to focus on quantifiable measures.

Metrics quantifying IT spend vs. overall business activity

Metrics quantifying the IT ROI (business investment portfolio view)

Metrics quantifying IT ROI (individual projects/initiatives)

Subjective senior executive assessment

Metrics quantifying IT ROI (IT investment portfolio view)

Don’t know / refused

Other

Not formally measured

% Citing Measurement as a Manner in which IT Alignment is Measured

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How is Alignment measured?Large organizations prove more likely to utilize quantifiable metrics in measuring IT alignment, particularly matching IT spend against overall business activity.

Measurement of the Success of IT Alignment

66%

55%

55%

32%

15%

66%

77%

58%

49%

41%

$500M to $2B More than $2B

Metrics quantifying the return on IT investments judged within an IT portfolio of investment view

Metrics quantifying the return on IT investments judged within an overall business portfolio of investments view

Metrics quantifying IT ROI on individual projects and initiatives

Metrics quantifying IT spending against overall business activity

Subjective senior executive assessment

% Citing Measurement as a Manner in which IT Alignment is Measured

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How is Alignment measured?Industry data shows some discernable differences. For example, finance and manufacturing IT executives are more likely to quantify IT spending against overall business activity.

Measurement of the Success of IT Alignment

61%

76%

53%

41%

33%

67%

76%

55%

49%

29%

71%

56%

65%

40%

35%

64%

48%

44%

30%

28%

Metrics quantifying the return on IT investments judged within an IT portfolio of investments view

Metrics quantifying the return on IT investments judged within an overall business portfolio of investments view

Metrics quantifying IT ROI on individual projects and initiatives

Metrics quantifying IT spending against overall business activity

Subjective senior executive assessment

% Citing Measurement as a Manner in which IT Alignment is Measured

Manufacturing Financial Services Consumer Business Government

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With whom do IT executives align?When asked whom on their executive team they have the strongest alignment or business-side relationship, respondents most often mention the VP/director of operations or the general manager or SVP.

Strongest Business Allies of IT

43% 42%

36%34%

32% 31%

28%

% Citing the Executive as their Strongest Business Ally (multiple answers allowed)

VP/DirectorOperations

General Manager or SVP

CFO CEO, President VP/DirectorFinance

COO VP/DirectorSales/Marketing

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10%

15%

15%

30%

40%

45%

45%

45%

55%

4%

22%

29%

10%

32%

42%

35%

29%

31%

43%

Percentage of Respondents

Well-aligned companies (a) Less-aligned companies (b)

With whom do IT executives align?Well-Aligned companies were almost twice as likely to cite a strong relationship with the CEO/President than less-aligned companies.

CEO, President

COO

CFO

General Manager or SVP

VP/Director Operations

VP/Director Finance

CIO

VP/Director Sales/Marketing

Other business unit management

Don’t know/refused

% Citing the Executive as their Strongest Business Ally (multiple answers allowed)

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With whom do IT executives align?Larger corporations are split across the board in whom they believe are the strongest allies of IT. Smaller companies are much more likely to ally with the CFO and the VP of Operations.

Strongest Business Allies of IT

40%

32%

47%

23%

28%26%

30%

46%

50%

39% 38% 39%37% 36%

$500M to $2B More than $2B

% Citing the Executive as their Strongest Business Ally (multiple answers allowed)

VP/DirectorOperations

General Manager or SVP

CFO CEO, President VP/DirectorFinance

COO VP/DirectorSales/Marketing

38Copyright © 2004 Deloitte Development LLC. All rights reserved.Mpls • PRD-6033\CIO\19795.ppt

Strongest Business Allies of IT

45%47%

53%

33%

43%

33%35%

45%

39%

31%33%

27%

35%

29%

42%

48%

40%

33%35%

31%

38%38%

34%

20%

34%

24%

8%

20%

With whom do IT executives align?Industry data shows predictable differences. For example, manufacturing IT executives align largely with financial executives and financial services IT executives with operations executives.

% Citing the Executive as their Strongest Business Ally (multiple answers allowed)

Manufacturing Financial Services Consumer Business Government

VP/DirectorOperations

General Manager or SVP

CFO CEO, President VP/DirectorFinance

COO VP/DirectorSales/Marketing

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Is executive perception of IT Value accurate?On the encouraging side of the survey, 63% of IT executives say top management’s perception of the value that IT provides to the business is accurate. This is a significant improvement over what their counterparts reported a year ago, when only about half of the respondents said that top management’s perception of the value of technology was correct.

Executive's Perception of IT Value63%

30%

7%

Accurate Value is overstated Value is understated

% of Respondents(equal to 100%)

40Copyright © 2004 Deloitte Development LLC. All rights reserved.Mpls • PRD-6033\CIO\19795.ppt

5%

10%

85%

7%

32%

61%

Percentage of Respondents

Well-aligned companies (a) Less-aligned companies (b)

Is executive perception of IT Value accurate?It is no surprise that the well-aligned companies are on the same page with management, while the less-aligned companies were more likely to state that the value of IT is understated.

Yes, it is accurate

No, value is understated

No, value is overstated

% of Respondents(equal to 100%)

41Copyright © 2004 Deloitte Development LLC. All rights reserved.Mpls • PRD-6033\CIO\19795.ppt

Is executive perception of IT Value accurate?IT Executives from larger organizations reported more optimistic assessments of executive perception of IT Value.

Executive's Perception of IT Value

57%

11%

32%

69%

5%

26%

Accurate Value is overstated Value is understated

$500M to $2B More than $2B

% of Respondents(equal to 100%)

42Copyright © 2004 Deloitte Development LLC. All rights reserved.Mpls • PRD-6033\CIO\19795.ppt

Executive's Perception of IT Value

57%

8%

35%

71%

6%

69%

6%

25%

56%

10%

34%

23%

Accurate Value is overstated Value is understated

Is executive perception of IT Value accurate?IT Executives within Financial Services and Consumer Business industries also reported more optimistic assessments of executive perception of IT Value

% of Respondents(equal to 100%)

Manufacturing Financial Services Consumer Business Government

43Copyright © 2004 Deloitte Development LLC. All rights reserved.Mpls • PRD-6033\CIO\19795.ppt

Are business executives involved in defining IT Strategies?

Survey results show that most companies have both defined corporate-level business and IT strategies. 82% report that their company has a defined corporate business strategy, and of these, 88% indicate that this business strategy is communicated to IT. But is this then taken to the next logical step? Are business executives involved in developing the IT Strategy? Yes.

Over 60% of respondents indicate that business leaders are either a full member of the team or actually lead the shaping of IT Strategy.

Exective Management's Role in Development of IT Strategy

40%

31%

23%

6%

Full Member of Team Provides I nput Leads the Shaping of I TStrategy

No I nvolvement

% of Respondents(equal to 100%)

44Copyright © 2004 Deloitte Development LLC. All rights reserved.Mpls • PRD-6033\CIO\19795.ppt

Are business executives involved in defining IT Strategies?

15%

30%

55%

7%

1%

22%

37%

33%

Percentage of Respondents

Well-aligned companies (a) Less-aligned companies (b)

An overwhelming majority of the IT executives from the well-aligned companies, over 85%, state that executive management often leads the shaping of IT strategy or is a full member of the team that shapes IT strategy. This is over 40% higher than is reported by their less-aligned counterparts.

Executive management is a full member of the team that shapes IT Strategy

Executive management often leads the shaping of IT strategy based on business strategy/goals

Executive management provides input into IT strategy development

Don’t know/Refused

Executive management has no involvement with IT strategy development

% of Respondents(equal to 100%)

45Copyright © 2004 Deloitte Development LLC. All rights reserved.Mpls • PRD-6033\CIO\19795.ppt

Are business executives involved in defining IT Strategies?Respondents from the larger corporations continue to stand out as the better students of IT alignment. A full 70% of those from larger organizations indicate that business leaders are either a full member of the team or actually lead the shaping of IT strategy compared to 55% from smaller organizations.

Executive Management's Role in Development of IT Strategy

36%

32%

19%

13%

45%

26% 25%

4%

Full Member of Team Provides Input Leads the Shaping of ITStrategy

No Involvement

$500M to $2B More than $2B

% of Respondents(equal to 100%)

46Copyright © 2004 Deloitte Development LLC. All rights reserved.Mpls • PRD-6033\CIO\19795.ppt

Are business executives involved in defining IT Strategies?When viewed by industry, IT Executives in the Consumer Business industry indicate the highest level of involvement from business executives in developing the IT strategy.

Executive management's Role in Development of IT Strategy

34% 35%

25%

6%

43%

27%

22%

8%

52%

23% 23%

32%

40%

20%

8%

2%

Manufacturing Financial Services Consumer Business Government

Full Member of the Team Provides Input Leads Shaping of IT Strategy

No Involvement

47Copyright © 2004 Deloitte Development LLC. All rights reserved.Mpls • PRD-6033\CIO\19795.ppt

What is the role of IT?

How do respondents characterize the role they currently play within their organization? Four options were provided.

Ori

en

tati

on

In

ward

to

Outw

ard

to

IT

B

usi

ness

Innovation

Fast LeadingFollower Edge

BusinessPartner

BusinessLeader

ITEntrepreneur

ServiceProvider

• Business Leader

• Service Provider

• Business Partner

• IT Entrepreneur

48Copyright © 2004 Deloitte Development LLC. All rights reserved.Mpls • PRD-6033\CIO\19795.ppt

What is the Role of the IT Department in the Organization?

• Business Partner—joint developer of business strategy

• Service Provider—supplier of technical services in response to business strategy

• Business Leader—leads business strategy development

• IT Entrepreneur—drives business strategies in new areas through the use of technology

Forty-two percent of respondents describe the IT department’s role at their companies as a “strategic business partner-joint developer of business strategy.” That said, it is not necessarily a negative characteristic of an IT Department to be viewed as a service provider. As long as, IT Departments who primarily service providers are providing services that are in alignment with the business.

Role of the IT Department

13%

45%42%

Business Leader Service Provider Business Partner IT Entreprenuer

0%

49Copyright © 2004 Deloitte Development LLC. All rights reserved.Mpls • PRD-6033\CIO\19795.ppt

What is the Role of the IT Department in the Organization?Companies that are succeeding with IT alignment are most likely to characterize their role as either a “Strategic Business Partner” or “Critical Business Leader.”

Role of the IT Department

30%

35%

35%

11%

46%

43%

0%0%

Percentage of Respondents

Well-aligned companies (a) Less-aligned companies (b)

Business Leader

IT Entrepreneur

Business Partner

Service Provider

50Copyright © 2004 Deloitte Development LLC. All rights reserved.Mpls • PRD-6033\CIO\19795.ppt

What is the Role of the IT Department in the Organization?IT Departments in smaller companies are more likely to be viewed as service providers as opposed to business leaders.

Role of the IT Department

9%

53%

38%

0%

12%

39%

50%

0%

Business Leader Service Provider Business Partner I T Entreprenuer

$500M to $2B More than $2B

51Copyright © 2004 Deloitte Development LLC. All rights reserved.Mpls • PRD-6033\CIO\19795.ppt

What is the Role of the IT Department in the Organization?

The distinction between business leaders and service providers is even more pronounced by looking at the data by industry. IT departments in industries heavily dependent upon IT such as financial services are more likely to identify themselves as business partners.

Role of the IT Department

8%

41% 41%

0%

14%

31%

57%

0%

10%

40% 40%

0%

20%

60%

30%

0%

Business Leader Service P rovider Business P artner IT Entreprenuer

Manufacturing Financial Services Consumer Business Government

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