Innovation Suffers as Leaders Court Wall Street Instead of Main Street
NEW YORK; Jan. 15, 2008 – When making decisions about investments in information technology (IT), organizations must shift their mindset from Wall Street to Main Street in order to retain and win new customers, according to the findings of a global study of Chief Information Officers (CIOs) released today by Accenture (NYSE: ACN).
The Accenture survey results indicate that executive and technology leadership � under pressure from investment analysts and other Wall Street observers � are undertaking superficial improvements in their IT systems rather than making fundamental changes to meet the growing demands of users.
Users � including consumers, business customers and, in the case of government, citizens � are demanding more because of their ever-increasing familiarity and comfort level with technology, an emerging phenomenon that Accenture has called �user-determined computing.�
The trend has the potential to create a dilemma in 2008 for CEOs and CIOs evaluating IT investments, the survey found. �CEOs and CIOs must decide between offering technology-literate customers new products and services that are truly unique, versus receiving a short round of applause from investment fund managers for holding the line on spending,� said Bob Suh, chief technology strategist, Accenture.
The study also indicates that the chasm between Wall Street and Main Street is wide and deep, with little evidence that companies and organizations are working to close it. At the same time, low-cost, emerging-market multinationals are establishing a completely new set of expectations around user experience, participation, mobile access and real-time responsiveness.
Similarly, the study found that user-determined computing also has implications for employees who use technology every day to do their jobs. �Consumer technology is now outpacing enterprise technology, leaving employees frustrated by the inadequacy of the technology they�re using at the office,� said Suh. �Consequently, employees are introducing their personal technologies into the workplace, even if the organization does not support them.�
The study, based on detailed online self-assessments of the senior-most IT executive at nearly 300 Fortune 1000 companies in North America, Europe, Asia Pacific and South America � with combined annual revenue of $5.3 trillion � yielded multiple findings that illustrate the depth of the chasm between Wall Street and Main Street:
- IT teams still spend 40 percent of their total time running and fixing existing systems, a number that remains essentially unchanged since Accenture conducted its last global IT study in July 2005. This is a result of many legacy systems remaining on life support for more than a decade and an unwillingness to pull the plug on outdated systems. In fact, on average more than 60 percent of all enterprise systems in the study were fully depreciated.
- On average just 22 percent of customer interactions, 19 percent of supplier interactions and 33 percent of employee interactions are conducted online and processed automatically.
- Only 11 percent of information system interfaces focus on the customer.
- Some 80 percent of organizations are failing to gather very detailed customer information and 84 percent are failing to make the information very accessible to decision makers and line staff.
- Only 35 percent of enterprises around the world are committing mobile applications to a major part of their business and only a fraction look seriously at such collaborative tools such as Wikis for their knowledge workers.
Another survey objective was exploring how large organizations manage their IT investments and to identify the common underlying behaviors and characteristics of �high performers.� Some findings related to high performers, which Accenture defines as those that consistently outperform their peers in revenue, profit growth and total shareholder return, include:
- More than 25 percent of application interfaces run by high performers focus on the customer, as opposed to 15 percent of low and average performers. More than half of all CIOs, however, say they need to increase customers as a priority for real-time interfaces.
- IT innovation leaders are already leveraging Service Oriented Architecture (SOA) for legacy integration, and are further ahead today in building new SOA-based applications. The study found that 38 percent of high performers� application portfolio is comprised of composite applications built using SOA, and 45 percent of new application functionalities of this group are built based on use/reuse of existing services.
- Masters in IT execution, having adopted disciplined approaches to increase standardization and centralization of their IT functions in recent years, are spending on average 19 percent less time on operations (i.e. running, fixing) than other CIOs.
- High performers have shed most of the legacy technology, as they report having the youngest application portfolios. When it comes to application migration, over two-thirds of high performers report looking for alternatives to traditional enterprise applications for their externally facing applications such as sales and marketing and customer services. In addition, over one-third of high performers will look for on-demand/Software as a Service applications for supply chain & distribution, research & development, human resources, finance and accounting.
About the Survey
Since 2005, Accenture has been studying performance drivers in managing and executing information technology. This global research program examines how the world�s largest businesses and public-sector organizations are managing their IT investment and processes across the fundamental IT functions. Many studies measure and report on information technology investment trends. But they don�t examine the quality of the spending. How is IT performing today? How will it perform in the future? The answers to these questions can provide the true indicator of the value of information technology and its role in helping organizations perform at higher levels.
To date, more than 700 Chief Information Officers in 22 countries have participated in this ongoing research.
Accenture is a global management consulting, technology services and outsourcing company. Combining unparalleled experience, comprehensive capabilities across all industries and business functions, and extensive research on the world�s most successful companies, Accenture collaborates with clients to help them become high-performance businesses and governments. With more than 175,000 people in 49 countries, the company generated net revenues of US$19.70 billion for the fiscal year ended Aug. 31, 2007. Its home page is www.accenture.com.