Companies Investing 30 Percent Less in Technology Innovation Than 2002, According to A.T. Kearney Study
March 23 2005 - 9:00AM
PR Newswire (US)
Companies Investing 30 Percent Less in Technology Innovation Than
2002, According to A.T. Kearney Study Widening Disconnect Apparent
Between Business and Technology Executives CHICAGO, March 23
/PRNewswire/ -- Companies have shifted their focus to growth
creation, yet their IT organizations continue to emphasize
maintenance of day-to-day operations and cost reduction, according
to a study of 200 North American and European business executives
by global management consulting firm A.T. Kearney. A.T. Kearney
predicts many companies' growth opportunities are at risk because
their IT organizations are not responding effectively to the
demands of their business. While 67 percent of business executives
view IT innovation as important or critical to their companies'
success, the study found only 20 percent of companies' IT
investment is allocated to IT innovation -- a 30 percent decrease
from a similar study conducted in 2002. According to the most
recent survey, nearly three quarters (72 percent) of executives say
the best technology ideas in their companies originate outside of
the IT department in areas such as corporate strategy, sales,
marketing and operations. In fact, nearly one half (47 percent) of
business leaders surveyed agree that their IT department focuses
primarily on tactical, day-to-day IT requirements rather than
longer-term strategic requirements. "These findings shatter the
notion that IT leads the early adoption of technology and the
business side slows down the process," said Mark Livingston, a vice
president at A.T. Kearney. "The reality is most IT departments
can't effectively explore innovative uses of technology because
they are stuck in the daily operational grind. Business leaders
accept this and look outside of IT for innovative technology
resources to achieve strategic business goals." The study found
that strategic alignment between companies and their IT departments
has moved in the wrong direction. Just 25 percent of respondents
said their IT planning and business planning processes are fully
integrated and developed simultaneously. In the 2002 study,
one-third (32 percent) of participants had a fully integrated IT
planning process. As a result, IT organizations are perceived by
many as unresponsive and not very agile. Only 41 percent of
business executives believe their IT organizations react well to
business change. And, more than 30 percent of executives believe
one-fifth or more of their company's IT budget is wasted each year.
"IT organizations are increasingly challenged to move beyond
maintaining and fixing the complex IT architectures of the past and
to begin producing true value beyond cost-cutting," said Dan
Starta, A.T. Kearney vice president and co-leader of the study.
"The most effective way to achieve value is via well-integrated
IT-business partnerships, not an environment where IT is viewed as
a tactical function. To be successful, IT organizations must start
judging their success in terms of value contribution to core
business operations and innovative initiatives that support
business strategy and drive growth." The study also found stark
differences in the way European and North American firms view IT.
European executives are more likely to have lower expectations of
IT and rely on it less. As a result, IT organizations are not as
accountable to the business and a smaller percentage of respondents
say they have realized strong benefits from IT. European executives
also are much more likely to be concerned with the operational
aspects of IT than with innovation. Only 20 percent of European
executives surveyed believe IT innovation is critical to their
business, compared with almost one-third (32 percent) of North
American executives. A report on the study, "Why Today's IT
Organization Won't Work Tomorrow," is available at
http://www.atkearney.com/main.taf?p=5,3,1,96. ABOUT THE STUDY In
late 2004, A.T. Kearney commissioned Harris Interactive to conduct
a global IT research study to gain a better understanding of the
strategic value of IT, business issues related to innovation and
adoption of technology, the role of executives in technology
planning and implementation, and IT governance practices. A primary
goal of the study was to compare opinions and insights from both
business and technology executives. Harris performed the survey by
telephone, contacting 200 business leaders in the United States,
Canada and Europe. Participants were from the following industries:
Financial services, consumer products and retail, process
industries (energy and chemicals), telecommunications and high
tech, pharmaceutical and health care, and automotive and
transportation. Survey participants in the financial services
industry have attained the level of senior vice president; in all
other industries, participants are vice presidents (or equivalents)
or higher. Participants in North America are with firms that have
more that US $1 billion in revenue; European participants are with
firms that have at least US $500 million in revenue. All
participants are knowledgeable about their company's IT strategy
and its contributions to their business. ABOUT A.T. KEARNEY A.T.
Kearney (http://www.atkearney.com/) is one of the world's largest
management consulting firms. With a global presence that includes
more than 60 offices in 37 countries, spanning major and emerging
markets, A.T. Kearney provides strategic, operational,
organizational and technology consulting and executive search
services to the world's leading companies. A.T. Kearney is the
high-value management consulting subsidiary of global services
leader EDS. About Harris Interactive(R) Harris Interactive Inc.
(http://www.harrisinteractive.com/), the 15th largest and
fastest-growing market research firm in the world, is a Rochester,
N.Y.-based global research company that blends premier strategic
consulting with innovative and efficient methods of investigation,
analysis and application. Known for The Harris Poll(R) and for
pioneering Internet-based research methods, Harris Interactive
conducts proprietary and public research to help its clients
achieve clear, material and enduring results. Harris Interactive
combines its intellectual capital, databases and technology to
advance market leadership through U.S. offices and wholly owned
subsidiaries: London-based HI Europe (http://www.hieurope.com/),
Paris-based Novatris (http://www.novatris.com/), Tokyo-based Harris
Interactive Japan, through newly acquired WirthlinWorldwide, a
Reston, Virginia-based research and consultancy firm ranked 25th
largest in the world, and through an independent global network of
affiliate market research companies. CONTACT: Douglas MacDonald --
A.T. Kearney (+1) 312-223-6892 Julie Helmstetter -- Edelman (+1)
312-240-3378 DATASOURCE: A.T. Kearney CONTACT: Douglas MacDonald of
A.T. Kearney, +1-312-223-6892, ; or Julie Helmstetter of Edelman,
+1-312-240-3378, , for A.T. Kearney Web site:
http://www.hieurope.com/ Web site: http://www.novatris.com/ Web
site: http://www.harrisinteractive.com/ Web site:
http://www.atkearney.com/main.taf?p=5,3,1,96 Web site:
http://www.atkearney.com/
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