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/

Copyright