Tuesday, August 09, 2011

Executives Turn to IT to Drive Performance in Tough Environment

Although macro-economic conditions remain challenging, or perhaps because of it, nearly 1/3rd of private companies are investing more in Information Technology (IT) to reduce costs to maintain bottom-line earnings and ignite growth.

According to PwC's Private Company Trendsetter Barometer, 233 CEOs/CFOs surveyed indicate plans to increase IT spending 19%, from 5.6% of their total budgets in 2010 to 6.6% over the next 12 months.

Even with the increases, senior executives remain frugal, focused on leveraging IT to drive and optimize business efficiency and effectiveness. IT priorities are foremost indicated to drive tangible Business Process Improvements (90%), and also drive improvements in performance monitoring, visibility and optimization, including initiatives to Better Manage Enterprise Data (75%) and Optimize Business Information/Analytics (73%).

The next highest indicated IT investment priorities focused on the ability to generate revenue opportunities and growth in a tough environment, including:

         Make the business more agile (58%)

         Attract new customers (58%)

         Drive growth and competitiveness (55%)

         Better identify the needs of existing customers (55%)

         Devise more effective ways to sell and deliver products/services (54%).
Nearly half (46%) of the senior executives interviewed indicate that, perhaps because of prior budget cuts and postponed investments over the past few years, that important and/or sizeable areas or functions are in need of IT upgrades, and 18% report that this will require incremental funding. For international, IT upgrade concerns were indicated as more critical, with 26% indicating additional fund allocation to cover the required infrastructure upgrades compared to US firms.

Key areas of planned IT investment over the next one to three years indicate that IT infrastructure upgrades indeed are a priority, with information security (70%) being the highest priority, and cloud computing (40%) within the top five focus areas. However, most of the priorities highlight the leverage of IT for business performance improvement, via  next-generation data management and analysis (50%), enterprise mobility via tablets and handheld devices (48%), and social media/networking (46%).

The Bottom-Line
Even though tough headwinds remain, Executives are shifting their focus from cutting costs to driving top-line growth, and turning to IT as a catalyst to drive business opportunities and growth, while continuing to drive business process improvements and improve visibility and performance optimization.

IT marketers should recognize the executive priority shift, evolving marketing messages and value propositions from a pure cost cutting focus towards a more balanced approach, especially including information on how proposed solutions / service can help drive revenue growth and competitive advantage.

Based on executive priorities, marketing should migrate messages and proof points to include: improving visibility and control, driving business agility, attracting new customer, better identifying needs of existing customers and devising more effective ways to sell and deliver products/services.

Source:PwC's Private Company Trendsetter Barometer tracks the business issues and standard industry practices of leading privately held US businesses. It incorporates the views of 233 CEOs/CFOs: 126 from companies in the product sector and 107 in the service sector, averaging $265.4 million in enterprise revenue/sales, and including large, $300 million-plus private  companies. More information can be found at: http://www.barometersurveys.com/vwAllNewsByDocID/54AE305195DC70E08525784C007109A8/index.html

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