CEOs dis IT investments

IT managers still don't get any respect.

Of more than 650 chief executive officers surveyed from the top 1,500 blue-chip corporations worldwide, only 25 percent believe IT makes a large contribution to bottom-line business results, according to a census conducted by the London School of Economics.

Indeed, 33 percent of the CEOs said IT's contribution to business was low, and more than 80 percent of the surveyed business leaders were disappointed in IT's contribution to their company's competitive advantage.

Despite CEOs' disappointment with past results, 48 percent of those surveyed say that in the future IT will play a prominent role in defining corporate strategy.

More than 54 percent said they had high expectations for IT's future capability to contribute to things such as their company's competitive advantage.

As for including IT in the upper echelons of management, when the CIO is made a member of the senior management team, 25 percent of the polled CEOs believe that IT becomes the top contributor to the business.

Many of the CEOs' comments were direct and critical.

"We always seem to be one year away from achieving high value," one CEO said.

"The high cost of undelivered promises is a continuing and increasing problem," another said.

Some IT executives are crying foul.

"From the CEO's perspective, a dollar spent on advertising may bring in $100 in revenue, or an invested dollar will generate a 20 percent return. However, a dollar spent on IT may help an organisation stay competitive or reduce expenses, but it is difficult to make direct comparisons to the bottom line and shareholder value," said Gregory Kinman, manager of enterprise information at the John Deere Insurance Group, and a member of InfoWorld's Corporate Advisory Board.

Many CIOs are finding that the ground beneath them is shifting as they suddenly discover themselves at the focal point for change brought on by the Internet and electronic commerce.

"The difficulty is [that] the CIO role is changing in a matter of months, as opposed to his position evolving over the years," said Dick Arns, executive director of the Chicago Research and Planning Group (www.silicon-city.com), a Chicago-based association of CIOs with 200 members nationwide.

The 1998 consumer buying spree via the Internet brought things to a head as shareholders and stakeholders realized that their businesses can be easily "cannibalised" by upstart companies, such as Amazon.com or Yahoo, that have taken early advantage of Internet opportunities.

These same stakeholders also see an opportunity and want their companies to make the most of it.

It is no surprise that many CEOs have been caught off guard by the Internet in the past 24 months and are now turning to their CIOs for a quick solution, Arns said.

Because there is a groundswell of technology surrounding electronic business, CEOs are looking toward IT for the experts who can design and define the direction that the business will take in the future, Arns said.

This is a new role for IT administrators, and they should not have to take ownership of it alone, according to Arns. Other business components such as marketing, advertising, and finance must work with IT to set the course for the next millennium, he added.

With rising expectations come increased responsibilities -- and this is a net gain for IT, according to the survey director, Kit Grindley, a professor at the London School of Economics, in London.

"I must admit to crusading for IT's right and duty to be at the heart of business strategy," Grindley said.

The survey indicates that the crusade to share the hot seat of responsibility for business results is over, according to Grindley.

One CEO who made his IT executive part of senior management put it this way: "We no longer get elegant solutions to problems we don't have."

The survey was conducted by the London School of Economics, and Compass America Inc.(www.compassamerica.com), a management consulting group in Reston.

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