The Value of IT Perceptions and Reality Forbes'com September 2003

1
The Value of IT Perceptions and Reality
Forbes.comSeptember 2003
Day in the Life of CEOs Online--Part III
2
Outline

• Background/Method
• Summary
• Demographics
• Web Usage
• Organizational Perceptions of IT
• Business Issues and the Perception of IT

3
Background and Method

• Questionnaire fielded in collaboration between
  GartnerG2 and Forbes.com.
• Fifteen minute, 39 question survey conducted by
  Survey.com.
• Web-based, respondents invited to participate via
  e-mail.
• Fielded July - August 2003.
• Respondent base - Forbes.com list of 30,000
  executives and WalterKarl business list of
  300,000 contacts.
• 2,837 total respondents, 408 from large (1000
  employee) companies
• Major Topics
• Demographics, including industry affiliation
• Web usage
• Personal beliefs and attitudes
• Company beliefs and attitudes
• Use of IT
• General business issues
• Business performance metrics

4
Summary - CEO Key Issues Study

• WEB USAGE
• The Web is a pervasive presence in the lives of
  C-level executives 38 percent of C-level
  respondents said the Web is their single most
  important source for information on business. The
  next most prevalent source of information was
  daily newspapers by 26 percent of respondents.
• Among large company executives, the reliance on
  the Web is even greater with 51 percent naming
  the Web is their most important business
  information resource, followed by newspapers at
  22 percent.
• C-level executive respondents also stated they
  are spending less time with other media,
  including newspapers, magazines, TV, radio and
  industry trade publications as a result of the
  time they spend online (not including email) 59
  percent are spending less time with magazines, 50
  percent say they are spending less time with
  newspapers, 48 percent less time with TV, 46
  percent less time with radio and industry trade
  publications respectively.
• 26 percent of large firm respondents said they
  are knowledgeable about Wi-Fi technology and they
  are reporting some current usage of the
  technology. By year-end 2005, 57 percent are
  planning to implement Wi-Fi technologies.

5
Summary - CEO Key Issues Study (contd)

• IT PERCEPTION GAP
• Senior executives see IT as having less value
  than line managers and staff, indicating a
  perception gap.
• While 42 of overall respondents report their
  companies tend to be leading edge in IT
  adoption, no CEOs report this.
• FURTHER IT PERCEPTIONS
• Less than one quarter indicate their IT
  departments are proactive, transformational, or
  strategic business accelerators. The remainder
  are to a greater extent more reactive,
  transactional, or infrastructure enabling.
• The most effective CIOs work in organizations
  that have a successful business strategy, lead IT
  departments that are proactive, and work for
  companies where IT is viewed as very important to
  sustainable competitive advantage.

6
Summary - CEO Key Issues Study (contd)

• BUSINESS PERCEPTIONS
• Widespread belief that the first mover has an
  advantage when entering new markets - no
  perception gap.
• Just 11 of companies are developing and
  communicating a successful business strategy.
• Cutting costs and improving productivity are
  viewed as the business areas where IT can have
  the greatest impact.
• Product/service excellence and customer
  intimacy/relationships are seen as most important
  to sustainable competitive advantage.

7
Demographics
8
Number of Survey Respondents
Large Companies (1000 employees)
C-Level Executives
Full Time Employees
All
9
Profile of Respondents by Company Size (n2602)
10
Profile of Respondents by Job Category (n2837)
All
11
Profile of Respondents by Job Category (n1875)
C-Level Executives
12
Profile of Respondents by Job Category (n407)
Large Companies 1000 employees
13
Web Usage
14
Web Usage
Q What would you consider your MOST important
source of information on business?
15
Web Usage
Q Relative to the time you spend each day on the
Web (not including email) at work and at home,
are you spending less time, more time, or the
same amount of time with Daily Newspapers?
16
Web Usage
Q Relative to the time you spend each day on the
Web (not including email) at work and at home,
are you spending less time, more time, or the
same amount of time with Magazines?
17
Web Usage
Q Relative to the time you spend each day on the
Web (not including email) at work and at home,
are you spending less time, more time, or the
same amount of time with TV?
18
Web Usage
Q Relative to the time you spend each day on the
Web (not including email) at work and at home,
are you spending less time, more time, or the
same amount of time with Radio?
19
Web Usage
Q Relative to the time you spend each day on the
Web (not including email) at work and at home,
are you spending less time, more time, or the
same amount of time with Industry Trade
Publications?
20
Web Usage
Q Thinking about your use of the Web in general,
please indicate which of the following describe
you. (Select all that apply)
21
Web Usage
Q Which of the statements below best describes
your companys use or plans for using wireless
Wi-Fi technology?
34 of all respondents currently use Wi-Fi
technology or plan to add it by year-end 2004
22
Organizational Perceptions of IT
Based on Large Company Respondents n 408
23
Respondents by Industry (n382)
Financial Services (78)
Manufacturing (51)
IT Vendors (40)
Professional Svcs. (37)
Healthcare/Life Sciences (33)
Public Sector (27)
Telco (26)
Retail (25)
Education (23)
Travel (14)
Energy (13)
Engineering/Construction (11)
Automotive (4)
24
Use of the Web is pervasive, even among CEOs
25
Definition of IT
Information Technology (IT) - the common title
for the entire spectrum of technologies used for
information processing, including software,
hardware, communications technologies, and
related services. In general, IT does not
include any technologies that do not generate
data for enterprise use.
26
Perceptions vary about whether companies
investing heavily in IT have a strong competitive
advantage
Percent Indicating Agreement
27
Consensus exists that leading edge IT is
necessary to deliver products/services and to
differentiate from competitors...
28
but the value of IT is again perceived
differently by job title - more evidence of a
perception gap.
My companys IT needs to be leading edge to
successfully deliver our products/services to our
customers
Percent Indicating Agreement
My companys IT needs to leading edge to
successfully differentiate ourselves from our
competitors
Percent Indicating Agreement
29
More evidence of a perception gap - a large
number report their company has leading edge
IT, but none are CEOs
Staff (46)
Director/Mgr. (44)
VP (41)
C-level (55)
President/CEO/Board (0)
30
The largest obstacle to implementing strategic
projects is changing corporate culture, not IT
systems
Thinking about implementing large strategic
projects within your company, how easy or
difficult is it to implement changes in each of
the following areas?
Percent Indicating Difficult
Perception Gap
Corporate Culture
Percent Indicating Difficult
31
IT departments are more tactical than strategic
today as reported by survey respondents
Strategic
Strategic Change Leader (17)
Business Consultant (18)
Business Partner (42)
Transaction Processor (23)
Tactical
32
In addition, only a few describe their IT dept.
as proactive, strategic business accelerators, or
transformational

Percent describing IT department this way
33
Major predictors of effective CIOs

• Firms have a successful business strategy for
  growth
• CIOs lead IT departments that are proactive
  rather than reactive
• Firms have view that IT is very important to
  sustainable competitive advantage

34
Business Issues and the Perception of IT
Based on Large Company Respondents n 408
35
Belief that the first mover has a significant
advantage over followers when entering new
markets holds across job titles
Percent Indicating Agreement
36
Importance of IT in enabling improved financial
performance measures - Cutting Costs and
Improving Productivity lead
37
Few firms report a successful business strategy
or clear communication of the strategy fewer
still do both
Successful business strategy
Articulates business strategy
Articulates successful business strategy
Percent Indicating Strongly Agreement
38
Importance of business issues to sustainable
competitive advantage - Product/Service
excellence leads

39
Planned Analysis Does IT deliver real business
value?
Question 1 Has leading edge adoption of IT been
successful in transforming the business in such
areas as dealing with suppliers, product
development, marketing, etc.? Question 2 To
what extent does technology effectively enable
business strategy? Question 3 Does the
enlightened use of IT enable organizations to
outperform their competition in market growth,
revenue growth, and profitability?
40
AppendixQuestionnaire
41
Questionnaire

• Standard demographics
• 1. Which of the following best describes your
  current employment status?
• SINGLE SELECT
• Employed full-time
• Employed part-time
• Retired
• None of the above
• 2. Which of the following best describes your
  organization's PRIMARY industry focus?
• SINGLE SELECT
• Accounting
• Aerospace
• Agriculture
• Architecture/engineering
• Automotive
• Banking
• Construction
• Consulting
• Distribution/logistics

23.Legal 24.Manufacturing-computer and electronic
products 25.Manufacturing-consumer packaged goods
(CPG) 26.Manufacturing-other than CPG or computer
and electronic products 27.Market
research 28.Marketing/advertising 29.Mining 30.Non
-profit 31.Petroleum 32.Life science/pharmaceutica
l 33.Publishing/broadcasting 34.Real
estate 35.Retail trade 36.Software
development 37.Telecommunications 38.Transportatio
n 39.Travel 40.Utilities 41.Warehousing 42.Waste
management 43.Wholesale trade 44.Other industry
not listed above (specify) TEXT BOX
42
Questionnaire

• 3. How many employees are at your location and
  across your entire organization worldwide,
  including all of its branches, divisions, and
  subsidiaries?
• 3r1. Your location
• 3r2. Entire organization
• PULL DOWN MENU FOR EACH
• 1. Fewer than 10
• 2. 10 to 24
• 3. 25 to 49
• 4. 50 to 99
• 5. 100 to 249
• 6. 250 to 499
• 7. 500 to 999
• 8. 1,000 to 2,499
• 9. 2,500 to 4,999
• 10. 5,000 to 9,999
• 11. 10,000 to 24,999
• 12. 25,000 to 49,999
• 13. 50,000 to 99,999
• 100,000 or more

43
Questionnaire

• 4. Which of the following best describes the
  site at which you work?
• SINGLE SELECT
• 1. Headquarters
• 2. Subsidiary
• 3. Branch office
• 4. Field/sales office
• 5. Manufacturing plant
• 6. Telecommute/office in home
• 7. Client site
• Other (specify) TEXT BOX
• 5. What is your organizations approximate
  enterprise-wide annual revenue?
• PULL DOWN MENU
• 1. Less than 10 million
• 2. 10 to less than 50 million
• 3. 50 to less than 100 million
• 4. 100 to less than 250 million
• 5. 250 to less than 500 million
• 6. 500 million to less than 1 billion

44
Questionnaire
6. Which of the following best describes your
job category? SINGLE SELECT 1. Board of
directors 2. President, owner, sole
proprietor 3. CEO 4. CFO 5. CIO 6. CTO 7. COO 8. O
ther C-level executive 9. Executive vice
president 10. Senior vice president 11. Vice
president 12. Director 13. Manager 14. Staff 15. C
onsultant 16. Other (specify) TEXT BOX
45
Questionnaire
7. Which of the following best describes the
department or area in which you work? SINGLE
SELECT 1. Administration/corporate
management 2. Communications/telecommunications 3.
Computer/MIS/DP/IS/IT/network 4. Customer
service/customer care 5. Design/CAD/CAM 6. Distrib
ution (delivery services, shipping/receiving) 7. E
ngineering 8. Facilities/plant engineering 9. Fina
nce/accounting/treasury 10. Human
resources/personnel administration 11. Legal/contr
acts 12. Library/information center 13. Manufactur
ing/operations/production 14. Marketing/marketing
communications/market research/advertising/public
relations 15. Publishing/word processing/graphical
design 16. Purchasing/materials
acquisition 17. Quality assurance/quality
control 18. Research and development 19. Sales 20.
Software engineering 21. Strategic
planning/business development 22. Technical and
support services/service technician 23. Training/e
ducational resources 24. Transportation 25. No
departments, it's a small organization
26. Self-employed 27. Other (specify) TEXT BOX
46
Questionnaire

• 8. Is your organization a publicly traded
  company?
• SINGLE SELECT
• Yes
• No
• 8a. (Optional) Company name TEXT BOX
• SERVER CALL
• IF Q8 1 THEN SHOW Q8B THEN CONTINUE ELSE GOTO
  Q9
• 8b. (Optional) What is your companys stock
  market ticker symbol? TEXT BOX
• 9. Thinking about your daily work routine,
  please indicate which of the following relate to
  the start of your work day. (Select all that
  apply)
• MULTIPLE SELECT
• Before I go to work, I read a newspaper
• Before I go to work, I watch TV
• Before I go to work, I access the Web
• Before I go to work, I listen to the radio
• While I commute, I read a newspaper, magazine, or
  book
• While I commute, I listen to the radio
• I use a wireless device (Blackberry, email
  enabled phone/PDA, etc) to do email

47
Questionnaire
10. What would you consider your single MOST
important source of information on
business? SINGLE SELECT 1. The Web 2. Daily
newspapers 3. Magazines 4. Radio
5. TV 6. Industry trade publication 11.
Relative to the time you spend each day on the
Web (not including email) at work and at home,
are you spending less time, more time, or the
same amount of time with each of the
following SINGLE SELECT FOR EACH RADIO BUTTON
MATRIX
48
Questionnaire

• Thinking about your use of the Web in general,
  please indicate which of the following describe
  you. (Select all that apply)
• MULTIPLE SELECT
• I buy/sell stocks or other financial investments
  online
• I use online banking services (pay bill online,
  manage checking/savings accounts online, etc)
• I respond to online advertising when I find
  something interesting
• SUPERFICIAL SERVER CALL
• Characteristics, beliefs, attitudes, and
  attributes
• Thinking about your personal views about IT in
  business, please rate your level of agreement
  with the following
• Definition Information technology (IT) the
  common title for the entire spectrum of
  technologies used for information processing,
  including software, hardware, communications
  technologies, and related services. In general,
  IT does not include any technologies that do not
  generate data for enterprise use.
• 13r1. Companies that invest heavily in IT have a
  strong competitive advantage
• 13r2. When organizations enter new markets, the
  first mover has a significant advantage over
  followers
• PULL DOWN MENU FOR EACH
• 1 - Strongly disagree

49
Questionnaire

• SUPERFICIAL SERVER CALL
• Company characteristics, culture, policies,
  processes, and organization
• IT related
• 14. Again, thinking about IT in business, please
  rate your level of agreement with the following
  
• SINGLE SELECT FOR EACH USE RADIO BUTTON MATRIX
• Strongly disagree Strongly agree
• 2 3 4 5
• 14r1 My company suffers from information overload
  
• 14r2 My company's ability to implement changes in
  strategy to take advantage of emerging
  opportunities is held back by its resistance to
  change
• 14r3 Executive sponsorship is necessary for large
  transformational IT projects
• 14r4 My companys current technology hinders our
  competitive advantage
• 14r5 My companys information technology needs to
  be leading edge to successfully deliver our
  products/services to our customers
• 14r6 My companys information technology needs to
  be leading edge to successfully differentiate
  ourselves from our competitors

50
Questionnaire
15. Thinking about implementing large strategic
projects within your company, how easy or
difficult is it to implement changes in each of
the following areas? 15r1 Corporate culture
15r2 Business process 15r3 Underlying IT
systems 15r4 Organization structure PULL DOWN
MENU FOR EACH 1 - Extremely difficult 2 - 3 -
4 - 5 - Extremely easy
51
Questionnaire

• SERVER CALL
• IF Q6 5 SHOW Q16 THEN GOTO Q18 ELSE SHOW Q17
  THEN CONTINUE
• Are you a member of your companys executive
  leadership team or executive committee?
• SINGLE SELECT
• Yes
• No
• Dont have an executive leadership team or an
  executive committee
• Does your CIO sit on your companys executive
  leadership team/executive committee?
• SINGLE SELECT
• 1. Yes
• 2. No
• 3. Dont have a CIO
• 4. Dont have an executive leadership team or an
  executive committee
• 5. Dont know

52
Questionnaire

• 19. Which one of the following descriptions best
  characterizes the role of the IT
  department/function at your company?
• SINGLE SELECT
• 1. Transaction processor (executes defined
  functions as identified by the business units.
  Generally does not initiate or recommend IT
  initiatives to higher level management)
• 2. Business partner/service deliverer (works
  with the business units as partners to identify
  and document business requirements and develop
  the defined IT applications)
• 3. Business consultant (brings technical
  recommendations to the business units and helps
  the business units develop their own
  applications)
• 4. Strategic change leader (prioritizes and
  facilitates programs/projects across the
  enterprise as part of the business strategy team)
  
• Our company does not have a specific IT
  department or function
• What percentage of IT expenditures by your
  business would you characterize as
• 20r1 Infrastructure enabling investments in IT
  necessary to keep the lights on TEXT BOX
• 20r2 Enhancement investments in IT that improve
  productivity and/or cut costs TEXT BOX
• 20r3 New business initiatives investments in IT
  that differentiate your business TEXT BOX
• from its competitors
• Must add to 100 to continue Total TEXT BOX

53
Questionnaire

• SERVER CALL
• Q20 MUST ADD TO 100 TO CONTINUE
• What model best describes IT decision making and
  governance in your organization?
• SINGLE SELECT
• 1. C-level executives, as a group or as
  individuals, including the CIO but not acting
  independently
• 2. Individuals or groups of IT executives
• 3. Business unit leaders or their delegates
• 4. C-level executives and at least one other
  business group
• 5. IT executives and at least one other business
  group
• 6. Each individual business process owner or end
  user
• Our company does not have a specific IT
  department or function
• Thinking about the IT department/function at your
  organization, would you say it would best be
  described as
• SINGLE SELECT FOR EACH USE RADIO BUTTONS
• Infrastructure Strategic NA
• enabling business accelerator

54
Questionnaire

• 24. Once again, thinking about the IT
  department/function at your organization, would
  you say it would best be described as
• SINGLE SELECT FOR EACH USE RADIO BUTTONS
• Reactive Proactive NA
• 1 2 3 4 5 6 7 8
• Approximately what percentage of your new
  business initiatives are dependent on information
  technology (IT) for their success? (Please fill
  in whole numbers only)
• 3 CHARACTER NUMERIC ONLY TEXT BOX
• SUPERFICIAL SERVER CALL
• Wi-Fi is a wireless technology like a cell phone.
  Wi-Fi enables computers to send and receive data
  indoors and out within the range of a base
  station.
• 26. Which of the statements below best describes
  your companys use or plans for using wireless
  Wi-Fi technology?
• SINGLE SELECT
• Currently use

55
Questionnaire
27. How important will the use of IT be in
enabling each of the following improvements to
your businesss financial performance over the
next 12 months? 27r1 Improving
productivity 27r2 Improving cash
flow 27r3 Selling more to existing
customers 27r4 Improving retention rate of
existing customers 27r5 Adding new customers in
existing markets 27r6 Adding new customers in
new markets 27r7Cutting costs PULL
DOWN MENU FOR EACH 1- Not at all important
2 - 3 - 4 - 5 - 6 -
7 - 8 - 9 - 10 - Most important
56
Questionnaire

• SUPERFICIAL SERVER CALL
• Non-IT related
• How important will each of the following business
  issues be to improving your businesss financial
  performance over the next 12 months?
• 28r1 Improved productivity
• 28r2 Improved cash flow
• 28r3 Selling more to existing customers
• 28r4 Improving retention rate of existing
  customers
• 28r5 Adding new customers in existing markets
• 28r6 Adding new customers in new markets
• 28r7 Cutting costs
• PULL DOWN MENU FOR EACH
• 1- Not at all important
• 2 -
• 3 -
• 4 -
• 5 -

57
Questionnaire

• 30. Please rate your level of agreement with the
  following statements.
• SINGLE SELECT USE RADIO BUTTON MATRIX
• Strongly disagree Strongly agree
• 2 3 4 5
• 30r1 My company has a successful business
  strategy for growth
• 30r2 My company clearly articulates its business
  strategy to all levels in the company
• 31. Please rate each of the following business
  issues in terms of its importance to sustainable
  competitive advantage for your company.
• 31r1 Access to financing
• 31r2 Strategic partnerships
• 31r3 Product or service excellence
• 31r4 Information technology
• 31r5 Economies of scale
• 31r6 Other cost economics (other than scale)
• 31r7 Staff skills
• 31r8 Customer intimacy/relationships
• 31r9 Supply chain excellence

58
Questionnaire

• 32. Does your company have a "chief strategy
  officer," head of strategy, or an equivalent
  role?
• SINGLE SELECT
• 1. Yes
• 2. No
• 3. Dont know
• SERVER CALL
• IF Q33 2 THEN SHOW Q34 THEN CONTINUE ELSE
  GOTO Q35
• Who takes on the role for defining the strategy
  of the company? (Select all that apply)
• MULTIPLE SELECT
• 1. President/CEO
• 2. COO
• 3. CMO
• 4. Board of directors
• 5. Executive committee
• 6. Other (specify) TEXT BOX
• Business benefits, impact, and value

59
Questionnaire

• 35. How do you believe your company will perform
  on each of these measures in the next 12 months
  compared to peers in your industry?
• 35r1 Market share growth
• 35r2 Revenue growth
• 35r3 Profitability
• SINGLE SELECT FOR EACH USE RADIO BUTTON MATRIX
• Significantly Significantly
• under perform outperform
• 1 2 3 4 5 6 7
• 36. How would you rate the effectiveness of your
  CIO?
• SINGLE SELECT USE RADIO BUTTONS
• Extremely Extremely Not
• ineffective effective Applicable
• 2 3 4 5 6 7

60
Questionnaire

• Thinking of all of the major IT-enabled business
  initiatives your business has undertaken across
  the following 6 categories, how would you rate
  the success of IT in transforming the business?
• 38r1 Dealing with suppliers
• 38r2 Product development
• 38r3 Dealing with customers
• 38r4 Dealing with sellers (distributors,
  wholesalers)
• 38r5 Managing the workforce (human
  infrastructure)
• 38r6 Managing the workplace (technology
  infrastructure)
• 38r7 Marketing
• PULL DOWN MENU FOR EACH
• 1- No impact
• 2 -
• 3 -
• 4 -
• 5 -
• 6 -
• 7 - Enabled transformation
• 8. Dont know