IT Fails To Meet Expectations

CEOs increasingly view information technology as a key strategic tool, but are disappointed in IT achievements. Nonetheless, senior executives believe IT will deliver significant benefits in the future. These findings highlight the Compass 1999 IT Census, an international survey of 650 CEOs and senior executives from a variety of industries. Conducted by the Department of Information Systems at the London School of Economics, the study was commissioned by Compass Analysis, a management consulting firm specializing in business performance improvement. "The bottom line is that CEOs expect more from IT than they’re getting," said David Burkett, President of Compass America. "Whether their expectations are realistic or not is beside the point. IT management needs to do a better job at delivering and demonstrating value from IT." Of the CEOs surveyed, 38 percent expect IT to make a significant contribution to business results, while 25 percent expect a low contribution. And 37 percent anticipate an average contribution. When asked about actual achievement, the numbers shift: 25 percent of CEOs believe IT provides a high contribution, while 33 percent say IT makes a low contribution.When asked about future requirements, 48 percent of CEOs expect IT to make a high contribution, 22 percent anticipate a low contribution and 30 percent foresee an average contribution.The IT executive’s role in the organization has a critical impact on CEO perceptions of IT contribution, the survey found. Among CEOs who say their chief IT executive has a prominent role in defining corporate strategy, 36 percent say IT makes a high contribution to the business, while 11 percent see a low contribution. In contrast, only 14 percent of CEOs who say their IT executive has a minor role or no role in corporate strategy believe IT makes a high contribution to business, while 20 percent of these executives believe IT’s contribution is low.The survey also examined CEO views of IT’s impact on business performance improvement, cost reduction and competitive advantage. IT does best in improving business performance, according to the CEOs: 46 percent of CEOs expect a significant impact in this area, and 32 percent say IT has indeedmet their expectations. Just under a third of CEOs expect IT to have a high impact on cost reduction, while 24 percent rate IT achievement highly in this area. Competitive advantage fared least well in meeting expectations: 37 percent of CEOs expect IT to make a significant impact in this area, but only 19 percent are satisfied with the results. Interestingly, 54 percent of CEOs expect IT to have a significant impact on competitive advantage in the future.