Sixty-two percent of CEOs recognise that IT-enabled changes will be a key element in their post-recession strategy, while only 13% disagree, according to a recent survey by Gartner. Preliminary results from the survey show 42% of business leaders are already focusing more on revenue growth than cost control.
In the third quarter of 2009, Gartner conducted a targeted web-based survey of 190 senior business executives, 81 of whom were CEOs, which probed their views and priorities for 2010 and beyond. It examined companies in the US and UK with annual revenues of more than $1-billion and specifically excluded technology service providers and government.
"These preliminary results will help CIOs and their teams with the planning and budgeting work they are doing in the next few months,” says Mark Raskino, research vice-president and Gartner fellow. “Business leaders are gasping for growth after a long period holding their breath, and they are expecting to increase the importance of IT in their post-recession approach.
"It is critical that CIOs review business leaders’ rapidly changing tactical business priorities and often unstated new expectations of where IT can help as the economy turns. CIOs are in a good position to have that conversion right now. They should also take advantage of business leader’s relatively positive attitude towards IT investment during budget negotiations.”
In 2009, CEOs initially placed cost cutting at the top of their priorities to cope with the sudden and severe recession. In 2010, the focus for 71 per cent of business leaders is a return to revenue growth.
Twenty-nine per cent of business leaders expect to see a return to revenue growth as their primary focus in 2010. Only 10% do not expect revenue growth to be their primary driver until beyond 2011.
“A switch in focus from cost to revenue will reshape business-change priorities and in turn will impact the IT project portfolio. CIOs should expect re-prioritisation of some key IT projects during 2010 as the business cycle starts to turn,” Raskino adds.
Similarly, business leaders’ investment attitude towards IT is reasonably positive. In addition to the 43% of respondents who will increase IT investment level, 45% will keep the same IT investment level, while only 13% of business leaders will decrease IT investment level. “These findings reinforce Gartner’s IT spending forecast of 3,3% growth in 2010,” said Mr Raskino. “With this warm attitude to IT, CIOs should stand their ground if peers attempt to gain investment share at IT’s expense.”
CEOs and business executives are also changing the order of their priorities in 2010. In particular, they are making customer focus the top priority for 2010, with 85% of respondents reporting that retaining and enhancing their existing customer bases will be their top priority next year.
Also, attracting and retaining skilled talent rose to the number three priority, while reducing costs has become less important, falling from the number one priority in 2009 to the number five priority for 2010. This latter trend is also reflected in their views on the capabilities that IT can bring to the business. They recognise IT’s contribution to business performance beyond managing costs and that it has a role to play in processes, flexible working, decision making and legal support.
“With business leaders progressively shifting their time and attention away from the introspection of restructuring and tactical cost cutting, and back towards customer value propositions and servicing during 2010, IT leaders should propose new ways in which technology can be used to support existing and new customers. They should also discuss talent-management issues and consider special provisions for key talent,” says Raskino.
Although business leaders will start to drive through an economic recovery next year, very few anticipate a return to the way things worked in 2007 and certainly do not expect the pace of business to be as rapid. The survey found that CEOs and business executives expect only low business-activity growth in 2010. When asked about their expected changes in core production or service activity volumes in 2010, 20% of respondents expect no change, 49% expect an increase, but 31% expect a decrease. Of those who do expect volume growth, 50% predict it will be less than 5% and more than three quarters foresee it will be below 10%.
“This further suggests very few business leaders are anticipating any sort of V-shaped recovery, and business volumes will not recover quickly,” says Raskino. “With the expectation of a modest rise in business activity, CIOs should control infrastructure investments accordingly.”
Although business leaders have a positive outlook for 2010, CIOs should anticipate a mid-year re-prioritisation of some key IT projects during 2010. They should explore post-recession ideas for new technology-enabled ideas that produce strategic business value. “Now is the time for CIOs and their teams to help power economic recovery and make a major contribution to the future prosperity of their businesses,” Raskino says.