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Information technology: justifying the investment - CEO Survey Report: Advertisement - Two executives share their views

Chief Executive, The, June, 2003 by Douglas Lichterman

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* IT investment is necessary to remain competitive, and more often than not it also returns shareholder value.

Half the CEOs believe their IT investments have returned real value to their shareholders over the past decade. Forty-two percent say that while their IT investments have been necessary to remain competitive, their shareholders have gained no real advantage from them.

* Three-quarters of CEOs use their IT resources every day.

Seventy-five percent of CEOs use IT as a routine part of their daily work, while 15 percent use IT occasionally, and 8 percent depend on others to use the available technologies for them. [See Chart 3]

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* Outsourcing is considered by many to be a viable option for certain aspects of IT.

Thirty-four percent of CEOs would outsource software development and deployment, and 34 percent would outsource software maintenance and enhancement. Twenty-eight percent would outsource support services (help desk, desk-side, break/fix, etc.), and 28 percent of CEOs would outsource the technology infrastructure (data centers and network). Thirty-nine percent of CEOs would not consider outsourcing any IT. [See Chart 4]

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RELATED ARTICLE: TWO EXECUTIVES SHARE THEIR VIEWS

Chief Executive asked two survey respondents to expand on a couple of key points from the survey. Donald Schneider is chairman of the board of Schneider National, Inc., a $2.6 billion transportation and logistics company; Stew Krentzman is COO of OKI Americas, a division of the $6 billion electronics giant.

The executives agreed that IT is essential to conducting business in the 21st century. Schneider points to the optimization models that enable his company to evaluate millions of contracts and determine how to ship them all on time and at the lowest cost. "This can only be done with the kind of capacity IT gives you--the human mind just can't do that," he says. Krentzman notes that "as the overall economy has compressed, in order to gain any competitive edge at all, people are using technology to identify and then address where value-chain savings can occur."

Their opinions diverge, however, when evaluating whether corporate investments in IT have resulted in shareholder benefit. Schneider's view is positive: "In our case it allows us to differentiate ourselves in the marketplace, and as a result gain access to the kinds of customers that would not be possible if we did not have our IT. A lot of our competitors just don't have it." But Krentzman points out that this is not true in every case: "I don't think a lot of businesses have determined what the current best practices should be, so I think they've disappointed a lot of people because all they have done is automate what they've always been doing."

Business Services Industry

Information technology: justifying the investment - CEO Survey Report: Advertisement - Two executives share their views

Chief Executive, The, June, 2003 by Douglas Lichterman

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