NEW YORK—There is more evidence that the IT spending freeze has thawed. IBM Business Consulting Services this week released the results of a survey of 456 top industry executives, the results of which confirm the attitudes reported elsewhere: that business leaders are loosening the purse strings on technology budgets with an eye toward revenue growth. The finding confirms a shift in attitude away from the severe cost cutting of the previous three years.
The survey was carried out in October and November of 2003 by partners in IBMs Business Consulting Services division, which consists mainly of PricewaterhouseCoopers Consulting, which was acquired by IBM in 2002.
“In our industry, cost-cutting your way to success just isnt an option,” said Joseph Reiser, CEO of Locus Pharmaceuticals of Blue Bell, Pa. He added, “We want to develop better drugs, we dont want to spend time fixing computers or making them faster.”
“Clearly, growth is back on an agenda,” said Ginni Rometty, managing partner of IBM BCS. The survey covered business entities with more than $500 million in annual revenues, including independent companies and units of large corporations.
IBM BCS Partner Eric Pelander said that to set aside cost containment and pursue revenue growth, the executives surveyed said they need to make their companies much more responsive to customers than previously. They also questioned whether their employees have the necessary skills to achieve growth through heightened responsiveness.
Pelander, who interviewed an insurance company CEO and a credit card company CEO as part of the survey said, “Both were on the hook to deliver value to their shareholders. They need to get more growth. Cost containment is not enough.” He declined to name the executives he surveyed, citing a confidentiality agreement with them.
Pelander noted that the survey had a tilt toward companies based in the Asia and Pacific regions. “Half the sample was Asia-Pacific,” he said, adding that of that amount, half were companies based in Japan.
Sixty percent of the CEOs surveyed said a major barrier to achieving new growth objectives is limited internal skills, capabilities and leadership. Less than 10 percent rated the ability of their companies to manage change as very successful.
“Our ability to realign, reshape and improve our cost structures is limited by a lack of managerial talent in some areas at the top,” said one of the survey respondents, whose identity was not disclosed by IBM.
The dearth of appropriately skilled professionals was underlined by Bill Pence, CEO of the Napster unit of Roxio Inc., of Los Angeles. “In the last 18 to 24 months, it has been much harder to find talent,” he said.
Cathy Palaez, chief operating officer of Liberty Travel, offered, “Technology skills are hard to find in the U. S. and are very expensive.”
Rometty said the results of the survey will be used by IBM “to set priorities for the investments we make.” Analytics, dashboards, telematics and RFID are emerging as areas of strong customer interest, she said. She also said IBM will focus its energies on CRM, financial management and supply chain management.
Pelander said the study is a more extensive version of one done in Europe by PWCC last year. IBM BCS plans to conduct a study like this every two years, Pelander said. He noted that IBM does a survey of chief financial officers and is considering doing a study of human resources directors.