Great Expectations: Top Executives Expect IT to Deliver on Revenue Growth

In most organisations, cost-cutting has been virtually a raison d’être for information technology. Not for much longer: 69% of senior IT and business executives from around the world surveyed by the Economist Intelligence Unit maintain that, within three years, ITs primary role will shift from driving cost efficiency to enabling revenue growth. This is more than posturing from technology managers. The expectation of a revenue-generating role for IT is strongest among CEOs and board members, while IT executives themselves are slightly slower to adopt this new mindset.

The strength of C-suite expectations suggests that the expansion of ITs role to encompass revenue generation is becoming a corporate mandate. Pressure on IT to help firms improve cost efficiency will not fall away, observes Robin Bew, Editorial Director of the Economist Intelligence Unit. But in a tough global operating environment, senior management will increasingly seek competitive advantage for their firms from the more effective use of technology.

IT executives will need to respond to these pressures, while at the same time dealing with the manifold other challenges they face, including the migration of enterprise networks to IP, ensuring data security and meeting the demands of compliance.

These findings are published today in Great expectations: The changing role of IT in the business, a report written by the Economist Intelligence Unit and sponsored by Capgemini, Cisco Systems and SAP. This is the first in a series of reports published under the umbrella of the Global Technology Forum, a research programme designed for senior executives who are responsible for managing and deploying information technology in the pursuit of business objectives.

Other key findings of the report include the following:

* An expectations gap exists between IT and the executive suite . Most technology managers (62%) also believe that enabling revenue generation will come to be ITs primary mission within the next three years, but CEOs and board members (83%) are almost wholly convinced of it. The gap yawns particularly wide in Asia-Pacific and Europe, where many IT managers retain a strong belief in the primacy of ITs cost-reduction role-partly due to continued C-level insistence on hitting cost-efficiency targets. This gap will need to close-and C-level priorities to become more consistent- for better IT-business alignment to be achieved.

*In all regions, C-level agreement with the premise that IT’s main role will shift to enabling revenue generation is higher than that of IT executives.
Source: Economist Intelligence Unit, Global Technology Forum survey, 2006

* Organisational and technical solutions will be tapped to improve ITs fit with the business objectives. The acquisition of new technologies tops the list of initiatives that survey respondents, including CEOs, hope will improve the level of IT-business alignment. But organisational measures are also prominent: all executives place strong emphasis on joint project management responsibility between IT and business managers, as well as the use of cross-functional teams.

* Some decentralisation of IT functions to other business units is also likely. The beginning of the end of the IT department as we know it? The majority of surveyed executives think not, at least for the next five years. But as many CEOs and board members (41%) foresee the disappearance of a stand-alone IT department as those who do not. More than a few companies appear ready to consider radical solutions to bring IT and the business closer together.

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