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CEO's perspective of IT

What CEOs expect from IT

Although many CEOs feel positive about the role of IT in the organization, how do they actually feel about its impact? And what kind of a role does the CEO feel IT will play in the organization in future? by Soutiman Das Gupta

CEOs across industry verticals have a few basic business goals, common to the entire fraternity. They are, generate more revenue, grow the customer base, increase profits, cut down costs, and provide better service value for customers.

But is it common to see the CEO actually happy to endorse the use of IT solutions in the organization, or is he/she cynical in the approach, due to the need to address other critical business-related aspects first? Do IT infrastructure and management-related aspects actually figure anywhere on the CEO's priority list? Read on for the answers.

Impact of IT

Ask a CIO what has been the impact of IT in his company. The reply is likely to be positive. But do CEOs actually appreciate IT's role in their organizations?

Yes they do. The Infrastructure Strategies (IS) 2004 CEO survey conducted jointly by Network Magazine and IMRB analyzed the findings from 31 CEOs nationwide. CEOs were asked to name the significant contributions of IT in their organizations.

42 percent view IT as a necessary commodity, 32 percent feel that the use of IT enables the company to meet regulatory compliance, and an overwhelming 94 percent said that IT improves efficiency of processes.

In any business, it's essential that the CEO recognizes the impact of IT, realizes in financial terms the value of IT-related services, and builds a road map for future organizational growth in which IT plays a significant role.

“Investments in IT help a growth-focused and dynamic organization to identify and meet the rapidly changing needs of its customers,” said Sandeep Nair-MD, Emerson Network Power India (ENPI). “IT helps in creating my company's business policies and strategies by analyzing current trends, forecasting future trends, and helping the organization take key decisions.”

Business priorities

The survey shows that the top three business priorities of CEOs are to decrease costs, increase customer loyalty, and increase revenue. And the top three goals for investments in IT are to provide better customer service, allow easy access to data, and deploy faster and more accurate tools to allocate resources.

Mindset change

This changed mindset is a radical shift from what a CIO thought a CEO's attitude to IT was, around five years ago. In the past, CIOs complained that CEOs viewed IT only as a minor support function. Thus created a mindset roadblock to exploit the full potential of IT.

CEOs on the other hand felt that the CIOs used too much jargon and did not entirely comprehend the business issues. After all, IT's task is not only to automate the existing processes, but also to introduce new and efficient means of business processes and functions.

So have CIOs moved up a 'value chain'? Are they able to display the optimum potential of IT? Or have CEOs educated themselves about the benefits of automation and computerization? Whatever may be the reason, it resulted in better harmony of business and IT, and more benefits to business.

Alignment of goals

Nearly 80 percent of the respondents (CEOs) believe that business goals are closely aligned with IT goals, in the organization. And compared to last year's survey, the percentage of companies that believe that the business goals are aligned with the IT goals, is the same (80 percent).

B. S. Nagesh, Managing Director & CEO, Shoppers' Stop said, “Our suppliers and personnel have now become more focussed, and spend more time on customer issues, rather than on communication problems. This has happened due to the sharing of information at the supplier level.”

“There has been an increase in productivity and efficiency for all customer-focussed activities. IT has introduced discipline and standardization in the organization,” he adds.

The survey reports that 3 percent of the respondents (CEOs) feel that IT and business goals are loosely aligned. Some of the significant reasons are that they feel this is not the main objective of the company, and the business goals are important.

That, 57 percent of these companies are now working at aligning the business and IT goals is good news.

Successful IT investments

What, according to the CEOs, makes a successful IT investment? The three important factors and expectations are that the project is completed on time, there is increase in revenue and profits, and there is an increase in customer value and satisfaction.

The expectations are not surprising considering the amount of promise that most CEOs see in IT. 97 percent of CEOs play active roles in IT budget approval and nearly 77 percent authorize and monitor the initiatives.

However, half the respondents are involved at the planning and post-completion stages of IT projects, and only one-third are involved at the execution stage. This happens only because the CEOs are confident about the CIOs' roles and abilities. If it wasn't so, the CEO would be certain to breathe down the CIO's neck at every stage and put close monitoring processes in place.

The CIO must evolve

84 percent of the CEOs say that CIOs must evolve from being back-room technologists to boardroom business strategists. And 73 percent of them have reported that the evolution processes have already begun in their organizations.

The three most important skills needed by a successful CIO/IT Head in the opinion of CEOs are a thorough understanding of business processes, a sound knowledge of technology options, and effective communication skills.

IT and the future

“IT will continue to be the backbone of our customer reach, service, and quality capabilities,” explained Vidur Kaushik of SRL Ranbaxy.

This sentiment is echoed in other organizations too.

“Since IT has always been an integral part of our success, I see my organization, delivering state-of-the-art technology based on integrated engineering solutions,” said Rajesh Srivastava of Meinhardt in India.

“We look forward to invest further in IT infrastructure to help enhance the Group's construction components and re-order our business processes,” said Surendra Hiranandani.

Dr Shailaesh Ayyangar of SSIL has a number of IT projects on the anvil. He wants to connect his nationwide sales force on an 'information superhighway', strengthen his business decision support system, and automate Knowledge Management in the organization.

And B.S. Nagesh of Shoppers' Stop wants to keep IT as the backbone on which he wants to build the future of his organization. He feels IT can facilitate good corporate governance.

Soutiman Das Gupta can be reached at

soutimand@networkmagazineindia.com

Research findings snapshot
  • 2/5th of the respondents view IT as a necessary commodity.
  • The two most significant contributions of IT were to increase efficiency of processes and enable regulatory compliance.
  • The top 3 Business priorities are to decrease costs, increase customer loyalty, and increase revenue.
  • The top three IT priorities this year are ERP, upgradation and replacement of IT infrastructure, and knowledge/process management.
  • Most of the 31 CEOs interviewed believe that the business and IT goals of their organization are closely aligned.
  • 97 percent of the CEOs play an active role in approving the IT budget.
  • Only 1/3rd involve themselves with the execution of an IT project.
  • CEOs feel the top three parameters for the success of IT investments are timely completion of the project, increase in revenue/profits, and customer satisfaction.
  • 84 percent of the CEOs believe that the role of the IT head needs to evolve from a back-room technologist to that of a boardroom business strategist.

CEO Talk
What according to CEOs is the actual impact of IT on their organizations?

“IT has helped us create a world class facility in the area of Laboratory Medicine and Clinical Trials,” said Vidur Kaushik-CEO, SRL Ranbaxy. It provides benefits like accuracy of tests since all equipment are bi-directionally interfaced, lower cost, increased efficiency, auditable analyses of medical tests in real-time, and reduced turnaround time of samples received from 360 global locations and reports sent.”

“IT has enabled us to reduce duplication of resources, re-working, and dependency on individual knowledge resources,” said Rajesh Srivastava, Director, Meinhardt (Singapore) Indian Branch. “It has allowed us better access and retrieval of information and improved quality assurance. And it has helped to reduce the cost of staffing the implementation of integrated information across systems. Our business policies and strategies are all technology-driven.”

The benefits of IT have also touched the construction giant Hiranandani Group. “IT has significantly enhanced communication amongst employees which helps them offer quick and prompt services to customers. Notices to customers for slab payments, and other relevant aspects are automated, and the required information is easy to retrieve,” said Surendra Hiranandani, MD, Hiranandani Group.

The company has deployed efficient means of information storage in all departments. Areas like customer accounts, vendor accounts, and engineering requirements generate increasing volumes of data. “Without the help of IT, it would be a tedious task to manage the information,” Hiranandani added.

The CEO of Sanofi Synthelabo India Limited (SSIL), Dr. Shailesh Ayyangar feels that IT provides accuracy and speed of exchange of information in his organization. “IT allows seamless business process integration with controlled data redundancy and increased productivity. These allow employees to focus on value addition tasks.”

 
     
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