NEW YORK, Dec. 19, 2013 (GLOBE NEWSWIRE) -- After years of seeing their companies languish in the economic doldrums, chief financial officers across Europe are feeling more buoyant about growth prospects and they are also aware that information technology is essential to driving business transformation and bottom-line success. But there are many obstacles to progress on the road ahead. A survey released today of CFOs and other senior finance executives from AlixPartners, the global business advisory firm, and researchers at Oxford Economics reveals that "keep-it-running" projects such as ERP (enterprise resource planning) systems, are consuming 70% of all IT spending, leaving just 30% for growth-oriented, "improve-the-business" IT spending. In addition, the survey also finds that a full 50% of companies feel they're not getting their money's worth from what, for many of them, has been considerable IT investment over recent years.
"This survey clearly shows that European CFOs feel their companies aren't getting enough ROI from their IT spending and are also frustrated with not getting the key insights from IT that enable maximizing business performance, given what they are spending," said Meade Monger, managing director at AlixPartners and global leader of the firm's Information Management Services group. "These are common themes we hear from CFOs worldwide, along with the challenges of attracting talent from insufficient supply, of internal politics that often lead to the wrong actions and of generally getting IT properly connected with the business."
The vast majority of European finance executives have embraced IT as a potential driver of profits, according to the survey, and 30% of respondents see the primary function of IT as improving operating profits. And the evidence would suggest that they are right. In fact, an AlixPartners analysis included as part of the study demonstrates that executives from nearly half (45%) of companies with rising margins over the past three years said in response to the survey that their access to management information matches or exceeds expectations, versus only 21% from companies with flat or falling margins.
European finance executives are still focusing their investments on systems, rather than growth-oriented IT. Sixty percent of survey respondents say that they have been successful in implementing IT projects aimed at improving their businesses' financial returns. With the rapid rise of social networks, the emergence of dynamic online and mobile channels, an avalanche of business data and the distribution of computing power through the cloud, growth-driving "improve-the-business" technologies contain real promise, suggests the study.
In order to improve IT investments, European finance executives agree that process problems have to be fixed. Weaknesses in the planning and budgeting process often undermine the effectiveness of their plans and 44% of respondents say that factors such as politics and personal persistence influence their decision-making.
The problem seems to come partially from a lack of analytical skills, since 54% of respondents admit that their teams lack the specific competencies needed to help drive their businesses forward.
European CFOs and their teams might also benefit from benchmarking U.S. practices, suggests the study. "With European finance leaders so focused on investments in 'keep-it-running' IT, they may not have turned their attention to the need to optimise their 'improve-the-business' project portfolio. By aggressively driving down the former type of IT costs, CFOs can create a bigger investment pot and apply rigorous portfolio-management techniques to get the most business benefit from growth-oriented IT," said Rob Hornby, managing director in AlixPartners' Information Technology and Applied Analytics Practice.
About the Study
The study, IT Spending and Return: A European Perspective, is the result of a collaboration between AlixPartners and Oxford Economics. In late 2013, Oxford Economics surveyed 50 executives across four European countries: France, Germany, Italy and the UK. The respondents worked for companies headquartered in 13 countries: US (20%); UK (16%); Germany (14%); Hong Kong (10%); Russia (8%); Indonesia, France, and Australia (6% each); Singapore and Canada (4% each); and Portugal, New Zealand, and China (2% each).
About Oxford Economics
Oxford Economics was founded in 1981 as a joint venture with Oxford University. Since then, we have become one of the world's foremost independent global research firms. Headquartered in Oxford, England, with offices throughout the world, we employ more than 80 professional macroeconomic and industry economists—one of the largest teams of economists in the private sector. Our global team is highly skilled in a full range of research techniques, from econometric modeling, impact analysis, and market sizing to executive surveys, case studies, and expert panels. Oxford Economics is a key adviser to corporate, financial, and government decision-makers. Our worldwide client base now comprises over 700 international organizations, including GE, IBM, Coca-Cola, and McKinsey.
AlixPartners is a leading global business advisory firm of results-oriented professionals who specialize in creating value and restoring performance at every stage of the business lifecycle. We thrive on our ability to make a difference in high-impact situations and deliver sustainable, bottom-line results. The firm's expertise covers a wide range of businesses and industries whether they are healthy, challenged or distressed. Since 1981, we have taken a unique, small-team, action-oriented approach to helping corporate boards and management, law firms, investment banks and investors respond to critical business issues. For more information, visit www.alixpartners.com.
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