Study: IT Execs Under Pressure to Deliver ROI -- Now

Cost cutting and improving productivity are top IT priorities for U.S. companies during the recession, and IT executives are under pressure to deliver a return on investment (ROI) in half the time, according to a new study by AT&T.

The study also concludes that U.S. companies are preparing for a global economic recovery to begin in the first half of 2010.

The "2009 AT&T Road to Growth Study" is based on interviews with 77 IT executives employed by multinational companies with an approximate annual revenue of at least $1 billion, including 47 U.S.-based IT executives and 30 European-based IT executives. All participants have responsibility for making decisions about IT strategy and budget allocations.

All U.S.-based IT executives work for a U.S. company or a U.S. subsidiary of a foreign company based in the United States, according to AT&T. Overall, the U.S. IT executives interviewed worked for multinational companies represented by 25 industries with median 2008 revenues of $4.75 billion and operations in an average of 28 countries.

Among the study's key findings:

  • The time horizon to achieve ROI has narrowed by 50% -- In today's economic climate, U.S. companies have significantly shortened the time frame over which ROI is delivered. More than half of U.S. IT executives interviewed stated they are under pressure to deliver a return on investment in half or less than half the time. As a result, two-thirds cited that the change has affected their IT budgets, strategies and priorities. The study found that companies are less willing to invest in longer-term projects or projects where the return does not come quickly. One CIO stated that the added pressure has forced the company to focus on IT projects that give at least 100% ROI in 12 months; otherwise, the project(s) get dropped.
  • Cost cutting and improving productivity are top priorities -- Cost cutting and increasing revenue remain the two primary business goals cited by U.S. companies. To achieve the goals, survive the recession and move toward growth, IT strategies are focused on reducing operating costs (87% cited this as "extremely or very important"); improving collaboration with customer and partners (85% cited this as "extremely or very important"); and enhancing workforce performance and productivity (83% cited this as "extremely or very important").

    "U.S. companies are under added pressure to deliver, and IT investments are more critical than ever before," said Bill Archer, chief marketing officer, AT&T Business Solutions. "From the study, we expect U.S. companies to come out of the recession leaner and more agile. Technologies that cut cost, reduce redundancies and loss, and improve efficiencies top the priorities list."

  • Short- and long-term strategies are similar -- The study found that U.S. companies employ multiple strategies to address business goals, and do not distinguish between short-term and long-term strategies. It appears that U.S. companies are reducing the time period for their long-term forecasting until after the recession is over. The role IT plays in helping U.S. companies achieve long-term strategies is similar to the role IT plays in supporting the companies' short-term business strategies.
  • Business continuity and security solutions have the highest positive impact -- IT investments and priorities will go toward lowering cost, reducing risks and improving productivity and efficiency. The study found that "business continuity and security solutions" will have the biggest positive impact on business growth as U.S. companies prepare for an economic turnaround. This is closely followed by "enterprise mobility solutions" and "Web delivery solutions." Areas of IT investment that are expected to have a high to moderate impact on businesses are "unified communications services" and "hosted solutions."

    AT&T notes that the findings are in line with its annual study on business continuity and disaster recovery preparedness for U.S. businesses in the private sector. The dramatic rise in social networking and mobility trends is presenting new challenges to companies' network security, disaster planning and business continuity programs, and businesses are stepping up their technology investment and efforts to meet these challenges, despite the economy.

  • Disparate views in Europe -- The European portion of the study found that in contrast to the U.S., European executives have a consensus view that the global economy will rebound between the first and fourth quarters of 2010. The majority of executives expect a recovery toward mid to the end of 2010. Additionally, 50% of the European executives stated that there is no change in the time period with which they achieve ROI. The consensus between European and U.S. IT executives is that the two largest global economies -- the United States and China -- will emerge first from the current recession, according to AT&T.

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