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The Aligned Agenda -Insights From Cfo And Cio Studies

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The Aligned Agenda -Insights From Cfo And Cio Studies

  1. 1. The Aligned Agenda Insights from the Global CFO and CIO Studies IBM Institute for Business Value
  2. 2. The IBM Global CIO and CFO studies are part of our C-Suite series 2005 Study 2006 Study 2004 Study 2008 Study 2007 Study 2008 Study 2005 Study 2003 Study Total Interviews: 450 Face-to-Face: 450 Total Interviews: 889 Face-to-Face: 267 Total Interviews: 1230 Face-to-Face: 619 Total Interviews: 1130 Face-to-Face: 1100 Total Interviews: 404 Face-to-Face: 337 Total Interviews: 456 Total Interviews: 320 Face-to-Face: 320 Total Interviews: 765 Face-to-Face: 506 2010 Study Total Interviews: 1917 Face-to-Face: 1485 CFO Studies CEO Studies CHRO Studies Total Interviews: 1564 Face-to-Face: 1564 2010 Study IBM Institute for Business Value 2009 Study Total Interviews: 2598 Face-to-Face: 2598 CIO Studies 2009 Study Total Interviews: 393 Face-to-Face: 367 CSCO Studies
  3. 3. IBM Institute for Business Value
  4. 4. <ul><li>The study represents different-sized organizations in 78 countries and 19 industries </li></ul>In the largest known sample of face-to-face interviews, we spoke with over 2,500 CIOs to understand their goals and challenges Our analysis used 2004-2007 Profit before Tax (PBT) growth, relative to peers in their industries, to associate organizations with one of three growth levels : High, Medium or Low. For organizations where this information was not available, we used statistical correlation to assign levels, based on closest overall similarity of answers. In this presentation, we primarily refer to CIOs who work in organizations with high PBT growth as “High-growth CIOs” and to those working in organizations with low PBT growth as “Low-growth CIOs.” Geography IBM Institute for Business Value Organization Size Sector Public 18% Distribution 24% Financial Services 21% Industrial 24% Others 2% Communications 11% Geography
  5. 5. Our analysis provides insights into how CIOs can make the biggest impact on behalf of the entire organization <ul><li>CIOs spend an impressive 55% of their time on activities that spur innovation and help the business </li></ul><ul><ul><li>Generating buy-in for innovative plans </li></ul></ul><ul><ul><li>Implementing new technologies </li></ul></ul><ul><ul><li>Managing non-technological issues </li></ul></ul><ul><li>Successful CIOs are much more actively engaged in </li></ul><ul><ul><li>Setting strategy </li></ul></ul><ul><ul><li>Enabling flexibility and change </li></ul></ul><ul><ul><li>Solving business problems </li></ul></ul><ul><li>CIOs are increasingly recognized as full-fledged members of the senior executive team </li></ul>However, CIOs universally acknowledge that some of their most important objectives sometimes seem to clash IBM Institute for Business Value
  6. 6. Long term trends Top three most important forces that impact your IT-organization over next 3 years High growth CIO emphasize business model change; budget constraints may constrain low growth CIOs Medium growth Low growth High growth IBM Institute for Business Value
  7. 7. Successful CIOs blend three pairs of roles that seem contradictory, but are actually complementary By integrating these three pairs of roles, the CIO makes innovation real, raises the ROI of IT and expands business impact IBM Institute for Business Value Able Pragmatist Savvy Value Creator Relentless Cost Cutter Collaborative Business Leader Inspiring IT Manager Making Innovation real Raising the ROI of IT Expanding business impact Insightful Visionary
  8. 8. The Insightful Visionary explores how technology drives innovation, and the Able Pragmatist enables innovative plans <ul><li>Truly integrates business and IT to innovate </li></ul><ul><li>Proactively reaches out to the business to co-create and champion innovation </li></ul><ul><li>Has a clear view of the top technological priorities that will enhance competitiveness </li></ul>Insightful Visionary <ul><li>Does practical things to help enable the business and corporate vision, as business leaders expect </li></ul><ul><li>Widely uses collaboration and partnering technologies to get work done </li></ul><ul><li>Uses third-party business and technology services to allow focus on the top priorities </li></ul>Able Pragmatist IBM Institute for Business Value CIOs reach out actively to the business to co-create and champion innovation… ” Innovation should be based on practical technology that can deliver business objectives within reasonable time and cost, which can be absorbed by the business.” Life insurance CIO, India High growth CIOs more actively use collaboration and partnering technology to drive innovation for the entire organization +86% 41% 22% ” Although IT performance is not where I would want it to be, IT is moving towards bringing more ideas to the business as opposed to starting with a whiteboard.” Retail Industry CIO, Ireland +40% 67% 48%
  9. 9. The priorities on the CIO agenda clearly demonstrate a broad business-oriented vision Ten most important visionary plan elements Interviewed CIOs could select as many as they wanted IBM Institute for Business Value Source: IBM Global CIO Study 2009; n = 2345 High growth Low growth
  10. 10. The Savvy Value Creator devises solutions to fit customers’ needs, while the Relentless Cost Cutter is vigilant about trimming expenses <ul><li>Proactively crafts data into information </li></ul><ul><li>Prepares for end-customers that will continuously explore new channels </li></ul><ul><li>“ Knows” that end-customers expect no less than world class integration and transparency </li></ul>Savvy Value Creator <ul><li>Aims for completely standardized, low-cost business processes </li></ul><ul><li>Foresees a centralized infrastructure </li></ul><ul><li>Focuses relentlessly on taking costs out of ongoing technology environment </li></ul>Relentless Cost Cutter IBM Institute for Business Value High growth CIOs add value by having a strong data governance model in place ” Having a strong data governance model is a strategic area on the roadmap; Having a single view of the truth through accurate data is a strategic imperative.” Financial Markets Industry CIO, U.S. +44% 32% 46% High growth CIOs proactively craft data into actionable information +61% 58% 36% ” We do recognize the strategic advantage of using data to support improved decision making. We are not as strong as we would like to be, but this is a key plank of our strategy moving forward.&quot; Consumer products CIO, Ireland
  11. 11. The Collaborative Business Leader knows the business and partners well, while the Inspiring IT Manager sharpens IT expertise <ul><li>Participates in strategy teams </li></ul><ul><li>Presents the strategy jointly with team members on the senior management team </li></ul><ul><li>Is often invited to meetings or even sits permanently on the most senior management team </li></ul>IBM Institute for Business Value Collaborative Business Leader <ul><li>Actively promotes business and technology innovation through creation of IT centers of excellence </li></ul><ul><li>Manages IT agenda to allow for multitude of new and inspiring initiatives </li></ul>Inspiring IT Manager High growth CIOs are closely involved in co-creating the business strategy with their fellow leaders Create business strategy as team member Present business strategy jointly with others to the senior management team Decide on business strategy as a member of the senior management team Low Growth High Growth 61% 74% 53% 66% 46% 62% +69% High-growth CIOs create IT centers of excellence to help realize business and technology innovation “ We have centers of excellence for ERP and business applications, collaboration and security - some are more formal than others.&quot; Government CIO 44% 36%
  12. 12. Each CIO role was scored based on responses to a discrete set of questions. The average overall score for each role was plotted within the three performance categories (High-, Medium- and Low-growth). With a possible range of 0 to 10, actual scores fell between 3 and 7. Using advanced statistical analysis, we profiled CIOs on the basis of six axes and plotted their unique characteristics Medium growth Low growth High growth IBM Institute for Business Value
  13. 13. Industry characteristics and dynamics have a substantial influence on the overall behavior of CIOs Consumer products Banking and financial markets Healthcare Retail
  14. 14. Our analysis identified key initiatives that can help CIOs make innovation real… <ul><li>Push business and technology integration. </li></ul><ul><li>Champion innovation. </li></ul><ul><li>Extend CIO influence . </li></ul><ul><li>Enable the corporate vision . </li></ul><ul><li>Make working together easy . </li></ul><ul><li>Concentrate on core competencies . </li></ul>Stretching as an Insightful Visionary Stretching as an Able Pragmatist Optional Design – Shortens bullet points / moves detail to notes
  15. 15. … raise the ROI of IT… Stretching as a Savvy Value Creator <ul><li>Make the data “sing”. </li></ul><ul><li>Reach customers in new ways . </li></ul><ul><li>Enhance integration and transparency . </li></ul><ul><li>Standardize to economize . </li></ul><ul><li>Centralize the infrastructure . </li></ul><ul><li>Keep cost reduction a top priority. </li></ul>Stretching as a Relentless Cost Cutter Optional Design – Shortens bullet points / moves detail to notes
  16. 16. … and expand business impact Stretching as a Collaborative Business Leader Stretching as an Inspiring IT Manager <ul><li>Cultivate truly extraordinary IT talent . </li></ul><ul><li>Lead the IT forces . </li></ul><ul><li>Enhance the data . </li></ul><ul><li>Know the business. </li></ul><ul><li>Get involved with business peers in non-IT projects. </li></ul><ul><li>Present and measure IT in business terms. </li></ul>Optional Design – Shortens bullet points / moves detail to notes
  17. 17. Despite multiple forces in play, our findings show that CIOs are focusing on what matters most for them and their organizations <ul><li>CIOs acknowledged the constant tension of integrating actions that sometimes seem oppositional </li></ul><ul><li>CIOs are working hard to establish deeper working relationships with the business side of the enterprise in order to support the growth and success of their organization </li></ul><ul><li>Over time, we expect CIOs to regularly assess how much emphasis is appropriate on each of the three pairs of roles in order to make innovation real, raise the ROI of IT and expand business impact </li></ul>IBM Institute for Business Value
  18. 18. IBM Institute for Business Value
  19. 19. The Global CFO Study 2010 is the largest known CFO-level study of its kind with over 1,900 participants Geography Sector Organization Size Title Scope of Role Asia Pacific 27% EMEA 42% Americas 31% Public 13% Communications 13% Industrial 25% Distribution 28% Financial Services 20% BU / Program Area, 5% Country 27% Region 11% Enterprise / Global 57% Others 8% SVP / Controller / Treasurer 14% CFO / Deputy CFO / Director 78% <=$500MM 25% $501MM to $1B 15% >$1B to $5B 28% >$5B to $10B 11% >$20B 14% >$10B to $20B 7% CFO Study 2010 Firmographics N = 1,910 Source: IBM Institute for Business Value, The Global CFO Study 2010 Geography = Country of Company Headquarters Overview Others 1%
  20. 20. CFOs revealed top concerns emerging from the recent economic downturn, with increased demands placed on Finance <ul><li>CFOs were clear on their top challenges </li></ul><ul><ul><li>Enterprise cost reduction/margin preservation </li></ul></ul><ul><ul><li>Need for faster decision making </li></ul></ul><ul><ul><li>Demand for transparency </li></ul></ul><ul><ul><li>Product & service demand growth </li></ul></ul><ul><ul><li>Ability to attract and retain talent </li></ul></ul><ul><ul><li>Strategy execution </li></ul></ul><ul><li>Successful CFOs are much more actively engaged in </li></ul><ul><ul><li>Enterprise cost reduction management </li></ul></ul><ul><ul><li>Selection of key performance indicators </li></ul></ul><ul><ul><li>Capital asset management </li></ul></ul><ul><ul><li>Risk Management </li></ul></ul><ul><ul><li>Strategy/Business model innovation </li></ul></ul>CFOs almost universally acknowledge that Finance’s ability to execute lags considerably IBM Institute for Business Value
  21. 21. N = 1,834 Note: Executives asked: How important to your Finance organization are each of following areas of responsibility? and How effectively do you think your Finance organization is performing in each of those areas? And Please rank your top 3. Importance defined as enterprises selecting [5] Critical and [4] on a 5-point scale where [5] Critical and [1] Unimportant. Effectiveness defined as enterprises selecting [5] Very Effective Critical and [4] on a 5-point scale where [5] Very Effective and [1] Ineffective Source: IBM Institute for Business Value, The Global CFO Study 2010 CFO priorities reveal a shift in focus from Core Finance to more Enterprise Focused activities, but ability to execute lags IBM Institute for Business Value 34% 28% 26% 21% 16% 9% 28% 35% 23% Core Finance Enterprise Focused CFO Agenda: Importance vs. Effectiveness 2 Gap 1 3 Importance Effectiveness Driving integration of information across the enterprise Providing inputs into enterprise strategy Supporting / managing / mitigating enterprise risk Driving enterprise cost reduction Strengthening compliance programs and internal controls Driving Finance function cost reduction Executing continuous Finance process improvements Developing your people in the Finance organization Measuring / monitoring business performance Rank 0% 20% 40% 60% 80% 100% 52% 61% 55% 83% 49% 84% 59% 75% 62% 85% 52% 80% 59% 80% 39% 73% 51% 77%
  22. 22. A broader enterprise focused role requires core Finance efficiency be in place to reliably support business insight and decision making Introduction Addressing the Broader Enterprise Focused Role of Finance Source: IBM Institute for Business Value, The Global CFO Study 2010 Finance Efficiency Business Insight Demands on Finance Help drive enterprise cost reduction Support risk management Partner in strategy and value creation Improve access to and reduce cost of capital Provide performance insight and anticipate Finance Capabilities Needed
  23. 23. Using Regression analysis, we developed a model that segmented participants into four profiles based on capabilities and maturity Finance Profiles Source: IBM Institute for Business Value, The Global CFO Study 2010 Introduction 23% 12% 32% 33%
  24. 24. The study revealed the three most prevalent things companies with higher Finance Efficiency have done to improve Finance Efficiency Accelerators Source: IBM Institute for Business Value, The Global CFO Study 2010 CFO Study 2010 Overview
  25. 25. The study revealed the three most prevalent things companies with higher Business Insight have done to improve Business Insight Accelerators Automate Production of Operational Metrics Source: IBM Institute for Business Value, The Global CFO Study 2010 Establish Non-Financial Data Standards Automate Production of Financial Metrics Business Insight
  26. 26. Value Integrators drive the broadest improvements in data and analytics, process, technology and people N = 1,454 to 1,469 Note: Defined as those enterprises selecting [5] To a very large extent or [4] on a 5-point scale where [5] To a very large extent and [1] Not at all Source: IBM Institute for Business Value, The Global CFO Study 2008, 2010 Value Integrator Streamlined information delivery Percent Adopted Electronic data capture at the source Systematic data cleansing and auditing Business Risks in Performance Reporting Employed Functional Best Practices Utilized automated workflow tools Measurement & monitoring of processes Common reporting platform Common planning platform What do Value Integrators do differently? % more 32% 35% 31% 22% 31% 25% 41% 31% 22% 0% Value Integrators 100% 80% 60% 20% 40% Constrained Advisors Disciplined Operators
  27. 27. Those that excel in either dimension have closed the effectiveness gap, with the Value Integrator closing the gap most consistently N = 1,454 to 1,469 Source: IBM Institute for Business Value, The Global CFO Study 2008, 2010 Value Integrator Effectiveness Across the Full CFO Agenda Driving integration of information across the enterprise Providing inputs into enterprise strategy Supporting / managing / mitigating enterprise risk Driving enterprise cost reduction Strengthening compliance programs and internal controls Driving Finance function cost reduction Executing continuous Finance process improvements Developing your people in the Finance organization Measuring / monitoring business performance Percent more effective than baseline 100% 80% 60% 0% 20% 40% Disciplined Operators 19% Better Constrained Advisors 33% Better Value Integrators 59% Better Scorekeepers (Baseline) 0% 120% Value Integrators Constrained Advisors Disciplined Operators Scorekeepers
  28. 28. IBM Institute for Business Value The Aligned Agenda
  29. 29. Comparing the agenda of each, we see remarkable alignment between CIO and CFO priorities IBM Institute for Business Value Source: IBM Global CIO Study 2009; IBM Global CFO Study 2010 A focus on these priorities turns Strategy into execution. 77% 85% 83% 86% 73% 73% 70% 75%
  30. 30. Deploying better business intelligence and analytics <ul><li>CIOs are challenged to bring organization and meaning to the vast amounts of data across the organization </li></ul><ul><li>Historical roadblocks to improved use of information to drive insights: </li></ul><ul><ul><li>Lack of clarity around data and analytical requirements … and data ownership </li></ul></ul><ul><ul><li>Poorly defined business requirements </li></ul></ul><ul><ul><li>Unclear business processes </li></ul></ul><ul><ul><li>Application and data integration </li></ul></ul><ul><li>CFOs are challenged to bring fact-based business insight on financial performance </li></ul><ul><li>Historical efforts to drive better insight have been hampered by </li></ul><ul><ul><li>Lack of clarity on the performance scorecard </li></ul></ul><ul><ul><li>Absence of risk factors </li></ul></ul><ul><ul><li>Poorly designed predictive models </li></ul></ul><ul><ul><li>Structural complexity of data and processes </li></ul></ul><ul><li>In many industries providing risk based analytics is becoming essential </li></ul>CIOs and CFOs can collaborate to address their Analytics priorities by: Chief Information Officer Chief Financial Officer Implications <ul><ul><li>Defining the company performance scorecard </li></ul></ul><ul><ul><li>Adopting enterprise wide data standards </li></ul></ul><ul><ul><li>Instituting a data governance process </li></ul></ul><ul><ul><li>Developing and supporting “one version of the truth” </li></ul></ul><ul><ul><li>Designing and creating a common data layer </li></ul></ul><ul><ul><li>Capturing data at the source </li></ul></ul><ul><ul><li>Applying systematic data cleansing </li></ul></ul><ul><ul><li>Streamlining information delivery through portals </li></ul></ul>
  31. 31. Improving Risk Management & Compliance <ul><li>While CIOs have traditionally focused on IT-related risks … risk is becoming more of a “Team Sport” across the enterprise </li></ul><ul><li>Improving risk management requires consolidating vast amounts of data and sophisticated predictive analytics </li></ul><ul><li>Computing resource requirements are vast </li></ul><ul><li>CFOs are concerned about all risk factors </li></ul><ul><ul><li>Financial and operational risk </li></ul></ul><ul><ul><li>Business continuity </li></ul></ul><ul><ul><li>Internal and external compliance requirements </li></ul></ul><ul><ul><li>Adapting to changing business conditions </li></ul></ul><ul><ul><li>Data access, security and privacy </li></ul></ul><ul><li>CIOs and CFOs can collaborate to address their Risk Management priorities by: </li></ul><ul><ul><li>Developing a strong analytical foundation </li></ul></ul><ul><ul><li>Defining and using data that predict potential consequences </li></ul></ul><ul><ul><li>Improving performance reporting with defined risk indicators </li></ul></ul><ul><ul><li>Implementing industry-specific risk monitoring application systems </li></ul></ul><ul><ul><li>Implementing Governance Risk and Compliance solutions to monitor business process changes </li></ul></ul><ul><ul><li>Providing information access and integration through roles-based portals </li></ul></ul>Chief Information Officer Chief Financial Officer Implications
  32. 32. Strengthening business collaboration <ul><li>The best CIOs are Savvy Value Creators </li></ul><ul><li>CIOs recognize the importance of understanding the business </li></ul><ul><li>CIOs use collaboration technologies to improve communication and teamwork internally and externally </li></ul><ul><li>The best CFOs are those that can be the “fact based voice of reason” </li></ul><ul><li>81% of CFOs cite developing people, talent and leadership as a top initiative </li></ul><ul><li>Effective business partnering can only occur when the reputation has been earned </li></ul><ul><li>CIOs and CFOs can foster greater business collaboration of both a strategic and tactical nature by: </li></ul><ul><ul><li>Developing consistent policies </li></ul></ul><ul><ul><li>Developing strong people talent and leadership </li></ul></ul><ul><ul><li>Driving common processes </li></ul></ul><ul><ul><li>Supporting automation and collaboration efficiency with enabling technologies </li></ul></ul><ul><ul><li>Aligning performance and goals to drive appropriate behaviors </li></ul></ul>Chief Information Officer Chief Financial Officer Implications
  33. 33. Optimizing Business Processes <ul><li>Successful CIOs are “Able Pragmatists” </li></ul><ul><li>Every process is increasingly technology based </li></ul><ul><li>CIOs can be instrumental in driving improvements across the organization </li></ul><ul><li>Successful CFOs are “Value Integrators” </li></ul><ul><li>Every process needs to become increasingly streamlined and integrated </li></ul><ul><li>CIOs and CFOs can collaborate on optimizing business processes by: </li></ul><ul><ul><li>Standardizing processes </li></ul></ul><ul><ul><li>Adopting automated workflow tools </li></ul></ul><ul><ul><li>Increasing transparency and information visibility </li></ul></ul><ul><ul><li>Implementing more effective risk management </li></ul></ul><ul><ul><li>Incorporating risk mitigation processes into business workflows </li></ul></ul>Chief Information Officer Chief Financial Officer Implications
  34. 34. The Aligned Agenda Provocative Questions How can these two collaborate to build a winning business case for driving change? How can processes be standardized across an enterprise that has multiple, sometimes very different businesses? How accurate are your crucial forecasts and analyses, such as plans and forecasts? How confident are you that your company is focused on the right business metrics - the ones that truly measure business performance and insight? Business Intelligence & Analytics Collaboration What is the Enterprise Philosophy on process standards? How can processes be standardized across an enterprise that has multiple, sometimes very different businesses? Who owns risks and which ones? What are the enterprise ’ s key risk factors? Risk and Compliance Business Process Management
  35. 35. More detail can be found at our external websites http://www.ibm.com/voiceoftheCIO http://www.ibm.com/cfostudy

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