A survey of 338 business leaders finds that while the pace at which IT projects are being implemented has accelerated greatly since the start of the COVID-19 pandemic, many of those investments appear to be based on blind faith as much as calculated strategy.
Conducted by the Harvard Business Review (HBR) Analytics Services on behalf of Apptio, a provider of tools for analyzing technology investments, the survey finds 82% have increased investment in digital initiatives as a result of the COVID-19 pandemic. Nearly two-thirds (62%) said investing in technologies to accelerate the delivery of new business applications and/or products is a top technology spending priority for the near future.
More than two-thirds (67%) said the pandemic changed their business priorities, while 80% noted there has been increased customer demand for digital products.
Despite the level of importance attached to those investments, half of respondents admitted they measure the business value from technology investments either only on an ad hoc basis (31%) or not at all (20%). Nearly two-thirds of respondents (62%), nevertheless, noted the cadence for reviewing technology budgets has picked up in the past year. A full 92% of respondents said they consider information about the business value of technology to be highly important when making budget decisions, but less than two-thirds (62%) are confident they actually have that information.
Overall, just under two-thirds (65%) identified improving the customer experience as their top strategic goal driving technology investments over the next 12 to 18 months, followed by automating business and manufacturing processes tied at 51% each and the development or enhancement of new digital business models (50%), and, finally, opportunities to expand their customer base or enter new markets (49%).
On the plus side, over two-thirds said (67%) they are able to make timely decisions about technology spending in response to changing business or market conditions. However, more than half (55%) also admitted the information they use to make those decisions isn’t as current as they would like it to be. Close to half (45%) cited the lack of systematic measurement of business value as a challenge, while a third noted IT, finance, and line-of-business leaders don’t have access to the same views of technology spending (33%). Other challenges cited include spending for digital initiatives is siloed in the IT department (31%); difficulty making accurate forecasts about technology spending (30%); spending for digital initiatives siloed in specific business units or functions (30%); and limited flexibility stemming from too many fixed costs (27%).
The survey makes it clear that many organizations are still struggling to align IT spending with their business goals even as IT investments become more strategic, said Apptio CEO Sunny Gupta. A big part of the issue is simply stale data, added Gupta. “The quality of a lot of the data is suspect,” he said.
Lack of alignment between IT and the rest of the business is, of course, a long-standing issue within most organizations. Arguably, gains have been made in the past four decades, but there is much more at stake as organizations start to realize how much more dependent they are on IT post-pandemic, noted Gupta. As a result, technology decisions are having a deeper impact on the ability of any organization to remain competitive, he added.
Appreciation for the value of IT will, of course, vary by vertical industry. However, it’s apparent that organizations that have invested in IT not only weathered the economic downturn better than rivals that didn’t, they are also seeing a multiplier effect from those investments as the global economy recovers. It’s also now only a matter of time before more executives are called to account more precisely for how spending on IT is helping the business as the economy recovers.
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