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© 2010 IBM Corporation
The Aligned AgendaInsights from the Global CFO and CIO Studies
IBM Institute for Business Value
© 2010 IBM Corporation2
2005 Study
2006 Study2004 Study 2008 Study
2007 Study
2008 Study2005 Study2003 Study
The IBM Global CIO and CFO studies are part of our C-Suite series
Total Interviews: 450 Face-to-Face: 450
Total Interviews: 889 Face-to-Face: 267
Total Interviews: 1230Face-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: 1917Face-to-Face: 1485
CFO Studies
2009 Study
Total Interviews: 2598Face-to-Face: 2598
CIO Studies
CEO Studies
CHRO Studies
2009 Study
Total Interviews: 393 Face-to-Face: 367
CSCO Studies
Total Interviews: 1564 Face-to-Face: 1564
2010 Study
IBM Institute for Business Value
© 2009 IBM Corporation© 2010 IBM Corporation
IBM Institute for Business Value
© 2010 IBM Corporation4
The study represents different-sized organizationsin 78 countries and 19 industries
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 Organization SizeSector
Public18%
Distribution24%
Financial Services
21%
Industrial24%
Others2%Communications
11%
IBM Institute for Business Value
Geography
© 2010 IBM Corporation5
Our analysis provides insights into how CIOs can make the biggest impact on behalf of the entire organization
CIOs spend an impressive 55% of their time on activities that spur innovation and help the business
– Generating buy-in for innovative plans– Implementing new technologies– Managing non-technological issues
Successful CIOs are much more actively engaged in– Setting strategy– Enabling flexibility and change– Solving business problems
CIOs are increasingly recognized as full-fledged members of the senior executive team
However, CIOs universally acknowledge that some of their most important objectives sometimes seem to clash
IBM Institute for Business Value
© 2010 IBM Corporation6
8%
8%
20%
23%
23%
27%
30%
30%
32%
49%
51%
8%
7%
25%
31%
7%
8%
18%
23%
29%
30%
27%
28%
36%
40%
56%53%
43%
32%
30%
30%
25%
18%
Other
Environmental Issues
Internal Customers
Security Factors
Technological Factors
Regulatory Concerns
Globalization Factors
People Skills
Macroeconomic Factors
Budgets
Changes in Business Model
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
© 2010 IBM Corporation7
Successful CIOs blend three pairs of roles that seem contradictory, but are actually complementary
AblePragmatist
SavvyValue Creator
RelentlessCost Cutter
CollaborativeBusiness Leader
InspiringIT Manager
MakingInnovation real
Raising the ROI of IT
Expandingbusiness impact
InsightfulVisionary
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
© 2010 IBM Corporation8
The Insightful Visionary explores how technology drives innovation, and the Able Pragmatist enables innovative plans
Truly integrates business and IT to innovate
Proactively reaches out to the business to co-create and champion innovation
Has a clear view of the top technological priorities that will enhance competitiveness
Truly integrates business and IT to innovate
Proactively reaches out to the business to co-create and champion innovation
Has a clear view of the top technological priorities that will enhance competitiveness
Insightful Visionary
Does practical things to help enable the business and corporate vision, as business leaders expect
Widely uses collaboration and partnering technologies to get work done
Uses third-party business and technology services to allow focus on the top priorities
Does practical things to help enable the business and corporate vision, as business leaders expect
Widely uses collaboration and partnering technologies to get work done
Uses third-party business and technology services to allow focus on the top priorities
Able Pragmatist
IBM Institute for Business Value
High growth CIOs more actively use collaboration and partnering technology to drive innovation for the entire
organization
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
CIOs reach out actively to the business to co-create and champion innovation…
+40% 67%
48% ”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
© 2010 IBM Corporation9
The priorities on the CIO agenda clearly demonstrate a broad business-oriented vision
Ten most important visionary plan elementsInterviewed CIOs could select as many as they wanted
IBM Institute for Business Value
Source: IBM Global CIO Study 2009; n = 2345 High growthLow growth
© 2010 IBM Corporation10
The Savvy Value Creator devises solutions to fit customers’ needs, while the Relentless Cost Cutter is vigilant about trimming expenses
Proactively crafts data into information
Prepares for end-customers that will continuously explore new channels
“Knows” that end-customers expect no less than world class integration and transparency
Proactively crafts data into information
Prepares for end-customers that will continuously explore new channels
“Knows” that end-customers expect no less than world class integration and transparency
Savvy Value Creator
Aims for completely standardized, low-cost business processes
Foresees a centralized infrastructure
Focuses relentlessly on taking costs out of ongoing technology environment
Aims for completely standardized, low-cost business processes
Foresees a centralized infrastructure
Focuses relentlessly on taking costs out of ongoing technology environment
Relentless Cost Cutter
IBM Institute for Business Value
High growth CIOs add value by having a strong data governance model in place
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."
Consumer products CIO, Ireland
© 2010 IBM Corporation11
The Collaborative Business Leader knows the business and partners well, while the Inspiring IT Manager sharpens IT expertise
Participates in strategy teams
Presents the strategy jointly with team members on the senior management team
Is often invited to meetings or even sits permanently on the most senior management team
Participates in strategy teams
Presents the strategy jointly with team members on the senior management team
Is often invited to meetings or even sits permanently on the most senior management team
IBM Institute for Business Value
Collaborative Business LeaderCollaborative Business Leader
Actively promotes business and technology innovation through creation of IT centers of excellence
Manages IT agenda to allow for multitude of new and inspiring initiatives
Actively promotes business and technology innovation through creation of IT centers of excellence
Manages IT agenda to allow for multitude of new and inspiring initiatives
Inspiring IT Manager
High growth CIOs are closely involved in co-creating the business strategy with their fellow leaders
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."
Government CIO
44%
36%
© 2010 IBM Corporation12
3
4
5
6
7
Insightful Visionary
Savvy Value Creator
Collaborative BusinessLeader
Able Pragmatist
Relentless Cost Cutter
Inspiring IT Manager
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
© 2010 IBM Corporation13
Industry characteristics and dynamics have a substantial influence on the overall behavior of CIOs
Consumer products Banking and financial markets
Healthcare Retail
© 2010 IBM Corporation1414
Our analysis identified key initiatives that can help CIOs make innovation real…
• Push business and technology integration.
• Champion innovation.
• Extend CIO influence.
• Enable the corporate vision.
• Make working together easy.
• Concentrate on core competencies.
Stretching as an Insightful Visionary
Stretching as an Able Pragmatist
Optional Design – Shortens bullet points / moves detail to notes
© 2010 IBM Corporation1515
… raise the ROI of IT…
Stretching as a Savvy Value Creator
• Make the data “sing”.
• Reach customers in new ways.
• Enhance integration and transparency.
• Standardize to economize.
• Centralize the infrastructure.
• Keep cost reduction a top priority.
Stretching as a Relentless Cost Cutter
Optional Design – Shortens bullet points / moves detail to notes
© 2010 IBM Corporation1616
… and expand business impact
Stretching as a Collaborative Business Leader
Stretching as an Inspiring IT Manager
• Cultivate truly extraordinary IT talent.
• Lead the IT forces.
• Enhance the data.
• Know the business.
• Get involved with business peers in non-IT projects.
• Present and measure IT in business terms.
Optional Design – Shortens bullet points / moves detail to notes
© 2010 IBM Corporation17
Despite multiple forces in play, our findings show that CIOs are focusing on what matters most for them and their organizations
CIOs acknowledged the constant tension of integrating actions that sometimes seem oppositional
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
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
IBM Institute for Business Value
© 2009 IBM Corporation© 2010 IBM Corporation
IBM Institute for Business Value
© 2010 IBM Corporation19
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%
Americas31%
Public13%
Communications 13%
Industrial25%
Distribution 28%
Financial Services
20%
BU / Program Area,
5%
Country27%
Region11%
Enterprise / Global
57%
Others 8%SVP /
Controller / Treasurer
14%
CFO / Deputy CFO /
Director78%
<=$500MM 25%
$501MM to $1B 15%
>$1B to $5B 28%
>$5B to $10B
11%
>$20B14%
>$10B to $20B
7%
CFO Study 2010 Firmographics
N = 1,910Source: IBM Institute for Business Value, The Global CFO Study 2010Geography = Country of Company Headquarters
Overview
Others1%
© 2010 IBM Corporation20
CFOs revealed top concerns emerging from the recent economic downturn, with increased demands placed on Finance
CFOs were clear on their top challenges – Enterprise cost reduction/margin preservation– Need for faster decision making– Demand for transparency– Product & service demand growth– Ability to attract and retain talent– Strategy execution
Successful CFOs are much more actively engaged in– Enterprise cost reduction management– Selection of key performance indicators– Capital asset management– Risk Management – Strategy/Business model innovation
CFOs almost universally acknowledge that Finance’s ability to execute lags considerably
IBM Institute for Business Value
© 2010 IBM Corporation21
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] IneffectiveSource: 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
52% 61%
55% 83%
49% 84%
59% 75%
62% 85%
52% 80%
59% 80%
39% 73%
51% 77%
0% 20% 40% 60% 80% 100%
© 2010 IBM Corporation22
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
© 2010 IBM Corporation23
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
Finance Efficiency
Business InsightLow High
Low
High23%
12%
32%
33%
© 2010 IBM Corporation24
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
81%
33%
Enterpriseswith highFinance
efficiency
All otherenterprises
Adoption of Process Ownership
145% more
91%
62%
Enterpriseswith highFinance
efficiency
All otherenterprises
Implementation of a Common Ledger and Accounting Transaction Applications
47% more
49%
29%
Enterpriseswith highFinance
efficiency
All otherenterprises
Adoption of Alternative Delivery Models
69% more
© 2010 IBM Corporation25
Business Insight Accelerators
Automate Production of Operational Metrics
Source: IBM Institute for Business Value, The Global CFO Study 2010
73%
57%
Financeorganizationswith strongbusinessinsight
All otherenterprises
FinancialMetrics
28% more
61%
43%
Financeorganizationswith strongbusinessinsight
All otherenterprises
OperationalMetrics
42% more
53%
35%
Financeorganizations withstrong business
insight
All other enterprises
51% more
The study revealed the three most prevalent things companies with higher Business Insight have done to improve
Establish Non-Financial Data Standards
Automate Production of Financial Metrics
Business Insight
© 2010 IBM Corporation26
Value Integrators drive the broadest improvements in data and analytics, process, technology and people
N = 1,454 to 1,469Note: 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 allSource: IBM Institute for Business Value, The Global CFO Study 2008, 2010
Value Integrator
Streamlined information delivery
Value Integrators
Percent Adopted
100%80%60%20% 40%
Constrained AdvisorsDisciplined Operators
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%
© 2010 IBM Corporation27
Those that excel in either dimension have closed the effectiveness gap, with the Value Integrator closing the gap most consistently
N = 1,454 to 1,469Source: 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
Value Integrators
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%
DisciplinedOperators19% Better
ConstrainedAdvisors
33% Better
ValueIntegrators59% Better
Scorekeepers(Baseline)
0%
120%
Constrained Advisors
Disciplined Operators
Scorekeepers
© 2009 IBM Corporation© 2010 IBM Corporation
IBM Institute for Business Value
The Aligned Agenda
© 2010 IBM Corporation29
77%
85%
83%
86%
73%
73%
70%
75%
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.
© 2010 IBM Corporation30
Deploying better business intelligence and analytics
CIOs are challenged to bring organization and meaning to the vast amounts of data across the organization
Historical roadblocks to improved use of information to drive insights:
– Lack of clarity around data and analytical requirements … and data ownership
– Poorly defined business requirements– Unclear business processes– Application and data integration
CIOs are challenged to bring organization and meaning to the vast amounts of data across the organization
Historical roadblocks to improved use of information to drive insights:
– Lack of clarity around data and analytical requirements … and data ownership
– Poorly defined business requirements– Unclear business processes– Application and data integration
CFOs are challenged to bring fact-based business insight on financial performance
Historical efforts to drive better insight have been hampered by
– Lack of clarity on the performance scorecard– Absence of risk factors– Poorly designed predictive models– Structural complexity of data and processes
In many industries providing risk based analytics is becoming essential
CFOs are challenged to bring fact-based business insight on financial performance
Historical efforts to drive better insight have been hampered by
– Lack of clarity on the performance scorecard– Absence of risk factors– Poorly designed predictive models– Structural complexity of data and processes
In many industries providing risk based analytics is becoming essential
CIOs and CFOs can collaborate to address their Analytics priorities by:CIOs and CFOs can collaborate to address their Analytics priorities by:
Chief Information Officer Chief Financial Officer
Implications
– Defining the company performance scorecard– Adopting enterprise wide data standards– Instituting a data governance process– Developing and supporting “one version of the
truth”
– Designing and creating a common data layer– Capturing data at the source– Applying systematic data cleansing– Streamlining information delivery through
portals
© 2010 IBM Corporation31
Improving Risk Management & Compliance
While CIOs have traditionally focused on IT-related risks … risk is becoming more of a “Team Sport” across the enterprise
Improving risk management requires consolidating vast amounts of data and sophisticated predictive analytics
Computing resource requirements are vast
While CIOs have traditionally focused on IT-related risks … risk is becoming more of a “Team Sport” across the enterprise
Improving risk management requires consolidating vast amounts of data and sophisticated predictive analytics
Computing resource requirements are vast
CFOs are concerned about all risk factors– Financial and operational risk– Business continuity– Internal and external compliance
requirements– Adapting to changing business conditions– Data access, security and privacy
CFOs are concerned about all risk factors– Financial and operational risk– Business continuity– Internal and external compliance
requirements– Adapting to changing business conditions– Data access, security and privacy
CIOs and CFOs can collaborate to address their Risk Management priorities by:– Developing a strong analytical foundation– Defining and using data that predict potential consequences– Improving performance reporting with defined risk indicators– Implementing industry-specific risk monitoring application systems – Implementing Governance Risk and Compliance solutions to monitor business process changes– Providing information access and integration through roles-based portals
CIOs and CFOs can collaborate to address their Risk Management priorities by:– Developing a strong analytical foundation– Defining and using data that predict potential consequences– Improving performance reporting with defined risk indicators– Implementing industry-specific risk monitoring application systems – Implementing Governance Risk and Compliance solutions to monitor business process changes– Providing information access and integration through roles-based portals
Chief Information Officer Chief Financial Officer
Implications
© 2010 IBM Corporation32
Strengthening business collaboration
The best CIOs are Savvy Value Creators
CIOs recognize the importance of understanding the business
CIOs use collaboration technologies to improve communication and teamwork internally and externally
The best CIOs are Savvy Value Creators
CIOs recognize the importance of understanding the business
CIOs use collaboration technologies to improve communication and teamwork internally and externally
The best CFOs are those that can be the “fact based voice of reason”
81% of CFOs cite developing people, talent and leadership as a top initiative
Effective business partnering can only occur when the reputation has been earned
The best CFOs are those that can be the “fact based voice of reason”
81% of CFOs cite developing people, talent and leadership as a top initiative
Effective business partnering can only occur when the reputation has been earned
CIOs and CFOs can foster greater business collaboration of both a strategic and tactical nature by:– Developing consistent policies– Developing strong people talent and leadership– Driving common processes– Supporting automation and collaboration efficiency with enabling technologies– Aligning performance and goals to drive appropriate behaviors
CIOs and CFOs can foster greater business collaboration of both a strategic and tactical nature by:– Developing consistent policies– Developing strong people talent and leadership– Driving common processes– Supporting automation and collaboration efficiency with enabling technologies– Aligning performance and goals to drive appropriate behaviors
Chief Information Officer Chief Financial Officer
Implications
© 2010 IBM Corporation33
Optimizing Business Processes
Successful CIOs are “Able Pragmatists”
Every process is increasingly technology based
CIOs can be instrumental in driving improvements across the organization
Successful CIOs are “Able Pragmatists”
Every process is increasingly technology based
CIOs can be instrumental in driving improvements across the organization
Successful CFOs are “Value Integrators”
Every process needs to become increasingly streamlined and integrated
Successful CFOs are “Value Integrators”
Every process needs to become increasingly streamlined and integrated
CIOs and CFOs can collaborate on optimizing business processes by:– Standardizing processes – Adopting automated workflow tools – Increasing transparency and information visibility – Implementing more effective risk management– Incorporating risk mitigation processes into business workflows
CIOs and CFOs can collaborate on optimizing business processes by:– Standardizing processes – Adopting automated workflow tools – Increasing transparency and information visibility – Implementing more effective risk management– Incorporating risk mitigation processes into business workflows
Chief Information Officer Chief Financial Officer
Implications
© 2010 IBM Corporation34
The Aligned AgendaProvocative 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 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?
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?
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?
Who owns risks and which ones?
What are the enterprise’s key risk factors?
Risk and Compliance Business Process Management
© 2010 IBM Corporation35
More detail can be found at our external websites
http://www.ibm.com/voiceoftheCIO http://www.ibm.com/cfostudy
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