The Aligned Agenda -Insights From Cfo And Cio Studies

© 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: 1230Face-to-Face: 619



Total Interviews: 456



2010 Study


CFO Studies

2009 Study


CIO Studies

CEO Studies

CHRO Studies

2009 Study


CSCO Studies


2010 Study


© 2009 IBM Corporation© 2010 IBM Corporation



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%


Geography


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



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



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



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


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


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


Source: IBM Global CIO Study 2009; n = 2345 High growthLow growth


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


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


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


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%


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



Industry characteristics and dynamics have a substantial influence on the overall behavior of CIOs

Consumer products Banking and financial markets

Healthcare Retail


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


… 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



… 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.



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





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%


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



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


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%


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


Using Regression analysis, we developed a model that segmented participants into four profiles based on capabilities and maturity

Finance Profiles


Introduction

Finance Efficiency

Business InsightLow High

Low

High23%

12%

32%

33%


The study revealed the three most prevalent things companies with higher Finance Efficiency have done to improve

Finance Efficiency Accelerators


CFO Study 2010 Overview

81%

33%

Enterpriseswith highFinance

efficiency

All otherenterprises

Adoption of Process Ownership

145% more

91%

62%


efficiency


Implementation of a Common Ledger and Accounting Transaction Applications

47% more

49%

29%


efficiency


Adoption of Alternative Delivery Models

69% more


Business Insight Accelerators

Automate Production of Operational Metrics


73%

57%

Financeorganizationswith strongbusinessinsight


FinancialMetrics

28% more

61%

43%

Financeorganizationswith strongbusinessinsight


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


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%


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



The Aligned Agenda


77%

85%

83%

86%

73%

73%

70%

75%

Comparing the agenda of each, we see remarkable alignment between CIO and CFO priorities


Source: IBM Global CIO Study 2009; IBM Global CFO Study 2010

A focus on these priorities turns Strategy into execution.


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


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


Implications


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


Implications


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


Implications


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 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?


What is the Enterprise Philosophy on process standards?


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


More detail can be found at our external websites

http://www.ibm.com/voiceoftheCIO http://www.ibm.com/cfostudy