The Technology Acquisition Report*, reveals that 45% of FDs admit their technology spending strategy is short-term, despite their acknowledgement of the important role technology plays in business competitiveness.
But the lack of forward planning for IT strategy has not prevented three-quarters of the finance directors surveyed increasing IT spending in 2001, with nearly a fifth reporting an increase in spending of more than 20%.
Jeff Addison, CEO of Siemens Financial Services says: “There’s clearly a serious gap emerging in the way businesses approach IT. On the one hand, they are listing IT as a critical priority – up there with making sales and improving margins. Yet nearly half the companies we surveyed have, by their own admission, a piecemeal approach to technology planning.”
Of the FDs who have a definite technology acquisition strategy, half meet with senior management annually to discuss it, and 5% meet every other year. Most of the rest simply meet “as and when”. A tenth of respondents review technology acquisition every six months, which the report suggests is too short a period of time to form a consistent plan of action, but could be a response to the pressure to keep up with the pace of technology itself.
Two-thirds of respondents stated that keeping up with the changes in IT is important or very important. But the report also suggests that hit-and-miss buying decisions do not allow for long-term strategic IT planning and damage profitability.
Over 80% of FDs surveyed rate system security as important or very important in terms of technology investment, while using technology to gain market advantage is viewed as important by 70% of respondents.
The research also shows that PC and desktop hardware are most commonly renewed on a three-year cycle, while core business systems hardware usually has no fixed renewal timetable.
It is also common for both office software packages (in 42% of cases) and core business software (50%) to have no fixed timetable for renewal.
The report points to the unpredictability of the development cycles of software providers as a possible cause. Renewal of technology appears to be important to the businesses, with over 70% planning to increase or maintain the levels of renewal for hardware and software.
Cash is used to purchase IT by the majority of FDs surveyed, which the report argues could be enforcing the idea of a short-term approach. Leasing IT equipment is the preferred choice of nearly a third of the respondents.
Research company Gartner, which is quoted in the report, suggests 70% of US companies lease some or all of their computers.
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* The Technology Acquisition Report surveyed the finance directors of 100 UK companies with a turnover of more than £50m. It was conducted by Cottee Meldrum & Co on behalf of Siemens Financial Services, and is available free by sending an email mentioning Financial Director to [email protected]