One-Quarter of Companies Are Increasing IT Investments

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Rolling Meadows, Ill. — April 29
More than 25 percent of companies are increasing their investments in information technology (IT) this year, according to the “Value of IT Investments” survey of more than 500 IT professionals in the U.S.

Conducted by ISACA, a nonprofit association serving 86,000 IT governance, audit and security professionals in 160 countries, the survey also found that only 16 percent of companies are making across-the-board cuts in IT spending and 14 percent are freezing at current levels.

Many organizations are trying to avoid making widespread cuts in IT because of growing awareness that IT, when implemented strategically, has the potential to deliver tremendous business value, according to Robert Stroud, international vice president of ISACA.

Also on the rise is attention to ensuring that value is obtained from IT. “The survey shows that nearly 29 percent of companies are fully measuring the value of their investments in IT, and more than 50 percent are measuring value to some extent,” Stroud said. “Just five years ago, those numbers would have been significantly smaller.”

Also, more than 69 percent of respondents indicated their organizations are achieving at least 50 to 100 percent of the expected value from their investments in IT.

Among the benefits organizations receive from their IT-related investments, respondents cited improved customer service (31.2 percent) and cost reduction (24.2 percent) as the two most important. Somewhat surprisingly, only 17.7 percent named new or improved products and services as the top benefit, added Stroud.

“Organizations should be careful not to ignore the value-generating opportunities of IT in favor of cost cutting,” said Stroud. “IT has the power to add competitive advantage and significant business value, so it is critical to focus on those opportunities, particularly in troubled economic times.”

The survey also identified improvements that need to be made. For example, while more than 82 percent of companies measure value in some way, only 51.8 percent have a framework, such as Val IT, or guidelines in place to select the investments that will result in the highest value.

Additionally, many companies do not have a consistent definition of what constitutes value. Only 33.7 percent of survey respondents said a shared understanding of value exists across different departments, such as IT and finance.

“This statistic is alarming because organizations must have clear expectations and goals to be able to successfully measure results,” Stroud said. “It is also a clear indication that more business involvement and accountability are needed when it comes to selecting IT investments and monitoring them through their life cycle.”

In another example of the lack of business and IT alignment, nearly 47 percent of survey respondents said the CIO is responsible for ensuring that stakeholder returns on IT-related investments are optimized. Only 20 percent said responsibility lies with the board, the CEO or the CFO.

“The business is delegating ownership of value to IT, when generally accepted IT governance guidance recommends that it should remain with the business,” Stroud said.

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