Despite numerous technological advancements and tens of billions of dollars companies have poured into information technology over the past five decades, a new study finds that a majority of responding business decision-makers do not have ready access to high-quality, reliable, useful information on operating and financial performance.
CFO Research Services and Deloitte Consulting LLP (Deloitte Consulting), a subsidiary of Deloitte & Touche USA LLP, surveyed 385 senior finance and IT professionals from the United States, Canada, Europe and China on the quality of management information and its proficiency in meeting information needs at large companies. The result: fewer than half of respondents believe they have achieved their information quality (IQ) objectives. Equally important, 82 percent believe they could improve the utility of financial information for forward-looking planning and strategy.
The research report, "IQ Matters: Senior Finance and IT Executives Seek to Boost Information Quality," further shows that in the absence of IQ, a majority of respondents are forced to spend time building special reports and analyses, as well as reconciling "multiple versions of the truth."
"Poor information quality is a critical problem for companies today. Today's companies have trimmed down—inventory, people, and time—to help raise productivity. Reliance on accurate information is growing. But as the amount of data companies have to deal with increases, so does the time spent investigating and resolving information quality issues," explains Lee Dittmar, a principal with Deloitte Consulting and leader of the Enterprise Governance service offering. "Clearly, progress in information quality must be made for companies to operate in today's marketplace and regulatory climate."
Among the primary drivers of poor IQ, more than 80 percent of respondents cited disparate, nonintegrated IT systems and the variability of business processes as a problem. Time-consuming special reports and analyses to supplement systems-generated reports, misguided incentive programs, and unrealistic plans and budgets were also cited as contributors to poor IQ.
Additional key findings included:
39 percent of respondents who say they have achieved their objective for IQ suffer less often from decision-making problems than those who see room for IQ improvement.
80 percent of survey respondents say timely access to higher quality information would improve profitability, and further survey results support this statement.
Two-thirds of respondents are currently investing or plan to continue investing to address the problem over the next two years.
The CFO Research/Deloitte Consulting research results optimistically indicate that CFOs and CIOs not only recognize the problems with IQ, but also intend to work together to address them. More than half of the survey respondents say their CFOs and CIOs are working more closely together, reflecting the growing realization that technology, business processes, management information, decision-making and business performance have become inexorably linked. More than 73 percent of survey respondents say finance is assuming a greater responsibility for managing IQ.
"Collaboration between finance and IT, the CFO and CIO, is absolutely key to boosting information quality," Dittmar adds. "With their respective vantage points, responsibilities, and organizational strengths, CFOs and CIOs together can identify the most painful issues, describe organizational and financial implications, and define solutions. And together, they can work with their colleagues to resolve the issues. Investments of time, money and attention toward this issue without a much closer and collaborative working relationship between the CFO and CIO, will ultimately fail."
Truly improving information quality, however, requires collaboration and effort far beyond just the finance and IT functions, Deloitte Consulting cautions. Given the many sources, uses and users of data, IQ requires enterprise-wide commitment to producing and effectively managing accurate, relevant information. "Executives can help set the stage by clarifying and focusing on the core information essential to conducting, managing, and leading the company and then by demanding and promoting high information quality throughout operational processes and systems," Dittmar adds.
Dittmar also points to the need for an effective information governance structure(s) to guide information-management strategies, policies, procedures and principles; to identify and remove barriers to quality information; and to motivate all of the people within the company to embrace and accept individual IQ responsibilities on an ongoing basis.
Geographically, the survey reveals that problems with IQ are more commonplace in China than in North America and Europe. In particular, Chinese respondents are more likely than their Western peers to say that their information on operating activities needs improvement—and also, that by improving IQ they will make better operating decisions faster and better mitigate enterprise risk.
CFO Research Services and Deloitte Consulting surveyed 385 senior finance and IT executives at companies with more than $1 billion in annual sales in North America, Europe, and China in the summer of 2005 to explore the quality of management information and its proficiency in meeting information needs at large companies globally. Sixty-seven percent of respondents are from North American companies, 24 percent from European companies, and 9 percent from Chinese companies.
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