Executives express widespread dissatisfaction with the ability of their organizations to assimilate and respond to business change, according to a new study issued by the Business Performance Management Forum (BPM Forum) and webMethods, Inc. While recognizing the strategic role that IT can play in addressing these requirements, these executives also indicate that IT often fails to keep pace with the demands of their business. Due to these limitations, they face significant constraints in confronting emerging risks and opportunities, as well as additional challenges in their ability to create long-lasting competitive differentiation.
In fact, some three quarters of executives surveyed from larger companies with more than $500 million in revenues said they are not satisfied with the ability of their companies to respond to change. Forty-five percent of these executives believe that their IT departments are either having "significant difficulties" keeping pace or "can't keep up at all."
"Accelerate How You Differentiate: The Alert Enterprise Audit" is based on a survey of 320 business executives in a cross-section of industries. The study examines the enterprise need to more quickly enact competitive differentiation in response to growing marketplace pressures. It measures executive perceptions and satisfaction levels with their companies' progress toward becoming an "Alert Enterprise," a new model proposed by the study that emphasizes IT's emerging role in sensing operational performance and market change, assuring business agility, and driving market distinction. It specifically looks at three critical areas of need for becoming an Alert Enterprise:
- Access to relevant, real-time business insight and information;
- The ability to adapt and modify key business processes and more quickly deliver applications for competitive advantage;
- The overall capacity of IT to keep pace with change and create business value.
"Executives in our study were consistent in their need to better grapple with business change," said David Mitchell, president and CEO, webMethods, Inc. "Specifically, they recognize that the increasing pace of change requires a new model that allows them to more readily transform operational insight into better business performance. The other key finding is that IT despite current challenges is viewed as critical to achieving this goal. What's clear from these executives' responses is that the more business-focused and outcome-oriented IT organization will ultimately thrive as a 'game changer' in this new environment."
Key findings of Accelerate How You Differentiate: The Alert Enterprise Audit include:
- The Value of Being Alert - Executives see the ability to more rapidly build new applications, improve business processes and gain more relevant, real-time insights into critical market and operational developments as delivering significant business value by improving their ability to anticipate and respond to change. However, only one-third of executives are satisfied with the ability of their companies to respond to change. For larger companies with revenue of more than $500 million, the number drops further to just one in four.
- The Need for Real-time Information Access - Only about 30 percent of respondents say they have the ability to frequently access real-time insight into operations and business processes. Respondents say the leading pain points requiring real-time information access include a need for improved competitive intelligence, more accurate customer information and better performance metrics.
- Business Process Adaptability Business executives indicate that rapid changes in customer preferences, competitive pressures, new product and revenue opportunities, increased regulatory requirements, and the need for greater operational efficiency all drive the need to redesign business processes and create new applications. Unfortunately, they also report that an average of 40 percent of all core business processes are in need of some kind of IT fix. Larger companies report that this number is 45 percent with slightly more than a quarter of these respondents indicating that more than 60 percent of their core processes are broken and in need of IT repair.
- IT Matters More Than Ever Contradicting industry pundit Nicholas Carr, these executives argue that IT matters more than ever. Some two-thirds of all respondents, and more than three-quarters from larger companies with revenues above $500 million, said IT plays an important role in creating market differentiation. Only about 10 percent of respondents and five percent among larger companies said IT was "not very important" to market differentiation.
- Problems With Keeping Pace In regard to actual performance, respondents indicate that their IT departments were challenged in meeting these expectations. In fact, among larger companies with revenues above $500 million, some 45 percent of respondents say their IT organizations are either having "significant difficulties" or "can't keep up at all."
- What Executives Want From IT - Executives want IT to be more strategic in its thinking and more integrated in its approaches. Specifically, participants indicate that their IT Dream Team would be: 1) flexible and responsive in delivering applications, 2) performance-driven and outcome-oriented, 3) understanding of strategic business needs, and 4) a leader in taking the initiative to bring new ideas to the table.
- Plans for SOA - There is a significant sentiment among business executives that service-oriented architecture (SOA) will become a critical enabler of the Alert Enterprise with 64 percent of larger company executives concurring with this point. While few companies are far along in implementation, a high percentage is at least in discussions. Only about 14 percent of respondents, 7 percent among large companies with revenues above $500 million, say they have no plans to implement SOA.
"The Alert Enterprise Audit indicates there is still a significant gulf between the expectations of business executives and the capacity of IT departments to keep up with demand," said Dave Murray, a BPM Forum executive and co-author of the report. "Closing the gap is an essential requirement for becoming an Alert Enterprise."
webMethods and the BPM Forum will host a webinar on Wednesday, June 14, 2006 at 12:00 N EDT that addresses the implications of the survey findings in greater detail. Participating in the discussion are J.P. Donlon, editor-in-chief, Chief Executive Magazine; Barry Libenson; vice president and CIO, Ingersoll-Rand Company; and David Mitchell, president and CEO, webMethods, Inc. The program will be moderated by Dave Murray of the BPM Forum. Additional information, including event registration, can be found at http://www.webmethods.com/alert_webinar.
The full report "Accelerate How You Differentiate: The Alert Enterprise Audit" is available by visiting www.bpmforum.org or www.webMethods.com.
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