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Ask FERF about ... the seventh annual technology issues survey.

Continuing a longstanding relationship, Financial Executives Research Foundation (FERF) and Computer Sciences Corp. (CSC) have jointly published the seventh annual "Technology Issues for Financial Executives" report, which explores technology practices, priorities and problems from the senior financial officer's perspective. The survey sets a new record in terms of FEI member participation: 782 completed surveys, a 29 percent increase over the prior report.

The report reaffirms a number of evolving themes and priorities, and highlights some areas of change. In the last survey, occupying the top spot as a concern among financial officers was "prioritizing technology investments" (deciding which technology investments represent the best use of the organization's scarce capital). While this issue still nears the top of the list, at No. 2, it has been displaced as No. 1 by "information security."

This probably shouldn't come as much of a surprise, with the continuing publicity related to the unauthorized access to and/or theft of confidential information in both the public and private sectors, often at organizations perceived as "highly secure." Further, only about 1 in 5 financial officers is "highly satisfied" with his or her organization's security program.

In terms of primary information needs, analytical and decision-support information to improve organizational performance and increase shareholder value again emerge as the most acute priority. Despite ongoing efforts to close the analytical information gap, only about 1 in 12 members reported making substantial progress in the past year. However, 60 percent of respondents plan to invest again in the coming year, with many planning significant expenditures.

Technology spending is again expected to rise somewhat on an overall basis, but financial officers remain concerned about the business benefits they are obtaining. Only about half of the respondents believe they are receiving a high or good return from their investments, and only about 70 percent of all technology projects are deemed successful by management.

Systems integration continues as a significant need for many, and is receiving increased attention due to Section 404 of the Sarbanes-Oxley Act (the Act), particularly among members representing larger organizations. The attention being paid to consolidation and reporting has also risen due to the Act.

The approaches being used to address integration issues are varied. "Adopt best-of-breed applications and develop interfaces" is the preferred approach across all company sizes, but the other responses suggest that one size doesn't fit all when it comes to addressing systems integration.

There is increasing market acceptance, and growth, of both outsourcing and shared services, with many respondents planning new arrangements in the next year. FERF suspects this trend reflects the relative success had by those who already use outsourcing. About 90 percent of existing outsourcing and existing shared services arrangements are viewed as successful by responding financial officers.

Offshore outsourcing continues to gain acceptance, but penetration is still relatively low, with about 5 out of 6 organizations reporting that they are not using offshore IT providers; only about 2 percent report offshore as their primary source. On a cautionary note, only about 65 percent report being satisfied with offshoring.

The pace of enterprise resource planning (ERP)-like IT investments continues at about the same rate as reported in the previous survey. About 1 in 12 has a new ERP implementation planned in the next year, while about 1 in 3 has some form of current ERP activity in progress.

Implementation timeframes and costs continue to be a concern. About half of the respondents report exceeding the original schedule and budget, some significantly. Customization continues to be an issue. Only about 11 percent report making no modifications to packaged software during implementation, while 46 percent report making either moderate or significant modifications.

This may correlate somewhat with organizations adopting new releases of software. One in five report staying current as the software vendor upgrades its product. Where ERP implementations have been completed, nearly 4 out of 5 report being satisfied with the results.

IT reporting relationships have changed very little over the seven years of the survey. Two key factors are organization size and the role IT plays in the business. As organization scale increases, there is a shift from CFO to CEO as the most common reporting line. Likewise, in industries where IT is integral to the product or service provided, reporting to the CEO is more likely, irrespective of organization size.

Fundamental IT skills are still a concern from the financial officer's perspective. The top IT weakness areas cited were: project management; understanding the relationship between business and technology; and communication.

The full report, "Technology Issues for Financial Executives," is available at the FERF bookstore, www.ferf.org.

Contributed by FERF

Contributed by FERF's partner in the research, Jerry Boltin, Senior Partner and Business Intelligence Practice leader at CSC. He can be reached at gboltin@csc.com.
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Title Annotation:resources; Financial Executives Research Foundation
Author:Boltin, Jerry
Publication:Financial Executive
Geographic Code:1USA
Date:Jul 1, 2005
Words:795
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