While industry press continues to stress the importance of ROI and financial payback as the prime metrics for IT investment value, a new study reveals that CFOs and CIOs judge customer satisfaction to be a more important gauge of IT investment value.
This insight is one of many spotlighted in the recently released study from CFO Research Services and Saugatuck Technology entitled "Customer-Centric Technology Investments: Where's the ROI?" The study concludes six months of surveys and interviews by Saugatuck in partnership with CFO to determine how financial and IT executives determine and manage the value of customer-centric technology (CCT) investments.
Among the key findings:
• Non-financial metrics outweigh financial metrics as gauges of technology investment value.
• Contact/Call Center, Sales Force Automation, Customer Self Service and Database Integration provide the greatest CCT payback.
• CFOs have begun to surpass CIOs as champions of technology as a strategic growth tool.
• Overall IT spending will brighten moderately in 2003, with CFOs more bullish than CIOs.
• Spending on CCT continues to outpace overall IT spending growth through 2003.
"Reliance upon customer satisfaction as a primary gauge of value indicates that CFOs believe technology investments are essential to successful execution of business strategy," said Mary Driscoll, president of CFO Research Services.
"The position that CFOs find themselves in as regards business technologies is unprecedented," added Bill McNee, founder and managing partner of Saugatuck Technology. "On one hand, almost all understand the intrinsic value of CCT investments. On the other, budget restrictions resulting from overall down market conditions require careful examination of any significant investment.
"Faced with this dilemma, CFOs as a group have come up with a practical, ingenious answer: Subject CCT investments to traditional financial metrics such as ROI, IRR and EVA, but combine these with traditional non-financial, customer-focused measures, especially customer satisfaction. These blended metrics enable CFOs to gauge the likely costs and impact on the firm in a manner that conforms to required budgetary control practices, while being able to track the actual business value of the investments -- or the lack of value, as the case may be."
In total, 304 financial and IT executives participated in the study -- 231 of which held senior financial titles such as chief financial officer, VP finance or controller, and 73 of which were senior IT executives such as chief information officer, VP of IT or IT director/manager. The combined CFO and CIO surveys targeted both large and medium-sized enterprises in a cross-section of industries.
Customer-Centric Technology Investments: Where's the ROI? is jointly published by CFO Research Services and Saugatuck Technology and can be accessed at www.cfo-research.com The study was funded by leading information technology providers: SAP, Ayava, SUN Microsystems and Epicor.
Original research and thoughtful analyses are the cornerstones of CFO Research Services Group, the sponsored research arm of CFO magazine. Its team of research professionals dissects emerging trends in business and financial management using mailed surveys and personal, on-the-record interviews with respected financial executives. Its white papers and research reports often provide a backdrop to conferences produced by CFO Executive Programs and illustrate new applications of technology and breakthrough managerial thinking. For more information, visit www.cfo-research.com.
Saugatuck Technology is a strategic adviser to leading information technology vendors. Its mission is to accelerate growth through strategic intelligence, filling a gap between high-cost strategy consultants and IT market research firms. Its proven research and consulting methodologies, and deep industry network, helps clients develop sustainable business models, effective product strategies and winning go-to-market tactics. Founded in 1999, Saugatuck Technology is headquartered in Westport, CT. For more information, visit www.saugatech.com.