Only 51% of Britain's top executives have a terminal on their desks. In the first of four articles on MIT, Jane Bird reviews a Management Today survey.
Britain's bosses have woken up to information technology (IT) as a powerful strategic weapon, which seems good news for the IT industry, but many, while realising that it is not only here to stay but also to develop, are strangely reluctant to use their own fingers on the button.
An exclusive survey by Management Today has revealed that 90% of top executives perceive IT as a strategic element in building business advantage, but only 51% have a terminal on their desks. This figure suggests a far greater use of IT among senior executives than was previously thought to be the case which is some kind of good news, but, quite obviously, many are still missing out on a major source of competitive strength. They remain detached from the undoubted ben- efits that modern technology can bring to management in the way of instant information and general efficiency, not to mention the mainstream of progress. It has to be assumed that they are, possibly ashamedly, in the grip of technofear.
The survey, carried out in conjunction with AT and T Istel, the telecoms and computer services group, questioned the chairmen or chief executives of 111 Times 1,000 companies on their attitudes to IT.
Where executives do have desk-top computers, the survey finds there is a high level of satisfaction. Indeed, more than 70% say they could not do without their screens, which not only suggests a far higher level of numeracy and computer literacy than has been suspected but surely indicates to the laggards that their fear might be worth conquering.
Executive Information Systems (EIS) are proving particularly popular, being used personally by 84% of them, which means that computer- literate top people are making real use of their systems as a management tool which is, of course, exactly what it is designed to be.
The survey also finds, unsurprisingly that companies whose top executives do have desk-top computers show a much stronger awareness of the role of technology throughout the organisation and are more likely to place responsibility for IT at board level. Of the company chiefs with desk-top terminals, 73% have a director responsible for IT, whereas only 42% of the companies whose bosses are without a desk-top terminal place responsibility for IT at this level.
Although most respondents agree about the strategic importance of IT, 16% report difficulty in measuring its effectiveness and do not even attempt to make an assessment. However, 31% say they evaluate IT's performance against financial criteria including internal rate of return and inter-company comparisons. On the encouraging side, 51% showed that they had begun to use IT as a commercial weapon by measuring the business advantages it delivers in terms of customer satisfaction, competitive edge and improved communications.
One such was British Airways which tests the effectiveness of corporate IT investment against a broad range of objectives. John Watson, BA's director of information management, says he examines 'the contribution towards corporate strategic initiatives (such as customer service, cost reduction and revenue improvement) expected from systems being developed.' He also considers the costs, benefits and performance of major systems that underpin the operation of the airline. Finally, he takes into account 'the ability of the technical infrastructure, systems portfolio and skills base to provide an integrated platform on which new business applications can be built quickly and cost-effectively'. These areas are measured formally through regular reviews and key performance indicators, and they are also the subject of senior level discussion held between Watson and other members of BA's Executive Policy Group.
The low priority ascribed to training by many British companies is highlighted in the survey. No formal training programme exists in 37% of the organisations questioned, and of these, 56% rely on in-house skills to keep the workforce up-to-date with the latest developments in technology.
This leads to the disturbing conclusion that 20% of British companies rely on unstructured development or staff-poaching for IT skills. But once again, the picture is much more healthy in the companies where IT awareness starts at the top. Of the organisations whose senior executives have a terminal, 71% have a formal IT training programme, compared with 51% of such programmes run by non-computer-literate bosses.
For the IT industry generally, the prognosis is not good. The effects of the recession, and cutbacks in capital expenditure, are still strongly in evidence. Only 59% of companies plan to spend more in 1991 than they did in 1990 - a meagre figure for an industry which has been accustomed to very high growth rates. Most companies aim to fork out around 1% of turnover on IT this year, although some organisations declare budgets of 5% and even 10% of sales.
But the situation could change very fast. Somewhat surprisingly, a long-term IT investment plan is eschewed by almost half the respondents, even though IT investment is universally regarded as a board-level issue. Less surprising is the fact that it is those companies which are forecasting increased investment that tend to have a five year plan. Sixty per cent of those aiming to spend more are already thinking about what their needs will be in the mid-1990s. On the other hand, of those organisations planning to hold or reduce spending, only 44% have a three-or five-year plan.
One popular myth exploded by the survey is the supposed dense in budgetary power of the traditional data-processing department. This long-established bastion of spending controls has retained far more power than the enthusiasts for distributed information management would have us believe.
According to the chief executives questioned by Management Today, data processing departments are still responsible for half of total IT spend. However, the people at the top may not be in a position to give a wholly accurate picture here. They may have more faith in corporate systems and are either under-estimating or have less knowledge of the determination of managers to get their own way within departmental budgets than is really the case.
Even companies which do not view IT as an element in building business advantage undoubtedly still see it as important-one third of them have a director with personal IT responsibility and the same proportion plan to increase spending on technology this year. A formal IT training programme is run by 44% of them, and half this number have a five-year investment plan. However, only 11% of the chief executives of such companies have a terminal on their desks, compared with 51% overall.