IT Tops BoD Investment Priorities, Tied With Sales

Board directors are prioritising customers, core competencies and competitive advantage, according to the second annual Gartner-Forbes 2012 Board of Directors Survey. Half of the board directors surveyed were willing to invest in IT as a means to change the rules of competition, and they had IT as the highest priority for investment in 2012, tied with investments in sales.

Gartner and Forbes surveyed 175 board members in March and April of 2012 regarding their perceptions of the key business issues facing their organisations, and the contemporary aspect of their attitudes toward IT.

“Board directors clearly have a top priority to invest in IT and leverage IT for competitive advantage,” said Jorge Lopez, Vice President and Distinguished Analyst, Gartner. “These forward-looking and proactive attitudes are being made although more than half of the survey respondents replied that they are preparing for a market recession. It underlines the fact that that the investments they plan to make are essential to growth and even survival, and that they are willing to throw the investment gauntlet down now, rather than later.”

The priorities of the board directors in this survey were directly centered on customers, building better ways to drive the business forward through better core competencies, working on sustaining competitive advantage, or innovation. Gartner analysts said all of these are proactive efforts to acquire, retain or develop customers and markets.

Eighty-six percent of respondents said they believe that IT’s strategic contribution to the business will increase by 2014.

“The best strategy for the CIO is to select projects that drive the strategic priorities of the firm,” said Mark Raskino, Vice President and Gartner fellow. “Although this seems obvious, in practice, it is challenging to drive consensus on what that exactly means. CIOs need to review project elements with the CEO and key board sponsors, so they can understand that the project is designed to enhance their priorities in a meaningful way.”

The fastest-rising priority is pursuing greater diversity in the business portfolio, which will drive mergers and acquisitions (M&As). Gartner recommends that IT leaders review their plans for integrating acquired company systems. They should also prepare plans for divestitures as the investment portfolio is restructured for lower risk.

The Gartner-Forbes 2012 Board of Directors Survey asked board directors to rate each of 30 different choices from extremely low importance to extremely high importance. The top five priorities were:

1. Attracting new customers

2. Retaining and enhancing existing customers

3. Focusing on core competencies

4. Maintaining competitive advantage

5. Fostering innovation

The top spots were dominated by issues that have a direct connection to revenue and profit. The fastest-rising priorities point to the rise of pursuing greater diversity in the business portfolio, which is usually a move to reduce the overall risk of an enterprise.

As boards seeking ways to build or extend their competitive advantage increasingly look to IT as a source of that advantage, Gartner believes that IT-enabled business models will be useful as advances in technology continue to gain ground, and the reputation of IT as a means to improve productivity persists.

“CIOs should continue to examine how to liberate budget allocations through improved efficiencies, so that the innovation and core competency investments prioritised by the board of directors are maintained,” Lopez said. “They should also investigate how IT can change the business model for their industry in a manner that will change the rules of competition.”