Financial services CEOs might think they know how to use their IT resources, but that is not always the case, according to a recent study by Gartner (Stamford, Conn.) and Forbes.com. The annual report - which surveyed 1,035 CEOs from 14 industries (167 respondents from financial services firms) and is in its fourth year - indicates that there is a chasm between CEOs' goals and their use of IT to attain them.
Primary responsibility for funding new IT projects and investments rests with the CEO at 48 percent of banks, the study reports. But, "There is a disconnect between what is required in the boardroom and what it will take to achieve that," says David Furlonger, managing vice president, Gartner.
Furlonger explains that financial services CEOs appear to have a love/hate relationship with technology. Sixty-five percent of bankers surveyed say IT is both an enabler and inhibitor of organizational change (compared to 39 percent of insurers, who view technology mostly as an enabler), he notes.
As an extension of this attitude, suggests Furlonger, 31 percent of banks do not measure ROI on any of their IT investments, and 43 percent of financial services firms consider IT only after business objectives have been set. Just 35 percent of bankers say they measure ROI on all IT investments (compared with 9 percent of insurers), and 52 percent say they find IT critical when planning business strategy.
Poor Attitude = Poor Performance
According to Furlonger, this attitude leads to failed projects, project cost overruns and lack of competitiveness. "This is not the fault of IT - it's the fault of business for not introducing IT into the equation," he maintains.
Financial services firms must improve their attitudes toward IT and CIOs, Furlonger adds. "There is a massive gap between the IT department and business," he says.
At the majority of financial institutions, claims Furlonger, IT is considered an enabler of business processes but not a contributor. "Until IT is considered a vital contributor to the bottom line, you will continue to see competitive differentiation emerge [along these lines]," he says. "Think of IT as a business generator and not a cost to your bottom line," he adds. Firms need to change their views of IT "from cost center to profit center."