Few Companies Will Get Maximum Value from IT Investments During Recession: Diamond Digital IQ Report

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Diamond Management & Technology Consultants' Annual Digital IQ Study Identifies Key IT Capabilities for Outperforming Competitors

The 20 percent of companies we surveyed that have strong strategic planning, mobilization and execution skills, what we call a 'high Digital IQ,' are much more likely to outperform their peers.

Get the CIO involved in the strategic planning process. Develop a clear roadmap for information technology ( IT) investments. Mobilize experienced leaders and team members to execute major projects. That sounds like a simple recipe for getting high value from a company's information and technology assets. But according to the second annual Digital IQ study released today by Diamond Management & Technology Consultants, Inc. (NASDAQ: DTPI), most companies still struggle to use IT to improve their financial performance.

Diamond's Digital IQ survey of 451 senior business and IT executives uncovered some surprising findings. For example, companies that heavily involve the senior IT leaders up front in the strategic planning process are four times more likely to be top performers in their industry than their competitors. However, only 20 percent actually include IT in strategic planning.

Only 29 percent said they are consistently successful in mobilizing the right mix of internal and outsourced IT resources to complete projects successfully.

Respondents also candidly confessed that their IT projects typically fall short on some critical measures. Only 45 percent said that projects are consistently delivered on time; 23 percent said they come in on budget. Most troubling, perhaps, only 16 percent said that IT projects deliver 100 percent of what was originally promised, which means a lot of expectations are unfulfilled and opportunities to save money or add new business capabilities are wasted.

"With budgets squeezed during a recession companies should focus on a few key ways to gain the maximum value from their IT investments," said Chris Curran, Diamond's Chief Technology Officer and an author of the DDIQ report. "The 20 percent of companies we surveyed that have strong strategic planning, mobilization and execution skills, what we call a 'high Digital IQ,' are much more likely to outperform their peers."

"Our concern," Curran said, "is that most companies aren't focused on increasing the capabilities that drive a high Digital IQ--integrating IT into the strategic planning process, developing a strategic roadmap to guide IT program implementation, and lining up the right mix of skills to execute projects efficiently."

Diamond research also provides insight into how Chief Information Officers (CIOs) are responding to recessionary pressures. According to John Sviokla, Diamond's Vice Chairman and Managing Partner-Innovation and Research, "The mix of IT spending is shifting to more strategic projects, with an even greater reliance on commodity services to lower the cost of running IT operations. That puts even more pressure on CIOs to strengthen their team's strategic, mobilization, and execution intelligence."

Improving key capabilities does not have to be an expensive proposition. The Diamond study found that the most successful firms spend only about 20 percent more time and effort on planning before they undertake large strategic projects. Considering that almost 60 percent of the survey respondents said they had a strategic roadmap for mobilizing the right mix of resources to execute projects, the incremental effort required to actually mobilize resources successfully is minimal

"The incremental value of that upfront planning can be a multiple of the investment, in terms of delivery success and new capabilities, and is even greater when you consider the millions of dollars at stake in a failed or delayed IT project," Sviokla said.

How can a company determine if it is in position to get maximum value from its IT investments in a recession? The Diamond Digital IQ report challenges executives to consider several key questions about the strategic, mobilization, and execution intelligence that resides in their organization, including:

  •     Is our strategy right for the current environment and the inevitable recovery? Are our IT investments aligned with that strategy? Call all line managers and senior executives accurately describe the strategy?
  •     Do we have a clear, multi-year roadmap to guide our strategic IT investments? Is there executive agreement on the sources of funding and resources necessary to deliver on the organization's strategy? Are skilled leaders with sufficient time in place to drive the company along that roadmap?
  •     Do the company's IT project execution skills include strong capabilities in all essential areas, including program management, enterprise architecture, business requirements management, and stakeholder communications? Is there a shared business/IT governance structure, with a clear set of rules for priority-setting, to ensure that major IT investments deliver real value to the organization?

"Answering some hard questions about how your company stacks up on the dimensions of strategy, mobilization, and execution is the first step in ensuring that a company is using its IT assets to improve business performance," said Sviokla. "That analysis will provide a fresh perspective on the value that you're potentially leaving on the table, and the unnecessary risks you are injecting into the business."

About Diamond
Diamond (NASDAQ: DTPI) is a management and technology consulting firm. Recognizing that information and technology shape market dynamics, Diamond's small teams of experts work across functional and organizational boundaries to develop new strategies, improve operations, and deliver results. Since the greatest value in a strategy, and its highest risk, resides in its implementation, Diamond also provides proven execution capabilities. We deliver three critical elements to every project: fact-based objectivity, spirited collaboration, and sustainable results. To learn more visit http://www.diamondconsultants.com.

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