Global execs say outsourcing is in

Overall IT spending is still depressed, while outsourcing remains a cost-effective method to fill skills gaps.

These were some of the conclusions drawn from a recent Financial Executives Survey conducted by solutions provider Computer Sciences Corporation and Financial Executives International (FEI).

The survey involved 607 members of FEI, with the respondents mainly living in the US or Canada. It aimed to identify the IT trends most critical to financial and senior executives. From a South African perspective, it is an opportunity to compare the local and global markets.

One of the key differences between the two markets is in the involvement of financial directors in information security (IS) programmes. While the survey indicates that financial executives are reluctant to expand beyond traditional IS programmes, South African industry experts say this isn`t so.

"You must consider the risk and the payoff. If there is a high enough risk, I don`t think they would be averse to doing that," says National Brands executive director of finance Keith Phillips.

The survey also found that IS strategies had not changed significantly over the past year; another point that Phillips feels is not true. "I think they are getting a lot clearer. Three to five years ago, we were nowhere near to understanding our business as we are now - a large part of that is to do with the IT platforms that we`ve got, and our approach to using those tools to make better informed decisions, quicker."

In terms of outsourcing, 90% of the survey respondents considered it to be successful, with IS and payroll two of the most commonly outsourced areas. Although outsourcing is a growing alternative locally, Blue Arrow International MD Angelo Kehayas says it is not yet as successful in SA as it is in the US market.

"From my experience, you won`t find 90% of South African companies happy with outsourcing. Payroll is not so commonly outsourced, and I don`t consider outsourcing IS a trend in SA."

Although the degrees of success with outsourcing are varied, most executives agree that outsourcing is here to stay, says Transtel acting CIO Chris Chapunya. "Most companies want to focus on their core business to remain competitive. Another reason for outsourcing is the lack of key skills within most organisations."

The survey also highlighted various issues that were pertinent to the local market.

Most survey respondents noted the importance of businesses aligning their IT and business strategies in order to achieve high returns on IT investments.

While local executives agree with the theory, many have been unsuccessful in their attempts to do so, says Edcon CIO Henri Slabbert. "Most companies are aware of this and they have tried. However, I don`t think many have got it right."

Chapunya believes the solution to this lies in placing the right skills in management positions. "The problem with most local companies is that they choose pure technical people to manage IT, with the consequence of those managers not being able to align strategies because they don`t fully understand business."

Another important finding in the survey is that IT spending is still depressed, and Slabbert agrees: "People are looking to do more with their money now. I think IT spending will increase slightly this year."

There is a level of uncertainty regarding local IT spend, with executives giving varied growth predictions for the upcoming year. Predictions of an upswing in IT spending by research group Gartner have provided a more optimistic view of the 2004/2005 financial year.

Security is becoming an increasingly important issue to local businesses, and this is in line with the survey findings. Phillips believes a lax approach to security could have severe consequences for a business. "It is a big issue. You are continuously getting hackers coming in. It would be a disaster if this caused our systems to crash."

The value of information far outweighs the costs involved with implementing security, says Chapunya. "We need to give this area a high priority."

The survey found that security still comprises a relatively small amount of companies` annual budget, with less than 15% being allocated to this area. Chapunya believes the same is true in SA. "It is much lower in corporates locally."

However, Slabbert believes it is difficult to say, as security functions are often buried in other areas of the business.

In terms of security, Blue Arrow`s Kehayas believes local needs will differ to global ones, and that this must be kept in mind. "For example, we are not as exposed to terrorism, so it is not a big issue here. But espionage is another thing, as it does happen, and I think we are very lax about it."