Technology | Media | Telecommunications

Monday, May 12, 2008

LatAm CEOs Focus on IT Business Alignment

In its recent market study, IDC explores the business priorities of the leading corporate executives in South America's three largest economies. The study explores various topics ranging from business expectations of IT to how IT vendors can be more effective.

In total, 187 interviews were conducted with CEOs, business vice presidents, and IT directors based in Argentina, Brazil, and Mexico. The executives represented medium- to large-sized enterprises from a diverse spectrum of industries including services, finance, commerce, telecom, communications, utilities, and manufacturing.

The study opens with an updated view of the economic and business perspectives for 2008. Even with a prolonged economic crisis expected in the United States, Latin American CEOs remain optimistic: 80 percent of those interviewed in the three countries believe that their business prospects will be better in six months that they are today.

And business as well as IT leaders are armed with OPEX and CAPEX budgets that are larger in 2008 than in 2007.

Other data shows that more than 70 percent of the financial institutions surveyed are increasing their overall operational expenses this year, while 55 percent of these institutions will increase their IT spending.

Companies in the communications, utilities, telecom and media industries are keeping their investments more conservative across the region, reflecting the challenging margins in these industries today. The services industry appears to be the industry most aggressively increasing its CAPEX as compared to its operational expenses.

With regards to business priorities for 2008, concern for the customer remains on the top of the CEO agenda in Latin America. What has changed from a similar analysis done in 2006 is that product innovation rose from fifth to second priority, further supporting the CEO focus on maintaining a competitive position in the marketplace.

"Achieving greater efficiencies through the supply chain is now the fifth priority, which is quite interesting since this was not even mentioned in our research from 2006," noted Eric Prothero, group vice president, Latin America. Sales productivity remained third on the list, while IT responsiveness rose from fifth to fourth.

The key areas for IT investment in 2008, according to these business executives, are back office applications at the top of the list, followed by security solutions and customers relationship solutions.

"Based on these solution needs, we expect to see above average spending on application software services, identity management, content management, and integrated reporting/query services in Latin America this year," added Prothero.

The majority of the CEOs interviewed believe that the number one focus for their IT department should be developing new strategic applications to improve competitiveness. More than half of the corporate leaders who participated in the survey believe that IT is a fundamental piece in assuring the operational effectiveness of the organization and see IT as a competitive advantage.

Clearly, increased adoption of managed service offerings is one way to reach that goal.