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Gulf Exists Between Desired and Actual IT Role at CPG Companies: Study

Just about everybody thinks IT ought to merit major investment but many fewer CPG exec believe their companies are putting their money where their mouth is, according to a research report issued yesterday by the Grocery Manufacturers Association.

The “GMA Information Technology Investment and Effectiveness Study,” based on surveys conducted for the CPG trade group by IBM and AMR Research, revealed that more than 75 percent of business executives, and 80 percent of information technology execs, think IT should be a major area for investment; but just one-quarter actually believe this investment is being made.

The study incorporated responses from 118 executives at 46 consumer packaged goods companies, GMA said. Their responses indicated that the discrepancy between the desired and actual role of IT at these companies is partly because of misaligned business strategies, in which executives see IT as a cost of running the business rather, than as a crucial player in revenue-generating programs, said GMA.

“The average IT budget for a CPG company is just over 2 percent of revenues and has not grown significantly in the past five years,” said Jeanne Iglesias, GMA’s senior director, supply chain and technology. “Until companies realize that IT can make strategic contributions well beyond the day-to-day operations, this lack of funding is likely to remain a challenge.”

Technological environments that are too complex also stymie improvements to IT’s effectiveness, the report said. Organizations with yearly revenues of over $1 billion reported using more than 750 applications within their systems; such complexity impedes their ability to employ IT more strategically.

“In an increasingly competitive environment, companies must leverage every asset to gain an advantage,” said Gerrit Schutté, s.v.p. and c.i.o. at ConAgra Foods, Inc., and also as a member of GMA’s Information Systems Committee. “The IT function has the opportunity to be a difference-maker, but only if IT executives assert their team’s potential and focus on value-adding activities.”’

The GMA Information Technology Investment and Effectiveness Study can be downloaded at
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