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IBM study: Revenue growth top CEO priority

IBM study: Revenue growth top CEO priority

IBM rounded up a panel of its customers in New York Monday to help unveil results from a worldwide survey of CEO (chief executive officer) priorities conducted by its consulting group. IBM's top finding: In the Americas and most of the Asia-Pacific region, revenue growth far outpaces cost containment as CEOs' top focus, but in Japan and Europe, cutting costs remains a pressing priority.

Fewer than 15 percent of those surveyed said their organization is "very responsive" to changing business conditions, while more than 70 percent rated increasing responsiveness as a top priority over the next three years, according to the study. IBM touted that result, citing it as validation of its "on-demand" philosophy, which emphasizes using technology to increase organizations' flexibility and responsiveness.

IBM conducted the study by surveying 450 CEOs, mostly through in-person interviews conducted by its Global Services consultants. The Economist Intelligence Unit and Nikkei Research Inc. also participated in the research.

Introducing new products and services topped the list of ways the executives intend to increase revenue, followed by entering new markets. New and differentiated products are a particular concern in Japan and the rest of the Asia-Pacific region, while CEOs in Europe and the Americas placed a greater emphasis on operational efficiency as a key to revenue growth.

Despite the soft IT job market of the past few years, hiring and workplace skills were cited as a concern by the executives surveyed. More than half listed limited leadership resources as a significant barrier to effecting change in their organization. One unnamed CEO in India lamented his company's inability to attract enough skilled workers: "The skills requirements are ever changing and the challenge is to retrain and re-skill people to extract the maximum productivity from them. While there are many job applicants in India for any post, the quality of candidates meeting this company's requirements are few," the CEO wrote.

IBM's Ginni Rometty, head of the Business Consulting Services group that IBM formed through its acquisition of PwC Consulting, said IBM will use the survey to help set its own priorities for investments and to develop skill sets among its consultants. Analytics, corporate dashboards and data-gathering technologies such as telematics and RFID (radio frequency identification) chips are some of the technologies IBM will track in response to customer feedback, she said.

Executives enlisted to speak about their organizations' priorities agreed that responsiveness is critical, but they differed in their descriptions of how effectively their various industries respond to technological change.

Locus Pharmaceuticals Inc. CEO Joseph Reiser recently signed a deal with IBM to use its supercomputing resources for drug design. With development of a single drug costing as much as US$1 billion and requiring more than a decade of work, maximizing research efficiency is critical to containing costs and gaining competitive advantage, Reiser said. Because of the massive computing power required to run experimental algorithms, partnering with an IT expert like IBM is helpful -- but outsourcing computation work isn't a risk-free option, he said. It took months for Locus and IBM to agree on terms regarding intellectual-property protection and other concerns.

"I think we must have drawn up five agreements," Reiser said.

Napster LLC Chief Technology Officer Bill Pence said his company is revising its business model on a near-daily basis as it tries to "reinvent" the music industry, a feat that requires an expensive and complex IT infrastructure to deliver the flexibility Napster needs. But the music industry as a whole has been slow to take advantage of technology, he said, citing the complexity Napster faces in filling the extensive reporting requirements of its music-label partners.

"We have no standardized way of doing that yet," Pence said. "We use XML (Extensible Markup Language) a lot, but there's no Web services layer in place yet. It's something we'd love to see."

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