IT, Business Exec Gulf Widens, McKinsey Says

As more businesses recognize IT's strategic importance, dissatisfaction with the group's effectiveness has grown, according to a new report. As a result, many organizations believe that a change in their IT management is necessary to fix it.

McKinsey & Co.'s latest Global Survey results highlight a shift in organizations' current priorities for IT. For example, concerns about managing costs are down, from 52% last year to 31% this year, while more executives say their organizations use IT to improve business effectiveness -- up 12 percentage points to 61%.

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To support these priorities, businesses have shifted their spending: Of respondents, 64% said their budgets for new investments will increase next year, up from 55% last year. According to the report, the largest share of IT budgets is spent on infrastructure, which has been the norm for the last several years, followed by core transactional applications. Most expect infrastructure spending to decline.

But as businesses focus on and invest in IT's ability to enable productivity, business efficiency, and product and service innovation, the report found that overall satisfaction with the group's performance has declined.

Executives from the business side are less likely this year to say that IT performs effectively in sharing knowledge, delivering year-over-year productivity gains, tracking customer-or segment-level profitability, creating new products, and entering new markets, according to McKinsey.

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