Nearly 800 senior executives agree that the ability to adapt quickly to change and improve services using IT will be more beneficial to publicly held organizations than the addition of new products and services, according to a new study that looks ahead to the next five years. The study was conducted by the global research and advisory firm Economist Intelligence Unit (EIU).

Between now and 2010, how organizations do business often will be more important than what they actually do, according to the report sponsored by SAP, a global provider of public services software solutions. Business 2010: Embracing the Challenge of Change was based on a survey of more than 4,000 senior executives from 23 countries in Europe, the Americas, and the Asia Pacific. Survey respondents included business leaders from private and public sectors — half were chief executive officers (CEOs), chief financial officers (CFOs), chief information officers (CIOs), and others at an equivalent level; the remaining participants consisted of senior managers such as directors of marketing or planning. Respondents represented a range of industries, with most coming from financial services, retailing, manufacturing, and the public sector.

The research, conducted from November 2004 through January 2005, showed that the increasing rates of all types of change — social, political, and technical — will require organizations to become much more IT savvy. More than 80 percent of respondents singled out IT as being of central importance to their organization's ability to implement future strategies. Nearly 60 percent view IT as increasingly becoming a competitive tool more than a cost saver. "IT will get closer and closer to business, and more and more business processes will be based on IT," said Sergey Kiryushin, CIO at Aeroflat Russian Airlines in Moscow and one of the surveyed executives.

Organizations will turn to flexible technology solutions to adapt quickly to, and support the challenges of, shrinking budgets and increasing expectations for better service delivery and transparency, according to the report. Almost 90 percent of executives believe that the public's expectations for speed and accuracy of service will increase between now and 2010. With technology having one of the greatest impacts on organizations, executives will turn to IT solutions and employee training to fulfill the public's needs. Government agencies also will look to technology to meet growing expectations for transparency.

About 40 percent of respondents expect technology innovation to have the most influence on overall business models. Eighty-seven percent of executives said it would be critical to their ability to adapt business models and implement strategy. About one-third of executives identified swift adaptability to change as the greatest management challenge for creating long-term value; another 18 percent cited speed of innovation.

According to the EIU study, as the demand for accurate, timely, and secure data increases during the next five years, effective gathering, storage, and analysis of information will be essential. Among the areas where the demand for data will grow fastest are:

• Collaborative working. The 2010 organization will depend increasingly on the flow of accurate and timely information within, across, and beyond organizational boundaries.
• Customer insight. A greater understanding of customer needs will be essential to the personalization of products and services. Organizations will seek to increase knowledge of customer behavior to better anticipate changes in demand. According to 62 percent of the executives surveyed, the role of IT will be most critical in improving those customer relationships.
• Risk management. Businesses must thoroughly prepare emergency plans, such as data backup and recovery.
• Governance. The quality of corporate governance increasingly will be a source of differentiation among organizations. More than 80 percent of survey respondents said brand value will be linked to good governance.

Extracting useful information from customer data, finances for compliance purposes, and operations for decision-making purposes, will remain a challenge. According to the EIU report, organizations will look to technology to help manage the flood of data. Surveyed executives discussed several options, including automated filters that sift through data and online agents, or "electronic valets," that help consumers make selections from the staggering number of products available on the Internet.

But IT alone is not the answer, according to the report. Executives also expect customers, shareholders, and employees to exert increasingly more — and often conflicting — demands on their organization. Other key survey findings show that:

• Diversification is out and specialization is in. Respondents expect competition to be much stronger five years out, with three out of five respondents citing consolidation as the No. 1 threat; the remainder of those surveyed fear new entrants from emerging markets. Faced with such pressures, 60 percent of organizations will focus on improving existing products or services. Staff "brain drain" is a major concern.
• Nearly 50 percent of business leaders cite finding and keeping personnel as the top human resources challenge, while the same percentage fear the loss of key personnel to competitors as the biggest threat to the integrity of intellectual property.
• Pay should be tied more closely to performance. Across all regions, the overwhelming majority of respondents agreed that board-level compensation should be tied more closely to performance.
• Transparency is required. In 2010, the public will expect more information both on the services they consume and on the value of the public investment. Executives expect to see an increase in the information accessible to the public, and there will be growing expectation for solid social and financial returns on the investment of public dollars in IT solutions.

Business 2010: Embracing the Challenge of Change is downloadable from http://a330.g.akamai.net/7/330/2540/20050225175109/graphics.eiu.com/files/ad_pdfs/Business%202010_Global_FINAL.pdf.