Related Topics:
			Business Research: Business, ERP, Finance Vendor Research: Adaptive Planning, Alight, Applix, Approva, Axentis, Business Objects, Cartesis, Centage, Clarity Systems, Coda, Cognos, FRx Software, Hyperion, Infor – Extensity/Systems Union, Intacct, KCI Computing, Lawson, Longview Solutions, Microsoft, Oracle, OutlookSoft, PROPHIX, QPR Software, SAP
			Printer friendly version Email this article Send feedback to editor

View
What constitutes technology maturity? The Ventana Research Maturity Model™ evaluates the maturity of business organizations in four dimensions – people, process, information and technology – and then ranks them in one of four successive levels of maturity: Tactical, Advanced, Strategic or Innovative.

In our model, companies at a Tactical level have automated the fewest processes, rely heavily on spreadsheets and have the least developed enterprise systems. In this study, sponsored by Lawson and Prophix and media sponsors Business Finance, IMA, Intelligent Enterprise and Montgomery Research, we found that nearly one-third (29 percent) of the midsize companies we surveyed (those having 100 to 4,999 employees) are at this basic level, compared to just 16 percent of large companies (with 5,000 or more employees). At the Advanced level, companies rely on spreadsheets less and have a broader array of appropriate IT assets available to them. Our research found 39 percent of midsize companies and 31 percent of the large companies at this level.

Strategic companies limit their use of spreadsheets to support enterprise business processes. Instead, they use enterprise applications to record transactions, analyze and report data, and measure and manage performance. Slightly more than one-quarter (28 percent) of midsize companies we surveyed fit this description, well short of the 36 percent of large companies at this level. Innovative companies rarely if ever use spreadsheets for enterprise functions and have a broad array of IT systems available for transactions and business intelligence (BI) functions. Only 4 percent of midsize companies we surveyed are at this level, compared to 16 percent of the large corporations.

This research shows that a company’s ability to manage processes effectively is closely tied to its technology maturity. We asked companies to assess how well they perform six basic tasks: managing costs and expenses; managing fixed assets; performing planning, budgeting and forecasting; managing production; managing the workforce; and setting practical targets for individuals and assessing results. In all cases, the more mature a company’s IT systems, the better able it is to execute these functions. For example, in managing costs and expenses, companies at the Strategic level scored higher in managing that process than companies at the Tactical level.

Most companies do not manage their workforce very well, but those that make the best use of technology achieve far better results. Almost none of the companies at the Tactical or Advanced level described themselves as managing their workforce very well or excellently, while slightly less than half (49 percent) of the Tactical companies and 44 percent of those at the Advanced level said they either do a poor job or do not manage them at all. In contrast, we found that 18 percent of companies ranked Strategic and one-third of those ranked Innovative said they do it well or excellently.

Moreover, our research illustrates the late Peter Drucker’s dictum, “You cannot manage what you cannot measure.” We found that one-third of Tactical-level organizations did not track key performance metrics for business units or individuals. This compares to 21 percent of Advanced companies, 12 percent of the Strategic ones and none of the Innovative ones. One-third of the companies said they do not track performance metrics because they do not have the time or resources; we think it likely they lack the software to easily access and analyze the information needed to track performance.

Assessment
Ten years ago, the cost and complexity of information technology kept midsize companies from having the same capabilities as larger ones. Today, most of the financial and BI capabilities once available only to Global 2000 companies can be had, designed and priced to fit the needs of midsize corporations. Our study found that a strong relationship exists between having a mature information technology environment and management’s ability to run the business well. This applies to Finance as well as other parts of the business. Ventana Research believes executives in midsize companies, particularly CFOs, need to reassess their IT capabilities with an eye toward improving their company’s ability to execute.