Monthly Research Update

Experton Group Weekly IT News

Surveys Point to Business Exposures

By: Cal Braunstein

The Association for Information and Image Management (AIIM) released results from its business process management (BPM) survey which showed companies are process ignorant. Meanwhile, a recent survey by RevenueRecognition.com of senior financial executives found companies rate revenue recognition accounting as having the greatest risk for errors and inaccuracies over other key finance and accounting processes. Avocent Corp. and EMC Corp. unveiled results of surveys focused on IT management in virtualized environments.

Focal Points:

• A new study on BPM by AIIM revealed that 48 percent of respondents report little to no BPM strategy, ad hoc process redesigns, and a lack of consistent practices. AIIM surveyed over 300 businesses last month and found 57 percent of respondents had no one group responsible for BPM initiatives and that reporting structures are spread among IT (primarily), finance, operations, and almost every other conceivable department. 77 percent of respondents stated their maturity level was at level one or two. Only 14 percent felt they had achieved standardized BPM processes (level three).
• A survey of senior financial executives at 586 companies found that 34 percent of respondents indicated that the complexity in their business and the inadequacy of their information infrastructures places them at high risk for revenue reporting errors. 42 percent rated revenue recognition accounting as their greatest risk for errors or inaccuracies. Contract management came in second with 14 percent most concerned about that process and its errors. Revenue recognition accounting also ranked number one for errors having the highest level of materiality to financial statements with financial consolidation and contract management coming in as distant second and third respectively. As in the previous year's survey, 92 percent of respondents from public companies claim they are using spreadsheets for one or more key revenue accounting activities.
• EMC released results of a survey that reveals that many companies feel unprepared to face the challenges associated with managing IT environments that include both physical and virtual elements. Approximately 48 percent of the 150 respondents reported their number one challenge in tier-one production environments is isolating root cause problems within server virtualized environments. Additionally, only 24 percent of respondents feel "very confident" their current management tools are sufficient to maintain existing IT service levels. The Avocent study found 89 percent of the 300 executives polled currently use server virtualization, most of which is in production. About one-third of those indicated their companies adopted virtualization to reduce hardware costs, and another third said reducing power consumption motivated virtualization deployment. 45 percent are concerned about getting virtualization skills in house. Another three top concerns were change and configuration management, infrastructure management, and protection of virtual servers from failure.

Experton Group believes process immaturity remains a key shortcoming in most enterprises and causes risk exposures to business, finance, and IT executives and the corporation as a whole. Although executives recognize the need for process management and maturity, the recognition has failed to alter the way the majority of organizations operate. The studies indicate IT executives will risk using new technologies without having all the processes and tools in place, while other executives are less willing to change the way they operate, even though the old methods create higher risk exposures. Executives must become more process oriented if they want to run their operations within the range of acceptable risks. This must start at the top with the establishment of policies and a governance commitment. Unless this challenge is met across the enterprise, the risk exposures to business continuity and success will remain high.