IT Seen as Growth Engine for CPGs

 
 
By Karen A. Frenkel  |  Posted 01-27-2014 Email Print this article Print
 
 
 
 
 
 
 
 

A new survey of CIOs at 27 leading consumer packaged goods (CPGs) companies finds that they are increasing their investments in new technologies to drive business growth, according to The Boston Consulting Group (BCG). These technologies include social media, software as a service and advanced analytics. There is a wide range of money spent and rate of adoption, however. Forty-two percent of the companies surveyed are not quick to adopt new technologies, despite spending significant sums on IT. Another eight percent of participants have constrained IT spending, yet did invest in new technologies, but the report warns that this strategy that may not be sustainable. "Many CPG chief information officers today are at an inflection point," says Ashwin Bhave, a BCG partner and coauthor of the report. CIOs at CPGs are also changing with the times—and being more strategic. "For the first time," says Elise Fennig, Grocery Manufacturers Association (GMA) vice president of industry affairs, "we are seeing many CPG CIOs look at IT through more than just a cost lens. Companies whose IT and business leaders have a clear, agreed-upon vision for the role of IT in their business model can take concrete steps to transform their growth position." The Boston Consulting Group and the Grocery Manufacturers Association conducted the study, which updates their 2010 report. For the full study, "GMA Information Technology Benchmarking 2013: The New Mission for IT in Consumer Packaged Goods," click here.

 
 
 
  • CPG CIOs Cite Business Growth as a Priority

    Almost 75% of the CPG CIOs surveyed cite supporting business growth as a top IT objective. Only 20% of respondents agreed with that statement in 2010.
    CPG CIOs Cite Business Growth as a Priority
  • New Technologies Drive CPG Brand Engagement

    CPG companies have successfully invested in digital and social media, smartphones, and tablets to drive brand engagement.
    New Technologies Drive CPG Brand Engagement
  • Big Data and Analytics Are Key

    Analytics and big data offer new tools for exploiting information to yield valuable, real-time insights into consumer behavior and sales.
    Big Data and Analytics Are Key
  • A New Role for CPG CIOs

    As the role of IT increasingly moves closer to the front and center of business operations, CPG CIOs can play a key role in delivering these new capabilities to the business.
    A New Role for CPG CIOs
  • Analytics Concurrent With Fiscal Discipline

    "CIOs must leverage their command of analytics to lead initiatives in these areas while maintaining fiscal discipline," the report notes.
    Analytics Concurrent With Fiscal Discipline
  • Marketing May Supplant IT

    IT leaders who do not meet the new demands of their executive-leadership teams may be sidelined as other departments, like marketing, take the lead in exploiting new technologies.
    Marketing May Supplant IT
  • IT Budgets are Tight

    IT funding remains tight, with growth in IT operating expenditures in 2013 trailing revenue growth. This year, operating expenses are 3% higher than last year, and are growing less than the projected revenue growth, which is expected to be 5%.
    IT Budgets are Tight
  • Just Getting Started With New Tech

    Because of tight budgets, most CPG companies are in the early stages of implementing new technologies. None of the survey participants have fully deployed big data solutions, for example.
    Just Getting Started With New Tech
  • A Low Proportion of Outsourcing

    Most CPG companies outsource a low proportion of their IT services: the median company outsources only 32% of IT. The survey found no evidence that outsourcing leads to lower IT costs: median IT operating expense as a percentage of revenue was higher for significantly outsourced companies than for minimally outsourced companies.
    A Low Proportion of Outsourcing
  • Find Funds by Economizing on Your IT Infrastructure

    The survey found that rapid adopters of new technologies spend proportionally less on IT infrastructure, as opposed to applications, than those taking a more conservative approach to adopting new technologies.
    Find Funds by Economizing on Your IT Infrastructure
 
 
 
 
 
Karen A. Frenkel writes about technology and innovation and lives in New York City.

 
 
 
 
 
 

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