CIO Executive Council Members Worry about Future of Information Technology in United States, Call on U.S. Congress and Academia to Help

FRAMINGHAM, MA – OCTOBER. 28, 2004 – A new poll of chief information officers (CIOs) conducted by the CIO Executive Council(TM) (founded by IDG's CXO Media Inc. and CIO magazine) reveals 81% of chief information offices are "extremely, very or somewhat concerned" about the future competitive advantage of the U.S. workforce in the global information technology (IT) marketplace. CIOs point to inadequate preparation from universities as a primary cause for their concern with 57% saying a lack of integration between business and IT skills is the biggest problem with today's IT education preparation programs in the U.S.

"Many universities have great MBA and medical and law degree programs. However, with the exception of a few universities who get it right, there isn't a heavy push in academia to teach IT skills or show how those IT skills are integrated into the overall business strategy," says Jeri Dunn, chair of the CIO Executive Council's IT Workforce Committee, who also serves as the CIO of Tyson Foods. "CIOs have a tall order. They're charged with using IT to run the business, streamline operations, lower costs and improve overall efficiencies. Without a younger generation of CIOs coming aboard with the right education and skills, the future of American business is in danger."

In addition to education concerns, CIOs worry about the federal government's leadership, understanding and appreciation of their vocation. Less than half (42%) believe the Bush Administration recognizes IT as a valuable profession. Furthermore, 45% believe improving U.S.-based IT education to preserve the future of IT workers here at home should be at the top of U.S. Congress's priority list.

Adds Dunn, "This issue is crucial to our country's future and deserves the attention of U.S. leadership."

The current IT outsourcing trend is another concern for the future of domestic IT. Currently, only 38% of CIO Executive Council respondents outsource a portion or all of their IT staffs. Of those who do, the majority (65%) cite lower costs as their primary motivator above faster access (18%) or better skills (9%). Sixty-percent (60%) believe the offshore outsourcing trend will remain strong for another two to five years before hitting a decline.

Despite the state of affairs regarding education and opportunities, 63% of CIO respondents say they would still choose IT as a career path if they could start their career tomorrow.

CIOs on the Sarbanes-Oxley Act of 2002:

Of those CIO Executive Council respondents impacted by the Sarbanes-Oxley (SOX) Act of 2002, the majority (73%) have a clear understanding of what the act requires. (NOTE: Following a spate of corporate scandals, the 2002 Sarbanes-Oxley Act mandated that public companies hire internal auditors to ensure that financial reporting is accurate and ethical. Public companies face deadlines as early as November 15, 2004 or as late as April 15, 2005). However, almost half (49%) do not think the requirements are fair and reasonable. And 42% believe the auditors of SOX compliance are not helpful to their organization's efforts to meet the requirements.

According to Marc West, co-chair of the CIO Executive Council's SOX taskforce and CIO of H&R Block, "Many CIOs believe the Sarbanes-Oxley Act imposes exceptionally demanding requirements that can drain business resources and operations. In order to meet established deadlines, CIOs in some instances are forced to shift their organization's focus and budget away from other IT projects and investments."

Still, most CIOs are steadfastly following SOX rules. Eighty-two percent (82%) say their organizations are putting 100% commitment to fulfilling all the requirements of Sarbanes-Oxley, while 11% are doing the minimum to get by and 2% claim their companies lack the staff or resources to devote much time to this issue.

And yet, many respondents express doubts about the act's ability to achieve its ultimate goal of preventing future corporate financial scandals, with 51% predicting Sarbanes-Oxley will be "somewhat effective" and 40% predicting it will be "not very or not at all effective."

CIOs also doubt any positive impact to their organizations with 41% rating the impact of Sarbanes-Oxley as fair (bringing limited value) and 23% as poor (increasing costs and taking away from investments in other areas). Only 29% believe the enforced reporting structure is good for business processes and efficiency.

Adds West, "The biggest concern for CIOs is how SOX requirements will impact day-to-day business after the initial deadline has come and gone. Right now, CIOs are doing all of the one-time upfront work needed to get their organizations in compliance however it's unclear how much work will be needed down the line to maintain that standard."

CIOs on the Oracle/PeopleSoft Deal:

CIO Executive Council members have mixed reactions to the proposed Oracle/PeopleSoft deal. In reaction to the recent federal ruling allowing Oracle to proceed with its hostile bid to acquire PeopleSoft, 44% say they agree while 43% disagree and 13% are unsure.

However, when considering Oracle's and PeopleSoft's separate suits, CIO respondents slightly favor PeopleSoft. Half (50%) believe the court should deny Oracle's plea to void PeopleSoft's anti-takeover provision vs. 29% who are in favor of Oracle's plea. Furthermore, 45% say the courts should rule that Oracle's bid was intended to destroy PeopleSoft's business, vs. 32% who favor a ruling for Oracle.

In other industry news, CIOs express dismay with the IT vendor community, with one in five (20%) saying they've spent more than $500,000 on software patches in the past year alone. However, CIOs are divided as to what changes need to be made to improve their relationship with the IT vendor community. When asked to name the number one priority, CIOs cite improved customer service (26%), more licensing choices (24%), better products/services (22%) and better service contracts without hidden fees/costs (21%). Not surprisingly, zero percent of respondents say there is no need for improvement.

The CIO Executive Council currently has a vendor relations taskforce dedicated to creating an equitable playing field between the buyers and sellers of technology to improve software quality, and support the kind of innovation that will advance business and industry goals. The task force is co-chaired by Bette Walker, CIO, Delphi Corporation and Geoffrey Hayden, CIO of Jacuzzi Brands.

For complete results, contact Karen Fogerty at 508.935.4091 or fogerty@cio.com or go to http://www.cioexecutivecouncil.com/marketing/itfuture.html.

Methodology:

The CIO Executive Council commissioned this online survey between October 1 and October 8, 2004 among CIOs who are members of the CIO Executive Council or who qualify for Council membership. All Council members must serve as the senior-most IT executive in their organization and have purchase authority for their organization's information technology products and services, as well as strategic oversight of the IT function. An email invitation containing a link to the survey was sent to 839 CIOs yielded 162 completed surveys for a 19% return rate.

Launched in April 2004, the CIO Executive Council ( www.cioexecutivecouncil.com) is a professional organization of the nation's leading CIOs. The Council is fully staffed, member-driven and governed by a distinguished group of top technology executives:

— Mark Hall, General Manager of the CIO Executive Council and CIO of CXO Media Inc.

— Jackie Barretta, CIO Con-Way Transportation Services;

— Dave Clarke, VP and CTO, American Red Cross;

— Roger Coville, CIO, Abercrombie & Fitch;

— Bill Deam, CIO, ACNielsen;

— John Puckett, CTO, DuPont;

— Rebecca Rhoads, VP and CIO, Raytheon Company

— Bette Walker, VP and CIO, Delphi Corporation;

— Stephen Warren, CIO, Federal Trade Commission;

— Bill Wray, EVP & CIO, Citizens Financial Group;

— Hank Zupnick, CIO, GE Real Estate;

ABOUT CIO

Launched in 1987, CIO magazine addresses issues vital to the success of chief information officers (CIOs) worldwide. The CIO portfolio includes a companion website ( www.CIO.com), CIO Executive Programs and the CIO Executive Council. CIO properties provide technology and business leaders with analysis and insight on information technology trends and a keen understanding of IT's role in achieving business goals. The U.S. edition of the magazine and website are recipients of 140 awards to date, including two Grand Neals from the Jesse H. Neal National Business Journalism Awards and two Magazine of the Year awards from the National Society of Business Publication Editors. CIO magazine is published in more than a dozen countries, including Australia, Canada, China, France and Germany. CIO Executive Programs–a series of face-to-face conferences including CIO Perspectives(R) and the CIO 100 Awards & Symposium(TM)–provide educational and networking opportunities for pre-qualified corporate and government leaders. The CIO Executive Council is a professional organization of CIOs created to achieve lasting change in critical industry, academic, media and governmental groups. CIO magazine, CIO.com, and CIO Executive Programs, and the CIO Executive Council are produced by International Data Group's award-winning business unit: CXO Media Inc.

ABOUT CXO MEDIA INC.

CXO Media Inc. produces award-winning media properties and executive programs for corporate officers who use technology to thrive and prosper in this new era of business, including CIO, CMO, CSO magazines and websites, Darwinmag.com and the CIO Executive Council. CXO Media is a subsidiary of International Data Group (IDG), the world's leading technology media, research and event company. A privately-held company, IDG publishes more than 300 magazines and newspapers including Bio-IT World, CIO, CSO, Computerworld, GamePro, InfoWorld, Network World, and PC World. The company features the largest network of technology-specific websites with more than 400 around the world. IDG is also a leading producer of more than 170 computer-related events worldwide including LinuxWorld Conference & Expo(R), Macworld Conference & Expo(R), DEMO(R), and IDC Directions. IDC provides global market research and advice through offices in 50 countries. Company information is available at http://www.idg.com.

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