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18/01/2010
Russian Business Leaders' Management Initiatives Study Conducted by IBS and The Managers Association
The study revealed that projects to boost capitalisation, financial transparency, investment appeal and suchlike were no longer relevant. Most of the projects carried out in 2009 were to provide solutions to meet specific operating objectives relative to the companies' core businesses while the most relevant ones were projects to enhance customer relationships.
The study had the following key objectives:
- measuring the impact of the crisis on the market for management solutions,
- determining top Russian companies' level of engagement with new management solutions amid the crisis,
- identifying main areas of investment in management technologies in the crisis.
The study focused on an impressively broad range of technology, organisational and management innovation implementations commenced in spring 2009 or later. 102 of Russia's top 500 companies from a variety of industries (Graph 1) were polled in an absentee questionnaire survey conducted in October and November 2009 and one of the priority projects commenced by each of the companies in spring 2009 or later was examined.
The study assessed the impact of the crisis on the following aspects of project activity:
- implementation objectives,
- areas of implementation (lines of the companies' businesses),
- timelines, budget and scale.
Respondents indicated when the projects were initiated, as well as commenced, in order to allow assessment of the impact of the crisis on the companies' pre-crisis plans. Autumn 2008 was used as the dividing line. This enabled tracking of changes in a range of characteristics.
Improvement of the organisation's competitive edge ranked first among objectives the companies sought to achieve by implementing new management technologies (39 per cent and 36 per cent of projects initiated before and after autumn 2008 (respectively) were to achieve that objective), while boosting income as a reason for a project became less of a priority (only 3 per cent of projects conceived after the crisis pursued that objective). (Graph 2).
Operational management became the main area of investment under internal management initiatives, having risen from 40 per cent (before the crisis) to 57 per cent (during the crisis) (Graph 3). The most common projects implemented in this segment were ones to improve customer relationships, make operational control more transparent, optimise workflow and strengthen operational financial management.
Improvement of customer relationships was the only functional area that rose substantially as a percentage of the total number of the projects. Respondents described a very broad range of initiatives as initiatives of this functional area, from restructuring of sales arrangements and development of new loyalty programmes to CRM system implementations and IT infrastructure upgrades. 30 per cent of the companies invested in that area before the crisis, as compared with 50 per cent during the crisis. The segment of financial management projects suffered most from the crisis, having dropped from 28 per cent to 12 per cent as a percentage of the total number of the projects. That segment was dominated by operational-level projects mostly designed to last up to one year. Project management slumped by nearly half too (from 47 per cent to 24 per cent) (Graph 4).
As regards characteristics of projects implemented the budgets changed the most. The planned budgets were cut in 40 per cent of projects conceived before autumn 2008 (Graph 5) and in 29 per cent of projects initiated during the crisis. It can be supposed that savings were achieved partly by involving in-house staff (Graph 6) in project implementations and using proprietary ideas and developments (Graph 7).
Implementation timelines were the least affected (about 60 per cent of the projects were commenced on time) (Graph 8).
Amounts of investment in projects initiated in or after autumn 2008 changed dramatically as compared with projects initiated before autumn 2008 (Graph 9). The share of big projects (worth more than 15 million rubles) fell from 41 per cent to 9 per cent, while the share of small projects (worth up to 1 million rubles) rose from 17 per cent to 43 per cent.
The study gave a more detailed insight into the relationship between a company's revenue and the characteristics of projects it implements, showing that big companies generally continued to operate in line with their long-term strategies carrying on with large-scale and expensive projects and adjusting their implementation subject to the company's capabilities and the current macroeconomic environment. Projects that were in all respects smaller in scale were conceived mainly after the crisis and implemented by mid-sized companies, which proved to be more flexible in their ability to implement innovations.
The study showed that the main objective both before the crisis and during the difficult economic conditions was to optimise the company's core business on the level of the entire organisation (70 per cent of projects as compared with 77 per cent of projects conceived before the crisis) (Graph 10). Such projects were very important for the companies whether or not the projects spanned all lines of the companies' businesses. There were not many isolated department-level solutions pursued solely to eliminate bottlenecks in business processes revealed at a time of instability. This could be a signal that the market was maturing as most of the companies did not pursue solutions that would give fast local benefits but instead initiated or continued priority projects intended to provide solutions to key management issues.
Company profile:
IBS is the leader in the Russian IT and consulting market. It was formed through the merger of IBS and Borlas Consulting Group. It is part of IBS Group Holding Limited, along with Luxoft. Its core lines of business span management consulting, implementation of business applications, IT outsourcing and IT infrastructure. IBS headcount is about 3,000 employees including over 1,500 certified consultants and professionals. IBS customer base includes 34 of Russia’s top 50 companies.
For more information on the company please visit www.ibs-company.com
