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Institional Investing
For decades, institutional investors in the aggregate
have been shifting from bonds into equities. For example,
in 1990, institutions committed 19.2 percent of total
assets to equities; by 1995, they allocated 34.4 percent;
by 1999, they allocated 47.0 percent of total assets
to equities. With the equity market downturn, this
allocation trend reversed in 2000 as equity holdings
decreased to 38.2 percent of the total by year-end 2002.
But, with the market recovery, the equity share of their
total assets rebounded to 44.5 percent of the total by
year-end 2005 (see Table 4 and Chart 5).
At the same time, the proportion of institutional investor
assets held as bond investments decreased from
44.6 percent of the aggregate in 1990 to 30.4 percent
by the end of 1999. Year 2000 started a reversal of this
downward trend (bonds accounted for 31.2 percent
of assets) and bond allocations increased to a peak of
38.9 percent in 2002, but have since resumed their
historic downward trend and, in 2005, bonds accounted
for 33.5 percent of total institutional investor assets.
from The 2007 Institutional Investment Report (CB-1400)
Corporate Performance Management
Currently, CFOs are preoccupied with regulatory
and compliance issues which have fuelled their
interest in BI. They see BI as a method for
accessing organisational data and to see how the
business is developing. BI is perceived as
providing fast answers to difficult past
performance questions from the full range of
enterprise stakeholders. This is largely backwardlooking
with a requirement for data completeness,
accuracy, transparency and accountability so that
regulatory demand can be met.
Regulatory and compliance issues will absorb the
primary attention of the CFO to the end of 2007,
as the CFO assumes a more operational,
controlling role. Compliance will take on a
flavour of corporate governance as it matures -
which includes ethics, sustainability and
corporate social responsibility. These are issues
for the whole Board rather than the CFO alone.
SEC chairman, Christopher Cox, wants markets
to self-regulate by providing investors with more
transparent data, rather than the SEC and other
regulatory organizations having to propose more
compliance legislation. Vendor CPM solutions
must support this.
CFOs will take a stronger leadership role in
delivering corporate change and will focus more
on strategic business development decisionmaking
such as Mergers & Acquisitions (M & As),
which they consider to be their real role. CFOs
will look to better manage a broader set of
environmental pressures such as economic
factors (e.g. rising energy prices, Middle East
unrest, outsourcing), demand management (e.g.
opportunities in the growth markets of India and
China) and risk (e.g. corporate pension fund
provisions). They will require CPM systems to provide information and decision support data to
help manage and control a larger number of
complex operational variables and to assist
strategic decision-making through the use of
predictive analysis and scenario building.
from Corporate Performance Management (BL-5550)
IT Spending in Manufacturing
Manufacturing is only slightly above the Health and Wholesale and Retail sectors in its IT spend per
employee ($3,287). Most of the Manufacturing segments are close to this overall average. The Electronics
Manufacturing segment is a stand out in this regard with an IT spend per employee of $7,426. This
difference likely relates to the nature of Electronics Manufacturing which is more electronically enabled than
other segments. The Electronics segment also has by far the largest proportion of IT employees to total.
As Manufacturing enterprises grow in annual revenue, there is an increase in spend per employee past the
$50 million mark after which the spend remains fairly constant between $3,000 and $4,000. As noted,
enterprises with between 201 and 500 employees step up their proportional spend, likely to graduate their
infrastructures from simple entry-level to more complex enterprise support. This same step-up is seen in
Chart B.3. While the IT spend per employee decreases as employee numbers grow to 200, past that mark
it increases and remains relatively constant at greater than $3,000 per employee beyond a size of 500
employees.
from 2006 IT Budget and Staffing Report: Manufacturing (IN-6121)
IT Budgets
A common metric for benchmarking IT spending is to view the IT budget as a percentage of
overall corporate revenues (or, in the case of public sector organizations, total operational
expenditures).
The percent-of-revenue metric has several drawbacks. First and foremost, it does not take
into account the differences between organizations in terms of their use of information
technology. Secondly, the percent-of-revenue metric may vary from year to year due to
changes in corporate revenues. In a period of revenue growth, the percent-of-revenue metric
will tend to appear smaller, as IT spending tends to lag corporate revenues. Conversely, in
periods of revenue decline, the percent-of-revenue metric may shoot up temporarily as it is
difficult to cut IT spending as fast as corporate revenues are falling.
We continue to report IT operational budgets as a percentage of revenue because it is a
popular metric and many organizations track this metric from year to year. Nevertheless, we
encourage the reader to combine this metric with other metrics in this study, such as
spending per user and spending per desktop, which tend to be more stable in terms of
measuring relative levels of IT spending. Evaluating an organization’s IT spending using
several different metrics, as provided in this study, will give a more complete view of IT
budget performance.
from IT Spending, Staffing & Technology Trends: Process Manufacturing Sector Benchmarks (CE-3901J)
Budgeting for the Adaptive Enterprise
An oft-claimed downside of working without budgets is that it becomes difficult to monitor performance on an ongoign basis and that controls and checks and balances disappear. Evidence from the research for this Report shows such fears are unfounded. On one level, high-performing organizations such as Svenska Handelsbanken monitor performance through a few vital metrics that are common enterprise-wide - sch as cost to income ratio. If a devolved unit strays outside of this ratio it triggers a response from the centre in the form of a request for an explanation or an intervention.
Several of our case organizations including Boston Scientific, Scottish Enterprise and Nordea hold formal quarterly review meetings at the senior level where the critical few financial - and non-financial - metrics are reviewed. These meetings enable close monitoring of financial performance but also mean that resources can be reapplied rapidly to contend with shifting market dynamics, rather than having to wait for the next round of budget negotiations. The quarterly session serves as a forum for both monitoring longer-term strategic goals and shorter-term financial performance.
from Reinventing Planning and Budgeting For the Adaptive Enterprise: Tools and Techniques for Reengineering the Budgeting Process (BI-3053)
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