Organic growth and pursuing opportunities within their own countries are key to driving success for Technology Fast 500 companies.
Posted May 4, 2005
Three out of four CEOs surveyed in a recent study are either "very confident" or "extremely confident" about continuing their company's current expansion rate. Deloitte's Technology, Media & Telecommunications Group (TMTG) conducted the study, "Deloitte Technology Fast 500," which measures the fastest growing technology companies based on revenue growth. Of the CEOs who comprise the Fast 500 list, approximately 300 responded and were surveyed during the first quarter of 2005, according to Tony Kern, deputy national managing principal of Deloitte's U.S. TMTG.
CEOs, according to the study, are more confident of achieving growth now than at any time in recent years. Interestingly, 60 percent responded they plan to achieve that success organically or internally, not through mergers or acquisitions as many have done since the dot-com era. Executives are focusing on fundamentals like product development and innovation. Also, more than half of CEOs surveyed--60 percent--are pursuing opportunities in their home region, rather than abroad. The study also found that the use of IP-based applications is steadily expanding beyond email and into customer-facing applications and supply chain management. Sixty percent of the companies surveyed consider such applications "very important" or "extremely important" to their strategic plans.
"This survey showed a big switch to IP-based services, whereas a year ago the big technology was wireless," Kern says. "I think the main reason is that companies [think they] need to follow the money. IP, VoIP, and everything around IP is hot right now. All of our surveys show it's on the mind of corporations."
The survey divided IP-based applications into three tiers: communications; sales, distribution, and CRM; and supply chain management and regulatory compliance. The study reports that 100 percent of those using IP are using it for communications (email and messaging) in North American and Europe, and 73 percent in Asia Pacific. More than half of companies (60 percent) are using IP-based applications for sales, distribution, and CRM. However, fewer than half of the companies surveyed use IP-based applications for supply chain management and regulatory compliance, although penetration levels are rising.
CEOs in North America and Europe have slightly different concerns than those in Asia Pacific. In North America and Europe, CEOs were most concerned about competition from India and China, which was followed by concerns about global terrorism. Gaining access to capital to support their aggressive growth plans also was cited as a concern. CEOs in Asia Pacific were also most worried about increased competition from emerging powers like India and China, but their second concern was product advancement and innovation.
The biggest challenges to growth, the survey reveals, include finding, hiring, and retaining qualified people, a challenge that is only getting worse as more experienced baby boomers retire from the workforce. Ninety-four percent of the CEOs surveyed expect to increase head count this year, with more than four out of 10 planning to grow by at least 25 percent. This was underscored by the fact that the majority of North American companies also place a strong emphasis on hiring qualified sales people, even stronger than customer loyalty. CEOs in Asia Pacific and North America have made it their top operational priority to find, hire, and retain qualified employees. CEOs in EMEA have done the same, although they place equal emphasis on developing a sales and marketing strategy.
"The global workforce is starting to tighten up again," Kern says. "I think the main reason for that is, product life cycles are becoming much shorter than they were five years ago. To keep generating new products and new services, you have to keep the very best people, so finding and retaining them is becoming very critical."
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