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CIOs can't focus on customer-facing activities

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4th Jun 2009
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The elephant in the room for CIOs is that the majority of their budgets are being swalled up by internal projects rather than being spent on customer services. But there is also a shock in store for customers who might care to complain about shoddy treatment in the financial services industry...

CIOs don't have the time or the resources to focus on customer-facing projects because a major chunk of their IT budgets is being swallowed up by internal IT operations and maintenance and support expenses, according to research.

The InformationWeek Analytics Global CIO Report, which surveyed 861 IT decision makers worldwide, found that more than half (57%) of respondents considered consolidating global data centres to be a very important goal, while almost a third (28%) are driving global technology and process standards.

"While CIOs around the globe have many pressing initiatives to deal with - including the economic downturn - they're not going to be able to make much progress on any of those until they deal with the big, smelly and increasingly dangerous elephant in the room: the fact that an excessive portion of their IT budget is being swallowed up by internal IT operations and maintenance and support expenses, leaving only crumbs for innovative new customer-facing projects," said Global CIO senior vice president Bob Evans.

"Across industries and across the globe, CIOs are working desperately to find ways to get rid of that out-of-control elephant and begin to lower the cost of infrastructure."

Getting rid of the elephant

The three top priorities cited by CIOs were:

  • Working to spend less money on internal IT issues and more on external customer-facing projects.
  • Developing and refining new ways to capture and communicate the business value of IT efforts and expenses on global projects.
  • Shifting the internal outlooks of worldwide IT organisations to reflect global perspectives rather than domestic ones.

The CIO is also still being overlooked when it comes to decision-making. Some 37% of European firms polled stated that the CIO is consulted only after most big business decisions are made. Meanwhile, financial Services ignore customer complaints in favour of bully tactics. But if you've ever wondered whether it's worth making a complaint when you've received bad service, take heart from the fact that more than half of those who complained to the Financial Ombudsman Service (FOS) in the last financial year won some compensation.

The FOS annual report chalked up a 14% increase in the number of disputes it decided, a record of 114,000. Of these, 57% went in favour of the complainant, a far higher proportion than in the past. "The financial world is a very different place now from a year ago and the Ombudsman, like everyone else, has been affected by the economic turmoil. For us it has involved dealing with a significant increase in the number of complaints arising from the impact of the worsening financial climate," said Sir Christopher Kelly, chairman of the Ombudsman service. "As businesses tighten their belts and the credit crunch leads to increased financial difficulty for many consumers, we are gearing up to deal with further volatility in complaint volumes.”

The topics producing most complaints were credit cards, payment protection insurance, loans and consumer credit. The six biggest financial services groups generated half of all the disputes the Ombudsman received. There was an an 11% rise in new complaints about mortgages, particularly about the handling of arrears, while complaints about payment protection insurance nearly tripled to just over 31,000.

Waving the white flag

Credit card companies were on the receiving end of a great deal of customer unhappiness. The FOS report said the number of complaints about credit cards rose 32% to nearly 19,000. One reason for this was the increase in default charges applied as well as anger that the card company had suddenly increased their interest rate, in some cases by as much as 10 percentage points. Interestingly, though,  the credit card firms don't seem to have the nerve for a fight when their customers stand up to them. "Almost all the credit-card companies subsequently chose to settle the complaints that had been brought against them, rather than have our investigation continue," reported the FOS.

"As part of our investigation into these complaints, we issued questionnaires to the credit-card companies involved to obtain information about - among other things - the actual assessments of risk that had been carried out in relation to these customers and how the new rates had been calculated.”

But other parts of the financial services industry are prepared to try and bully their customers into submission. Last month the Chief Ombudsman, Walter Merrick, complained that some firms were actively trying to stop dissatisfied customers taking their complaints further by being deliberately unhelpful. This shows no sign of stopping. “There is still a widespread problem involving businesses rejecting complaints that they know, or should know, we will uphold. This only adds to the inconvenience suffered by consumers,” he said. "What is new and very disappointing is that, of the complaints we have handled, we have found a record proportion - almost six out of 10 - to be justified.

"Businesses should usually be able to settle justified complaints early on, so we would normally expect only a minority of the complaints referred to us to turn out to have been justified. This has not been the case during the year under review."

Merrick has taken a dim view of the financial services industry's attitude to its customers. He said: "Some in the financial services industry - currently facing significant business challenges - appear to be taking the jaundiced view that having a large number of complaining customers is just an unfortunate fact of life. So they seem to be geared up simply to dispose of complaints at the minimum cost, and with minimal attention to the individual facts and circumstances."

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