U.S. finance execs remain optimistic, envision growth, according to survey
During the recession, many companies were hesitant to buy new
computer hardware or upgrade software. For some, it was hard to
justify the investment when cost-cutting was the norm and aging
equipment was still working.
But an improvement in economic conditions, the need to provide
customers better technology, and heightened concern about
cybersecurity have led to a steady increase in information technology
investment over the past few years.
CPA decision-makers have carried a positive outlook on IT spending
in recent quarters, according to the Business & Industry Economic
Outlook Survey released Thursday by the AICPA.
Although IT spending projections declined slightly in the most
recent outlook, it is one of four survey indicators that remained
above 75. A reading above 50 indicates a generally positive outlook
(see full index below).
Meanwhile, more CPA decision-makers are optimistic about the U.S.
economy than any time in the past 10 years, according to the outlook.
While the momentum of executives’ optimism slowed overall in the most
recent quarter, respondents remain positive about revenue and profit
projections, especially when compared with first-quarter numbers in
previous years. And that, in part, is emboldening companies to spend
more on IT.
One company that is continuing to invest in IT on several fronts is
Alaska Air Group Inc., a publicly traded airline with about 14,000
employees and $5.4 billion in annual revenue.
Chris Berry, CPA, Alaska Air’s corporate controller, said the
company recognizes it has underinvested in IT and is reversing that
trend. The past three to four years, Berry said, “we’ve been focused
on our costs being competitive, so we put a halt on a lot of things,
including IT spending.” But spending on IT has doubled since then, he
said, with the focus on customer-facing projects such as mobile technology.
One example of the company’s innovation is its experiment with
biometric boarding passes, where a fingerprint serves as a way for
customers to board Alaska Air planes. The airline already uses
biometrics to allow customers entry to airport lounges.
“We’re in such a competitive industry that we have to focus a lot of
our IT spend on customer innovation products,” he said.
Berry also said the company has invested recently in computer and
email upgrades. It also has spent more on beefing up its cybersecurity
efforts. That has come in part through hiring new positions devoted
solely to data privacy and data security.
Berry said a strong local economy in Seattle, where the company is
based, gives him reason to expect the company to continue to grow. For
the U.S. economy overall, he expects slow but steady growth.
Planning to hire
Another finance decision-maker who expects his company to grow is
Luigi Buffone, CPA, CGMA, the vice president of finance for Avatar
Corp., which sells specialty ingredients to food, drug, and cosmetic companies.
Buffone said plenty of headwinds exist for both the global and
domestic economies, but he is hopeful that Avatar will grow, possibly
through acquisitions in the coming year. He said the company, which is
based outside Chicago, plans to hire and also to upgrade its technology.
“There are positions we’re looking to put in place to support our
growth initiatives,” Buffone said. “With the number of things we are
doing, there is likely to be a slight increase in IT spending. To stay
competitive, you have to have all the information you need quickly.”
Centennial Bank in Denver is doing solid business, according to Marc
Hendrikson, CPA, CGMA, the bank’s senior vice president for commercial
lending. While the bank remains lean, he said, it is in the process of
adding to its staff of about 140.
“We just hired a senior credit officer. That position didn’t exist
before,” Hendrikson said. “We’ve grown to the point where we need that position.”
He said clients for business loans are coming in because they held
on to machinery longer as they tried to wait out the recession. Now,
it’s time to invest.
“Everything they own is breaking, from boardroom chairs to their PCs
to backhoes,” Hendrikson said. “The deferred spending is roaring. They
were so careful for so long, and now they don’t have a choice.”
Centennial Bank, which has 14 branches and more than $730 million in
assets, is also investing in necessary infrastructure, including
improving its cybersecurity controls.
“The risk on the cybersecurity side has become so large,” he said.
“It’s not our money, it’s our customer’s money that the [hackers] are
targeting. … It’s a nonearning investment, but that’s the world we’re
in right now.”
Other highlights of the survey:
Neil Amato is a
JofA senior editor.
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