Information Technology Maturity Index and Profitability in the Philippine Food, Beverage and Tobacco Industry

Beginning of article

1. INTRODUCTION

Information technology has reshaped the way businesses are being conducted nowadays. From the operational level, to the middle management, and to the top management level, the benefit IT brings can never be disregarded. It has become a potent resource in creating value to organizations and in translating key strengths to competitive advantages. Because of this, a new member is born to the organization's strategic group--the chief IT officer (Hall, 2008).

Because of this development, as cited by Simonsson, Johnson & Eckstedt (2010), defined structures, processes, and relational mechanisms for should be established to properly govern and manage IT resources (Van Grembergen, De Haes & Guldentops, 2004). This is the concept of IT governance. According to the IT Governance Institute, established by the Information Systems Audit and Control Association (ISACA), IT governance is the responsibility of the board of directors and executive management. It is an integral part of corporate governance and consists of the leadership and organizational structure and processes that ensure an organization's information technology sustains and extends the organization's strategies and objectives, adding value to shareholders.

Focusing on the Philippine FBT industry, this study is directed toward determining whether or not the perceived benefits of IT governance can be manifested in profitability measures.

2. LITERATURE REVIEW

Most research papers about IT governance in the Philippines dealt with assessing the IT maturity indexes in a particular industry. Most of them, except that of Tugas (2009), did not make use of a comprehensive assessment of their chosen industry. This was evidenced by the number of their respondent-companies as against the total number of companies in their chosen industry.

2.1 The FBT industry

Over the last few years, the global food, beverage and tobacco (FBT) industry group has exhibited modest growth, with growth particularly low in the tobacco and beverage markets. The industry group generated total revenues of $4,140.3 billion in 2005, this representing a compound annual growth rate (CAGR) of 2.9% for the five-year period spanning 2001-2005 (Datamonitor, 2006). The leading revenue source for the global FBT industry group is the sale of food products, which generated total revenues of $2,634.3 billion in 2005, equivalent to 63.6% of the overall industry value. The global FBT industry group is expected to accelerate from its current value growth position. With an anticipated CAGR of 3% over the 2005-2010 period, the industry is expected to reach a value of $4,805.5 billion by the end of 2010. The drivers operating during the last five years are set to persist for the next five …