Assessing the Level of Information Technology (IT) Processes Performance and Capability Maturity in the Philippine Food, Beverage, and Tobacco (FBT) Industry Using the CobiT Framework

Article excerpt

INTRODUCTION

The advent of information technology has significantly influenced and changed how businesses are being managed and monitored today (Hunton, Bryant & Bagranoff, 2004). It has brought both positive and negative impacts to the business world. As such, a term double-edged sword is often used to describe it.

To ensure smooth management of the new business set-up, the concept of corporate governance was redesigned to include information technology as a major part of it. New governance and internal control frameworks came up just for this concern to be addressed. This resulted to an increased awareness that IT governance is a major ingredient in achieving every organization's goal of value creation.

In spite of the availability of new governance and internal control frameworks, many organizations still compromised their going concern because of poor enterprise- wide governance. The collapse of Enron in 2002 and the recent 2009 Satyam scandal in India are among the proofs of this predicament. Much more alarming is that in 2008, Satyam was the winner of the coveted Golden Peacock Award for Corporate Governance under Risk Management and Compliance Issues. Because of this, the awareness for both corporate and IT governance must be heightened and taken more seriously.

THE STATE OF 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).

[FIGURE 1 OMITTED]

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. In comparison, beverage sales accounted for $1,035.4 billion in 2005, which represents 25% of the industry value. However, the increasing global population will drive demand up, while rising income levels in many economies allow increased spending on added-value processed, packaged, and luxury items in this category. The global consumption volumes of tobacco are steadily falling, as the health risks become more widely understood, although in some countries, such as India, volume growth remains positive (Datamonitor, 2006).

But looking forward, 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 (Datamonitor, 2006).

In the Philippines, the FBT industry belongs to the industrial sector. There are 23 publiclylisted companies under the FBT industry (Philippine Stock Exchange (PSE), 2009). It is a highly regulated industry particularly the tobacco companies. A study by RNCOS in New Delhi on September 13, 2008 on the Philippine FBT Market Forecast until 2011 showed the patterns in consumption behavior in the different food segments. The study indicated five key results about the sub-industry: (1) because of the strong increase in consumer expenditure during 2001 to 2006, a rise of 7.5% is also expected from 2007 to 2011; (2) the increase in the working hours of employees, increase in number of employees and diverse eating habits has lead to a high consumption of readyto-eat meals; (3) the demand for organic food will increase at a growth rate of10% to 20% because of the growing middle class population; (4) an increase in disposable incomes and demand fro imported alcoholic beverages; and (5) there is an inadequate water supply and healthy drinking concerns that have resulted in the growth in the bottled water industry (Dy, Ha, Gan & Alba, 2009). …