Looking back one can think of three inflection points that intertwined technology and business: the advent of mainframes in the 1970s; the PC revolution followed by the introduction of powerful servers; the Y2K threat, which led to rethinking of IT infrastructure and introduction of enterprise resource planning (ERP) systems followed by open source and the outsourcing/off-shoring revolution of the 21st century.
A fourth inflection point has appeared on the horizon in the last five years due to the explosive growth in smart devices with multiple operating systems, the tablet, social media and declining cost of bandwidth with increasing speed.
This relentless march of technology has resulted in new terms, concerns, offerings and demands on Chief Information Officers (CIOs) including: big data, software as a service (SaaS), cloud-based, on-demand platforms for data and applications (e.g. Amazon EC2, Microsoft Azure, Rackspace – just to name a few), dirty data, data security/privacy concerns and regulation, 24/7 web-centric enterprises and the corresponding increased reliance on data-driven decision-making.
While these advances in both the business and technology environments have been widely recognised as having major impact on business success, there is also an undercurrent that CIOs and their IT teams have not delivered. The cumulative results of numerous surveys have found:
- Over half of all IT projects have been over budget and over schedule;
- More than 50 per cent have delivered less than half of the promise benefits; and
- Over three quarters of business users cannot even confirm that IT projects have been successful.
Comments being heard in the C-Suite include: “If we want to get something done, IT is the roadblock – all they say is either ‘no’ or ‘next year’. We can’t run a business like that and we do not have an unlimited budget to get things done.”
On the other side are the embattled CIO and CTOs who lament the fact that no one seems to understand the challenges they face from an ever changing technological landscape, limited budgets and continued shortage of qualified IT people in North America. This shortage is understandable as people are deterred from considering an enterprise IT position when all they seem to hear about is outsourcing or offshoring. In such a job market, developing apps and games would naturally seem to be a better career choice.
So, it is no surprise that CIOs are under relentless pressure to show their value-add for the business and limited budgets. They are asked to balance three key business imperatives: IT driven innovations that improve both the customer and employee experiences; aligning the IT strategy to the business strategy, while minimising security risks; and leveraging data residing in different systems to provide information that is accurate and thus actionable – the notion of a “single version of the truth”.
The relative degree of importance of these three imperatives varies across different types of businesses. For example, Amazon wants its e-Commerce platform to deliver fast searches across the thousands of products it sells while providing an instantaneous customised experience for the user by showing: “Customers Who Bought This Item Also Bought….” In contrast, banks’ customer service requires physical devices, like ATMs, in tandem with very secure internet-enabled banking platforms. Meanwhile, a fast-growing restaurant chain might prioritize leveraging social media and developing an ERP system that is scalable for expected growth.
So what does the embattled CIO to do? Well, it is clear that this battle has to be fought on at least two fronts: at the functional level and at the personal level.
At the functional level, at least seven actions need to be undertaken to build trust and demonstrate that IT as a function adds business value.
- First and foremost, the CIO needs to bridge the “knowledge” divide that exists between the CIO and the other members of the C-Suite who may have limited IT knowledge. If members of the leadership team do not even understand the CIO’s message then there is little chance of having an intelligent conversation about the role of IT in delivering on business strategy.
- Second, the speed of innovations requires a continuous assessment of the IT assets (hardware, software and people) and on-going projects against the ever changing business needs. Such an assessment is critical to having an informed conversation about IT budgets.
- Third, the CIO must be able to align the current and emerging technology advances to the strategy of the business. This “radar” function is crucial to maintaining a competitive edge against new market entrants with deep pockets.
- Fourth, the CIO must demonstrate that the IT team can take on a large initiative and then chunk it into small digestible pieces that can be delivered on time and within budget. This will go a long way towards building trust
- Fifth, the CIO must help meet the analytical needs of the enterprise. It is not the role of IT to be the gate keeper of data and reports; however, IT does need to empower business users to have 24/7 access to data and provide those users with the right tools for analysis.
- Sixth, the process for budgeting for IT as a cost centre needs to be changed to viewing IT as a shared service that has no budget of its own except for its team. The CIO would continue to be the custodian of all IT spending across the business, but the budget will be jointly determined with the members of the leadership team.
- And, last but not the least, the CIO must be able to demonstrate the performance of his team – in terms of both the services it provides and the projects it delivers – to demonstrate effectiveness and customer satisfaction via metrics and result-based drivers.
At the personal level, the CIO of the future needs to get out of the technology cocoon. Gone are the days when all that was expected of a CIO was knowledge of technology. What matters today is also having business knowledge.
A CIO who is viewed as having tech savvy but lacking in business acumen has a limited future. He or she needs to balance the adoption of technological advances with the readiness of the enterprise to absorb these changes. The CIO needs to champion the technology, not because it is good for IT but because it’s good for the overall business. Most importantly, the CIO either needs to be a positive influence on the achieving business goals or needs to get out of the way.
So what does future promise for CIOs and their IT teams? All we really know is that technology is going to continue to be a key driver of business success and that both the enterprise and IT function are going to susceptible to disruptive innovations. Only those CIOs who demonstrate both the willingness and the courage to change to meet evolving business needs will succeed. It is indeed a new paradigm – again!
Originally published in The Bottom Line, February 2014
About Dr. Vijay Jog
Vijay Jog Ph.D. is the Founder and President of Corporate Renaissance Group (CRGroup) – a global firm that specializes in improving enterprise performance through innovative technology driven solutions. He is also a Chancellor Professor at Carleton University where he teaches at the Sprott School of Business. This article is based on his 25 years of experience in dealing with technology and his interactions with CEOs/CFOS and CIOs.