Big changes are brewing for today’s CIOs, as the days of internally focused cost cutting seem to be numbered. There is only so much any organisation can save through infrastructure efficiency and commodity panel contracts. The next big wave is likely to focus on productivity and business outcomes. Many CIOs are already taking advantage of opportunities offered by this broader remit, while others are still caught in a technology-based cost-cutting spiral.
For today’s IT leaders, the winds of change are again blowing. Tech-savvy staff and external customers are creating new opportunities, however there is a growing realisation that IT needs to look beyond its current role as an administrative support function. Today, many CIOs are members of the senior executive team. CEOs are looking to them to play their part in driving innovation and corporate productivity.
However, for many organisations, there is a hard mould to break, given the many years spent defending a technical remit built around equipment, configurations and coding standards. Next year will mark the 10th anniversary of a milestone article in Harvard Business Review written by its then editor-at-large, Nicolas Carr. Claiming “IT doesn’t matter”, Carr shone a bright light on prevailing management sentiment. His article impacted future discussion about IT in such a fundamental way that today it is still being raised and hotly debated. Now, as we move through the second decade of the 21st century, it is time to again ask whether these views are relevant to enterprises in the future.
In 2003, Carr’s article reflected a view that IT’s transformative ability had run its course. Information Technology, he argued, had become a commodity infrastructure similar to utilities like electricity, railways, roads and water. IT therefore needed to be managed as a commodity service, rather than as a source of innovation and change.
“When a resource becomes essential for competition but inconsequential for strategy” he said, “the risks it creates become more important than the advantages it provides.” …. “With opportunities for gaining a strategic advantage from Information Technology rapidly disappearing, many companies will want to take a hard look at how they invest in IT and manage their systems”.
Carr’s article made three recommendations about future IT strategy:
Spend less on IT
Follow, don’t lead
Focus on vulnerabilities not opportunities
Over the past ten years, changes in the wider world economy have put IT budgets under significant pressure. This has driven an even stronger focus on cutting IT costs through common panel contracts, outsourcing and standardised commodity purchases. In many of these contracts, price has been a big differentiator in assessing value for money, particularly in areas of common IT infrastructure such as PCs, printers and storage.
Many CIOs may have found comfort from the “follow, don’t lead” principle, by pointing to business managers when it came to accountability for driving change and thought leadership about innovation. However, looking forward, IT cannot get off so lightly.
Generational change is bringing new attitudes to technology and new energy to leveraging the opportunities it may offer. In the past CEOs may have dismissed technology by remarking, “I am not an IT person”. Today, CEOs are leading the charge - looking for iPad connectivity and demanding improved mobile facilities. Empowered staff members are already armed with an array of leading edge technology and are looking for ways to make use of these facilities in the workplace. Staff are now turning to internal social networks to sort out technology problems rather than waiting for helpdesks to deal with their problem.
Our traditional ideas of IT service management might be about to face some disruptive change, but this also opens new opportunities for IT to deliver innovative solutions to a willing user base. An excessive focus on commodity cost containment will just create an internally directed race to the bottom. Meanwhile many companies including Apple, Google and Facebook have profited handsomely by taking a bullish position on bringing to market appropriate technology-based innovation. Community attitudes are changing fast, particularly in areas such as mobile computing and social networking. Big Data is challenging traditional thinking about corporate competitiveness and is questioning long-held views of customer intimacy.
In response to changing market forces, the IT function needs to find ways to be more responsive and flexible in delivering technical solutions. Traditional methods of bespoke system development tend to force CIOs to wait for specifications and then embark on a long, costly and risky program of system development. Meanwhile cloud services and packaged solutions are able to offer viable alternatives based on proven solutions that can be quickly deployed. However this can be a hard sell to business managers who have service expectations built around unique solutions and non-negotiable business requirements.
Tomorrow’s CIO role is promising to be less restrictive and less internally focused, but it will be no less complex. We live in interesting times.
Kevin Noonan is research director at Ovum.
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