Value, innovation new focus areas for CIOs

Industry developments will raise compliance awareness, notes KPMG report.

In a post-GFC world CIOs are looking to outsourcing to drive better value for money, but also want to focus on using IT to transform the business through innovation and productivity, a new survey has revealed. In a new report, From cost to value: 2010 Global Survey on the CIO Agenda, advisory firm KPMG has published the results of the CIO survey as part of the 2010 World Congress on IT in the Netherlands.

A questionnaire based on KPMG's technology agenda was distributed among 4500 CIOs from around the world, with a response rate of about 10 per cent.

The CIO agenda survey focused on IT value delivery, sourcing, risk and compliance, optimising IT costs, project portfolio management and personal priority setting.

The results were categorised into eight areas of priority with one to eight being: IT value, the CIO profile, the value of people, process improvement, risk and compliance, sourcing, collaboration and finally optimism.

"Organisations wishing to create sustainable value need to get a grip on the way all information is produced, collected and used, and they need to use IT to respond rapidly to the changing market and society," according to the survey.

"To a large extent, the daily focus of any CIO depends on the sector in which he or she operates. CIOs in the financial sector are comparatively more involved with daily operations, while CIOs in the manufacturing sector are looking more at ways to innovate and transform with the help of IT."

Even amid rapid technology developments, CIOs still rate people as a significant asset with 90 per cent of respondents saying "people" as a major component of IT value.

According to 56 per cent of respondents, cost optimisation should always be a part of an organisation's IT strategy as it is a competitive weapon. The focus is mainly on higher business process efficiency than on pure IT topics like IT staff and components.

CIO of Dubai-based global ports operator DP World, Yousif Almutawa, said his job is a lot more than "baby-sitting IT".

"IT needs to not only support but also inspire. We have to have a wide vision, be alert to how the world is changing, translate those changes into smart IT projects and communicate this to the business in simple and tangible terms," Almutawa said, adding a CIO must have a sharp eye for change.

"Leadership is one of the critical success factors if value is to be realised through IT investments. In the end success is not about technology but about the culture you create within an organisation. A culture in which people share ideas and co-operate with trust. A culture in which IT projects receive sufficient management buy-in and support. A culture in which there is also room to experiment."

Risk and compliance is higher on the agenda within the financial sector. Two factors that contribute to this are a high degree of regulation in the financial sector and the global financial crisis. CIOs are placing more emphasis on risk and compliance and sourcing with IT projects and less on IT value.

According to the survey, many CIOs are becoming more critical of their sourcing providers and some mentioned they are paying much more attention to price-quality ratios. A significant majority of respondents indicated they intended to increase pressure on sourcing partners.

The report was prepared by KPMG's Performance & Technology team, including Kumar Parakala, the company's Europe, Middle East and Africa IT advisor based in India and former President of the Australian Computer Society.

With online services growing rapidly, CIOs expect use of collaboration tooling to increase significantly over the next five years and cloud computing received significant interest with 72 per cent of respondents saying this as a good way of outsourcing IT functionality.

The future is not all doom and gloom with many CIOs optimistic about the future.

"They expect both their project success ratios and their returns on investment to grow in the coming years," according to KPMG.

Ian Hancock, partner in charge for KPMGs' national IT advisory in Australia, said the concepts raised in the survey are applicable globally and definitely relevant here with some 16 CIOs from the top 200 listed companies participating.

Hancock said staffing, sourcing, compliance and cloud computing are all at the top of local CIOs' agendas.

"Retaining people is a challenge for everyone and my view is to retain good people you need to be able to give them ways to develop new capabilities," Hancock said. "The message in the report is about innovation and the challenge for CIOs is to enable a career path."

On sourcing, Hancock said Australian organisations have been through a major wave of outsourcing and the next stage is a move to multi-sourcing where we will see smaller contracts aimed at creating better value.

"The real challenge of previous outsourcing was predicated on cost, but CIOs lost control of the environment they need to create value in. How do I continue to create value in environment that I've outsourced to a third party?"

Hancock said changes in the IT industry around the NBN, e-health, superannuation reform and cloud computing will usher in a new level of interest in risk and compliance for CIOs.

"All of those things are going to increase the level of regulatory requirement and scrutiny around data management," he said.

"Now the discussions around cloud computing is more about 'how do we get business value' than security and privacy."