CIOs must get the balance right between utility and innovation in order to secure influence in the future, according to new research from PA Consulting Group and Harvey Nash, a global professional recruitment consultancy and IT outsourcing service provider.
The 2011 survey of over 2,500 CIOs and IT leaders reveals that CIOs are playing an increasingly influential role within their organizations with 50 percent now sitting on operational boards or management teams. However, the main demands on them remain cost saving, increasing operational efficiencies and delivering consistent and stable IT performance to the business.
“The challenge for CIOs is to not only find the right balance between utility and innovation for their organization, but to also recognize that achieving equilibrium is a moving target,” said PA Consulting Group’s David Elton, an IT and change management specialist, in a statement. “There is constant change in the business environment and in business appetite for risk. Outsourcing is increasing, cyber security is a growing concern and cloud is a potential game changer, albeit with a lot of firms in wait and see mode.
“All of these trends are creating an opportunity for CIOs to innovate and collaborate, but it also means CIOs constantly have to adjust the utility and innovation balance in their organizations. But for those that get this balance right, the prize is real influence in the business, rather than simply being seen as facilities managers.”
Balancing risk and opportunity
Striking the right balance is a challenge. The top three issues that management boards are asking CIOs to address are: saving costs (67 percent), increasing operational efficiencies (65 percent) and delivering consistent and stable IT performance to the business (64 percent).
An excessive focus on utility activities can undermine the pursuit of technology innovation.
Focusing on either extreme of the utility-to-innovation continuum is not an option for ambitious CIOs. Those that simply focus on utility will run the risk of becoming the equivalent of facilities managers as work is increasingly outsourced. Meanwhile, those pursuing a strategy of innovation must remember the importance of keeping the lights on: It’s all very well to offer the business the latest social networking app, but if core business operations are hampered by IT failure, the CIO’s career may be over.
The balance between utility and innovation is different in every industry. CIOs in city markets lead on innovation with 77 percent focused on innovation, with retail (75 percent) and financial services (71 percent) close behind.
At the other end of the spectrum, less than half of CIOs in pharmaceuticals are focused on innovation, and less than quarter in both construction and engineering are innovation focused.
Cloud remains contentious
In 2010, 51 percent of CIOs were considering using cloud computing. In 2011, there is still a mixed picture of use. Despite the much cited benefits, just eight percent of organizations that have considered cloud have discounted it for their organization and only 22 percent of CIOs are exploiting cloud for core business processes. CIOs are still resolving where cloud can and cannot add value as part of their business model.
“Driving innovation whilst continuing to provide core technology utility services to the business will be increasingly demanded from CIOs as we move out of recession,” said Albert Ellis, Harvey Nash’s CEO, in a statement. “Securing the company’s data and technology from cyber attacks, while at the same time exploiting the growth of social media for business use will be the key challenge facing CIOs in the coming decade. And yet we are increasingly seeing these hybrid CIOs on our short-lists, many of whom see the CIO role as a stepping stone to something much bigger.”
Luckily, an organization’s position on the continuum is not fixed. In order to get the balance right, CIOs need to:
- Foster a shared understanding between IT and the business of the issues the CIO should be prioritizing. CIOs need to look ahead at the internal and external factors that will determine these issues and create a shared vision and understanding.
- Consider the current and ideal position of their organization on the utility-to-innovation continuum. CIOs should recognize that, before they can innovate successfully, they need to earn trust by getting the utility component of their activities right
- Ensure their team can accomplish both utility and innovation activities concurrently and flexibly. These different types of activity require different approaches, skills and attitudes. For example, any kind of innovation requires an open culture of collaboration where the business is willing not only to take a risk but also to accept the possibility of failure.
Ultimately, an organization’s position on the continuum will reflect a series of movements as CIOs react and adapt to the forces shaping their environment. Those that get the balance right will ensure they are on the path to increasing influence in the business, rather than being simply facilities managers.
About the survey
The survey was conducted online by PA Consulting Group and Harvey Nash between November 18, 2010 and April 4, 2011 among 2,575 senior level IT professionals from businesses across the world. This is the 13th in a series of annual CIO surveys conducted to identify emerging trends and issues in IT leadership that has firmly established itself as the industry benchmark over the years. To request a copy of the PA Consulting Group and Harvey Nash survey, visit www.paconsulting.com/ciosurvey2011.