KPMG recently surveyed 450 CIOs from around the globe to ascertain their agendas for the coming years, what they perceive to be the primary obstacles faced as well as the areas of opportunity. Bryan Cruickshank, global leader for Technology Advisory at KPMG was point man for that project. Bryan trained as an auditor and has been a partner in the Advisory practice for over 10 years. During his time at KPMG he has been responsible for the creation of the firm’s Enterprise Risk Management Unit and its Financial Sector Advisory and IT Advisory businesses in the UK. His background is in risk, controls, operations and technology and he has advised some of Europe’s largest businesses on their technology-enabled transformation.
CIO Update interviewed Bryan to find out what he learned from the survey.
CIO Update: How is the role of the CIO changing?
Cruickshank: The overall theme of our report was an increasing focus amongst CIOs on delivering value from IT investments. The business turmoil over the last few years has clearly brought renewed focus to organisational IT strategy. CIOs are looking for both value in monetary terms and in the way IT can enhance an organisation, and even add to the top-line.
This came through strongly in the report with over two thirds (68 percent) of CIOs highlighting ‘enabling innovation’ and ‘competitive advantage’ (63 percent) as key objectives for their IT investments. Value for money, a staple CIO consideration, was also high on the agenda with over half (56 percent) of respondents saying cost optimisation should always be part of the IT strategy.
CIO Update: Your report seems to indicate that CIOs are too focused on the day-to-day. If so, what shift in emphasis would you like to see for the CIO?
Cruickshank: Day-to-day focus amongst CIOs differed markedly in our research depending on sector; for example manufacturing CIOs spend more time daily on business transformation than their financial services (FS) counterparts. This isn’t due to a difference in vision but simply the circumstances facing the different sectors during the recession. Operational concerns were found to take up more of the FS CIO’s day, presumably due to the increasing risk and compliance pressure facing their organisations. This may change going forwards however, as FS CIOs get a better understanding of the inherent data opportunities that can come from strategic compliance activity.
While there are clear sector differences, it appears that CIOs have the right overall direction of travel. They are thinking about innovation, transformation and really using IT to strategic advantage. They are also very positive about their roles going forwards with over 80 percent expecting an increase in project success ratios and 70 percent expecting increased ROIs. Encouragingly a vast majority (86 percent) also expect organisational dependency on IT to see an increase, or major increase, in the next few years — indicating that the CIO’s organisational importance will continue to grow. Having said this, the individual CIO’s success will rest upon his or her ability to maintain importance within an organisation.
To do this they must sustain their position as the ‘go-to’ person for major technology questions, developing the knowledge and relationships to make themselves invaluable. Awareness of emerging technologies such as cloud computing and its impact on organisational IT, for example, will be an important area going forwards.
CIO Update: Can you provide some examples of how the CIO could assist in driving innovation?
Cruickshank: In our report over two thirds (64 percent) of CIOs saw IT’s role as enabling and driving business innovation. Clearly CIOs around the world are increasingly thinking about innovation as an important part of what they do. And yet we see a marked difference between the day-to-day focus of CIOs in different sectors. Financial sector IT people, for example, spend much less time focused on transformation than those in manufacturing.
As delivery models evolve for business IT, what innovation ‘looks like’ will undoubtedly change. For example, in the financial sector in the last ten years, competitive advantage has been driven by the development of innovative proprietary technology such as its use in electronic trading. Going forwards it is likely this focus on developing cutting-edge proprietary IT will change. The growth of cloud computing, for instance, will lead to greater standardisation and less differentiation in what can be done at an in-house technology level.
In this case, the ability to use cloud infrastructure and applications to bring new products to market rapidly is just one area where new competitive advantages may be created. Likewise, increasing risk and compliance requirements in FS presents a double-edged sword for many organisations. Strategic thought and innovation in data management, for example, could help drive new customer insight and competitive advantage.
CIO Update: What are some of the ways in which the CIO can increase productivity?
Cruickshank: An important opportunity for CIOs to increase productivity comes with the growth in breadth and function of collaboration tools available to today’s organizations. This is an area firmly on CIO’s radars with almost half expecting collaboration tooling to increase internal dynamism and 40 percent expecting it to have a major overall impact on organizations.
Interestingly, younger professionals prefer the virtual interaction offered by such tools. For them, in-person meetings are restrictive as they don’t allow the instant input, interaction and sharing of ideas that younger generations are used to in their everyday lives. For this reason face-to-face meetings will become the exception and not the norm. This is a cultural shift and comes from the desire to achieve more out of meetings in a shorter space of time. CIOs can augment this trend by investigating and experimenting with these technologies in their organizations.
The challenge here will be persuading those with the purse strings as to the benefit of collaborative technologies. The perception has always been that big wins come from large exciting projects, so executives may not recognize that great benefit could be created through relatively simple services such as collaboration environments.
Also, it is difficult for professional IT managers to articulate the business case of these technologies. Although intangible, the benefits are real and companies need to be willing to watch consumer trends and then pilot some of those simple solutions for employees. Much of it will not work out but enough will be successful to make the projects — and the knowledge gained from the process — worthwhile.
CIO Update: How has outsourcing been changing in recent years?
Cruickshank: Sourcing has been an integral part of organisational IT strategy for many years and has contributed significantly to performance. The first wave of outsourcing activity seems to have reached its end, as this theme was barely mentioned by respondents. It appears sourcing has become part of the day-to-day activities for most IT departments and buyers have increased significantly in maturity.
CIO Update: How is this influencing the CIO?
Cruickshank: Outsourcing and offshoring of processes, not only for IT but also HR, finance and other business unit processes is set to continue, as will organisations establishing their own captives on offshore locations. The challenge for these initiatives is not only to look at short-term cost optimisation, but also at long-term value creation.
Most respondents said they expected to increase their contract volumes over the next five years, but it looks like the traditional sourcing relationship is set to change. The majority of CIOs are becoming more critical of their sourcing providers, mentioning that they intend to pay much more attention to the price-quality ratio and increase pressure (almost 60 percent) on their sourcing providers. This indicates increasing buyer maturity and a realisation that sourcing must show tangible results and add value. The report also suggests greater cost awareness with over 71 percent of CIOs using their own audits to monitor sourcing providers’ working methods. It is clear the days of ‘set and forget’ outsourcing are truly over.
For more information The KPMG survey report, “From Cost to Value: Global CIO Survey on the CIO Agenda”, is available online at: http://www.kpmg.nl/Docs/Corporate_Site/Publicaties/From_cost_to_value.pdf.