Why The CIO Role Is Under Fire
Posted by R “Ray” Wang, Nov. 22 2010, 2:08 pm
Less than three years ago, the mighty CIO controlled his organization’s destiny by shepherding multi-million dollar IT projects and ruling technology strategy with an iron fist. Business leaders had to pay homage to the IT team in order to implement any new business capability. IT leaders believed they led massive business change within organizations via technology adoption.
Unfortunately for many CIOs, those days are just fond memories. There are three forces of change challenging the authority, credibility and role of today’s CIO.
• Declining management influence stems from a drop in credibility and gains in consumer tech.
- Many CIOs have lost control in guiding how technology is used in the enterprise because the world of consumer tech has out innovated enterprise class technologies. For example, when corporate email goes down, frustrated employees get around IT via Gmail, YouSend It or Skype. When business units seek new functionality in areas such as incentive comp, strategic HCM and email marketing, they flock to SaaS apps and IT discovers purchases after the fact.
• Burdens of legacy technology place ball and chains on organizational agility.
At the same time, the technologies ushered in during the Y2K investment rush no longer meet the organization’s needs. One example, packaged applications and the best practices designed in the late 80’s often were implemented in the late 90’s . These applications often support antiquated models of functional fiefdoms and impede any progress in optimizing cross-functional business processes such as order to cash, incident to resolution, or hire to retire. Despite vendor assurances, these systems are so rigid that any changes or customizations often creates costly scenarios that require IT to expend significant resources while impeding future upgrades. It’s as if these systems were put in and concrete poured around it. Systems must adapt to how people work. Form must follow function.
• Pace of technology advancements outpaces ability to adopt.
Finally, organizations find the pace of advancement in technology to be outpacing an organization’s capability to make changes. Take the world of enterprise apps. It’s essentially a sunk cost theory. Many organizations have spent the past decade implementing end to end business systems and trying to get users to adopt these technologies. Unfortunately, just as users become comfortable, upgrades appear that change how users use the technology and regulations are enacted which negate the current system – all leaving companies and users behind as they struggle to keep up with the next advancement. It may be more effective to rip it out and start from scratch. Another example, in most three-year IT plans from 2008, most organizations could not have factored in the pervasive impact of social media.
The Bottom Line: Succeed By Adopting A Next Generation Point of View
Getting out of the firing line will not be easy. Today’s CIOs spend up to 70% of their IT budget and resources struggling to keep the lights on. Instead of drowning under the three macro forces of change, CIOs must refocus their priorities and adopt a next generation point of view. In a recent Constellation Research, Inc. survey of 83 global CIOs, 29 next generation CIOs identified seven fundamental shifts in thinking that helped transform their ability to succeed in the CIO role. These seven areas include:
1. Pace of change. Assume that change will not only be a constant, but also accelerate over time. Successful CIOs focus on delivering agility in business models and business processes.
2. Planning assumptions. Expect today’s static planning to transform itself into iterative and collaborative approaches. Three to five year plans can’t account for or incorporate the entry of disruptive technologies. Plans transform into living documents and business processes adopt agile methodologies.
3. Viability factors. Realize that yesterday’s design points shift from amassing tremendous size and scale to crafting innovative and nimble approaches. Size and scale no longer equate to viability. Organizations require new business models to support flexibility and viability.
4. Success criteria. Re-earn a seat at the board room table by focusing on business value and business impact. Technology is an enabler, not the complete solution. Successful projects can no longer be measured by whether or not the technology is adopted.
5. Change management. Incorporate the latest techniques to improve user adoption and create sustaining change. The human factor remains the hardest barrier to overcome. Adoption of both traditional and disruptive technologies will require that CIOs elevate the priority of change management to an essential category.
6. Technology acquisition. Consider new deployment options to reduce capital expenses. Shift capex to opex. As budgets shift to operating expenses, CIOs can free up capital for much needed optimization projects that can fund future innovation.
7. Innovation path. Focus priorities on identifying areas to create disruptive business models and adopt emerging technologies. Learn to fail fast and move on. Iterative approaches no longer provide the key payback times required for competitive advantage.
Your Point Of View
Ready to make the shift and regain some lost ground? Got a story to share on how you’ve turned the corner? Looking for new techniques to drive the business value discussion in the board room? Comment here.
R “Ray” Wang is a Principal Analyst and CEO of Constellation Research, Inc., a next generation research firm that focuses on disruptive technologies and legacy optimization.