Research: Digital creates CIO innovation opportunities but challenges remain

A recent survey of 3,352 CIOs and IT leaders sheds light on important aspects of the CIO role and describes CIO perspectives on areas such as digital disruption and cloud. Most important, the study offers proof points of the conflicting demands that face CIOs and IT during this time of digital transition.

The research is a joint project of recruiting firm, Harvey Nash, and consulting firm, KPMG.

Research summary

CIO operational priorities. The top three CIO priorities are:

  • Increasing operational efficiencies
  • Improving business processes
  • Delivering consistent and stable IT performance to the business

In other words, the CIO is responsible for ensuring that business systems run smoothly and efficiently at low cost. Further down the list, we see points such as improving time to market, enabling change, and other attributes associated with truly innovative CIOs.

These priorities demonstrate the tension between CIO aspirations to innovate and practical realities of running IT and “keeping the lights on,” to use a familiar expression.

CEO priorities. While CIOs focus on stability, creating efficiencies and improving business processes, CEOs seek IT projects that make money. Right here, we have the core CIO paradox: the company wants growth, but the CIOs first job is consistency and systems that work.

The most successful CIOs figure out how to deliver operational stability as the foundation for innovation and growth. In effect, this requires the CIO to run two business models simultaneously: one to maintain stability and the second for growth.

 

CEO priorities for the CIO

CEO priorities

Budget influencers. Increasingly, stakeholders outside IT are influencing, or even controlling, how the CIO spends his or her budget. This corresponds to the exploding proliferation of technology expertise outside IT.

As marketing, finance, and line of business functions com to rely on specialized technology and applications, they will exert greater control over IT budgets.

 

Influence on IT budgets

Influence on IT budgets

Cloud adoption. The three top justifications for moving to the cloud are:

  • Agility and responsiveness
  • System availability
  • Innovation

All three are great reasons to adopt the cloud, and they indicate that CIOs know IT must become more responsive partners to the business. This message comes across loud and clear.

 

Reasons for cloud adoption

Reasons for adopting cloud

According to the survey, the primary inhibitors to cloud adoption are security concerns and challenges around data integration.

The security argument is an issue because only the largest companies in the world have even a chance of protecting their data centers at the same level of top cloud providers. Few organizations possess the security resources and expertise of cloud vendors like Microsoft, SAP, Oracle, or Salesforce, to name a few major providers.

Data integration is a reasonable concern. Whether systems are on-premise or in the cloud, IT must manage data exchange with other applications.

 

Obstacles to cloud adoption

Obstacles to cloud adoption

Agile dominates. As we can see in the chart below, agile methodologies have become commonplace among IT departments. Certainly, when I talk with innovative CIOs, agile is the preferred approach in almost every case. One CIO recently told me, “Agile forces everyone to participate and help solve problems, rather than be the voice of ‘No’.

 

Approaches to increase responsiveness

Agile methodologies prevail

IT project failure and success rates. Top performing CIOs talk about “operational excellence,” the need to deliver useful projects on-time and within budget.

This survey shows that only around half of all projects actually succeed. Among IT failure research, the data presented in the chart below is unique, because it breaks out project success by type of project. The overall failure rates reported are consistent with other research.

 

IT project success and failure rates

IT project failure and success rates

Digital disruption. Of course, we are all interested in attributes and characteristics of digital transformation.

As one might expect, media tops the list of industries facing disruption.

 

Digital disruption by industry

Digital disruption by industry

Similarly, advertising and media companies are most likely to have an enterprise digital strategy.

 

Digital strategy by industry

Digital strategy by industry

Importantly, ownership of digital initiatives has become strategic for many organizations. However, this presents a leadership question for CIOs, who must find ways to create their own involvement in these core programs going forward.

Part of the CIO challenge in creating leadership is to recognize that influential, rather hierarchical control, is a crucial part of this equation.

 

Ownership of digital strategies

Ownership of digital strategies

Advice for the CIO

The research offers a compelling view into important aspects of CIO life. Based on my experience, frequently talking with CIOs and interviewing many on the CXOTALK show, there are three important lessons.

Operational excellence is the foundation. Create an IT organization that delivers the right projects on-time and within budget. As CIO, operational excellence must be your baseline. If your plans are not highly successful, then start a program to figure out why and fix it. Project success leads to credibility and organization support for innovation.

CIOs face a core chronic conflict. The urgent requirements of daily IT deliverables create a focus on inward-facing activities that crowds out innovation. Top CIO priorities include cost savings, efficiency, and improving processes. Although these are worthy goals, CEOs want IT to support core company strategies, particularly revenue. The gap between CIO activities and CEO mandates is a real challenge.

Said differently, ultimate CIO success can only come when IT supports the CEO’s most important business strategies.

Digital creates opportunity. With the rise of digital transformation, CIOs have a golden chance to rethink relationships across the enterprise. Now is the time to clean up IT, establish the essential ability to deliver operational excellence, and put together an innovative IT organization.

Digital is shaking up established relationships between technologists and business functions. For CIOs, these changes open the door to new positions of influence. However, taking advantage of the opportunities requires IT to possess a profound understanding of the business, the ability to listen accurately and respond with precision, and excellent communication skills.

Therefore, start by making a dispassionate assessment of your IT organization (and yourself), to be sure that these skills and capabilities are present on your team.

(Cross-posted @ ZDNet | Beyond IT Failure Blog)

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Well-known expert on why IT projects fail, CEO of Asuret, a Brookline, MA consultancy that uses specialized tools to measure and detect potential vulnerabilities in projects, programs, and initiatives. Also a popular and prolific blogger, writing the IT Project Failures blog for ZDNet. Frequently quoted by the press on topics related to IT management.

One response to “Research: Digital creates CIO innovation opportunities but challenges remain”

  1. sidney

    great article on various aspects of technology and inovation that affect an organization decision wise and implementstion