Computer Weekly’s first CW500 Club of 2015 brought together experts in economics, the technologies driving business and IT leadership, to give their views of the year ahead.
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Ian Stewart, chief economist, at Deloitte provided his thoughts on the UK’s economic outlook and Marc Dowd, principal advisor at IT analyst group Forrester Research described some of the technology trends driving businesses. Chris Chandler, at IT recruitment specialist La Fosse Associates, gave his outlook on the CIOs in demand today.
The meeting revealed that CIOs will have to turn their thinking from cutting costs to winning business; that IT will as a result deliver what the business needs to grow; and finally the role of the CIO will need to change make all this to happen.
Apart from the election this year, the economy is probably the most talked-about subject in offices across the country and perhaps even IT departments – and things are looking brighter than they did a few years ago. CIOs are being tasked with spending money to grow business.
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Technology attracts economists' attention
Low inflation, low interest rates and low oil prices rarely occur together, but that is the situation in the UK today. So what does this mean?
Ian Stewart, chief economist at Deloitte, says it is hard to talk about the economy in ten minutes – but there are key themes that interest business.
He says the IT sector is exciting economists. "IT is becoming interesting to economists for the first time since the dotcom boom of the nineties.” This is the result of the growth of the industry and the interest it is generating among investors.
But for CIOs in UK businesses, the mood of the CFO is probably more interesting and it looks like there could be a loosening of the purse strings. Stewart says that, for the first time in eight years, the economy is not the biggest concern among CFOs – the general election and the problems in the Eurozone are on their minds today.
In fact, the economic environment could provide opportunities. Despite fears of deflation amongst European central banks, low inflation means cheap money and now might be the time to invest in major projects. It doesn’t end there. Low oil prices present an opportunity, says Stewart: “This is really good news for the global economy. We can drive and make stuff with much lower costs.”
The oil price and low inflation is encouraging consumers to buy non-essentials such as electrical household goods – so increased demand for products and services in many business-to-consumer (B2C) sectors could be on the cards.
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IT transforms the work landscape
But consumers have to work to pay for these goods and IT is changing the jobs they do. Stewart says technology is having a significant effect on the jobs market: “Routine jobs have collapsed as computers take over more and more of them.”
As a result, people are required for jobs that involve relationships and consultation, rather than transactions or information provision. The bank sector provides a good example. Barclays turned cashiers into "community bankers", when the transactions they complete moved online. Theses community bankers, armed with iPads, offer customers advice and support – and even got a pay rise.
Consumers’ IT-enabled relationship with businesses and public sector organisations is an important trend and something IT analyst firm Forrester is addressing.
Marc Dowd, principal advisor at Forrester, said the internet is changing relationships today. “People are redefining their relationships with companies, with each other and the government, based around technology more than ever before,” he says.
The way we interact is through technology and – although this might seem old news – things are changing more than had been expected and are still changing now, says Dowd. Businesses cannot afford to ignore it.
He says people today are of a mobile mindset and expect services on their smartphones. “People want any piece of information when they need it no matter where they are. When business and governments don't provide this, they are seen as doing something wrong.”
Businesses need to expand relationships with customers to grow. Dowd says that technology can contribute to this, but must stay relevant. Mobile services and wearable devices are good examples of using technology to develop closer relationships with customers. But as soon as they are not deemed useful they are dropped. “People are becoming fickle,” says Dowd.
IT departments lag behind business expectations
To this end, companies are putting a lot of effort into providing long-term interaction and improving customer experience.
Dowd says the challenge is to get the right support from the IT department to enable businesses to do it. “But IT operations are increasingly failing to enable the business to do this.”
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He has figures to prove it. In recent research, Forrester found only 38% of IT decision makers collaborate with business on business strategy and innovation, and only 28% think they have built an architecture that can easily accommodate changes to the business strategy. Perhaps the headline figure was the 32% that believe their IT department hinders business success. And that is the view from inside the IT department.
Over half (54%) of business executives think the IT department is an obstacle to business. Not a good conclusion, at a time when the business needs IT to win business rather than just keep the lights on and cut costs here and there.
So IT has to become more about business and less about cost. “You need to be working to help the business with the technology that winds customers,” says Dowd.
Dowd says that, in 1998, the IT department was100% about managing IT which, he says, is the traditional model of an IT department. By 2008, a separation emerged between "traditional IT" and "business technology" – the IT that wins business. He says that, by 2018, half the department will be about “traditional IT” and the other half about “business IT.”
The future of the CIO
So given this development, what of the CIO of today?
Chris Chandler, at IT recruitment specialist La Fosse Associates, says the “recruitment merry-go-round is moving faster” right now.
But CIOs need to change or face disappointment. “We are at the cusp of a very dramatic shift in what corporate IT organisations are seeing in terms of people, process, technology and culture,” says Chandler.
To take the business forward, rather than just keeping it running, will be a challenge facing IT leaders as technology becomes core to business activity. “Businesses don’t know exactly the CIO they want, but know the business they want to be. The CIO will be the person that can help them get there.”
In the same way that the IT department is changing, so must its leader. The traditional experiences of many CIOs in running IT departments will count for nothing when it comes to driving business unless the role is approached differently.
Chandler was recently surprised by a brief given to him by the chairman of a large business, looking for a CIO. The chairman made it clear he wanted the next CIO to be different and not a “yes man” or just someone to run IT.
“He wanted someone that would not work by the same principles that the rest of the organisation is guided by,” he says.
“What he wanted was a visionary. He wanted someone to turn the business on its head, challenge the norm, and see new technologies coming over the horizon."
This was not a one-off as other business leaders look for more from their IT leadership.
In short changes in technology and customer behavior mean businesses and government need IT leaders to think differently.