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The report detailing the results of Gartner’s latest annual CIO survey was named Taming the Digital Dragon: The 2014 CIO Agenda.
As the title suggests, it focuses on the challenges facing CIOs and their IT functions as they try to cope with the demands of the digital revolution.
For example, the survey found that 51% of CIOs are concerned that the “digital torrent” is coming faster than they can cope with, and 42% do not feel that they have the talent needed to face this future.
Commenting on the findings, Dave Aron, vice-president and Gartner Fellow, said: “2014 must be a year of significant change if CIOs are to help their businesses and public sector agencies remain relevant in an increasingly digital world.”
Aron also noted that “2014 will be a year of dual goals: responding to ongoing needs for efficiency and growth, but also shifting to exploit a fundamentally different digital paradigm. Ignoring either of these is not an option".
Digital challenges faced by CIOs
The challenges faced by CIOs and IT functions in the digital age is one of the key themes of my new book, Disrupt IT.
Technology is now more accessible to non-IT staff, awareness and knowledge of its application within the enterprise has never been higher and, as a result, neither have expectations about what can be achieved in terms of functionality and speed of delivery.
While process automation and efficiency are still key requirements for all businesses, the primary focus in the digital age for technology has shifted to enabling new capabilities, enhancing the customer experience, creating value and generating revenue. Technology is now a source of differentiation and competitive advantage in all industries.
CIOs do not feel prepared for digital
But the IT function has failed to evolve in terms of structure, skills, ways of working and culture, and is now facing a battle to stay relevant in the digital age. No wonder then that CIOs do not feel prepared for digital and are worried about how their departments will cope; the IT function is still operating as an internal service provider when the rest of the business needs it to be a technology and service broker.
Read more about the digital CIO
Graham Waller, vice-president and executive partner for Gartner Executive Programs, highlighted the lack of change in the underlying model for IT when he observed that service provider behaviours such as “treating colleagues as customers are potential hindrances to exploiting digitalisation". In other words, if IT functions continue to operate as service providers – a model that has its origins in the 1980s – then they will struggle to meet the needs of the digital business.
A new digital model
In Disrupt IT, I define a new model for IT in the digital age. This model calls for a radical transformation of the IT function to ensure it can play the role of the organisation’s technology and service broker. Through a framework of seven principles, I also provide advice for CIOs and boards on how to design and manage this transformation.
The principles address the challenge of the “dual goals” highlighted by Aron in a way that removes CIOs from the day-to-day distractions of running IT services while ensuring these services continue to meet the business needs. This approach is essential if CIOs are to successfully reposition their role as one that can and should be contributing to the digital transformation of the organisation.
Shadow IT spending growing
Another finding from the Gartner survey is that around a quarter of the organisation’s total IT spending will be outside of the CIO’s budget. The report also notes that this is just the spending of which CIOs are aware and hence “the reality may be significantly higher".
There must be significant change if CIOs are to help their businesses and public sector agencies remain relevant in an increasingly digital world
This view is consistent with research conducted by CEB, which found that while CIOs estimated the IT spending outside of their control was an additional 20%, the reality is that technology spending by non-IT functions actually adds another 40% to the official IT budget. Put another way, this means that CIOs control just over 70% of the total IT spending within their organisations.
Not all bad news
The fact so much expenditure on technology is happening outside of the IT function, and without their involvement or knowledge could be worrying for CIOs. However, it is not necessarily all bad news, as it could be argued that it does not matter who holds the budget for IT expenditure as long as the organisation is investing in the right technology and that this investment results in a platform that is integrated, secure and resilient, and can respond quickly to changes in market conditions, customer preferences and competitor behaviour.
And this is where the CIO has a key role to play in the digital business. CIOs that are involved in all the key technology decisions made by their organisation, regardless of who controls the budget, will be able to influence those decisions and therefore ensure that solutions can be integrated and are secure.
How CIOs need to change
But for many CIOs, the problem is they are not being involved in the technology decisions being made by their peers. As well as being an issue for CIOs, the bypassing of IT can also expose the organisation to risks in areas such as security, service compatibility and vendor lock-in. To avoid being bypassed, CIOs also need to change.
The CIO in a digital business needs to be a much more social animal; they need to spend an increasing amount of their time outside of the IT department building their knowledge of the business, developing their profile and establishing their credibility as a business leader and partner. If they can do this successfully, they will be involved in all technology decisions and will play a key role in shaping the organisation’s digital future as result.
And this is why three of the seven principles in Disrupt IT apply specifically to the CIO role. Creating the IT capability required in the digital age requires changes to the CIO role as well as to the IT function. CIOs need to look at their own performance, ways of working, skills and experience to ensure they are equipped to deal with the digital torrent.
Ian Cox is a recognised thought leader in strategy, digital transformation, and the role of the CIO and IT in leading and transforming organisations
- Disrupt IT is available from Amazon in print and Kindle formats. Download a free chapter at Disrupt IT: A new model for IT in the digital age
This was first published in June 2014