CIOs miss out on funding for digital innovation, claims research

IT budgets are rising but less than 10% is allocated to supporting innovation, a survey of 900 CIOs finds

CIOs are missing out on funding to invest in innovative technology despite a projected growth in IT spending this year.

Organisations worldwide are stepping up their strategic investment plans in 2014, a survey of 900 IT leaders worldwide claimed.

But almost half of the respondents said less than 10% of their budgets is devoted to supporting innovation.

Deloitte’s annual CIO survey suggested that businesses are handing responsibility for innovation over to chief digital officers (CDOs) and chief marketing officers (CMOs), rather than the IT department.

“The concern is that budget is more easily placed with the CDO and CMO. These people are more likely to be seen as custodians of innovation,” said Kevin Walsh, head of Deloitte’s technology consulting practice.

Some 77% of CIOs reported that their IT budgets have increased or remain the same as in 2013. Over half of IT spending is focused on “business as usual activities”, with the rest split between supporting business change and supporting business growth.

CIOs are willing to take risks with their innovative technology, with 71% describing themselves as risk tolerant, rather than risk averse.

What the CIOs say

We need increased budget to enable greater innovation, adoption of new technologies and engagement of higher skilled and experienced staff.

We need to create a culture that encourages risk-taking and tolerance of failure.

We need to prioritise and align technology investments into areas that drive real growth and innovation for the business.

But CIOs will need to work hard to convince company leaders that they are capable of taking responsibility for digital innovation in their companies, the research suggested.

“Investment is available and organisations, from the CIO down, understand investment must be made in technology. The question is whether you leave the CIO in the role of keeping the lights on and refreshing technology,” said Walsh.

Some 79% of CIOs say that their relationship with their chief executive is “very important”, but only 42% say their relationship is “very good”. Just under half of CIOs rate themselves as “strong and effective” business partners.

CIOs could also benefit from building stronger relationships with suppliers, technology analysts, partners and customers, the research suggested.

Only 33% of CIOs describe their relationship with external suppliers as "very good”, and this falls to 16% for customers and 11% for technology analysts.

“Networking could be one way for CIOs to access skills and innovative capabilities. There have got to be opportunities to link up with the technology community,” said Walsh.

CIOs, he suggested, should offer themselves as mentors to startup companies. They would benefit from the input of an experienced CIO, and the CIO would gain a better understanding of emerging technology.

The survey shows that the main priorities for CIOs are supporting business needs (71%) and driving digital strategy (47%). Reducing IT costs is now only seen a priority for 35% of CIOs, compared with 56% in 2013.

Around half of CIOs are either piloting or implementing analytics technology – a major change from last year, when many CIOs said they had yet to be convinced of its benefits.

The main barrier to implementing analytics is the lack of skilled people to analyse the data, for 26% of CIOs, and the lack of a centralised approach to capturing and analysing data, for 22%.

“A key question is whether CIOs should take more responsibility for technology innovation to help their organisations grow,” said Walsh. “The challenge will be to convince company leadership they are capable of delivering these new technologies.”

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