As the economy recovers, many organizations are maintaining their frugal spending ways to improve the bottom line. This can mean the loss of IT staff as well as continually reduced budgets, lack of raises, and slashing of benefits. I’ve seen all three happen to IT departments – and entire organizations – in recent years. Hopefully, as the economy continues to recover, IT spending can make a similar recovery.
At the same time, overall expectations for technology are skyrocketing as CEOs and other C-levelers continue to demand that investments in IT positively impact the bottom line. Whether that’s through cost reduction or whether that’s through improved sales isn’t important as long as one or the other – or, preferably both – outcomes take place.
For my last article at Wikibon for 2013, I wanted to take a look ahead at 2014 at what I believe are some significant challenges facing CIOs in the coming year.
As executives and employees become more tech-savvy, CIOs and IT departments are under increasing scrutiny to provide measurable outcomes that provide solid business benefits. As such, CIOs will be expected to spend more time proving the value of their own positions and that of the IT department.
This is not new. However, as time goes on and when budgets are tight, scrutiny increases. Anything considered waste or unnecessary gets eliminated. As such, IT departments more than ever need to stay laser focused on activities that truly add value to the business and boost the bottom line. When done right, IT departments can be considered strategic multipliers rather than cost centers.
The scattering of the IT budget
It should come as no surprise that IT doesn’t control all IT expenditures in an organization. In fact, according to Forbes, CIOs control only 60% of technology expenditures, while the other 40% is scattered throughout the rest of the organization. This is not necessarily a bad thing as long as activities are coordinated, but it may come as a surprise to many.
Perhaps most importantly, the Chief Marketing Officers are beginning to control a significant chunk of what would have once been considered the domain of the IT group. But they’re not the only ones. Today, individual business units can quickly and easily buy their own services using nothing more than a credit card. So, rather than waiting for IT to get around to meeting their needs, they can just build their own mini-portfolio.
Fracturing of IT services puts emphasis on true application and platform integration and governance
As a result of this slow creep of the IT budget, organizations run the real risk of fracturing what once may have been combined IT services. As a result, CIOs may need to shift their priorities to ensuring that these fractured services are well-implemented and well-integrated into the existing environment.
In addition, this fracturing may create a situation in which too many projects get stacked on IT as business units require support in enabling their own individual services. As such, ensuring that there is a good governance model in place will be vital to overall organizational success as time goes on.
In addition, the IT staff needs to become well-versed in application and platform integration technologies and techniques as the IT budget continues to seep out of central IT and into individual business units. As many have said, IT must learn to become a broker of services rather than a direct provider of all things tech.
The status of the CIO position
It’s no secret that the CIO position itself is under constant scrutiny as well as it’s regularly questioned whether or not the role is strategically significant in the C-suite. Personally, I believe that the role is more important than ever, but only when both the position and the person in the position constantly reinvent themselves.
For those CIOs that have failed to keep pace with both personal and technology change, the shift may be jarring, but it’s important. Now is the time to explore solutions that unburden the IT staff from direct technological support to more of a focus on business solutions. Now is the time for the CIO and the IT department to move beyond being a “keeping the lights on” organization and absolutely prove value to the business.
In organizations that are seriously considering creating a Chief Digital Officer role, I believe that one of two things is true:
- Senior management believes that the CIO role is too broad and wants to break up the duties.
- The CIO or the IT department has not met expectations with regard to technology and there is a desire to have a different kind of emphasis on data-based activities. As is stated in this article, companies “that hire CDOs say the CIO is important, Aron says, but they're clearly seeking something the CIO isn't delivering.”
Action Item: It’s unfortunate that CIOs always seem to be under fire, but that is simply reality and it’s one that CIOs must face as the world changes around them. CIOs must defocus on technology and redirect that energy into transformational business activities. That’s not to say that CIOs should consider technology unimportant, but it does mean that they need to think differently about technology solutions with an eye on the overall goal of business focus. Further, they need to find ways to continually reinforce the importance of the position by staying laser focused on strategic business outcomes and ensure that the IT department is an enabler of the business, and not a drag on it.