Economist Intelligence Unit Study: CIOs face challenge of change and confidence

Dell Services recently conducted research in conjunction with the world-renowned Economist Intelligence Unit. The findings, based on surveys of 536 C-suite executives, spotlight a new future for the IT function and its executives that will reshape its role for years to come. Can IT meet the challenge?

Lead, follow, or get out of the way.” -Thomas Paine

Here are some of the key findings in the survey:

  • Of executives surveyed, 57% expect their IT function to change significantly over the next 3 years.

This comes as no surprise as IT organizations face most of the pressures from data deluge, cloud computing, and mobile devices. It would seem logical that IT structure and measures and must recalibrate to keep pace. We’ve seen IT respond with new job titles for cloud computing, but this may not be enough to satisfy the pace of change. The study highlights the challenge is no longer about technology.

  • As part of this change, 43% say their company will increasingly use IT as a commodity service to be bought as and when needed.

To be considered a competitive advantage, there must be value-add. As IT functions become easily copied and commercialized, they are seen as a commodity. Payroll, hiring, background checks or collection functions are widely performed by third-party firms as commodity services. In every line of business, there is the ‘tip of the iceberg’ that delivers innovation, and the portion pulling it under. IT needs to climb to the tip.

  • One in six (17%) CIOs are only ‘consulted’ or have no role at all when IT strategy is formulated.

In the one of the more striking findings, we learn how disconnected IT and business strategy has become. Through either lack of confidence or perception of lack of its value-add, IT is isolated from the C-suite. The research offers a tale of caution whereby IT can no longer prioritize cost cutting over revenue growth; they must do both. Some of the responsibility, of course, lies with the CEO and the rest of the C-suite.

  • CIO involvement in business strategy leads to better financial performance.

Companies that involve the CIO in business strategy are much more likely to achieve financial performance superior to their peers. Of the respondents who said their CIO was actively involved in setting business strategy, 47 percent said their company financially outperformed industry peers. Compare that to the respondents who said the CIO had no role in business strategy – only 28 percent say they were performing better than their peers.

  • Less than one-half of C-suite executives rate their CIO positively in terms of understanding the business and technical risks involved in new ways of using IT. 

One might read this and believe IT is either isolated, overwhelmed, or a bit of both. IT sits at the center of an organization but it needs development of skills and metrics. Being unable to draw a direct correlation between IT systems and resulting revenues or innovation means cloud computing won’t get funding. Gartner suggests that, “More purposeful, structured innovation management could be one way to make technology investments pay off.”

  • Cloud computing, a key development facilitating these shifts, is already widely adopted.

Survey found that 47% are already using private cloud services and 54% are using cloud models to access business applications as a service. Often, cloud computing is seen as technology, not a corporate strategy and therefore only partially effective.

It is only natural that companies rethink the role of IT, but communication among the entire C-suite needs to improve and IT metrics must be aligned to business value in order for the CIO succeed. Feel free to read The Economist’s study  (or flip through the SlideShare document below) and share your comments and thoughts.

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About the Author: Matthew Mikell