“The challenge for CIOs is to find the right balance between utility and innovation for their organisation, recognising that it might be a moving target."
DAVID ELTON, IT AND CHANGE MANAGEMENTENT CONSULTING,
PA CONSULTING GROUP
.15 June 2011
CIOs must get the balance right between utility and innovation in order to best support the business and secure influence, according to new research from PA Consulting Group and Harvey Nash. The 2011 survey of over 2,500 CIOs and IT leaders reveals that CIOs are playing an increasingly influential role within their organisations (50 per cent now sit on the operational board or management team). However, the main demands on them remain cost saving, increasing operational efficiencies and delivering consistent and stable IT performance to the business. They need to consider the right balance between the utility and innovation components of IT.
Balancing risk and opportunity
Striking the right balance is a challenge. The top three issues that management boards are asking CIOs to address are: saving costs (67 per cent), increasing operational efficiencies (65 per cent) and delivering consistent and stable IT performance to the business (64 per cent). An excessive focus on utility activities can undermine the pursuit of technology innovation.
Focusing on either extreme of the utility-to-innovation continuum is not an option for ambitious CIOs. Those that simply focus on utility will run the risk of becoming the equivalent of facilities managers as work is increasingly outsourced, almost half (47 per cent) of UK CIOs are planning to increase their outsourcing spend. Meanwhile, those pursuing a strategy of innovation must remember the importance of keeping the lights on - it is all very well to offer the business the latest social networking app, but if core business operations are hampered by IT failure, the CIO’s career may be over.
How the balance changes from industry to industry
The balance between utility and innovation is different in every industry. CIOs in city markets lead on innovation with 77 per cent focused on innovation, with retail (75 per cent) and financial services (71 per cent) close behind. At the other end of the spectrum, less than half of CIOs in pharmaceuticals are focused on innovation, and less than quarter in both construction and engineering are innovation focused.
Cloud remains contentious
In 2010, 51 per cent of CIOs were considering using cloud computing. In 2011, there is still a mixed picture of use. Despite the much cited benefits, 8 per cent of organisations that have considered cloud have discounted it for their organisation and only 22 per cent of CIOs are exploiting cloud for core business processes. CIOs are still resolving where cloud can and cannot add value as part of their business model.
PA’s David Elton, IT and change management specialist, says: “The challenge for CIOs is to find the right balance between utility and innovation for their organisation, recognising that it might be a moving target.
“There is constant change in the business environment and in business appetite for risk. Outsourcing is increasing, cyber security is a growing concern and cloud is a potential game changer (albeit with a lot of firms in wait and see mode). All of these trends are creating an opportunity for CIOs to innovate and collaborate, but it also means CIOs constantly have to adjust the utility and innovation balance in their organisations. But for those that get this balance right, the prize is real influence in the business, rather than simply being seen as facilities managers.”
Albert Ellis, Harvey Nash Chief Executive Officer, says: “Driving innovation whilst continuing to provide core technology utility services to the business will be increasingly demanded from CIOs as we move out of recession. Securing the company's data and technology from cyberattacks, whilst at the same time exploiting the growth of social media for business use will be the key challenge facing CIOs in the coming decade. And yet we are increasingly seeing these hybrid CIOs on our shortlists, many of whom see the CIO role as a stepping stone to something much bigger.”
An organisation’s position on the continuum is not fixed. To get the balance right, CIOs need to:
foster a shared understanding between IT and the business of the issues the CIO should be prioritising. CIOs need to look ahead at the internal and external factors that will determine these issues and create a shared vision and understanding
consider the current and ideal position of their organisation on the utility-to-innovation continuum – CIOs should recognise that, before they can innovate successfully, they need to earn trust by getting the utility component of their activities right
ensure their team can accomplish both utility and innovation activities concurrently and flexibly. These different types of activity require different approaches, skills and attitudes. For example, any kind of innovation requires an open culture of collaboration where the business is willing not only to take a risk but also to accept the possibility of failure.
Ultimately, an organisation’s position on the continuum will reflect a series of movements as CIOs react and adapt to the forces shaping their environment. Those that get the balance right will ensure they - and their function - are on the path to increasing influence in the business, rather than being simply facilities managers.
The decision is theirs as to which route they take.
To request a copy of the PA Consulting Group and Harvey Nash survey, visit here.
Notes to the editor
About the survey
Thesurvey was conducted online by PA Consulting Group and Harvey Nash between 18 November 2010 and 4 April 2011 amongst 2,575 senior level IT professionals from businesses across the world. This is the 13th in a series of annual CIO surveys conducted to identify emerging trends and issues in IT leadership and has firmly established itself as the industry benchmark over the years.
About PA Consulting Group
PA Consulting Group is a leading management and IT consulting and technology firm. Independent and employee owned, we operate globally in more than 30 countries and transform the performance of major organisations in both the private and public sectors.
From initial idea generation and strategy development through to detailed implementation, we deliver significant and tangible results. We have outstanding technology development capability; a unique breadth of skills from strategy to performance improvement, from HR to IT; and strong expertise in communications, defence, energy, financial services, government and public services, healthcare, international development, manufacturing and water.
About Harvey Nash
Harvey Nash, a global professional recruitment consultancy and IT outsourcing service provider, is committed to delivering the very best talent and IT solutions to a broad base of international clients. The Group is a trusted advisor to some of the world’s leading business, governments and institutions. Operating from 39 offices covering the USA, Europe and Asia, its talented professionals pursue the highest levels of integrity and quality in providing a unique portfolio of services: executive search, interim management, IT and finance recruitment and IT outsourcing.
Learn more, visit here.
For further information, please send an email to Laura Hamblin.