The recession and widespread lack of available capital has split the CIO body into two distinct groups:
i) Those who have recently had to focus on cutting costs (32%) and had their budgets decreased (43%)
ii) and those who have had their budgets increased (28%) and are actively looking to invest, innovate and overtake competitors (32%).
Organisations cannot simply fall into just one of these camps. CIOs must improve efficiencies and cut costs in order to free up budget to innovate and increase commercial value – 83% of businesses expect IT to innovate, but only 66% of these are reasonably successful.
If IT is to play a key role in recovery, CIOs must deliver successful innovations and improve operational efficiencies. According to the research, the CIO needs to adopt a commercial role demonstrating return on investment, utilise innovative business models enabled by technology such as Cloud and understand a mature multi-source landscape. CIOs can no longer afford to only do one or the other.
In an annual global survey of 2,665 senior IT professionals from public and private sector companies across the UK, US and Europe, PA Consulting Group, the global firm of management, IT and technology consultants, and Harvey Hash, the professional recruitment consultancy and IT outsourcing service provider, are revealing insights into CIOs’ strategies.
Jonathan Crews, IT and sourcing expert at PA Consulting Group, explains the key findings, “The emphasis for CIOs has to be on cutting costs first, and fast, to free up budget and resource to invest in innovation, not merely doing one or the other. Even those CIOs who already have sufficient liquidity to invest run the risk of failing to achieve the maximum possible return on their investments if basic operational efficiencies have not been achieved first.”
The survey indicated that the commercial role of the CIO and wider IT function is key, with 90% believing knowledge of the business an essential skill. Yet, only 17% think IT is integrated with the business and over a quarter of CIOs surveyed do not track return on investment. However there is widespread acknowledgement that this pressure is likely to grow in the future (17% expect it within a year, 22% within one to three years). Crews adds, “In a market where capital and liquidity is an organisation’s lifeblood, and where scrutiny of all departments’ activities is only likely to grow, the ability to demonstrate the effectiveness of your investments is absolutely paramount. Business leaders really ought to be demonstrating their commercial value, even if not being directly asked for it.”
The research showed that IT needs to understand a mature multi-source environment. In a similar result to last year’s survey, 90% of CIOs surveyed were increasing or maintaining their levels of investment in outsourcing, demonstrating an underlying trust in a matured and stable outsourcing market. This trust has largely come not from the prolonged use of traditional outsourcing models and offshore destinations, but instead from the successful development and use of new models such as Cloud Computing (51% of respondents were considering investment), Software-as-a-Service (34% were keen to increase their investment) and also emerging offshore destinations in Eastern Europe away from traditional locations such as India.
Crews concludes, “CIOs are at risk of pursuing dated strategies and sticking their heads in the sand – a blind pursuance of cost cuts or unaccountable investment will result in IT departments becoming ‘just another support function’ and missing a clear opportunity to show their commercial value to best effect.”
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.