There’s an increasing perception across the enterprise that the role of the CIO as we know it won’t survive the decade. This isn’t anecdotal evidence, either, as respected institutions like the Harvard Business Review, the Economist and others are publishing studies that show that the average CEO is unhappy with the status quo of their own technology shops. In a great piece, The IT Conversation We Should Be Having, author Jim Stikeleather says:
A simple summary of the work suggests that CEOs believe that CIOs are not in sync with the new issues CEOs are facing, CIOs do not understand where the business needs to go, and CIOs do not have a strategy, in terms of opportunities to be pursued or challenges to be addressed in support of the business.
- Almost half of CEOs feel IT should be a commodity service purchased as needed
- Almost half of CEOs rate their CIOs negatively in terms of understanding the business and understanding how to apply IT in new ways to the business
- 57% of the executives expect their IT function to change significantly over the next three years, and 12% predict a “complete overhaul” of IT
- Only a quarter of executives felt their CIO was performing above his or her peers
Our observations:
- CEOs are demanding more visible value from their CIOs, in terms of generating revenue, gaining new customers, and increasing customer satisfaction.
- Increasingly, the CIO and IT must be seen less as developing and deploying technology, and more as a source of innovation and transformation that delivers business value, leveraging technology instead of directly delivering it.
- The CIO must be responsible and accountable if technology enables, facilitates or accelerates competition that the C-suite didn’t see coming, or allows the enterprise to miss opportunities because the C-suite did not understand the possibilities technology offered.
- CIOs today must adapt or risk being marginalized.
What Stikeleather is saying is far from unique. As I talk with CIO’s and their C-Suite piers, I hear the same stories of, “They need to have patience,” from the technology side and, “I need this now,” from the business. Knowing technology for decades, IT has weathered many transformational moments in the past, so what’s so different about now that causes this credibility and execution gap?
SaaS, PaaS and iPaaS
The answer has to be the arrival of cloud computing. We’re no longer a business world measured by what we buy as raw materials (and that includes computing power, storage, networks and engineers) and what we build from those raw goods (technology applications and services). The idea of an IT budget and capital expenditure is turned on its head by the arrival of services that can be picked up on the Internet like bread and milk at Safeway.
At the same time that cloud allows the business to rent what they need, the industrial age concept of a top-down pyramid of executives then managers, moving downward and outward to a ‘base’ of workers is now a costly model to deliver technology value. And before any non-technology types get smug, what’s happening in IT today will very likely be rippling through the business in the near future as well…more on that in a minute. When we can buy whatever is needed in the moment, and by doing so get the most up-to-date technology possible, what’s the need for ‘innovation teams’ and other concepts that are meant to produce ideas internally like a factory produces widgets?
Folks, it only happened in IT first because of enormous maintenance budgets and the easy of delivering technology over the Web. It isn’t stopping there.
SaaS-ifying business
Businesses beware…you’re next. I can’t predict what it will be called but this movement is toward renting more and more of what we need and owning less and less. Business Process as a Service (BPaaS) is as good a name as any. This isn’t offshoring to save money as we saw for the past decade plus. This is a new business model where value is found in putting pieces together that may or may not exist within the definition of the enterprise (and more often won’t). Think of how many roles are affected when smart people ask, “Does this work provide value?” and, “Is this work required by regulation?” and, “Is this work core to my business?” If the answer to the three big questions is, “No,” you’ve found the candidates for BPaaS.
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Well, IT is a silo that believes it owns all silos.
The facts are functional specialists like to work the way they like to work and do not take kindly to imposed workflows.
We now have tools that allow functional specialists develop, own and manage their own workflows, so IT needs to let go.
This, in no way, diminishes the value of the IT contribution - it’s just that the scope of IT has now shifted to helping with rule sets and providing interoperability.
IT always has and will continue to play the lead role in providing enterprise architecture.
Thanks, Karl. I tend to believe IT will continue to play the role of providing interoperability but as Caroline says, below, maybe as a facilitator. As the tools become more business-facing and cloud becomes more standard, interoperability may very well slip to an IT-facilitated function over iPaaS software.
I agree with the comment that “IT always has and will continue to play the lead role in providing enterprise architecture” but I think instead of directly providing that architecture, IT will play more of a facilitator role.
Due to widely available SaaS options, IT is no longer the gatekeeper of technology and solutions. Being the technology experts, CIOs need to guide their companies through the “As A Service” jungle to leverage the best possible solutions.
The last question asked in this article is the most critical consideration.. “Is this work core to my business?”
Take a look at this helpful checklist to see what you consider core to your business and what you should be focused on to gain competitive advantage in your industry.
http://www.voicedata.com/IT-projects/Strategic-IT-Checklist
Chris,
Thanks for this blog. I support the premise that IT is facing a trans-formative moment and that all of Business may equally be disrupted. The reason the CIO is driving IT toward the cliff is because the underlying vehicle can’t steer away fast enough. Existing enterprise software is that vehicle: SAP, Oracle, Homegrown, you-name-it. These systems are not agile enough to keep pace with the needs of business and their implementation and on-going maintenance costs gobble up resources, budgets and schedules. So the path and speed of IT is dictated by the systems themselves.
Your points about alignment between IT and Operations, value and innovation are all indicators that have been flashing for years. @kwkeirstead said that IT is a silo and believes it owns all other silos. While that may be true the unfortunate reality is that IT became an obstacle not out of choice but out of necessity. It is impractical to modify, integrate, replace or upgrade the enterprise software. Budgets, resources and risk do not support that strategy and the ‘yield’ received made it intolerable.
It isn’t too late to stop the perilous fall over the cliff. Turn the vehicle off, let it coast to a stop and apply the brakes on any new development. It isn’t necessary to scrap the enterprise systems. Instead, shield them from change and protect their inherent and existing capabilities. Then select a new enterprise technology platform that promotes innovation, value and alignment to meet the opportunities and demands of business. IT can and should own this platform but service the Operations side of business by sitting side by side quickly solving the problems as they arise to capture the opportunity.
Steve, thanks for great comments. If you saw my previous blog about the 3rd Platform, you’d know we’re in agreement on the idea of choosing a new platform to go forward and keeping the best of the old (like the way mainframe survives to this day).
Reblogged this on We Are Xtream IT and commented:
The future of cloud is right now. The data center political game is coming to an end sooner than later.