Is operational cost-effectiveness the new "comfort zone" for today's CIOs?
It's all too easy for CIOs to slip into "cruise control" and focus the efforts of the IT department on projects like server consolidations, process management, cost cutting and security. After all, why go to bat for some strategic initiative that might be hard to justify and susceptible to risk? You'll only antagonize the accountants and, if you do succeed, you'll probably scare the executive above into thinking they're being undermined.
Nevertheless, the days of CIOs who float along in this comfort zone are numbered. The era when organizations believed they could cost-cut themselves to greatness is over. When you look at what CEOs and boards of directors say are their priorities today, cost savings and cost efficiencies have slipped noticeably down their agendas.
The Conference Board, which surveys over 500 CEOs on an annual basis, found in its latest study that tight cost control only ranked sixth as a corporate priority. Ahead of it on the list were issues like sustaining growth, stimulating innovation, customer retention and attracting high-calibre executives.
These findings are reinforced by a recent study that McKinsey's carried out among 1000 representatives from boards of directors around the world. These directors were asked to identify the areas where they needed more data and better information. Their responses had little to do with gaining greater insight into their organizations' financial and operational performance. Instead the directors said they want data that sheds light on softer issues, such as client profitability and satisfaction, employee retention and public opinion. In other words they are starting to recognize that monitoring an organization's performance requires a much broader perspective than merely looking at balance sheets and following how the share price tracked over the last quarter.
Yet when IDC surveyed over 4000 IS executives across Asia Pacific earlier this year (including Australia and New Zealand) in their annual Continuum study, it was apparent that not many CIOs are working in this direction. When asked what their last significant IT purchase was, the dominant responses were network upgrades, refreshing infrastructure, and security. Strategic applications like CRM and data warehousing were well down the list. IT's focus on operational effectiveness appears unlikely to change in the short term, at least not in the Asia Pacific region.
I know what you are going to say: CIOs are just responding to what business executives have been mandating. These are the people who believe their IT Rome can be built in a day while they relentlessly cut budgets and put all IT projects under the financial microscope. However, in my experience the reality in business is that while customers may always be right, they don't always know what they want. For IT to get the respect it deserves, IS leaders must have the courage of their convictions. If we don't propose something new from IT, who will?
If IT was switched off tomorrow we all know that the business couldn't function. Isn't it time CIOs started to get a little more courageous? The executives report that their priorities are changing. The boards say they want data shedding a broader perspective on the business performance. Let's help them. Let's remember the strategic potential of IT. Let's remind these executives of what IT can achieve.
Let's make 2006 the year we fight for more budget and start making a strategic difference to our organizations - and get out of the comfort zone of operational efficiency.
Peter Hind is a freelance consultant and commentator with nearly 25 years experience in the IT industry. He is co-author of The IT Manager's Survival Guide and ran the InTEP IS executive gatherings in Australia for over 10 years.
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