There's life in those IT budgets yet
An economic spring is in the air - even if it's autumn locally. After almost three years of tightening our belts, an economic recovery is finally under way. Growth is returning to that consumer of first and last resort: the US, the euro zone and even Japan are showing signs of life and here in Australia the Reserve Bank looks set to continue to raise interest rates again - a sure sign that the economy is in rude good health.
What does this good news story mean for CIOs? For many, this economic growth is translating into increases in IT budget; but this increase is only slight, and does not signal a return to the untrammelled profligacy of the late 90s. IT budgets may be looking slightly healthier, but growth is competing with undiminished focus on cost and unrelenting demand for bulletproof operational integrity.
This change in economic conditions is also exacerbating differences between types of CIO. Drawing on the results from Gartner EXP's annual survey of our CIO members it seems that three different types of CIO are emerging: competitors, fighters and breakaways.
Competitors are achieving traction, but struggling to focus. Most CIOs (some 69 percent of our respondents) are in enterprises that are "maintaining competitiveness". These "competitors" are balancing effectiveness, efficiency, cost management and operational integrity in equal measure.
If you are one of these competitors it is likely that you are holding steady this year but face a conundrum. As CIO you have the trust and respect of your business peers to shape the demand for technology. You can engage your senior business colleagues who are likely to have positive views on IT's value. Competitor CIOs are also being given more financial scope, with some IT budget growth. In short, you have a solid platform to move forward from - but which direction should you move in?
The challenge is to form a clear vision and action plan. At the moment, effectiveness, efficiency and operational integrity needs are all competing for attention and budget. Like the lead singer of a rock band you are trying to "turn everything up louder than everything else". Everything seems to be the priority.
As evidence of this paradox, no clear pattern of IT investment emerges from our survey. Multiple priorities are pulling competitor's budgets in all directions. Of the different categories of technology that might be the focus, CRM, business intelligence and real-time enterprise technologies all emphasize effectiveness. Enterprise application integration and middleware emphasize efficiency, while security promotes operational integrity.
Competitors need to focus. There are four things a CIO can focus on. Decide which of these four best suits the needs and expectations of your enterprises and concentrate on it. IT service providers demonstrate value by providing reliable IT services to the business. Technology innovators demonstrate value by identifying and introducing technologies that help the business. Business process managers demonstrate value by supporting and improving business processes. Business delivery leaders demonstrate value by creating growth through technology-enabled business initiatives.
Fighters are focused on business efficiency. Some of us aren't so lucky to be competitors. Some CIOs (about 15 percent of our survey) are in enterprises that are fighting for survival. Fighters are efficiency-focused, devoting more of their budget and attention to cost disciplines.
Enterprises fighting for survival naturally set cost management as a priority. So fighter CIOs focus on efficiency measures, leaving little room for manoeuvring. Fighters get less attention from senior business colleagues and communicate less with their CXO peers.
Our survey shows a strong correlation between the time CIOs spend with business colleagues and the respect and trust that they receive. Of the three types of CIOs, fighters spend the least time with their business colleagues. As a result they receive less respect, trust and scope to operate than the other two types.
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