For some IT departments, the most damaging consequence of the recession – more damaging than the budget cuts, the project cancellations and even the redundancies – may well be that it has revived the perception that IT expenditure is a cost to be contained, not an investment that adds value to the business.
Happily, this is not true of all organisations. A recent report by Accenture and the Economist Intelligence Unit found that three-quarters of global IT executives believe that the recession has “brought greater acknowledgment from business unit managers and staff of how important the IT function’s objectives are to the business”. But in some cases at least, the recession and the accompanying cost-reduction monomania have frustrated attempts by IT leadership to claw themselves a more strategic role.
This follows what R ‘Ray’ Wang, enterprise software analyst at the Altimeter Group, controversially describes as a gradual erosion of the role of the chief information officer within corporations. “CIOs are no longer in charge of their organisations the way they were in the 1990s and early 2000s,” he says. “Business decisions are being made without the CIO, and software-as-a-service offerings allow business users to take [IT procurement] decisions without their involvement. Those factors are whittling down the role of the CIO.”
However, the coming year could present the opportunity to remedy that. A recent survey of CEOs and business leaders by IT analyst company Gartner found that many see IT as a critical component in the anticipated return to revenue growth. Of the 190 executives surveyed, 62% agreed with the statement that ‘IT-enabled change would play a key role in their post-recession recovery strategy’. Only one other statement was met with greater agreement among respondents, that ‘Consumers have been living beyond their means for years, fuelled by borrowing’ and that there would be a ‘correctional impact on spending for years to come’.
Another measure of the role that technology will play in the hoped-for economic recovery, in the minds of business leaders at least, comes from a poll by business and technology advisory firm McKinsey. It found that three-quarters of European business leaders consider their companies ‘very’ or ‘extremely’ vulnerable to technology-driven disruption. Two-thirds of respondents to the survey placed IT among the top three mechanisms for achieving competitive advantage.
Gartner fellow Mark Raskino, who conducted the CEO survey, says that it is certainly good news for IT leaders that their chief executives still see IT as a source of value creation. That was not necessarily a given, he says: the dotcom crash triggered an “IT backlash”. But that doesn’t mean the IT department and its leadership can expect life to return to pre-recession normality. Judging by responses to the survey, he says, “CEOs expect more from IT in the post-recession decade than before.”
What that entails, however, is not entirely clear. “CEOs don’t look to be very well informed about what IT could do, or about where IT is weak, beyond not being fast enough or reliable enough,” he says. “That suggests that there needs to be some more proactive involvement by the people who work for them to lay out the options and the issues in a more digestible way.”
Raskino predicts that 2010 will see an uptick in chief executive churn as companies move from a defensive to an aggressive stance. This will in turn lead to greater demand for CIOs with skills that are suited to a growth economy, he says: “In general, change at the top is followed by such questions as ‘Do I have the right CIO for the issues we are going to be facing this year?’”
The best of both worlds
However, ‘the right CIOs’, at least as far as some CEOs might perceive them to be, are in short supply. “That breed of CIO that we would describe as entrepreneurial – those who break new ground, do new things and mess with the business model as opposed to IT implementation and delivery – they are pretty rare,” says Raskino, “and good ones tend to rotate through organisations regularly.”
Not everyone is of the opinion, though, that these ‘entrepreneurial CIOs’, who typically began their careers as management consultants, are what the business needs. “A CIO of a very large organisation, who had other CIOs working for him, told me he thought that [such entrepreneurial CIOs] are a bit dangerous,” Raskino recalls. “They are very good at working with the business, he said, but some of the decisions they make are inexpert, and sometimes you don’t see the architectural impact of those inexpert decisions for years.”
Creativity with practicality, vision with experience: as ever, the best of both worlds is in high demand. “What businesses need are entrepreneurial CIOs who have a good technical background; they are looking for someone who has majored in IT, but has moved into a corporate position.” A good example, says Raskino, is British-born Nokia CIO John Clarke, who served four years at Accenture.
What marks Clarke and his ilk out, Raskino argues, is their focus on the IT department as a human organisation. “Too many CIOs tell their story of achievement in terms of the systems they leave behind,” he explains.
“The strongest IT directors talk in terms of the people they hired and the organisation they leave behind.”
Unfortunately, recent economic circumstances have forced many IT leaders to save costs by sacrificing the human organisation. In the Effective IT Survey, ‘Reducing IT staffing costs’ was the strategy that the largest proportion of respondents (26.4%) had adopted for the first time this year. It was, however, also the strategy that the largest number of adopters considered ‘not very effective’ or ‘not effective’, with 22.7% describing it so.
Clearly, there are considerable challenges facing IT leaders at the start of 2010. However, there are also many more causes for optimism, and opportunities to prove oneself, than there were a year ago.