It has been a while since I was a parent of teenagers, but I remember when the question, "Have you had the conversation yet?" made me break out in cold sweats. The Conversation is also a 1974 film by Francis Ford Coppola whose themes include the role of technology in society and being so focused on what you are doing that you forget why you are doing it and become oblivious to what is happening around you. Both examples fit the conversation that should be going on in the C-suite, but isn't, because it makes people nervous, and because people lose visibility and perspective of what is changing around them as they focus on their goals. It is a conversation about the increasing importance of information technology and the role it must assume in every enterprise, regardless of size, industry or geography.
Over the last two years, we have been engaged in primary research with The Harvard Business Review, The Economist, CEB (formerly known as the Corporate Executive Board), Intel, and TNS Global in an attempt to paint a picture of how the role of the CIO and the IT department is changing. We also engaged with CIOs across the globe in discussions about what they were experiencing and what changes were surprising or bewildering them.
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.
Key findings from our research:
- 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
- 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.
Why this is happening:
As we worked with the data, while we saw what was happening it became clear we were missing the "why" it was happening. Why is this dissonance between the CIO and the C-suite happening? It could be the rapid pace of technological change, but historically that only facilitates or accelerates change already desired or underway? The more we looked for an answer, the more we realized we were at an impasse. Then we realized that what we were seeing were not changes in IT, but secondary effects from changes going on in business.
In order to understand the future of enterprise IT, the evolving future of business itself must be considered.
Trends that are affecting fundamental concepts of business, and in turn IT:
- The basic ideas of capitalism--return on investment (ROI) and return on assets (ROA)--are being challenged by the historical stalwarts of capitalism (Harvard, Drucker Society, Forbes, the London School of Economics and many more). Many of these ideas shun ownership for rent on those elements of the enterprise not tied directly to value creation, suggesting a rethink in how IT is delivered.
- As we transform from industrial work more easily and efficiently done by robots to creative and knowledge work leveraging humans, we are balancing the values of scale and efficiency (industrial work) with the need for agility and efficacy (creative and knowledge work). This means that transactional systems that ensured security, encouraged conformance and drove operational goals of predictability and productivity lose value to new systems of collaboration, transparency and agility.
- The nature of economics is transforming as complexity science and behavioral science provide valuable insights about how value is created, markets work and buyers think. The nature of value which is momentarily created and quickly perished in turn drives the new economics as it diverges from classical ideas of value chains. As a consequence, the boundaries between customers, suppliers, partners, staff, contractors, channels and even competitors begin to diminish and even disappear, creating a whole new user community for enterprise IT systems.
- All of these ideas are drastically changing how we organize to accomplish the necessary work, and in turn how we manage those organizational structures and resources. This suggests more unique, highly focused niched application systems with integration of information and systems across organizational and agent boundaries - no IT system is an island.
How this affects the CIO and enterprise IT:
All of this is changing the role of the CIO before our very eyes. Not only are there new systems, business and delivery models, types of information, technologies, etc., but whole new roles for IT in the enterprise's ecosystem. These new business insights, tied to the emergence of new technologies, are creating an opportunity for IT to lead business transformational efforts, creating new business models, initiating new business processes and making the enterprise agile in this challenging economic environment.
Leveraging that change requires starting with a conversation that CIOs, CEOs and the rest other members of the C-suite should be having, but aren't. Here's a start to that conversation.
In future pieces, I will explore the dramatic business changes and challenges that are affecting the C-suite and the role of the CIO; look at how innovation, as the only way to create long-term profit, provides a solution to these challenges; and outline the new conversation that CIOs should be having in the C-suite.
Many organizations are approaching the tipping point being described in this series of blogs. Stepping into the role of strategic visionary and business driver requires CIOs to have a completely new conversation with their C-suite colleagues. To begin the conversation, Dell, HBR, and CIO magazine are sponsoring a Harvard Business Review panel discussion, "Change the Conversation, Change the Game," through a webinar, broadcasting live from The CIO Leadership event in Boca Raton, Florida May 5-7, 2013.