Innovating for growth: IT’s role in the new global economy
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14 Aprilie 2011 |
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ERNST & YOUNG S.R.L. |
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In recent years, the role of IT has been changing – in some cases radically. Rather than being seen merely as a utility, the function is increasingly expected to come up with innovative business improvements.
Post-recession, organizations inhabit a very different global economy and IT has a vital part to play in supporting change and growth.
With competition increasingly being shaped by a number of macroeconomic factors, IT leaders have to understand the dynamics of this “new normal” and work closely with the business to address the challenges.
Executive summary
There is considerable confidence in IT’s potential to help organizations respond to marketplace changes. The responses suggest that businesses are looking to their IT departments for innovative strategic and operational solutions. However, almost three-quarters (73%) feel that IT could take a more active role in innovation.
The CIO could become a key figure in driving business change. In particular, IT is expected to provide essential data management to help analyze markets and customers and focus on more profitable segments. Respondents also believe IT can help manage future economic and business trends, such as consolidating markets, geographical shifts in economic power and increasing regulation.
Just 15% of respondents believe the IT function is very well prepared for future demands. Although most of those takingpart in the survey acknowledge the potential of IT to help transform the business, there is a feeling that it has yet to fully deliver on this promise.
To better manage stakeholders, IT should improve its understanding of business needs and communicate more effectively. With outsourcing prevalent, around half of those surveyed feel that IT should enhance its skills in managingcontractual relationships.
Non-board respondents are concerned about IT’s budget planning and control capabilities. And only 4 in 10 say their organization measures return on IT investment. However, most of those involved in the survey are confident that their board has a complete picture of all IT expenditure.
Across the survey, CIOs tend to have a higher opinion of their performance than their non-board and C-suite counterparts. This suggests that IT should keep in closer touch with other departments to gauge and improve their standing.
Is IT ready for the future?
The survey suggests that IT has some way to go before it becomes a true partner to the business. Only 15% of respondents feel that the function is very well prepared for future demands.
Participants in the global survey have mixed expectations on how IT can support the business over the coming years. Although many are looking to IT for innovative, strategic input, there are also some doubts over the department's ability to deliver.
Interestingly, respondents from India, the Middle East and Africa have far greater confidence in IT's readiness – as do those working in the financial services sector. The business feels that IT has the technology capability to cope with future demands, but that it lacks the appropriate skills and trained staff.
The rapidly changing competitive environment may call for a more involved role for IT, and the survey indicates that many organizations are stepping up to this challenge. When asked what stage of evolution the IT function had reached, almost 6 out of 10 (57%) feel that it is at the critical "transformer/performer" phase – quite a progression from its more traditional role as utility or protector (where its main objective is to keep the business running and manage the IT estate).
The different survey participants vary in their perception of how far IT has evolved. The majority of CIOs see the function as a more advanced “performer/transformer,” but almost half of those in a C-suite position view IT as a basic “utility/protector.” These results suggest that IT leaders exert less influence than they realize at the most senior levels. Indeed, less than one in three (28%) of executives report that the CIO (or equivalent) occupies a seat on the board of their organization.
There are also some major regional differences in the role and status of IT. Whereas 85% of US respondents say their company has a CIO, very few Chinese companies in the survey have either a CIO or a CTO (chief technology officer) and virtually none have a chief innovation officer. This reflects the relatively low importance IT appears to hold in Chinese businesses, with the survey showing that the function is often seen as a “protector” that manages the IT estate.
Brazilian businesses, on the other hand, appear to view IT as a critical strategic partner. Over half of the executives from this South American powerhouse say their company has a CTO and a huge 41% view IT as a “transformer” – more than any other country in the survey. IT’s position differs yet again in the US, the UK, the Middle East and India, where it’s seen as a “performer” that adds business value but is not essential to transforming the organization. Finally, respondents from Eastern Europe consider IT as a “utility” that essentially “keeps the lights on.”
Regardless of the economic progress in emerging markets, it seems that, when it comes to IT, China and Eastern Europe are not quite as enlightened in their thinking. Such a maturity gap could provide an opportunity for more developed economies to gain a competitive technology advantage.
A potential force for change
Although the average CIO has yet to reach the corporate board, organizations are starting to realize the latent possibilities within IT. A majority (61%) of executives taking part in the survey believe that IT should focus on driving innovation in business processes. Respondents also recognize that IT touches every part of the organization and feel that innovative technology solutions could bring benefits across the business to sales, finance, operations, customer service and marketing. Over two-thirds (71%) believe that its board appreciates and understands the transformative potential of IT. However, around half of the C-suite and non-board members taking part in the survey feel that IT is not delivering on this potential to meet the needs of the business. Interestingly, such a view is not shared by the CIOs, who evidently face a challenge to change perceptions of their department’s value.
And IT gets a higher rating in certain sectors, notably financial services and technology and communications, where the function is more likely to be a key contributor to the core business. However, respondents from the heavy industries of mining and metals and transport (where there is typically less dependence on knowledge and fast-moving consumer preferences) scored IT poorly in terms of meeting the business needs. This may reflect the overall position of IT within these organizations as much as its actual performance.
