The world of IT is bifurcating into infrastructure providers and innovators. It’s time for CIOs to get on the right side of that wave.
Gartner analyst, Mark P. McDonald, wrote a compelling piece showing IT growth rates over the last decade. Here's his graphic showing the trend:
You can see that IT growth rates have declined dramatically and are rising slowly. Given high activity levels around computing that we see in the enterprise, Mark tries to reconcile these slowing growth rates. His conclusion:
It’s difficult to reconcile these budget numbers against the level of IT activity. CIOs and IT have been busy over the past ten years. Activity requires funding, so in an environment of flat budgets you have to ask where is the money coming from?
The answer is most of the money has come from IT sweating its assets and resources — doing more with less. Or more accurately doing more while keeping the budget flat. Outsourcing, offshoring, consolidation, renegotiating contracts all play a role in cutting IT costs and keeping them down, even in the face of increased transaction and data storage demands. This has made IT infrastructure one of the most productive resources in the organization.
We can conclude that most organizations view IT as a means to increase productivity and efficiency, rather than a source of innovation and business transformation.
As another data point, Gartner analyst Laura McLellan predicts, "by 2017 the CMO will Spend More on IT Than the CIO." Her webinar on this topic includes the following slide, showing that marketing budgets are large and growing more rapidly than those in IT:
This next chart completes the picture: marketing is taking more control over its own technology budget and leaving IT in the dust:
The implications here are clear: the enterprise increasingly views IT as a commodity while marketing seeks to control its own technology destiny.
STRATEGY IMPLICATIONS FOR THE CIO
If you are a CIO, you can take several steps to prevent your IT organization from becoming marginalized.
Consider the following points to help turn your IT organization into a source of innovation and transformation:
- Execute with excellence: deliver your projects on time and within budget. When IT fails to deliver the basics, it loses credibility and undermines attempts to raise the bar in other areas. Make sure that IT supplies basic infrastructure, security, and reliability without a lot of fanfare. At the most basic level, IT should disappear because things just work.
- Make friends with the business. Get engaged and meet with folks from marketing and the lines of business. If you do not understand what these folks need to get their jobs done, you diminish your capacity to offer beneficial assistance. Seriously, spend lots of time with them.
- Take a leadership role. Having achieved delivery excellence and learned to understand the business, you are now actually in a position to make a change. Be strategic in your thinking, so the business perceives value in your proposals; if you can help drive a material transformation or improvement, the business will find your suggestions useful.
- Communicate with simplicity. After coming up with ideas, develop simple messages and language to test your ideas with folks from the business. Avoiding all technical jargon and concepts has two benefits: first and most important, it forces you to think clearly and crisply; second, simplicity increases the chances that the business audience will understand your intent and see the benefits.
- Repeat and evolve. Becoming an innovation partner and breaking patterns of the past requires commitment, so be prepared to invest time and energy. Continue delivering with excellence, talking with the business, being a leader, and presenting your ideas in simple, clear terms.
The world of CIOs and IT is likely to split into infrastructure providers and innovation partners. To become a genuine partner to the business, start taking steps today. If you don't make a change soon, your IT organization may end up a commodity shop in a transforming world.