Many business leaders see IT as 'commodity': survey

Many business leaders see IT as 'commodity': survey

Summary: Business leaders say IT's role in business innovation is accelerating, but IT managers aren't up to the task. Is this a fair perception?


A majority of business leaders believe their information technology functions are on the verge of a major, impending disruption, and 43% say their company will increasingly use IT "as a commodity service that is bought as and when needed."

That's the gist of a new survey of 536 business leaders, released by The Economist Intelligence Unit and sponsored by Dell Services. As reported by CIO's Thor Olavsrud, at least 57% if the C-suite executives say transformation is imminent with the next three years.  However, many don't feel their CIOs are up for the challenges -- only 46% say their CIOs understand the business and only 44% say their CIOs understand the technical risks involved in new ways of using IT. In addition, Olavsrud reports, one in six CIOs don't really have a hand in forumating business strategy.

Is this an indictment of CIOs, or an indictment of business-side executives who are blind to the potential of IT to move businesses forward into an increasingly, hyper-competitive global market? The survey shows little doubt that IT will drive the business forward with new innovations and ways to connect with customers.

And, tellingly, companies that recognize the value of their IT resources do better In their markets, the survey finds. For example, of the 37% of respondents who said their CIO was actively involved in setting business strategy, 47% -- versus 28% of those with silent CIOs.

As for the increasing perception that IT is a commodity, this has been building for more than a decade now. IT resources have become increasingly cheap and yet more powerful. Now, the cloud offer alternatives outside the enterprise walls.

Still, having all the state-of-the-art computing resources in the world do not alone make a well-run company -- any more than having great video and editing technology will turn its user into the next Steven Spielberg, or merely owning a Stradivarius violin will make someone a great musician. It takes a special mix of vision, along with an ability to get people passionate and committed, and lots and lots of hard work to make a company rise above the competition.

To take the musician analogy a step further, think of the CIO as an orchestra conductor, pulling in the right technology solutions and IT pros just at the right times to make things hum.

The report also provides some advice to both CIOs and business leaders, including the need to push IT services budgeting down to the business unit level so "the people who pay for an IT service are those who benefit from it," and to think more widely about the role of IT in the business.

Topic: CXO

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  • Self-fulfilling prophecy

    Most CEOs and CFOs treat their CIOs as administrators rather than strategists. Their only mandate for improvement is to lower costs, not to innovate or drive business objectives.

    But there's a lot of blame to go around. Many CIOs who have risen from the ranks do not have adequate business and entrepreneurial experience. They spend too much time looking for technical "silver bullets" when what they should really be focused on are their organization and process issues. And far too many IT operations end up looking like outside service providers instead of integral parts of the business. They have in essence disconnected and "outsourced" themselves.
    terry flores
  • RBS just found out... much that commodity can cost if failed...
  • Lessons learned

    The company I work for (a Fortune 500 company) was recently acquired by a larger rival. The parent company treated IT as a commodity and outsourced pretty much every aspect of their IT to a third party contracting firm. My company's core functions are all handled in-house. Their IT infrastructure is a horrible mess, with embarrassing, widespread service outages and ridiculous security holes throughout. Our IT infrastructure is consistently lauded for for its efficicency and organization. Guess who's being retained to build and manage the new environment we're creating for the merged company? We are.

    Penny wise pound foolish definitely applies to IT. The company that acquired us learned that lesson.
  • Orchestras

    Have a score and rehearsals, surely this isn't agile enough for a modern business?
  • Really?

    How many companies have processes, systems, and data so generic that IT can be treated as a commodity? Like water coming out of the tap or electricity out of the socket? If this was the case nearly all ERP installations would be vanilla. People greatly underestimate how important staff knowledge is. You can’t capture everything about your company in Word documents and Visio diagrams. What they are essentially saying is that the PEOPLE and what those people know are commodities. They are deceiving themselves because they want to trim their budgets and outsource their problems. Learn the hard way, I guess.