McKinsey research: IT needs a kick in the keister

McKinsey research: IT needs a kick in the keister

Summary: A new study shows increasing dissatisfaction with IT and the CIO. Here's the problem and some solutions.

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TOPICS: CXO
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A new study from strategy consulting firm, McKinsey, shows “growing dissatisfaction” with IT performance, from both business users and within the ranks of IT itself. The study notes that almost one-third of IT respondents believe replacing their own leadership should be a top priority to improve IT performance.

This data signals a growing crisis, in which the CIO and IT are evolving but have not yet found their rightful place during a time in which expectations of IT are changing rapidly. Among the CIO’s greatest challenges is leading IT from its established role as infrastructure provider to help drive organization-wide business transformation efforts.

Also read: Cutting IT costs is so 2011

For many organizations, making this change requires IT to develop business skills and strategy experience that it may not currently possess. Simultaneously, it will take time for many companies to accept a new role for IT, which layers innovation and strategy onto its historical position as the provider of corporate technology infrastructure. The McKinsey survey offers evidence that we are in this challenging transitional period.

Perceived decline in IT performance. The following chart shows that respondents from IT view themselves primarily as managers of corporate infrastructure. Areas such as innovation and adding business value are much lower on the list. Importantly, IT's perception of its own performance declined over the last year:

McKinsey - IT as infrastructure provider

 IT executives: "replace our management." The report presents a striking indictment against confidence in the CIO: 

enthusiasm to replace management highlights the concerns of some IT organizations that their leaders cannot manage change in rapidly evolving circumstances. Just 55 percent of all executives say their CIOs have a significant impact on their organizations’ business issues

Wow! One could hardly imagine a clearer statement that CIOs are not properly managing the infrastructure-to-digital transition for IT. As this table shows, IT executives view their own leadership even more harshly than do non-IT execs:

McKinsey - replacing IT management is a priority

This last chart suggests two important points. First, both business and IT executives recognize that business leaders must have greater accountability for the outcomes of IT projects. Second, both groups see the need to reallocate IT spending and ensure it aligns with business needs.

These points reflect the reality that IT is not separate from the business, even though many companies act as if IT projects are somehow different from company activities in non-technology areas.

Thoughts for the CIOs among us

For CIOs and IT, the message is clear and definite: being an infrastructure provider is not sufficient to meet expectations of today's business leaders and IT executives.

As I wrote previously, research from CIO Magazine's State of the CIO 2014 survey confirms this view:

Cost-center CIOs must finish a major enterprise project, simplify IT and cut technology spending by a set percentage. Game-changers are being asked to lead product innovation efforts and enable global expansion.

There is a polarization to what's happening

For years, we have spoken about IT and the CIO adding business value. This vague terminology is virtually useless without a concrete discussion that explains specifically how IT will engage with business leaders to understand and solve their specific problems.

Fellow ZDNet author, Dion Hinchcliffe, summarizes the adaptation that CIOs must undertake:

The CIO should... translate the current business into today's emerging digital marketplaces and channels. And yes, that means knowing more about how to apply digital to the various parts of the enterprise than line of business executives. Relentless education and experimentation is required here to be successful. The CIO should be the visionary and evangelist that can get the business -- from the management team to the workforce -- fully on board with digital business.

The best CIOs understand that engagement — talking, listening, learning, and doing —are the hallmark activities for CIO greatness and achievement.

Topic: CXO

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8 comments
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  • Look

    The number one problem facing businesses today is nepotism!

    This goes for IT as well... People are eliminating skilled employees in order to keep their friends and family in a job regardless of their skill levels.

    This is why quality is lacking and accountability as well.

    It is the fleecing of American businesses and does as much damage to the country as some unions have done to hurt their respective industries.
    slickjim
    • I would agree with one imporatnt addition

      It’s not only nepotism, but it’s the same old practice that has plagued American business for a long long time; "The Peter Principle". Meaning continually move people up who are either incompetent, lack skills and knowledge or simply lack the know how to do the job. It can be witnessed every day in any business and it’s global. The reson of course is to try to move these people higher to "get them out of the way", unfortunately, most are moved into even more important decision making positions. My observation is that senior management and some executives are simply scared of people who are "below" them on the food chain. More of the low bottom feeder IT employees actually have more skill, more knowledge, better leadership skills and more understanding on how their particular business environments that theuy support are operating. They even have more knowledge and understanding then the business (side) executives. They have vision, are innovative and creative and possess superior business acumen. It is really sad to witness because so many of these IT organizations do have promise and can really make a difference to business competitiveness. Sadly, however, because of this “skill threat” from the lower-end staff, those managing will make sure that these highly effective IT staff members are held back as much as possible as to not risk their own positions. They are truly incompetent management and they know it, or we could say "that is one thing upper IT managment does know".
      BruinB88
    • look, you missed a lot of obvious factors as well

      Job offshoring by management to save a buck,
      The market forces demanding you put something on it first and fixing it later (Microsoft execs were known for saying that, too),
      People blindly supporting it...
      Piracy...

      Not saying you're wrong, but I will admit in not painting the big picture. Your ignoring what the media has put out time and again is more interesting...

      And if you hare unions, give up your vacation time, sick time, middle class wage, company-funded retirement contribution, company-subsidized education..
      HypnoToad72
  • McKinsey : that says it all

    Whatever this loony company comes up with is merely intended to drive its own business.
    The likes of McK try hard to establish new trends so they stay in business.
    Yikes.
    EnticingHavoc
  • Overemphasis on "team player", lack of individual accountability

    Way too much "team" emphasis, where some individuals pick up the slack from non-performers. It's not necessarily that those folks aren't trying...they just aren't very good at what they do. It's common for managers to think the solution for tight timelines is to throw more bodies at a project, even though addition of sub-par skill levels causes more problems than it solves. And then those who are competent have their hands full simply trying to keep up with fixing the cruft that comes out of the new team members in such body shops. There is little to no accountability mechanism for the quality of output of individuals in such body shops, because their lack of competence is not seen, having been covered by those who are capable.

    This whole scenario is prevalent, and is a huge drag on IT performance and time-to-market. This is why so many start-ups can turn on a dime, and out-innovate larger companies: they are not burdened with body-shop syndrome!

    Clue to IT managers: smaller teams are often better, and more productive, given competent members, than larger teams with the same number of competent folks plus additional incompetent ones. Find ways to do near real-time quality feedback loops on output at the individual level (e.g., for app devs, run a CI build frequently, that does static code analysis on committed code and knows who did the commit for each set of changes).
    Techboy_z
  • IT management - the blind leading the deaf.

    Once the rank and file realize what idiots they have as managers, they do their best to ignore their idiotic projects and get the real work done instead. If the rank and file did exactly what their idiotic managers wanted, the company would go out of business. After a decent interval, the idiotic project gets recognized for what it was, and permanently shelved. Business goes on.
    thetwonkey
  • CEOs who are serious about creating Strategic IT oganiztions must invest $

    In some ways, a CIO who have been relegated to being a senior manager of a cost center, are probably better off moving to companies even if those companies now claim they want IT to play some kind of strategic role. Even if that CIO is capable of making the shift, there is too much baggage and legacy impression to overcome.

    In addition, note the contradiction, that after a decade of year-over-year cutting of IT budgets:
    * Few executives, including IT executives indicated that IT budgets would increase

    * Over 40 percent indicated that IT budgets should be reallocated to focus on critical drivers of business value

    * About 1/3 indicated that IT should improve the talent and capabilities of IT staff


    In other words, squeeze the living daylights out of the budget, change the allocation of what little is left, and don’t invest in potential of your human resources. It’s no wonder everyone, including IT, sees declining performance and contribution from IT.
    elizab
  • Respect?

    In my 20 years experience, the comments made here about cutting IT budgets are one of the most important factors. I worked in a large government organization where the CIO was a former college IT professor. He preached training at every meeting. Yet whenever anyone requested training classes, they were--more often than not--denied permission.

    Also important I think are people in upper management making important IT decisions, for example what critical software will be purchased and implemented for the help desk, who have no IT experience at all. Sure, IT is represented in the meetings about it, but in the end they base decisions not on how difficult it will be to support, implement and train the users on, but on the bottom line. Then when problems inevitably arise in supporting, implementing and training, who do they blame? Well it's the fault of IT, of course!

    What I think the gist of it is, at least in my experience, is that organizations need IT--sometimes desperately--but they don't respect IT. They don't understand that poor IT-related decisions affect not only the IT department, but the entire organization.
    TechieInLA