Why an aversion to risk is the biggest constraint on IT

More than half of CIOs see innovation as a key priority, but they also feel that CEOs are so risk-averse they are unable to get the money to fund the innovation, according to this year's global CIO Survey from Deloitte.
Written by Colin Barker, Contributor

While IT chiefs want to invest for innovation, they also know that the current global climate of austerity means they are going to have trouble getting the money to finance it. Or at least, that is one of the broad conclusions from a global CIO survey which has been produced by the accountants and advisors Deloitte.

According to Kevin Walsh, head of Deloitte’s technology consulting practice, this year’s survey "points to a real shift in board members’ attitudes towards IT investment and the importance of new and digital technologies for business development".

But, as Walsh puts it: "The ongoing lack of innovation budget is very surprising given positive current market conditions and a general acknowledgement that technology is essential for organisations to deliver stronger customer engagement."

Walsh says its not clear whether this is because there is still limited budget for innovation — or, "and perhaps more likely", the responsibility has been shifted away from IT and towards someone else in the organisation.

The attitude of business leaders to risk "is an even bigger constraint than inadequate budgets", the survey found.

While the survey results suggest CIOs are willing to take intelligent risks with IT investments (71 percent of those surveyed class themselves as "risk tolerant, not risk averse"), this appetite for investment does not seem to be reflected in their current portfolios of projects, Deloitte says.

“The next 12 months will be critical for CIOs as their relationship with the business, and in particular the CEO, takes centre stage," Walsh says. "Stronger business relationships will open more opportunities and allow them more ownership and responsibility of the innovation function."

Other key findings include:

IT budgets. In 2014, 77 percent of IT budgets are the same or up from 2013 and 23 percent are down. More than 55 percent of budgets are allocated to business as "usual activities", with the rest split between supporting business change (23 percent) and supporting business growth (22 percent).

IT priorities. Supporting new business needs (71 percent) and driving digital strategy (47 percent) are top of the priority list for the next 12-18 months, the survey says. Reducing IT cost as a priority has dropped more than 20 percent from 2013 (in 2014, 35 percent consider it a priority versus 56 percent in 2013).

Business partnering. CIOs are becoming more "effective business partners" with half of CIOs rating themselves "strong and effective" in that area, which is a 10 percent increase on 2013. However, while 79 percent say that their relationship with the CEO is "very important", only 42 percent would describe that relationship as "very good".

Innovation. Most CIOs have limited budgets for innovation-related activities, which almost half of them put at less than 10 percent of their total budget.

Analytics. Half of CIOs say they are piloting, implementing and adopting analytics which is a change from last year when many respondents said they remained to be convinced of the benefits. The main barriers to adoption are a lack of the right talent to use data (26 percent) and no centralised approach to capturing and analysing data (22 percent).

You will find the Deloitte 2014 Global CIO survey here.

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