According to some of the headlines generated by the results of the 17th Harvey Nash CIO Survey, CEOs are now focusing more on how to use IT as a means of generating revenue as opposed to cutting costs.
The key figures behind the headlines are that 34% of the 3,700 technology leaders that responded to the survey said that their CEO is more interested in IT investments that save the business money whereas 66% said that their CEO saw driving revenue as the main priority for IT. These findings reflect the importance of IT in the digital world where technology is being used to enable new business models and create new products and services and enhance the customer experience.
However, the figures on IT priorities have barely changed in the last three years; in 2013 38% of CIOs said that the priority for technology was cost reduction and in 2014 it was 36%. And the corresponding figures for CEOs wanting to use technology to generate revenue were 62% in 2013 and 64% in 2014. In absolute terms the findings over the last few years do show a modest increase in the number of CEOs that see IT as a means to drive revenue. But the implied growth is almost certainly within the margin of error for the survey’s results. In other words, with such small changes in the numbers, the results cannot be used as an indicator that CEOs have changed their view about the priority for using technology over the last few years. In fact it is probably more accurate to say that CEOs have been fairly consistent about wanting IT focus on growing the business instead of cutting costs.
The real issue in these findings is whether, after hearing the same thing from CEOs for the last three years, CIOs are rising to the challenge of creating new revenue streams using technology. Historically, CIOs and IT functions have had an internal focus; using technology to automate, improve and control the organisation’s existing business processes and making its existing operations cheaper, quicker and more consistent. That will always be a key objective of the IT function. But as the threats and opportunities of digital have become apparent, the rest of the business has started to focus on how they can use technology to create digital experiences, products and services. This is an outward, customer-led perspective and it is new territory for many CIOs and IT departments.
Can CIOs rise to the challenge? Are they capable of switching their focus from cost control to revenue generation? Based on the evidence to date it would seem that many CIOs have struggled to make the change. The growth of shadow IT and the Chief Digital Officer role imply that many organisations have a leadership gap when it comes to using technology and digital to grow the business. The Harvey Nash survey found that 18% of CIOs are leading digital within their organisation. Whilst this is an increase from the 10% that said they were leading digital in 2013 it still seems relatively low.
Digital is not all about technology, however. And it also spans the entire organisation. No one executive can own digital; it requires collaboration and a joined-up approach across all functions. But digital only exists because of technology. The application and impact of digital will vary across industries and organisations but one thing is certain: technology will be key. Without technology there can be no digital business models, products or services. CIOs should therefore be playing a leading role in every business.
The CIO and the IT function occupy a unique position within the organisation; no other role or function has the same end-to-end view of the business allowing them to gain an unparalleled understanding of the people, process and technology issues spanning the full business lifecycle. This end-to-end perspective is key to creating seamless digital experiences and identifying opportunities to use technology to create new revenue streams. No other executive has the knowledge of technology and the end-to-end view of the business. CIOs should, therefore, be the obvious choice to lead digital initiatives.
Digital is inevitable. It will impact every industry and business at some point. For 34% of the respondents in the Harvey Nash survey it is already happening while a further 28% expect their organisation to be disrupted by digital within the next two years. And only one in ten CIOs believe their organisation will be unaffected by digital disruption in the foreseeable future.
Digital is a real opportunity for CIOs to reposition themselves as business leaders within their organisation. But this will only happen if they can rise to the challenge of shaping and leading their organisation’s digital initiatives. As the Harvey Nash survey reported, a small number of CIOs are already playing a key role in the digital transformation of their business. It is time for the rest to step up.