CIO Barometer: A Storm Is Coming

Like green and red Doppler on a weather map, the new attitudes loom over CSC’s CIO Barometer 2012 report, based on a survey of more than 330 IT directors and managers at major North American and European companies and public agencies. The survey was conducted in conjunction with TNS Sofres, a Paris-based market research institute.

Although more than 80% of business leaders surveyed believe technology is fundamental to their business model, many do not rely on the IT department to satisfy this need. Some view IT as overwhelmed by its simultaneous demands for cost reduction, simplification and better/cheaper/faster services.

Most damaging is the survey’s finding that many top business managers see IT as a cost center, not as a true business partner. Nearly 45% of respondents say general management views IT as a cost center, while only 35% say management views IT as a collaborative partner. In a separate question, 25% acknowledged that their company doesn’t even view IT as a driver of innovation.

This means CIOs must not only reposition IT as a strategic consultant to top management, but must also repel any attempts by mobile users to cut IT out of the process. It’s a delicate balancing act, creating value while preserving IT control and coherence across the enterprise.

“Fundamentally, we see ourselves as service providers delivering internal solutions,” says Klaus Glatz, CIO of Andritz AG, an Austrian systems integrator. “On the one hand, we support the necessary solutions and services, and on the other hand we determine, together with the business, what solutions need to be used. This consulting role is very important to us.”

Even if CIOs are able to pull off the balancing act and demonstrate their value, they have to do so in an environment of tight budgets. More than half of survey respondents expect their budgets to remain flat this year, and 5% expect a drop. When asked to list the main problems limiting the innovation leadership of the IT department, 53% named “budget constraints” — by far their top choice.

CIOs are being asked to hold or reduce not only IT costs, but also those of the overall organization. “IT must make a double contribution,” says Jörn Riedel, CIO of the city of Hamburg, Germany. “On the one hand, we use our resources as economically as possible. On the other hand, our automation efforts should also lead to more efficient administrative action in many areas, and make processes more streamlined and less costly.”

Air France KLM plans to downsize by 15% between now and 2014. “It’s all about doing more with less,” says Deputy CIO Jean-Christophe Lalanne. In part, he’ll do it by outsourcing certain activities.

In this respect, Lalanne is far from alone. Fifty-five percent of CIO Barometer survey respondents said the impact of outsourcing on cutting costs is positive, while only 17% said the impact is negative.

What’s more, demand for outsourcing seems poised for growth. Nearly half the survey respondents said one of their top priorities for the coming year was to spend more on IT outsourcing. Already, nearly three-quarters of IT departments in the survey outsource at least a quarter of their IT activities. And half say outsourced projects are every bit as visible as those conducted internally.

BYOD boom

One of the biggest trends behind the change in the CIO’s role is BYOD, short for “bring your own device.” BYOD refers to growing demands by employees for the ability to access enterprise data and applications using personal smartphones and computing tablets from anywhere, at any time. From a CIO’s perspective, users are taking control of IT. Technological innovations, formerly driven by business demands, are now aimed at satisfying users’ desires.

In the CIO Barometer 2012 survey, extending mobile applications was cited as a top priority by 62% of European respondents, while in the U.S., mobile applications in general were cited as a top priority by a similarly impressive 58% of respondents. That priority, in turn, will require new modular IT systems “to keep pace with the rise of the Web, mobile technologies and social networks ... without major impact,” says Pierre Gressier, CIO of Groupe 3 Suisses International, an e-commerce and services provider.

Several benefits are driving the growth of mobile technology. One is cost: Mobile devices are generally less expensive than equivalent PCs or terminals. Another benefit: increased responsiveness and flexibility. With some 80% of workers now on the Internet, organizations can rely on mobile devices to easily and quickly communicate with staff, further enhancing standardization and consistency. Yet another benefit: worker motivation.

TNS Sofres reports that 45% of employees say their personal devices and software are more useful than the devices and software provided by their employers. And nearly 90% of managers agree that mobile devices can improve the job satisfaction of their staffs.

Yet the mobile revolution also presents challenges to CIOs and their IT departments, particularly in security and authentication. When mobile users try to access an enterprise application or data, the enterprise must determine the users’ identities and access privileges. Specifically, are these users who they say they are? And if so, are they permitted to gain access to this data or application?

Even after a transaction is permitted, it must be protected against hackers, thieves and other bad guys. This also goes for mobile devices that are stolen or lost. More than 70% of companies say that more use of mobile devices by their employees results in more security incidents.

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