CIO Barometer: A New, Strategic Role
The role of the CIO continues its remarkable transformation. No longer relegated to merely 'keeping the lights on,' today's CIOs are expected to enable their organizations' most important strategies.
In the recent CIO Barometer survey of more than 680 CIOs and other IT executives at large organizations, nearly 65 percent say their IT group is recognized by management for its involvement in the direction of the core business strategy. And slightly more than that say IT leads in innovating and creating value with new technology.
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This is good news for the role of the CIO. Last year's CIO Barometer report painted an uncertain picture for CIOs — as cloud computing, mobility and other trends seemed to shift power away from them. The 2013 report, however, reflects an acceptance of the new realities and a reaffirmation of the CIO role. This is the fifth year of the annual survey, conducted by CSC in conjunction with TNS Sofres across 20 countries for the most global view to date.
What's behind this dramatic transformation of IT and the CIO's role? Equally dramatic changes in both organizational strategies and IT itself.
Companies at the forefront of the digital transformation are redefining the way people around the world communicate, purchase goods and services, share information, watch TV, and even socialize with their families and friends. These trends are permeating the business-to-business marketplace as well. And the spread of mobile technology, cloud computing, social media and other recent IT developments — coupled with the rise of the IT-savvy business manager — has CIOs greatly expanding their technological coverage and collaborating with new partners.
These developments, combined with a challenging global economy, are also making obsolete the traditional IT organizational models relied on by both companies and public agencies.
"Historically, IT was often perceived primarily as a support function," says John Furlong, CIO, Group Insurance at New York-based Guardian Life Insurance Co. "But in the last three years, IT is being viewed more and more as a way to add competitive edge to the corporation." That's the case at Guardian, which aims to expand its insurance business beyond its traditional stronghold in small businesses to reach midsize organizations — an expansion in which Furlong and his IT organization will play a key role.
Technology is changing the role of the CIO — and cloud computing, probably more than any other technology, is a key factor. The cloud removes the need for IT systems and information to reside in an organization's own data center, placing them instead 'in the cloud' — that is, in nearly any Internet-connected location worldwide. Cloud technology also presents CIOs with new opportunities to work with service providers and other partners, and to avail themselves of Software as a Service (SaaS), Storage as a Service and other cloud-based services. These services let CIOs harness the power of the cloud to lower costs, increase flexibility and speed, and beef up cybersecurity.
The cloud is also redefining CIOs' relationships within their organizations. Nontechnical business managers can now buy IT services without the CIO's help or even, in some cases, their knowledge. Chief marketing officers (CMOs), for example, are implementing SaaS-based lead-nurturing solutions, leading some industry watchers to predict that CMOs will actually outspend CIOs on IT before the end of this decade. Similarly, IT investments are also being made by nontechnical managers in HR, purchasing, sales and other areas.
No surprise, then, that more than 70 percent of respondents to the CIO Barometer survey cite the cloud as one of their IT department's biggest challenges. When IT managers were asked to rank the most costly elements in their overall budget for the previous year, nearly 30 percent listed cloud and outsourced services. And this trend is expected to continue. CSC Research Network's FutureTense predictive modeling software forecasts that cloud computing will be cited by as many as 90 percent of respondents in coming years, making the cloud far and away the most cited challenge.
"Cloud computing is a basic requirement to mobilize our business processes," says Marcus Frantz, CIO of OMV, an integrated oil and gas company based in Vienna. "Today we are very close to full orchestration of a private cloud. Our next aim is to provide our services anytime and anywhere."
Mobile technology empowers individual employees to process, consume, manipulate and share huge amounts of information nearly instantly, from almost anywhere in the world, and often at very low cost. But for CIOs, all this mobility creates new IT management challenges. Mobile technology, combined with the related bring-your-own-device (BYOD) trend, is contributing to the transformation of the CIO's role. Like cloud-based services, mobile devices can be easily purchased by nontechnical managers and workers.
Even if the CIOs are not involved with these purchases, they still must integrate these mobile devices with enterprise systems and secure the enterprise against a wide range of mobile threats, including malware, unauthorized access and outright theft.
In the CIO Barometer survey, respondents show concern over these new mobile challenges. Sixty-five percent call the development of mobile applications one of IT's major challenges. Nearly as many (63 percent) also cite managing BYOD and other consumer technologies in the workplace as a top challenge.
For the mail division of France's postal service, La Poste Group, mobile is already making an impact. Some 10,000 French postal carriers are using its Facteo smartphone application right now.
"Technology will help the postal department ... transform itself by using and promoting our biggest asset," says CIO Michel Foulon. "[That's the] 90,000 postmen and postwomen who serve the country every day, whose commitment creates unparalleled trust in the community and powerful customer relationships."
Two other technologies transforming the CIO's role are big data and business analytics. Their development is pushing CIOs to work with unstructured data, such as videos, blogs and tweets. It is also pushing CIOs not only to collect and store data but also to analyze it for predictions about future customer and market behavior.
CIOs are being asked to collect data from new and different sources — sensors and transmitters collectively known as the Internet of Things. Industrial and consumer devices are increasingly being equipped with Internet-connected sensors. Already, many cars can alert their driver when they have a flat or low-pressure tire; now imagine this information being transmitted to a local tire shop. Some industry watchers predict that as many as 50 billion devices will be Internetconnected by 2020.
In the survey, more than 55 percent of respondents listed analytics and big data as one of the most significant developments for IT. Similarly, when asked to prioritize ways of improving operational performance, more than 70 percent cited solutions for knowledge, big data and information management. Many leading CIOs already use big data and analytics to increase sales, identify trends in consumer behavior, understand buying patterns, optimize logistics processes, and develop new products and services.
At Dutch Railways, CIO Hessel Dikkers plans to apply analytics to information collected from smart cards, which the railway’s customers use to buy not only train tickets but also products and services from retail shops in Dutch rail stations.
“In the past, our customers bought paper tickets. What did that tell us about them? Nothing. We didn’t know who was buying the tickets, or whether they were frequent riders,” he says. “The smart-card system will give us a much better picture of our customers, how they use our system and what is important to them.”
IT security and more
The management of expanding IT security is emerging as a top challenge for CIOs — and for good reason. Cloud computing, mobile technology, social media and the growing interconnectedness of enterprises all expose organizations and their employees to increased risk from hacking, theft, malware and other threats.
Security was the most frequently checked box on the 2013 CIO Barometer survey, regardless of region or business sector. Although 63 percent of CIOs surveyed said supporting BYOD was an important major challenge in the coming years, the sentiment was overshadowed by the greater challenge of IT security. In all, 78 percent saw that as a key concern in the next three to five years.
For more IT security insights and a deeper dive into the report’s findings, visit our microsite where you can interact with the data, watch perspective videos, and read more detailed results from the survey on the topics of cloud computing, IT security, big data, mobility, IT culture and managed services. csc.com/cio_barometer.