Faced with cost pressures and the encroachment of ‘shadow IT,’ CIOs need to demonstrate multiple traits, says Constellation Research’s Ray Wang.
Just three years ago, CIOs were riding high. They had multi-million dollar project budgets, and pretty much full control over IT across the enterprise. But following the global financial crisis and the rise of the consumerization of IT, a lot of things have changed about the role. I’d argue there are now four distinct personas of the next-generation CIO:
Chief infrastructure officer
With this kind of persona, the focus is on trying to reduce costs, to do more with less. It’s all about operational efficiency and keeping the lights on. That can account for as much as 60% to 70% of an organization’s IT budget.
Chief integration officer
Part of the job here is to bring together the IT from all the M&As an organization might make. But, more importantly, this persona is expected to connect internal systems with those of suppliers, customers and partners as the supply chain is extended. And 15% to 30% of the budget is allocated here.
Chief intelligence officer
The challenge is to ensure the right information is delivered to the right person at the right time on the right security model and, of course, on the right form factor. And today that can account for 25% to 30% of the budget.
Chief innovation officer
This is not necessarily someone from the IT side — often it’s an individual drawn from the business side or the transformation office. Their job is to figure out which new technologies and processes will have the greatest impact on the business.
There are very few individuals in which all four of these skillsets come together. At very large organizations, you might find four lieutenants to the CIO — separately playing these roles. But what we observe elsewhere is that “shadow IT” [in which business groups purchase and introduce their own solutions outside of the control of the IT organization] is emerging to fill some facets of these functions.
On average, IT budgets are being cut by 5% year-over-year. However, net spending on IT is up 18% to 22%. Guess who’s got the money? The business. The reason the IT budget is being whittled down is that the business side is buying SaaS applications and iPads; it’s testing out new tools. The pendulum will continue to swing towards the business side for the next two years, but then start to come back again as IT is tasked with rationalizing what’s going on with shadow IT. So given the priorities are shifting, it’s very important that CIOs coordinate the different roles they are expected to fulfill, working as closely as possible with their business colleagues.
• Ray Wang is principal analyst, founder and CEO at research and advisory firm Constellation Research, and author of the popular enterprise software blog, A Software Insider’s Point of View. He also blogs for Forbes and the Harvard Business Review, and has served at Forrester Research, Deloitte Consulting, Ernst &Young, Oracle and PeopleSoft.