The second trend is the emergence of Software as a Service (SaaS) and the related Freemium business model: entire departments are adopting SaaS solutions without consulting the CIO, and it’s extremely easy for them to do: all they need is a credit card to sign-up to an online service, something they’re used to do at home. Think of HR implementing the latest talent management SaaS solution, a sales department migrating to SalesForce.com, etc. During the events I attended, a few attempts were made to put a percentage against how much of the IT budget is actually being spent outside of IT. Independently from the exact percentage, it is a fact that the CIO has lost control of this budget, and it ain’t coming back. Trying to regain this control by locking down firewalls, implementing policies is clearly not working: one recurring phrase I heard was “if users want to do it, and you tell them they can’t, they’ll find a way. You’d better give them a better and faster alternative.”
The third trend, which we’ve heard about for a while now, is the emergence of IT as a profit centre, with the CIO having a more active role in revenue generation, and ultimately a seat on the board. Trevor Didcock (CIO EasyJet) and Nick Beighton (CFO Asos) were illuminating: IT brings inimitable success factors to the company; among others, cost to serve in the case of Easyjet, and an items’ range that would require 50 Selfridges in the “real world” in the case of Asos (a strategy similar to Amazon’s. A good reading on the topic is W. Chan Kim’s and Renée Mauborgne’s Blue Ocean Strategy). And no, I don’t buy that this only happens in businesses that are prevalently online: if you want to hear everything about the future of IT talk to Volkswagen’s or BMW’s CIOs: IT success in these companies is measured against how many cars are coming out at every single shift. Literally, it’s their KPI. At the CIO Connect Annual Conference we were asked to discuss a case study where a technical publications’ company moves from books into e-books, online databases, etc. In my opinion this was an excellent example of how IT is taking centre stage, moving to the core business of each company.
Where these trends will lead to was the big question. Some very interesting conclusions on the case studies will be published by CIO Connect, but a broad answer is already emerging: the role of the CIO will more and more split between an operational and a business role. The first will be responsible for keeping the systems running, secure and efficient, and will be measured on cost; this will require embracing SaaS where appropriate, involving third parties, outsourcing, and striking the right balance between mandating some IT decisions and taking a more consultative role for others. The second side of the CIO role will be more business-centric role, and will be looking into IT as a business driver; this will require leveraging on IT for anticipating market trends and customer needs, using IT to open new markets and engage with a broader audience. An interesting aspect is that for this second role to be successful, CIOs will need to embrace external innovation, with a broad consensus towards the up and coming startups: the IT titans of the past won’t provide that differentiation that is needed to make IT unique. Ultimately this latter role will become central for any kind of business, with the majority of the IT budget (someone was talking about 80%) being allocated to this.
If you’d like to discuss, either comment on this blog or contact me directly: firstname.lastname@example.org