“CIOs should build a platform for innovation to unlock its potential.”
Technology-driven innovation is everywhere. It’s in our electronic devices and in almost every product or service we use as customers in some shape or form. From enterprise social media to algothythmic decision-making apps right through to big data and analytics, it’s pervading the corporate world too. The rate and scale of tech innovation is greater than it’s ever been. And it’s only set to continue and speed up as more and more firms tackle the digital agenda.
Brand power and operational excellence are no longer enough to sustain competitive advantage. More than 50% of companies have disappeared from the Fortune 500 over the last 15 years and (depending on which source you look at) the average life of a Fortune 500 company is approximately 30 years. Today’s business leaders must innovate and embrace new technologies, and fast. They must drive disruptions of their own just to survive, let alone stay ahead.
As the traditional go-to person for all things IT-related, the CIO has a clear opportunity to be the catalyst and biggest champion of technology-driven innovation. We believe that to successfully fulfill this mandate, the CIO should focus on providing the ‘platform’ for technology innovation, allowing the business to take the lead in delivering digital initiatives. In other words, to fundamentally enable versus ‘drive’ or ‘own’ the exploitation of new technologies.
The role of the CIO is being stretched to include innovation, integration, digitisation and customer experience. Most CIOs are unable to meet those expectations with the teams, partnership models and ways of working they have today.
In addition, the wider business is becoming more tech-savvy and more informed on how technology is driving business change. We can see this illustrated by the way that IT budgets are being allocated and where technical skills now sit, especially on systems of engagement.
Where the CIO had 80%+ of the overall IT budget in 2011, Gartner predicts that this will be less than 10% by the end of the decade. New senior business roles such as Chief Digital Officer (CDO) and Chief Innovation Officer are taking up the remit for the business enabling, more strategic technology investments. Gartner predict more than 25% of large firms will have a CDO in place by the end of this year with more than 500 already counted in 2014. With relatively chunky budgets and more flexibility to stretch traditional organisational boundaries, they are given the responsibility to bring in new technologies and create digital business models and platforms.
Skills are following suit. For example, more than 50% of Marketing hires in 2013 had technical backgrounds and IDC predicts that 90% of new hires in 2015 will require ICT (Information Communication and Technology) skillsets. The days of “business defines the requirement and IT provides the solution” are no more. IT is now being done progressively more ‘in and by’ the business.
The trend here is that the CIO spends more time looking after IT Operations; the custodian of legacy ‘back-end’ systems and ensuring a secure, reliable infrastructure. How then does the CIO take a prominent innovation role for the business? Looking at the business-as-usual role of the CIO and taking a leaf from the book of how tech and startup firms effectively run IT as a business, the space for the CIO as innovation catalyst becomes quite clear.
The typical CIO wears a number of hats but for most, it’s the one of looking after IT operations and infrastructure that consumes most energy and resource. App rationalization, data center consolidation/outsourcing, shifting more to SaaS or cloud to reduce TCO all the while maintaining secure and reliable systems require significant effort. Any mindshare and resource left is spent on feeding the ever-hungry machine of system and data integration, harmonization projects and incremental change releases.
Many CIOs would love to spend more time on scanning the horizon for new technology and bringing tech-led innovation to the table. The hard truth is that most don’t have the time and level of business intimacy required to do this with the level of impact required.
Rather than looking to find and bring in new technologies, the CIO can play from a position of strength on the innovation charge. Most CIOs will have some form of IT or architecture roadmap. By redefining these and establishing new IT operating models, the CIO can provide a digital ready innovation platform for the business to leverage more readily.
For example, providing an incubation environment and brokering the set-up of the right internal and external experts and technical resource for the business to plug into is a compelling draw-card. With these types of business-enabling frameworks and a network of trusted partners in place, the business gets freedom and flexibility in a way that does not compromise the integrity and security of systems overall.
Tech-savvy business natives with deeper understanding of innovation opportunity in their business area can still explore and exploit new technologies. But with the right platform in place, they won’t have the incentive to skirt around the edges of IT or keep initiatives under the radar.
Actively supporting and enabling the business to explore and exploit new technologies and bringing more activity off the edges into the CIO purview has a cumulative benefit. By trying to control less, CIOs will gain more – more transparency into what is happening, better time to value for IT investments, improved business engagement and enablement. With some of the tools that exist today, CIOs can gain real insight into how technology is being used and how effective the digital-ready platform is in enabling the business.
Making it easier for the business to leverage new technologies to drive innovation should be the single objective of today’s CIO. The improved visibility this would facilitate gives the CIO the opportunity to constantly evolve and improve the platform and provide more value-add frameworks for the business to use. For example:
- ‘Toolkits’ and vendor access frameworks for the business to scout, assess, experiment with and pilot new technologies
- Internal, white-label app stores
- Improved internal and external knowledge share and collaboration networks and tools
- Frameworks and hosted environments established for co-creation
- Enhanced integration protocols
- Improved data models and more flexible APIs
These then become just a few of the new tangible and practical products and services that play directly into the CIO’s ‘deliver’ sweet-spot and at the same time putting them in a unique position to fundamentally empower innovation.
Playing a very active role in leading innovation is vital for the CIO to remain business-relevant in today’s fast moving, software-enabled business world. The CIO cannot however be the single protagonist for tech-driven innovation or driving forward the digital agenda. Innovation happens more easily and effectively in the right pockets of the organisation where there is more direct business drive and where the benefits can be achieved and seen more rapidly. The innovation mandate of the CIO is to set out and manage the platform and conditions to introduce, orchestrate and absorb those innovations at scale.
We realise that this point of view does not cover the full extent of the big questions and challenges that the CIO faces on technology innovation and digital transformation and reflects a scenario that will be true for some and not for others. For example:
- How do you get the business P&L owners to really engage and pick up more ownership where you (or someone else) have already been given the digital and innovation agenda to drive?
- It sounds ok in theory, but where does the money and resource come from to do any of this while still needing to deliver on business-as-usual expectations on an already stretched budget?
- What happens to the demand-side of IT and what’s the point of changing my operating model if there’s no real prospect of the business changing theirs?
- It can’t be a ‘one-size’ answer. How do we ring-fence where innovation is happening and protect and still deliver to cover the current baseline business that’s still bringing in the money?
- My organisation tends to work in silos – how can I create a single platform to foster innovation and collaboration in an environment where people don’t work together?
- How can I create a platform for innovation that addresses the complex data and back-end integration requirements but also allows people to plug in and move quickly?