Business has enjoyed unprecedented productivity growth for the past two decades, fueled primarily by the increasing use and sophistication of IT. Businesses are not only dependent on IT but, more importantly, the high productivity workflow processes enabled by IT have become the frontline in global competitive differentiation. The role of CIO has therefore evolved beyond managing technology to being a key strategic competitive partner. Many organizations have renamed the role of CIO to Chief Process Officer to better reflect its responsibility for the efficient and effective management of the firm’s operational infrastructure.
The increased scope of the role, coupled with the unparalleled rate of technological change, has compounded the challenges that CIOs and other corporate executives face. For example:
1. Vendor and Technology Selection.
The efficiency of the free enterprise system is built upon the foundation of the educated consumer. With technology becoming so specialized and evolving so quickly, it is almost impossible for people within your organization to be “educated consumers”. Given the rapid pace of technological change, coupled with their normal workload, most technical resources are unable to keep up with the market and technology. As an executive officer of your company, you must ask yourself, are my “technical buyers” truly educated and objective?
2. Convergence Implications
Many technology silos are now converging and vendors are offering a much broader array of functionality and claim to “do it all.” The problem is always in the details, since each vendor has unique strengths and weaknesses. How do you tell which is the best solution for your particular business requirements? Can you assume the vendor is objective and is going to act completely in your best interests?
3. The People Challenge: Recruiting, Training and Retaining
IT organizations face a current and growing talent availability crisis. College enrollment in computer science has declined by 70% over the past decade, resulting in critical skills shortages in a number of technology areas. Compounding the issue is the increasing complexity and knowledge required to be proficient in a specific technical domain. Rapid technological evolution makes it extremely difficult for IT resources to keep their skills current unless they are working in a single technology area on a full time basis, which is rare except in the largest IT centric companies.
Many technical resources believe they must “follow the technology” and therefore have short retention times since a company rarely implements each technology generation. This employment cycle persists as long as the evolution of technology is faster than the life of a deployment generation at the employing company. As a result, companies are faced with the following issues:
- Rapid talent turnover
- High recruiting costs
- Inadequate technical skills of the current staff
- Inability to find skilled talent
4. Improving Competitiveness while Reducing Costs
The return on an IT resource is the value that he/she creates per unit time or per dollar expense. Value created means value to the firm’s customer. So applying portfolio theory to IT management indicates that we should allocate our scarce resources among those tasks that create the highest customer value. This would maximize our profitability and competitive position. These tasks tend to be the most customer facing applications and systems. Core infrastructure tasks, such as networking, communications, servers and storage do not create customer value, but rather are vehicles that permit value creation. Therefore, you should apply your resources to those activities with the highest customer value creation and find alternatives for non-domain knowledge specific technical requirements.
5. Summary
Both the role of the CIO and the technology markets have rapidly changed. The traditional model of managing IT organizations must also change in order to remain competitive. To remain effective and efficient, CIOs and other corporate executives must focus internal resources on strategic competitive developments and processes while partnering and outsourcing non-core operations to firms that specialize in the required technology. CIOs today are business managers more than technologists, and must run their businesses with a variety of suppliers and partners in order to maximize their ROI on IT.
|
Challenges
