The world's largest companies say they plan to do everything it takes this year to gain a competitive edge in their markets. In the meantime, their CIOs are still stuck trying to be the best darn technology providers they can be.
Hmmm, a disconnect between CEOs and CIOs? Haven't we heard this one before?
Well, yes. But Gartner Inc. analyst Mark McDonald points to fresh statistics from the Stamford, Conn.-based research firm that suggest the perennial disconnect has more urgency, especially at companies trying to grow faster than the market.
The report surveyed 1,400 CIOs at organizations with an average IT budget of $90 million.
The study found that 63% of business leaders expect their organizations and companies to grow faster than their industry's average growth. That's compared with about 35% of the group in years past, McDonald said.
Not only has the percentage of business leaders focused on growing faster than their markets nearly doubled, but the strategies these business leaders are using to accomplish that goal are also highly stratified.
Among businesses looking to grab market share, 20% said they plan to do so through mergers and acquisition; 28% are pursuing new products and services; 28% are trying to get into new geographies; and 24% are trying to get closer to the customer.
The disconnect with IT?
The CIOs of these aggressive companies are predominantly focusing on one strategy: to continually improve IT services. So, while companies are using highly differentiated strategies to accomplish their goal of beating the market -- mergers and acquisitions, entering new geographical markets, etc. -- their CIOs are stuck in a continuous improvement model.
There is nothing wrong with that model for a company that aims to maintain the status quo, McDonald said. But if the CIO wants to be a "strategic player" in an aggressive company, then IT needs to focus on improving and creating those IT functions that, yes, align with their company's particular growth strategy.
IT has often been criticized for working in silos and failing to align IT objectives with the business. In turn, it's no secret that business leaders, namely CEOs, don't understand the value IT brings to the table. In fact, a recent report from Forrester Research Inc. in Cambridge, Mass., revealed that while CEOs say they're happy with the job performance of their CIOs, fewer than half have any confidence in IT as a contributor to business success. Bottom line: They don't understand what technology (and the CIO) can do to drive business innovation.
While the CEO may be able to get away with not understanding all that IT can do for the business, the CIO probably can't. And, for most companies, IT must be more than a service provider if the aim is to help meet the top business expectations, Gartner's McDonald said.
"If the prior expectations the business had of you was to run a staff function, then you of course wanted to give the best possible service at the most managed cost," McDonald said. "But if you look at the top business expectations -- business process improvement, controlling enterprise-wide costs, workforce effectiveness -- that is not a to-do list for a back-office staff function anymore."
System X will not make the world a better place
Gartner advises CIOs to listen to how CEOs at aggressive companies talk about beating the market. According to Gartner, four "leveraging" points come up: technology (the familiar, deliver better for less); agility (managing speed through applying risk management disciplines); information (getting the right business insight to the right people at the right time); and innovation (use your imagination).
Two years ago, companies looked to IT for individual solutions. If a company wanted to be "customer centric," the answer was to buy, for example, a customer relationship management product through IT, which also installed and operated the application, McDonald said.
Today, if a company's strategy for survival relies on it becoming more innovative, and using information better, the solution is "foundational," requiring what Gartner calls "complex leverage." Translation: Putting multiple things in the right order in the right place that are business- and technology- and people-related," McDonald said.
"So it is no longer about installing System X and the world will be better place," McDonald said. "We're seeing a level of collaboration we did not see before to produce a business result."
The big-picture takeaway for CIOs, according to McDonald? "What you're really trying to do is change the way the enterprise works, as opposed to automating it."