Mike Lynch: Does the CIO matter?
The hoped-for return to growth, following the financial crisis of 2008, has yet to become established. But despite or possibly because of this, businesses are spending again on IT.
A recent report by the CBI shows that in the year ahead, many firms are planning to invest more in IT, in large part by scaling back on other spending such as land, buildings, vehicles, plant and machinery.
Across the private and public sectors, technology and its ability to transform business continues to be at the forefront of board agendas. In times of uncertainty, IT matters again.
Boards and leadership teams are challenged today to secure and advance their business, and to deal with multiple factors such as tighter credit markets, less certain supply chains, more demanding customers, and the need to operate on a global scale.
So whether it is to promote growth, be closer to customers or to control costs, IT has a key role to play.
There is a renewed focus on using business transformation projects — underpinned by IT — to outperform the competition through more efficient processes, launching differentiated products or creating innovative new business models.
Simply put, there are aspects of technology today that matter more than ever before.
So, what does matter? Based on extensive conversations with CIOs, the main priorities and focus areas for them today are:
- IT leadership and talent
- Business driven delivery of large scale IT projects
- New models for sourcing and contracting
- Innovation through analytics
Let's look at the last element: Information.
CIOs: Competing on insight
New data analytics techniques are allowing organisations to exploit data in previously unheard of volumes, varieties and velocities.
Many business leaders already know the inherent value of analytics insights for improving operations and driving smarter decisions.
But, we will see more companies competing purely on insight.
As such, the CIO will become increasingly influential in enabling their organisations to compete.
In fact, in many businesses the CIO is likely to become the originator and facilitator of interesting, new commercial opportunities related to monetising the unique data combinations they have mastered and their ability to derive insight.
As the world becomes more analytical, the CIOs role will become more significant.
The secret and power of analytics
Analytical data promises to enhance insightful decision making, win or retain customers, and develop new products. But different sources of data can have dramatically different meaning, value and quality depending on the ultimate objective of the analysis and the type of analytics applied.
Organisations should not fall into the trap of thinking that processing more data automatically leads to better decision making.
Instead, the challenge is to create differentiation on the strength of the insights that can be gleaned from the raw data and also from their subsequent impact when applied to the business.
Nowhere is this more necessary than in health or safety-related applications, such as neo-natal care or workforce safety, or in large business change programmes where decisions made using analytics can make the difference between multi-million pound efficiency savings or significant additional costs.
Competing on insight rather than competing on data or technology creates much needed synergy between the traditional silos of information processes and business delivery; it also means that business units must select their data combinations and apply technologies in a more intelligent way if they are to pinpoint and exploit insights for commercial advantage. The data and technology that are right for one business objective may be very different to that needed for another.
Analytics to transform insights into action and outperform the competition
Businesses at the innovative edge of data exploitation are using it to identify new markets and new products, to manage their operational exposure to risk, and to provide accurate and up to date information on the company's position across its markets at any time of the day.
Investments in these real-time and predictive analytics capabilities, position leading organisations far ahead of the competition, knowing things others do not and before they happen.
Pharmaceutical companies, for example, now analyse the global web of social media sites and use this vast, unstructured data for enhanced sentiment analysis of their products.
What supermarkets have been doing with loyalty card and transaction data is progressing across other industries.
Patterns in vast quantities of mobile phone location data can be used to measure and predict the volume and demographics of customers, allowing retailers to target their product range and local authorities to better plan effective transportation.
The Analytical Bottom Line
By leading an IT organisation, a CIO, in the true sense of the word, should be the company's custodian of data.
And as organisations come to compete on insight, the closer alignment between IT and business units will mean that the CIO's role will evolve to the point where it becomes instrumental in delivering and maintaining the company's competitive advantage.
This means that CIOs must develop an appreciation for where unique combinations of the company's data can be monetised or facilitate the commercial opportunities that arise from the company's ability to exploit insights derived from it.
Whatever the outcome, the IT department should champion and exploit insight, not just technology.
For each individual organisation, the challenge is to identify where IT matters the most; IT can help businesses enter markets or exploit market opportunities, or become more responsive to the changing demands of customers and wider economic pressures.
IT leaders have a real opportunity to identify competitive advantages through information insight, enabled by relevant technological changes, and use these to drive the business forward.
The last few years have proven that good IT leaders can manage costs, and manage change.
The most successful CIOs in the next year will focus on differentiating themselves through insight and investing again in technology that matters.
Richard Hammell is Lead Partner for Deloitte Analytics