Five Golden Rules to Avoid IT Irrelevance

CIOs Shine Brightest When They Deliver Business Value – Keeping the Lights on Just Won’t Do

The biggest challenge facing CIOs and IT departments is ensuring their on-going relevance as software becomes commoditized, IT and network infrastructure increasingly evaporates into the Cloud and affordable third party support increasingly becomes available on-demand. We are reaching a point where envisaging a large enterprise without an IT department is reasonable. New technologies and more virtualized working environments could well shift responsibility for managing – or even replace – many of the traditional IT towers. For example:

• End user computing: Where self-service and remote support replaces desktop management.
• Datacenters: Cloud hardware as a service (HaaS) replaces the need for traditional centrally controlled enterprise data centers.
• Applications: We could see responsibility for applications shift to functional departments, diminishing the operational role of the IT department in the application space. Plus, the movement of the large turnkey and custom enterprise applications toward more standard commodity cloud-delivered commercial of the shelf (COTS) software and, of course, software as a service (SaaS).
• Networking: Once office networks shift more fully to wireless, the need for permanent on-site staff to support both LAN and WAN disappears and shifts to facilities management rather than IT.

Do we believe that every IT department will disappear? No, of course not and, certainly not overnight. But we could see it happen to those that fail to demonstrate value to the business leaders. The real danger for many IT departments is a slow and lingering reduction in influence. Moreover, with the massive increase in “born in the cloud” enterprises—where cloud-based IT, digital technology and automation are native to their operations (and are not constrained by legacy on-premises IT and archaic ERP systems)—the role of the traditional IT manager is going to be very different in the next five years. 

We are already seeing ambitious businesses create chief data officers and chief digital officers positions. Those roles are much more aligned to enabling business outcomes from smarter uses of technology. These are the “emerging CIOs” who are replacing the legacy CIOs who still focus on keeping the lights on, as opposed to what is possible when the lights are shining brightly.

Five golden rules IT executives must follow to increase their relevance and value to their organizations:

1. Be a broker of capability: We often hear that the IT department needs to treat the business as a customer, but really it needs to be the place the business lines turns to when it they need to innovate. With technology increasingly embedded at the heart of all business activity, the IT department must be on top of emerging technology trends to support of wider enterprise goals.
2. Be so much more than the “custodian of IT equipment and IT products”: The operational spend of IT departments has been falling steadily for the last 15 years. 10 years ago the operational “keeping the lights on” part of the IT budget was holding steady at about 70-80% of the total. Our survey work shows that this has dropped in most organizations to around 50%, with 50% of spend on new initiatives. The focus of the IT department needs to be on the 50% of spend that is growing.
3. Have a “can do” attitude: As we stated in our recent research, attitude is becoming a key factor in IT. IT departments and service providers with a can’t do attitude won’t last long. Technology is about making things happen and giving business options based on relative risks, not acting as the gatekeeper. Cloud gives business unit managers the key to the gate they will walk through unless you offer them a credible alternative.
4. Create goals tied to enriching the employee and customer experience: IT departments’ goals – and performance metrics – need to move away from the staid, reactive, back office priorities of the past. Reliability and security should not be goals. They are table stakes. Goals for a modern IT department need to be about contributing to growing revenue, driving profit, building customer engagement and enriching the employee experience.
5. Get some business ambition: Some of the most successful IT departments, now and in the future, will be developing products for the company to add value to their customers, or to sell as part of the company’s portfolio. The best examples of this are Amazon and Google developing products and services through the IT department. Another example for the future is the ambition of GE, an example we have cited before where its CIO has declared that GE will make $15 billion in revenue from software sales by 2020.