Technology has become an essential element for any business to remain competitive in today’s fast-paced environment. However, with the growing complexity of technological solutions, the responsibility of the Chief Information Officer (CIO) has become more crucial than ever.
In this interview, Crawford Del Prete, President of IDC, delves into the role of the CIO and their responsibilities, including the changing perspectives of businesses towards IT investments, measuring the ROI of IT investments, and demonstrating the value to stakeholders. Read below for a comprehensive discussion on the role of the CIO in the digital age.
How have business perspectives towards IT investments changed over the past few years?
Our research suggests that 97% of CIOs are thinking about changing their IT strategy. Over the past few years, we saw IT spending ramp up to about 11% growth, which is very strong compared to historical trends. It was in the 6-7% range the year before that. This year, it’ll be about 5%. So it went up, and it’s going back down, but it’s still at that 5% range. This represents the pivot towards the pandemic and the move towards technologies like personal devices and collaborative software. As companies like Amazon invested in logistics, Google invested in new services, and Apple invested in new media services, I believe we’ll see IT investment level off at 5%, which is still higher than a decade ago when it was in the 3% range. Every company needs to invest in technology to be competitive going forward, and I think that’s a long-term trend we’ll see for many years.
How can companies measure the ROI of their IT investment, and how will they demonstrate their value to stakeholders?
Companies can measure the amount they’re spending on tech as a per cent of their revenue. The benefit is creating new sources of growth or revenue for the company as a result of technology investments. For example, is the company able to invest in technology and close leads faster, penetrate new customer bases, or create new products/services? These are happening in every industry.
Some airlines in the US won’t let customers pay with a credit card on the flight as there is no system in-flight to capture the credit card number and expiration date, and then verify the transaction on the ground. But with new technology, airlines can accept payments in-flight and penetrate new customer bases.
If someone asks to demonstrate the benefit of IT investment, a CIO could point to that line of business and say that previously the business had losses of over a million dollars a year, but now those losses have been eliminated, or a new revenue stream is opened.
What are the key responsibilities and expectations that a CEO typically has of their CIO?
The CEO expects CIO to be responsible for acquiring technology and delivering a level of resilience to the organisation. Resilience here means the ability to maintain the execution of the strategy even as business conditions change. This is a critical point because if the CIO is being pulled in too many directions or not focused on the task, they won’t be resilient through good and bad times.
We’re at an interesting time in the evolution of technology where the dollars associated with technology spent outside of the CIO’s office will cross the dollars that the CIO spends in 2023. The CIO is in a tough position because they have less authority to spend that money, but all the responsibility to do it right. When things go wrong, they’re on the hook. Therefore, the CEO is looking for a resilient CIO who takes ownership and responsibility throughout the organisation. The CIO must be able to say no to other departments if a technology investment doesn’t have an ROI or payback that the organisation cannot execute.
