With a new world order gradually emerging from the economic chaos of the last couple of years, Xantus felt it was time to take a litmus test of the IT industry and see what the UK's leading CIOs felt about the future. Some of the results were surprising.
It would appear that money may not be the greatest immediate concern for IT departments. In fact, almost half the CIOs we talked to claim that key skill shortages within their departments are hitting performance and collectively costing their organisations millions of pounds.
This finding was one of a number of interesting trends that emerged from the Xantus report, Supporting Business: The CIO Challenge. When we discussed issues around IT department resourcing with CIOs of large companies with a turnover £250m to £1bn, over a third told us they want more business and management skills within their department, the lack of which, they say, is costing more than 10 per cent in departmental productivity and performance. Almost all of the rest agreed the skills issue is affecting performance by anything up to 10 percent, which equates to an organisational cost of tens of millions of pounds every year.
Surprisingly, after the recent economic experience and with a number of European countries yet to see clear evidence of long-term growth, one might imagine that pressure on budgets would be as great, or even greater, than we have seen over the last few years. By the same token, the thought of adding headcount or increasing training costs would be as welcome as a main server crash.
In fact, it seems that this is not the model that is emerging. In almost every case, CIOs expressed a need to strengthen the business relationship and management skills of their IT staff, but they also largely agree these skills are currently hard to find.
With the IT industry having seen its fair share of redundancies across almost every sector, there is plenty of resource on the market. Clearly 'traditional' IT skills - such as strategy and architecture - remain critical, but almost half of respondents felt they were still hard to source.
However, as CIOs are discovering, the 'softer skills', which place IT departments in the wider business context, showed a deficit between need and availability in every case, the most extreme being good leadership and communication skills. Finding the right combination of skills that can turn IT departments from a technical cost centre into a trusted business advisor and innovator who can help drive cost effectiveness across the whole business, would seem to be a tough task.
Money No Object?
And it would appear that this skills shortage isn't as a result of a lack of available money, as almost three quarters of CIOs we spoke to believe their departmental budgets will rise over the next 12 months, and more than half expect an increase greater than 10 per cent.
However, Mike Bell, CIO of Kingfisher, provides some context to this budgetary growth and offers a word of caution to any of his colleagues considering a spending spree. "There's no money to be made by holding money in the bank. Getting more from less was, and remains, the focus; putting IT functions under pressure to identify innovative ways to improve service without increasing costs."
A Strategic Business Role for IT
For most organisations, IT is a critical part of the core infrastructure, so CIOs recognise that IT decisions are strategic for the whole business and not just their department. Critically, they need teams around them that also recognise their strategic importance and have the skills to be able to articulate and deliver this. To achieve this, the role of the CIO as leader and champion of change is paramount.
So, when corporate attention is likely to be focused on recovery and post-slump growth, what does it take for CIOs to play a key role in this process?
1. Question the importance of CEOs and non-IT Directors understanding technology
There is a big difference between designing microprocessors and designing a CRM system. CEOs and non-IT directors)do not need to know the nuts and bolts of what the IT team are doing. They do need to understand and empathise with the challenges faced by the IT team, in the same way that they have to with the sales or product design teams. Equally, the IT team needs its finger on the pulse of the whole business. A business partner role is ideal for this but requires an individual with specific business analysis skills and a sound understanding of all aspects of the organisation.
2. Communication is key
Whilst there can be a communication issue between IT and other parts of the business, there are often similar inter-departmental communication challenges elsewhere in the organisation, either regarding the same issues or because of the company's general approach to communication. If a business operates globally, local culture plays an important role and this is not unique to IT. Developing clear communication structures and processes between the IT team and the commercial part of the business will help overcome communication issues and bridge gaps. Again, a business partner can help bridge those communication gaps, as can seconding people from other areas of the business to run or work within the IT team.
3. Aligning IT strategy and business strategy
In other words, treat the whole IT infrastructure as a service and focus on what makes a difference to that service, rather than simply focusing on the technology itself - even if there are some new fancy, shiny gadgets that Board members are desperate to have. By focusing on service and developing new skills around cause and effect, CIOs can identify bottle necks and successful processes in the same way as the Director of any other department in the business. An IT Strategist is a key departmental resource, although individuals with both specific organisation and broader sector and supplier knowledge are difficult to find.
4. Focusing on the dichotomy between reducing cost and delivering innovation
As well as skills, there appears to be an increasing focus on the gap between reducing cost and delivering innovation. Can CIOs do both or just one? Before the downturn, there were a lot of people very excited about what could be achieved with new technology. With an increasingly sharp swing towards reducing costs, there is a clear need to focus on approaches which innovate and take costs out of the business.
Xantus' research indicates that the biggest obstacle for growth appears to be legacy hardware and systems, although for many CIOs (43 per cent), the application of new technology, such as cloud computing, will be key to overcoming these issues. A strong IT Architect in the department can offer significant help to both the CIO and the rest of the business in developing this area.
5. Bridging the skills gap to make IT a trusted adviser
More CIOs are now able to articulate how IT makes a difference to the business as a whole, rather than treating it simply as a manufacturing department. However, while technically skilled individuals are fairly readily available, CIOs are finding it difficult to recruit or up-skill IT department members with the softer skills needed to help manage the broader relationship with the business. Working with good reliable recruitment agencies, head hunters or external consultancies can help, as well as simply 'keeping an ear to the ground' or networking. If CIOs already have the resource in-house, do everything possible to keep them!
Finding the Balance
It is apparent that the pressure for CIOs to pull innovative rabbits out of cost-constrained hats still remains. While the brakes may be coming off departmental budgets - the IT equivalent of quantitative easing - there will be increased scrutiny on demonstrating a broader corporate return on investment.
In essence, by creating a team that can not only deliver cost effective IT solutions, but also explain and deliver the broader benefits of IT as part an overall business strategy, IT departments can, and need to, stake their corporate position as both a trusted adviser and a key business player.
In the new economic environment, organisations will be looking to pull-off a difficult balancing act of managing costs and investing for growth. If CIOs and their teams can develop the skills internally, or recruit them from outside, they have a clear and positive opportunity to help organisations find the right balance and even become the pivotal department in maintaining it.
Steve Watmough, CEO of Xantus, an independent IT consultancy, believes IT departments can play a pivotal role in developing overall business strategies to balance costs and growth. They just need to bridge the 'soft' skills gap: a task that is apparently harder than it sounds.