CIO innovation plans hampered by budgets: Deloitte survey

  • C-suite increasingly looking to CIOs to lead charge
  • But only 16% of IT budgets allocated for business innovation and growth
CIO innovation plans hampered by budgets: Deloitte survey 

GLOBAL chief information officers (CIOs) cite innovation and growth as top business priorities, yet 84% of IT budgets are spent on running day-to-day operations and incremental change, according to Deloitte’s 2015 Global CIO Survey: Creating Legacy report.
 
At a time when new business ecosystems are emerging and the C-suite is becoming more interconnected, CIOs are striving to strike a balance between innovation and operational effectiveness while improving their C-suite relationships and leadership skills, Deloitte said in a statement.
 
“As global business ecosystems evolve, CIOs are expected to embrace and anticipate the pace of change and its impact on enterprise-wide technology needs,” said Kevin Walsh, partner and global technology consulting leader, Deloitte Consulting LLP.
 
“The C-suite is now, more than ever, looking at the CIO as a leader who is prepared to drive global business priorities through both scalable technology solutions and smart investments,” he added.
 
Top concerns not mirrored in investment strategy
 
CIO innovation plans hampered by budgets: Deloitte surveyWhile assisting in business innovation is a top technology priority for CIOs across industries, according to the survey, only 16% of IT budgets focus investment on innovation and growth.
 
In addition, only 15% of global tech leaders are investing in emerging technologies that would contribute to innovation and growth.
 
“CIOs have a huge opportunity to drive innovation and growth in today’s increasingly global and connected business environment,” said Karen Mazer, US CIO Programme executive sponsor, Deloitte Consulting.
 
“The challenge lies in the CIO becoming a respected business leader, with a role in advancing both the growth and innovation agenda as well as supporting operational excellence,” she said.
 
Prioritisation and access to proper funding is typically dependent upon the relationship with the rest of the C-suite, and pose a significant challenge for allocating investments.
 
Nearly 70% of CIOs surveyed claimed excellent or very good relationships with the CFO (chief financial officer) and 51% said the same of the CEO (chief executive officer). Only 42% self-identified as being co-leaders or initiators of business strategy.
 
To that end, three in four CIOs said that analytics and digital technologies will have a significant impact on their business.
 
At the same time, many CIOs mentioned the struggle to get ongoing funding for legacy and core investments which will be serve as the foundation for growth and innovation.
 
Five business priorities
 
The Deloitte survey shows that across organisations large and small, CIOs share five business priorities which are directly linked to the heart of their businesses: Performance (48%), innovation (45%), customers (45%), cost (45%), and growth (44%).
  • CIOs in technology, telecom and financial services identified innovation as the top business mandate, with 58% and 50% identifying these as business priorities, respectively.
  • Performance is top of mind for consumer business, manufacturing and healthcare CIOs with more than half of CIOs picking these as their business priorities.
  • Cost dominates the government and energy sector CIO agendas, with a majority of respondents in government (65%) and energy and resources (59%) picking ‘cost’ as a top business priority.
Looking beyond their specific industries, CIOs are becoming more focused on the broader ecosystems in which businesses operate, Deloitte said in its statement.
 
To that end, the survey found that more than half of CIOs chose one priority different from the top three for their industry.
 
Vision for CIO leadership role
CIO innovation plans hampered by budgets: Deloitte survey 

As CIOs seek to execute against these varied priorities, they leverage a diverse set of skills and leadership approaches, despite the survey having found that 91% of CIOs do not believe they have all of the requisite skills to be a successful tech leader.
 
In fact, the survey found that CIOs surveyed vary significantly in how they deliver value to their organisations and are naturally clustered across three patterns:
  • Trusted Operators: Deliver operational discipline within their organisations by focusing on cost, operational efficiency and performance reliability. They also provide enabling technologies that support business transformation efforts and align to business strategy.
  • Change Instigators: Lead technology-enabled business transformation and other change initiatives. They allocate a portion of time to supporting business strategy and delivering enabling technologies.
  • Business Co-Creators: Spend most of their time on business strategy and driving change within their organisations to ensure effective execution of the strategy. 
“In order to truly shape the future of business, CIOs should assess their current competencies and business needs in order to chart out an unambiguous vision for the future,” said Khalid Kark, US CIO research director, Deloitte Services LP.
 
“As CIOs crystalise their leadership vision, they can be in a stronger position to identify the skills, relationships and technology investments they need to fulfill their business priorities,” he added.
 
The global CIO survey
 
Deloitte said its global 2015 CIO survey examines CIOs as unique individuals by exploring their career aspirations and personal goals, which go beyond the technology environment.
 
Deloitte surveyed 1,271 CIOs from 43 countries around the globe between May and July 2015 to capture significant data, trends and insight for this initiative.
 
The majority of the participants were global CIOs or division/ business unit/ region/ country CIOs of organisations with revenues of more than US$1 billion during the last financial year.
 
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