Last week more than 250 CIOs attended Gartner Symposium in Goa, India. This year’s event was the second symposium in India with last year’s held in Mumbai. In talking with CIOs and IT executives at the event it became clear that 2013 is going to be a transitional year for CIOs and for IT in their organizations. Forgive some oversimplifications as I condense three days of meetings, presentations and discussions into a few key points.
Domestic competition is heating up.
Companies have established initial market share during the past few years of the higher growth economy. They have the core IT applications and operations needed to serve the market. Now they are honing their competitive skills and seeking to take market share away from competitors. This comes at the same time that Indian companies look to grow outside of India in the emerging markets of Asia and Latin America and North America.
Several CIOs in different industries had increased domestic growth as part of their agenda reflected in the following:
Strong desire for greater agility and responsiveness as markets were changing at an accelerating rate requiring more to keep up and stay ahead.
Interest in technology and the customer experience as business strategies were shifting from collecting customers in a growing market to enticing customers to choose and switch their product and service allegiances.
A focus on generating a greater returns on investments in core IT applications, systems and operations. The days of just running IT are giving way to a world of business-focused technology.
A recognition that IT metrics and measurement needs to incorporate externally facing metrics, targets and measures. IT’s business impact is in more than tight operations as it extends to creating business value.
The Nexus is Next
The Nexus of Forces was the theme of this year’s analyst keynote. The nexus of forces describes the convergence and mutual reinforcement of four interdependent trends: social interaction, mobility, cloud, and information. The forces combine to empower individuals as they interact with each other and their information through well-designed ubiquitous technology. The create demand for a new sets of disruptive digital technologies in the enterprise.
CIO interest in the technologies of the Nexus is strong as it explains the technologies that will help drive innovation and growth in the future.
There was particular interest in the potential combination of mobility and information creating new channels and products to reach a market with the size, diversity and complexity of the Indian market.
CIO’s view the Nexus as a set of technologies to build as many expressed an interest in the technology itself. While the technologies are important, that interest needs to focus on their application to new products, services and channels.
Technology is moving up the value chain.
The companies I spoke with have completed implementing their core systems and are looking for what is next. These are the systems of record that are part of a pace layering application strategy. Systems of record are the core of the business operation providing a stable base for performance and profitability. With these systems in place its time for IT to move up the value chain to technologies of differentiation but that will require doing things differently.
Avoid entering a cycle where IT concentrates on operating and updating these systems to the exclusion of investing time, attention and talent in applications that create differentiation and innovation for the company.
Increasing agility is a concern for CIOs moving their IT organizations out of the back office and into front line revenue generating projects. Indian CIOs recognize that the structures, habits and practices used to build a system of record are not the same as those required to innovate and differentiate.
Time to market becomes critical as domestic competition heats up and technology is expected to create a difference in products and services. The CIOs I spoke with recognized that they needed to shorten IT cycle times dramatically, but they were unsure of how to do so other than asking people to go faster.
Sourcing is less and less of a solution
The Indian IT market is a heavy user of sourcing, either to the IT services company within the conglomerate or with a third party sourcing company with extensive Indian operations. These sourcing arrangements exist for many reasons, most concentrate on ‘cost cutting’ but more than a few source because they cannot find the right talent to bring in-house. Whatever the initial sourcing rational, these sourcing arrangements are creating core rigidities rather than providing a source of core capabilities.
According to CIOs, their sourcing arrangements are going sour. They all describe the initial attention and excitement of winning and starting a deal; but point out that the focus, dedication and interest on the part of the sourcing partner declines in the second and third years of their contracts. Declines right at the time when the CIO needs their sourcing partner to flex and adapt in the face of the market changes mentioned above.
CIOs are looking to take this position as many cited their sourcing partner lacking the skills they need to run the business much less grow or transform it. IT skills at the start of the project are high, but deteriorate as personnel shift to other projects or leave in search of another job. While sourcing companies view this as their internal issue, the impact is felt directly by the CIOs in current service levels and limitations for future investment.
The dissatisfaction with sourcing arrangements, expressed among the Indian CIOs I spoke with, was universal. No one company was cited as being the best or meeting needs and every major company seemed to face the same issues of responsiveness, flexibility and skill capability.
CIOs are no longer planning to rely exclusively on the outsourcing partner. They want to know how they organize their IT group around the limitations of the sourcing contract, sourcing skills and sourcing capabilities. CIOs were interested in models that go beyond IS-LITE to create a type of focused, responsive and lean IT organization.
Meeting demands for growth, innovation and new technology describes the challenges expressed by CIOs attending this year’s Gartner Symposium. These challenges reflect a different role of technology in the enterprise. A role based on technology amplification rather than IT automation. A role based on creating value and market capability while at the same time controlling cost and quality of service. These issues are complex. There are no simple answers. No technology alone will suffice.
CIOs in India and elsewhere feel the pressure and need to climb out of IT’s traditional ‘box’ defined by its current set of responsibilities and resources. That box is collapsing under demands for increasing growth, current resource capabilities and the new technologies associated with the nexus.
How CIOs lead over the next three years will determine the future of IT in the enterprise. Lead not just in terms of being the head of IT, but lead in terms of the application of technology to create business value. Leading in that role requires addressing the issues raised above and others discussed at this year’s symposium. It is a great time to be a CIO, if you choose to accept and take on these issues. If not, then it’s the worst time to be a CIO as the box is collapsing along with everything in it.
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