The challenges facing CIOs in 2023 and the actions to take
March 21, 2023
March 21, 2023
Whether you see a bumpy economic ride or a strong recovery ahead, it’s clear that many companies are spending more on technology, not less. Currently, my discussions with chief information officers (CIOs) are exploring the key financial and operational actions they can take to maximize tech’s contribution to the enterprise.
Five key areas dominate these conversations. Here, I’ve organized them into the most immediate, practical moves that CIOs say they need to make now and in the coming months, before stretching into the more strategic moves shaping their approach. As you look ahead, use these to test your strategy and identify areas that need more tactical consideration.
It will come as no surprise that CIOs must be more efficient with what they spend. The turn of the calendar year always focuses the financial mind, and my colleagues Diana Bersohn and Adam Burden have outlined four moves CIOs should make to achieve a more efficient IT organization. From optimizing cloud spend to reviewing licenses, every dollar that companies drop is under scrutiny. Adam and Diana also explain how executives should build an automation strategy that complements their enterprise strategy.
The next step for CIOs is to show the value to the business of every dollar spent – not just financially, but operationally and reputationally. For example, with cloud consumption skyrocketing, CIOs must improve this spend, create visibility to consumption drivers for the business, and show how each dollar spent drives a business outcome.
The key to unlocking this is transparency. In our Tech Value practice, we want to take the best principles and strategies from what the industry calls “technology business management” (TBM) and move beyond it to help CIOs measure and maximize what they spend on tech. This gives them the transparency they need to show the business outcome that every dollar delivers. So, if a CIO spends, say, $1 million on cloud compute and storage, they can show exactly what that allowed the business to do. And, if they had not spent that money, they can accurately show the relevant revenue the business would not have been able to generate. All of which helps an executive to make a better decision and a better plan.
To take another example, let’s imagine an insurance company plans to grow its customer base by 10% next year. The CIO should be able to say how much it will cost to onboard and service each customer from the cloud compute standpoint – and if they have the potential to reduce that cost in 2023.
The cloud is, of course, one of the greatest enablers of this transparency. In our latest research on how companies can maximize their cloud advantage, we discuss how the new frontier of industry competition is data excellence and the ability to exploit data for value.
CIOs need to improve the productivity and operations of their organizations in building, managing and using their technology. We work with many clients on optimizing their operating models to achieve efficiency gains in this area.
Right now, there is a discernible shift toward decentralization, with more data analytics happening out in the business. This creates its own unique challenges for CIOs on how they can keep these more widely distributed assets and operations working efficiently.
When it comes to cloud operations in particular, our research shows that to get cost benefits, organizations need to embrace modern architectures and operating models, and use FinOps and a Continuum Control Plane to provide the transparency they need to manage today’s complex IT environment. If companies are going to be brave and embrace decentralizing their IT operations, they will also need to allow their teams to make rapid, real-time decisions. This approach also drives a culture of continuous innovation and improvement.
TBM approaches are extremely useful in this environment. TBM helps integrate operating models and processes so you can better track what you are spending where. And it helps shift your thinking from a project to a product mindset.
The scrutiny on value is intensifying. However, this gives CIOs a greater license to deal with their challenges - and one that is directly driven by the needs and demands of the business.
To quote my colleague Penelope Prett, our chief information, data and analytics officer: “Without the right people, the right technology is useless.” CIOs still face a “war for talent” in 2023. They need to access, create and unlock talent to meet the demands of their business. The gold standard is to become a talent magnet for engineering and technology talent – and that is no longer limited to the tech firms that have traditionally dominated the marketplace. Many engineers are opting to join mainstream industries to further their careers, creating an opportunity for savvy CIOs. There is also a growing trend of companies insourcing their talent pools.
CIOs also have a growing responsibility to create and unlock talent within their companies.
HR leaders are increasingly relying on CIOs to advise on how a company’s entire employee base should be upskilled and reskilled.
Our latest research on the future of work shows that by asking four key questions, leaders can create more human-centric models of work that will support their business’s success. All four questions need the CIO’s involvement for a comprehensive response.
I’ve previously lauded the CIO as the emerging corporate rock star and in recent years I’ve seen the value of CIOs’ stock continue to rise among the C-suite. As our latest research points out, a handful of companies are quietly and systematically changing the game and their industries. They are driving what we call “Total Enterprise Reinvention”, a continuous, dynamic strategy that aims to set a new performance frontier for companies. It is centered around a strong digital core and helps drive growth and optimize operations.
The CIO is the co-pilot for this reinvention: much of their time is spent collaborating with colleagues and executives, business unit leaders, and functional heads in their organizations, working on how technology can transform their operations, their processes, their procedures and their policies.
That dynamic will continue. As new tech capabilities are diffused into the business and technical acumen becomes essential for everyone in a company, the CIO will become even more central to how the overall organization strategically transforms its business.
Sales executives can no longer run departments without having a deep appreciation for analytics and data insights. HR leaders need to measure how effectively they are upskilling the organization with technology talent. Business unit leaders are asking tech executives for new types of digital products that they can add to their physical products so they can develop new offerings for the market.
Every job function is required to be more technically astute than 12 months ago. And many companies are looking to the CIO to be the champion of this.
CIOs are more heavily involved in every aspect of the business than ever before. It’s not a new trend, though it’s reinforced each year and that trajectory will only continue. And while the scrutiny on value and efficiency is intensifying, I believe this gives CIOs a greater license to deal with their challenges – and one that is directly driven by the needs and demands of the business.
CIOs can provide that transparency and can give the direct connection to value. Collaborating with the business and being tight with your business partners is going to be more important than ever.