The chief information officer (CIO) could become a key figure in driving business change but IT function is not prepared for future demands.
This is according to the 'Innovating for growth' report released earlier this month by Ernst & Young, carried out in 15 countries including SA.
According to the study, 73% of respondents believe the CIO can drive business change, yet just 15% believe the IT function is very well prepared for future demands.
The report also reveals that businesses believe that the IT function can help manage future economic and business trends, such as consolidating markets, geographical shifts in economic power and increasing regulation.
Dave Ryerkerk, Ernst & Young Global IT Advisory leader, says as companies move from simple cost reduction to cost optimisation, IT can help create a permanently lower-cost business model.
“The role of IT has been changing - in some cases radically. As we see return to growth in developed countries and continued growth in developing countries, the function is increasingly expected to come up with innovative business improvements.”
IT leaders need to understand what is needed in the new economy and work closely with the business to address the opportunities and challenges, Ryerkerk points out.
Ryerkerk says IT has contributed immensely to business success in the past decade but it's clear that management wants even more innovation. “The board and the CIO should therefore be clear about what is expected of IT to ensure that it continues to meet expectations.”
He reckons, in order to meet the needs of the business, IT will need to develop its skills in a number of areas. “These include communication, budget planning and managing risk, as well as better understanding how to take advantage of emerging technologies.”
Despite the uncertain economic climate, 42% of respondents - notably in SA - claim that IT spend has risen in the past 12 months. Nonetheless, just 39% of respondents say their organisation has measures in place to quantify the return on this outlay.
Larger companies are more likely to measure return on IT investment.
This report also revealed that a large majority of respondents, 81%, believe IT should better understand business needs and improve its ability to communicate.
“With companies under pressure to report on financial and environmental performance, effective communications are a growing priority,” Ernst & Young says.
However, around three in 10 respondents are not satisfied with the way IT communicates with the business, rising to four in 10 for non-board members.
“Respondents from larger companies are the most critical of IT's ability to understand and communicate with the business,” the company says.
There are concerns over IT's ability to manage budgets: only 55% of non-board respondents are satisfied with the IT function's budget planning and control.
Conversely, 73% of CIO respondents are satisfied with budget planning and control. CIOs also have differing views on how much the organisation is actually spending on IT, quoting a lower figure than their C-suite counterparts.
Seventy-three percent of CIOs are either 'very' or 'fairly' satisfied with the IT department's budget planning and control versus 61% of C-suite, 55% of non-board and 63% of global respondents.
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