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Top Three Takeaways For IT From The 2013 McKinsey Global Survey

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IT can — and should — be the most innovative department in your company.

Once pegged as the geek squad, in charge of cutting costs and keeping the internet up and running, today’s IT department has the power to drive innovation at organizations of all kinds. In fact, it’s high time every company rethought the role of IT, to unlock its potential for transformative insight, creativity and value for the business.

We’re not the only ones who believe this. It’s written all over the results of the recently released 2013 McKinsey Global Survey. In its eighth year, the report asks executives from all functions to rate IT’s effectiveness and comment on its future in their organizations.

In typical ‘good news-bad news’ fashion, the report’s central conclusion is that even though IT’s strategic importance is growing, so is the dissatisfaction with its performance. We took a look at the results and identified the three areas that companies need to pay attention to now:

1. Approval is sinking as expectations are rising.

According to the study, pressure is ratcheting up on IT. Executives and IT professionals themselves are generally less satisfied with IT’s effectiveness in achieving business goals. In fact, only 13 percent of IT executives say that their organizations are completely or very effective at introducing new technologies faster or more effectively than their competitors, down from 22 percent in 2012.

Why is satisfaction declining? As McKinsey suggests, it is likely correlated with the “overall rising expectations for corporate IT – that it can, for example, provide service comparable to the consumer-grade cloud and mobile applications that are readily available outside the business.”

One way IT can begin reversing this trend is by closing the employee-consumer experience gap. We’ve all become accustomed to the quality experience of consumer apps and services, but corporate IT has lagged behind in providing user-friendly technologies for the workplace. You wouldn’t use an app to track your personal budget if it took five minutes to load, so why should you put up with this when it comes to managing business expenses?

IT needs to approach enterprise apps with the same level of thoughtfulness that goes into consumer apps, making the digital experience for work as seamless as what we would expect for “life.”

2. As IT’s strategic importance grows, so will the emphasis on analytics and innovation.

Despite falling approvals, McKinsey finds that more and more executives are recognizing the strategic value of IT to improve the effectiveness of their businesses. Two years ago, cost cutting was a greater priority than providing information to support sound decision-making. Today, we’re seeing the opposite, with 61 percent of respondents saying their organizations use IT to improve the effectiveness of business processes, up from 49 percent in 2012.

To accommodate this upgrade in priorities, IT organizations are forecasting that they will spend less on the traditional big-ticket items like infrastructure, while investments in analytics and innovation will climb.

Right now, IT departments should be thinking about how to update their skillsets and incorporate new technologies to support these higher value activities. The first step can be as simple as taking the mobile apps and other technology solutions that are already in place and incorporating analytics to give the company hard data on how things are actually being used within the enterprise. Mobile dashboards and in-app analytics make it possible to tell exactly how users are engaging with a product and can inform decisions on how to improve business processes and where to place bets on new innovations.

3. Businesses are ready to double down on IT.

Even more promisingly, the recognition of IT’s strategic potential appears to also be attracting the dollars needed to bring it to life. 64 percent of executives say their budgets for new IT investments will increase next year, up from 55 percent in 2012. Complementing rising budget allowances, respondents are prioritizing initiatives that have the potential to drive innovation, including reallocating budget to focus on drivers of business value, and improving IT talent and capabilities.

So how might CIOs go about meeting rising expectations to innovate while still delivering upon the traditional IT function? First, IT should recognize that they don’t have to do everything themselves; as the McKinsey survey points out, increasing business-side involvement and accountability is believed to have the biggest potential for improving IT performance. IT needs to evolve from being a central provider of all things tech, to an innovation partner, an enabler, a broker of best-of-breed capabilities across the enterprise. For instance, by creating a collection of published APIs, IT can enable participants across the business, or even externally, to create innovations around enterprise systems and capabilities.

The pressure is on for today’s IT to build talent, assert their capacity to deliver insight and redefine their value to executives and employees alike. Meanwhile enterprises are realizing that long-term success will require strong IT organizations that do more than just command and control. As the scales tip toward giving greater influence to IT departments, its time to leap on the opportunity to raise the bar for innovation in every part of the enterprise.

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2 Comments

  1. You ask the question, ‘So how might CIOs go about meeting rising expectations to innovate while still delivering upon the traditional IT function?”

    Here’s one for you: Is it easier for the business-side to learn enough technology to innovate using support from SaaS vendors or for the IT department to become sufficiently expert in all the processes and all the customer segments of an enterprise to drive innovation?

    I think you’ve given a clue to the best answer in saying that IT needs to be an “innovation partner.” Defining what that really means and how to do it effectively should be what McKinsey writes about next and what CIO’s do to keep themselves from becoming part of the Facilities department.

    • Nolan Wright

      Mike: fully agree. There’s no way that IT by itself (or IT in partnership with one or two mega vendors) can deliver the type of innovation the business demands, at the rate it demands it. To our way of thinking, IT in the future looks much more like a seeder of ecosystems vs. a sole-source provider. We refer to it as an “innovation exchange” – if you’re interested, you can read a little more about it here: http://appcelerator.uberflip.com/i/262507 (last page).

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