Deloitte global survey shows Irish CIO innovation budgets remain insignificant
By Michael Hennigan, Finfacts founder and editor
Oct 21, 2014 - 1:43 PM

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While more than half of Irish CIOs (57%) consider innovation an important priority, they receive little or no funding for this within their IT function. 43% of Irish respondents to the annual Deloitte CIO (chief information officer) survey indicated that less than 1% of IT budgets were ring-fenced for innovation. This compares to their global peers where 19% of all respondents to the survey indicated that less than 1% of their budgets aligned to innovation-related activities. Similarly, while 30% of CIOs internationally consider IT innovation very important to the IT function, only 19% of Irish CIOs feel the same.

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Harry Goddard, head of Deloitte Ireland’s technology consulting practice, says: “After the prolonged economic downturn here in Ireland, organisations are now looking to drive sustainable growth. We know from research amongst Irish CFOs that they view technology as having a key role in driving this growth. Therefore, the ongoing lack of innovation budget is surprising given positive current market conditions and an acknowledgement that technology is essential for organisations to develop and deliver new products and services to remain competitive. This is perhaps even more surprising given Ireland’s reputation as an innovation engine for technology.”

Similar to their international counterparts, 45% of Irish CIOs report that business leaders’ attitudes to risk are an even bigger constraint than inadequate budgets in making riskier IT investments for innovation and growth. While the survey results suggest Irish CIOs are willing to take intelligent risks with IT investments (62% class themselves as risk tolerant, not risk averse), this appetite for investment does not seem to be reflected in their current portfolios of projects.

“CIOs are still most often associated with maintaining core IT systems and ‘keeping the lights on’,” says Goddard. “However, a key question in this year’s survey is whether CIOs should take more responsibility for technology innovation to help their organisations grow. The challenge will be to convince company leadership they are capable of delivering these new technologies.”

Deloitte says that despite some challenges, there have been some improvements in business relationships as findings reveal Irish CIOs are becoming more effective business partners (4 percentage point increase on last year, with 44% rating themselves as strong and effective). That said, we are now somewhat behind global counterparts in this area - this figure has risen 10% to 49% in this year’s survey results.

However, there are still gaps when looking at individual leadership relationships. Four out of five Irish CIOs (80%) consider their relationship with the CEO ‘very important’, yet only 48% believe this relationship is currently ‘very good’. New generation business leadership roles such as chief digital and data officers are gaining prominence. “It is becoming essential for CIOs to nurture stronger and trusted relationships with emerging business leaders who champion change and CIOs themselves must ensure their functions enable these roles,” says Simon Murphy, partner, Technology Consulting, Deloitte.

“The next 12 months will be critical for CIOs as their relationship with the business, and in particular the CEO, takes centre stage. Stronger business relationships will open more opportunities and allow them more ownership and responsibility of the innovation function. Now is the time for CIOs to choose whether to remain custodians of core IT systems or become drivers of growth through technological innovation,” concludes Murphy.

Overview of key findings:

IT budgets. 74% of IT budgets are the same or up from 2013, 26% down. 60% of budgets are allocated to business as usual activities, with the rest split between supporting business change (22%) and supporting business growth (18%). When asked where CIOs would invest more money if they had it, the majority (43%) said analytics and big data. This was followed by public cloud (18%) and private cloud (18%) and mobile apps (12%).

IT priorities. Supporting new business needs (60%) and driving digital strategy (45%) are top of the priority list amongst Irish CIOs for the next 12-18 months. Reducing IT cost as a priority has dropped 29 percentage points from 2013 (in 2014, 28% consider it a priority vs. 57% in 2013).

Business partnering. CIOs are becoming more effective business partners with 44% of Irish CIOs rating themselves “strong and effective” in that regard – a marginal increase on last year. However, while 80% consider their relationship with the CEO a “very important” one, just under half of Irish CIOs believe this relationship is currently “very good”. Similar disparities exist in the CFO and COO relationships.

Innovation. 57% of Irish CIOs believe that innovation is considered an important a priority but receives little funding within the IT functions. In fact, almost half of Irish CIOs put less than 1% of their budgets aside for that purpose. However, the number one barrier to riskier IT investments is the business leadership’s attitude to risk; budget is second.

Analytics. 41% of Irish CIOs (down from 42% in 2013 and compared with 48% globally) are piloting, implementing and adopting analytics and big data – a change from last year when many respondents said they remained to be convinced of the benefits. Across the global respondents, the main barriers to adoption are lack of correct talent to use data (26%) and no centralised approach to capturing and analysing data (22%).

Over 900 CIOs across 49 countries, including Ireland, provided insight into the perceptions, priorities, opportunities and challenges of CIOs around the world.

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