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CIOs and The 80/20 Rule

CIOs and The 80/20 Rule

CIO Becoming a “next-gen CIO” is hardest on those who started as IT administrators, were promoted up through the IT ranks as the business grew, and have had their hands full just with maintaining availability. Most CIO’s are in their comfort zone for the first two roles—Infrastructure and Integration—but have to stretch to perform as Chief Intelligence Officer and Chief Innovation Officer. These two roles, which ideally control 20% of the IT budget, increasingly go to tech-savvy business leaders.

Every CIO knows the 80/20 rule, the Pareto principle, stating that 80% of the effects come from 20% of the causes. The principle has many applications in business, such as that 80% of your orders come from 20% of your customers. The application that concerns us here is that 20% of the IT budget has to produce 80% of the competitive advantages from technology.

As a practical example that companies of all sizes can relate to, consider the claims associated with cloud computing. Rick Nucci, founder and CTO of Dell Boomi, which markets a platform for integrating cloud and on-premises applications, says, “Cloud [computing] is more than moving IT from the data center and scaling it into the cloud. Customers currently have an 80/20 paradox – 80% is maintaining the stuff you already have, 20% is getting to innovation. This paradox is a main driver for moving to the cloud. Cloud provides the fundamentals (free trials, automatic upgrades, constant streams of innovation, reduced CapEx expenses) to flip flop the 80/20, so IT can deliver more innovation to their customers and focus less on maintenance (Forbes).

And cloud computing is not alone in promising competitive advantages from innovation. Especially in mid-size and larger companies, various other disruptive technologies— Bring your own device (BYOD), mobile technology, social media, Big Data—clamor for attention. If they don’t get it from the CIO, they get it from business champions. IBM’s “State of Marketing 2012” survey found that fully 60 percent of marketers point to their lack of alignment with the company’s IT department as the biggest obstacle to reaching today’s consumers across new channels including mobile devices and social networks (CRM Advocate). Capgemini says that “The exploitation of Big Data fuels a step change in the quality of business decision-making,” but the biggest obstacle to taking that step for most organizations is finding qualified data analysts.

Which of these disruptive technologies has the most promise? What competitive advantage do they offer your organization? Which solutions should you select? How can you combine technologies and what could you accomplish if you did? How would that impact the systems environment and the bottom line? Should you migrate some of the legacy systems to the cloud in order to free up time and money to retrain and reallocate staff into other roles such as data analysts and application developers? These are the kinds of questions an internal IT consultancy under the direction of the Chief Intelligence Officer and the Chief Innovation officer would field.

If such an internal consultancy does not exist, CIO Advisory Services can fill this gap. “From a technology perspective, it’s the best time in history to be in business as more capabilities are available at a lower flexible price point than ever before. However, navigating those options and turning them into business profits can lead to decision paralysis,” says Ryan Risley, Managing Director of CIO Advisory Services, Brittenford Systems. “In addition to moving decisions along, a virtual CIO can help the whole organization focus on the big picture—a holistic view of business objectives and the infrastructure to support them.”

For more information on CIO Advisory services, download: A Guide to CIO Advisory Services.

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