By Tim Zanni, KPMG Global and U.S. Technology Sector Leader
As technology has evolved into a strategic priority for companies in recent years, the role of the chief information officer has grown in prestige and importance. CIOs have transitioned from IT leaders to critical members of the C-Suite. Now, within the technology sector, they are playing a key role as innovation leaders as well.
KPMG surveyed U.S.-based business leaders at mid-to-large tech companies as part of a broader technology industry innovation study and found these leaders most-often identified the CIO as responsible for driving innovation in their company, followed by the chief innovation officer and the CEO. We asked this question four times over the past six years, and this is the first time that the chief information officer topped this list.
Tech industry chief information officers and chief innovation officers will continue to lead innovation across the enterprise. They are expected to produce an IT ecosystem that can adapt and support a tech company’s disruptive technologies and new business models aimed at rapidly capturing opportunities.
For CIOs to maintain their position as innovation leaders, they must have the ability to measure initiatives that impact the business, as well as attract and retain the right talent.
Motivating employees to innovate
Complementing the push to retain talent, CIOs are considering how best to drive and measure innovation. KPMG’s overall survey of technology industry leaders found that promotions were the most effective ways to motivate employees to be innovative, ahead of measures such as other financial incentives and cash. Asked how they gauge the value of innovation, these survey respondents cited measures such as revenue growth, market share and return on investment. Revenue growth moved up from the second spot in last year’s findings.
The battle for talent plays into another key trend that emerged from our survey - the decentralization of technology innovation, as more hubs grow around the country. In the United States, many cities are implementing the start-up playbook that Silicon Valley developed as a model for economic growth. New York, Boston, Chicago, Los Angeles, Houston, Seattle and Austin compose the list in our survey as leading U.S. innovation hubs over the next four years, in addition to Silicon Valley and the San Francisco Bay Area. Among factors driving innovation decentralization are access to talent, funding, local infrastructure, and cost of living, though the latter can be outweighed by other factors.
Innovation and Risk Management
With no slowdown in the pace of change in technology and innovation, CIOs must not only focus on the strategic promise of technology but the potential pitfalls as well. Critical to the latter is the creation and development of a well-defined enterprise technology risk management strategy that grows with the tech-driven business strategy. Yet the findings in a cross-industry KPMG survey of U.S. IT risk management professionals shows that IT organizations still have work to do. More than 45 percent of the companies that adopted the Internet of Things and 44 percent that adopted cloud computing are not assessing their risk. About one-third of the companies that have adopted artificial intelligence or robotic process automation have not assessed their risk either.
With their strategic position in technology companies as innovation drivers, CIOs are in a unique position to close this gap and foster the balance between technology innovation and technology risk management. A key to an effective risk management function is the tight collaboration between the Risk Management unit and strategic teams such as Innovation and Technology Enablement. CIOs can help drive both a culture of innovation and a culture of risk management. Having a CIO’s strategic business perspective available to both enables the Risk Management team to more clearly understand how they can contribute to the growth of the business through innovation as opposed to being viewed as an impediment to innovation. Understanding the macro-business issues is vital to the effective interworking between the technology innovation and risk management teams. A CIO can help foster the understanding by encouraging cross-functional education and knowledge sharing throughout the teams.
To lead and sustain a successful technology innovation program also requires having a lens on risks that are not as obvious today. The CIO who spurs and embraces a collaborative culture between innovation and risk management will more likely have that look ahead. Doing so would also add to a company’s overall focus on the importance of maintaining the trust of stakeholders – employees, investors and customers.
As we can clearly see, the role of technology company CIO has grown in opportunity, complexity and expectations. CIOs who can flourish in this dynamic environment as the innovation leader of their enterprise will significantly add to the growth of their companies.
To find out more, contact Mike Alva. He can also arrange for an interview with KPMG Global and U.S. Technology Sector Leader Tim Zanni.