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By Tim Ferguson, 18 November 2009 10:00

COMMENT

Michael Chui is a senior fellow of the McKinsey Global Institute, the economics research arm of analyst house McKinsey & Company.

In an exclusive interview, silicon.com reporter Tim Ferguson spoke to Chui about the report he co-authored on how CIOs can overcome the significant challenges posed by the business world emerging from the global recession into the 'new normal'.

You can view the newly published article, Time to raise the CIO's game, at McKinsey Quarterly

silicon.com: Can you describe the 'new normal' for the business world?
Chui: Some of the things that were identified [in our research] are increasing uncertainty, lower availability on credit, potentially lower consumer spending in certain areas and more public sector involvement in the business world.

There are probably other aspects of the new normal which we're only going to discover as we're going forward but those are the ones that are coming to the fore.

How will the 'new normal' impact CIOs in Europe?
What we identified were a series of challenges that the European CIO has to overcome and then a set of things that we believe will lead to real success.

In terms of the hurdles, we continue to see some challenges with the alignment of IT with the rest of the business. We're also seeing continuing cost pressure despite a continuing need for IT to improve the productivity in the rest of the business. [This] provides a significant challenge to IT leaders within companies - they're being asked to take the cost down at the same time as they're being asked to improve the efficiency of the rest of the business.

[Also we're seeing] some real challenges from a business standpoint, in terms of the degree to which executives perceive their businesses to be threatened by potential IT-based disruption and their readiness or state of preparation with regard to their ability to deal with those challenges.

So with that in mind, the recommendations or the success factors that we've identified correspond quite directly to those. First of all it becomes even more important in this new normal environment to really align IT and business priorities and strategies. This means both business input into IT decisions as well as IT having a seat at the table and being a leader in some cases for business-based decisions.

The second one is around improving productivity - and that's productivity within the IT function as well as improving the productivity of the rest of the business in an IT-enabled way.

And finally, having the IT director or CIO be a co-leader in identifying those sorts of disruptive moves that a company can produce in order to drive real competitive advantage.

Tell me more about the hurdles CIOs will have to jump in the 'new normal'.
One key result is that 71 per cent of European IT and business executives told us that when setting IT and business strategy, they should be tightly integrated. That being said, the significant gap is that only 27 per cent [of respondents] consider that to be true in their companies. So there's a difference between the ideal state and what they thought was actually the case in their companies. That's a clear indicator of a significant challenge there.

Another one of our studies [examined] to whom the head of IT or CIO reports in European countries versus in other regions. It turns out that fewer CIOs report to the CEOs in Europe than in other regions of the world. We're not saying in every case the CIO must report to the CEO but in aggregate what's interesting is [our research] might suggest that in many [European] companies the IT function is considered more of a back-office support function rather than being an enabling function for real business strategy.

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