CIO Priorities 2023

• Updated on: 2023-05-15
• Read original article here

CIO Priorities 2023
Engage cross-functional leadership to seize opportunity while protecting the organization from volatility.
CIOs are facing these challenges in 2023:
Trying to understand the implications of external trends.
Determining what capabilities are most important to support the organization.
Understanding how to help the organization pursue new opportunities.
Preparing to mitigate new sources of organizational risk.
Our Advice
Critical Insight
While functional leaders may only see their next move, as head of the organization with a complete view of all the pieces, the CIO has full context awareness. It's up to them to assess their gaps, consider the present scenario, and then make their next move.
Each priority carries new opportunities for organizations that pursue them.
There are also different risks to mitigate as each priority is explored.
Impact and Result
Inform your IT strategy for the year ahead.
Identify which capabilities you need to improve.
Add initiatives that support your priorities to your roadmap.
CIO Priorities 2023 Research & Tools
1. CIO Priorities 2023 Report – Read about the priorities on IT leaders' agenda.
Understand the five priorities that will help navigate the opportunities and risks of the year ahead.
Engage cross-functional leadership to seize opportunity while protecting the organization from volatility.
Analyst Perspective
Take a full view of the board and use all your pieces to win.
In our Tech Trends 2023 report, we called on CIOs to think of themselves as chess grandmasters. To view strategy as playing both sides of the board, simultaneously attacking the opponent's king while defending your own. In our CIO Priorities 2023 report, we'll continue with that metaphor as we reflect on IT's capability to respond to trends.
If the trends report is a study of the board state that CIOs are playing with, the priorities report is about what move they should make next. We must consider all the pieces we have at our disposal and determine which ones we can afford to use to seize on opportunity. Other pieces are best used by staying put to defend their position.
In examining the different capabilities that CIOs will require to succeed in the year ahead, it's apparent that a siloed view of IT isn't going to work. Just like a chess player in a competitive match would never limit themselves to only using their knights or their rooks, a CIO's responsibility is to deploy each of their pieces to win the day. While functional leaders may only see their next move, as head of the organization with a complete view of all the pieces, the CIO has full awareness of the board state.
It's up to them to assess their gaps, consider the present scenario, and then make their next move.
Brian Jackson
Principal Research Director, Research – CIO
Info-Tech Research Group
CIO Priorities 2023 is informed by Info-Tech's primary research data of surveys and benchmarks
Info-Tech's Tech Trends 2023 report and State of Hybrid Work in IT: A Trend Report inform the externalities faced by organizations in the year ahead. They imply opportunities and risks that organizations face. Leadership must determine if they will respond and how to do so. CIOs then determine how to support those responses by creating or improving their IT capabilities. The priorities are the initiatives that will deliver the most value across the capabilities that are most in demand. The CIO Priorities 2023 report draws on data from several different Info-Tech surveys and diagnostic benchmarks.
2023 Tech Trends and Priorities Survey; N=813 (partial), n=521 (completed)
Info-Tech's Trends and Priorities 2023 Survey was conducted between August 9 and September 9, 2022. We received 813 total responses with 521 completed surveys. More than 90% of respondents work in IT departments. More than 84% of respondents are at a manager level of seniority or higher.
2023 The State of Hybrid Work in IT Survey; N=518
The State of Hybrid Work in IT Survey was conducted between July 11 and July 29 and received 518 responses. Nine in ten respondents were at a manager level of seniority or higher.
Every organization will have its own custom list of priorities based on its internal context. Organizational goals, IT maturity level, and effectiveness of capabilities are some of the important factors to consider. To provide CIOs with a starting point for their list of priorities for 2023, we used aggregate data collected in our diagnostic benchmark tools between August 1, 2021, and October 31, 2022.
Info-Tech's CEO-CIO Alignment Program is intended to be completed by CIOs and their supervisors (CEO or other executive position [CxO]) and will provide the average maturity level and budget expectations (N=107). The IT Management and Governance Diagnostic will provide the average capability effectiveness and importance ranking to CIOs (N=271). The CIO Business Vision Diagnostic will provide stakeholder satisfaction feedback (N=259).
The 2023 CIO priorities are based on that data, internal collaboration sessions at Info-Tech, and external interviews with CIOs and subject matter experts.
Determine stakeholder satisfaction
Most IT departments should aim to drive outcomes that deliver better efficiency and cost savings
Slightly more than half of CIOs using Info-Tech's CEO-CIO Alignment Program rated themselves at a Support level of maturity in 2022. That aligns with IT professionals' view of their organizations from our Tech Trends and Priorities Survey, where organizations are rated at the Support level on average. At this level, IT departments can provide reliable infrastructure and support a responsive IT service desk that reasonably satisfies stakeholders.
In the future, CIOs aspire to attain the Transform level of maturity. Nearly half of CIOs select this future state in our diagnostic, indicating a desire to deliver reliable innovation and lead the organization to become a technology-driven firm. However, we see that fewer CxOs aspire for that level of maturity from IT. CxOs are more likely than CIOs to say that IT should aim for the Optimize level of maturity. At this level, IT will help other departments become more efficient and lower costs across the organization.
Whether a CIO is aiming for the top of the maturity scale in the future or not, IT maturity is achieved one step at a time. Aiming for outcomes at the Optimize level will be a realistic goal for most CIOs in 2023 and will satisfy many stakeholders.
Current and future state of IT maturity
Trends indicate a need to focus on leadership and change management
Trends imply new opportunities and risks that an organization must decide on. Organizational leadership determines if action will be taken to respond to the new external context based on its importance compared to current internal context. To support their organizations, IT must use its capabilities to deliver on initiatives. But if a capability's effectiveness is poor, it could hamper the effort.
To determine what capabilities IT departments may need to improve or create to support their organizations in 2023, we conducted an analysis of our trends data. Using the opportunities and risks implied by the Tech Trends 2023 report and the State of Hybrid Work in IT: A Trend Report, we've determined the top capabilities IT will need to respond. Capabilities are defined by Info-Tech's IT Management and Governance Framework.
Tier 1: The Most Important Capabilities In 2023
Enterprise Application Selection & Implementation
Manage the selection and implementation of enterprise applications, off-the-shelf software, and software as a service to ensure that IT provides the business with the most appropriate applications at an acceptable cost.
Leadership, Culture, and Values
Ensure that the IT department reflects the values of your organization. Improve the leadership skills of your team to generate top performance.
Data Architecture
Manage the business' databases, including the technology, the governance processes, and the people that manage them. Establish the principles, policies, and guidelines relevant to the effective use of data within the organization.
Organizational Change Management
Implement or optimize the organization's capabilities for managing the impact of new business processes, new IT systems, and changes in organizational structure or culture.
External Compliance
Ensure that IT processes and IT-supported business processes are compliant with laws, regulations, and contractual requirements.
Info-Tech's Management and Diagnostic Benchmark
Tier 2: Other Important Capabilities In 2023
Ten more capabilities surfaced as important compared to others but not as important as the capabilities in tier 1.
Asset Management
Track IT assets through their lifecycle to make sure that they deliver value at optimal cost, remain operational, and are accounted for and physically protected. Ensure that the assets are reliable and available as needed.
Business Intelligence and Reporting
Develop a set of capabilities, including people, processes, and technology, to enable the transformation of raw data into meaningful and useful information for the purpose of business analysis.
Business Value
Secure optimal value from IT-enabled initiatives, services, and assets by delivering cost-efficient solutions and services and by providing a reliable and accurate picture of costs and benefits.
Cost and Budget Management
Manage the IT-related financial activities and prioritize spending through the use of formal budgeting practices. Provide transparency and accountability for the cost and business value of IT solutions and services.
Data Quality
Put policies, processes, and capabilities in place to ensure that appropriate targets for data quality are set and achieved to match the needs of the business.
Enterprise Architecture
Establish a management practice to create and maintain a coherent set of principles, methods, and models that are used in the design and implementation of the enterprise's business processes, information systems, and infrastructure.
IT Organizational Design
Set up the structure of IT's people, processes, and technology as well as roles and responsibilities to ensure that it's best meeting the needs of the business.
Performance Measurement
Manage IT and process goals and metrics. Monitor and communicate that processes are performing against expectations and provide transparency for performance and conformance.
Stakeholder Relations
Manage the relationship between the business and IT to ensure that the stakeholders are satisfied with the services they need from IT and have visibility into IT processes.
Vendor Management
Manage IT-related services provided by all suppliers, including selecting suppliers, managing relationships and contracts, and reviewing and monitoring supplier performance.
Defining the CIO Priorities for 2023
Understand the CIO priorities by analyzing both how CIOs respond to trends in general and how a specific CIO responded in the context of their organization.
The Five CIO Priorities for 2023
Engage cross-functional leadership to seize opportunity while protecting the organization from volatility.
Adjust IT operations to manage for inflation
Business Value
Recognize the relative impact of higher inflation on IT's spending power and adjust accordingly.
Inflation takes a bite out of the budget
Two-thirds of IT professionals are expecting their budgets to increase in 2023, according to our survey. But not every increase is keeping up with the pace of inflation. The International Monetary Fund forecasts that global inflation rose to 8.8% in 2022. It projects it will decline to 6.5% in 2023 and 4.1% by 2024 (IMF, 2022).
CIOs must account for the impact of inflation on their IT budgets and realize that what looks like an increase on paper is effectively a flat budget or worse. Applied to our survey takers, an IT budget increase of more than 6.5% would be required to keep pace with inflation in 2023. Only 40% of survey takers are expecting that level of increase. For the 27% expecting an increase between 1-5%, they are facing an effective decrease in budget after the impact of inflation. Those expecting no change in budget or a decrease will be even worse off.
Looking ahead to 2023, how do you anticipate your IT spending will change compared to spending in 2022?
Global inflation estimates by year
2022
International Monetary Fund, 2022
CIOs are more optimistic about budgets than their supervisors
Data from Info-Tech's CEO-CIO Alignment Diagnostic benchmark also shows that CIOs and their supervisors are planning for increases to the budget. This diagnostic is designed for a CIO to use with their direct supervisor, whether it's the CEO or otherwise (CxO). Results show that on average, CIOs are more optimistic than their supervisors that they will receive budget increases and headcount increases in the years ahead.
While 14% of CxOs estimated the IT budget would see no change or a decrease in the next three to five years, only 3% of CIOs said the same. A larger discrepancy is seen in headcount, where nearly one-quarter of CXOs estimated no change or decrease in the years ahead, versus only 10% of CIOs estimating the same.
When we account for the impact of inflation in 2023, this misalignment between CIOs and their supervisors increases. When adjusting for inflation, we need to view the responses projecting an increase of between 1-5% as an effective decrease. With the inflation adjustment, 26% of CXOs are predicting IT budgets to stay flat or see a decrease compared to only 10% of CIOs.
CIOs should consider how inflation has affected their projected spending power over the past year and take into account projected inflation rates over the next couple of years. Given that the past decade has seen inflation rates between 2-3%, the higher rates projected will have more of an impact on organizational budgets than usual.
Expect headcount to stay flat or decline over 3-5 years
IT budget expectations to stay flat or decrease before inflation
IT budget expectations to stay flat or decrease adjusted for inflation
Info-Tech's CEO-CIO Alignment Program
Opportunities
Appoint a "cloud economist"
Organizations that migrated from on-premises data centers to infrastructure as a service shifted their capital expenditures on server racks to operational expenditures on paying the monthly service bill. Managing that monthly bill so that it is in line with desired performance levels now becomes crucial. The expected benefit of the cloud is that an organization can turn the dial up to meet higher demand and turn it down when demand slows. In practice this is sometimes more difficult to execute than anticipated. Some IT departments realize their cloud-based data flows aren't always connected to the revenue-generating activity seen in the business. As a result, a "cloud economist" is needed to closely monitor cloud usage and adjust it to financial expectations. Especially during any recessionary period, IT departments will want to avoid a "bill shock" incident.
Partner with technology providers
Keep your friends close and your vendors closer. Look for opportunities to create leverage with your strategic vendors to unlock new opportunities. Identify if a vendor you work with is not entrenched in your industry and offer them the credibility of working with you in exchange for a favorable contract. Offering up your logo for a website listing clients or giving your own time to speak in a customer session at a conference can go a long way to building up some goodwill with your vendors. That's goodwill you'll need when you ask for a new multi-year contract on your software license without annual increases built into the structure.
Demonstrate IT projects improve efficiency
An IT department that operates at the Optimize level of Info-Tech's maturity scale can deliver outcomes that lower costs for other departments. IT can defend its own budget if it's able to demonstrate that its initiatives will automate or augment business activities in a way that improves margins. The argument becomes even more compelling if IT can demonstrate it is supporting a revenue-generating initiative or customer-facing experience. CIOs will need to find business champions to vouch for the important contributions IT is making to their area.
Risks
Imposition of non-financial reporting requirements
In some jurisdictions, the largest companies will be required to start collecting information on carbon emissions emitted as a result of business activities by the end of next year. Smaller sized organizations will be next on the list to determine how to meet new requirements issued by various regulators. Risks of failure include facing fines or being shunned by investors. CIOs will need to support their financial reporting teams in collecting the new required data accurately. This will incur new costs as well.
Rising asset costs
Acquiring IT equipment is becoming more expensive due to overall inflation and specific pressures around semiconductor supply chains. As a result, more CIOs are extending their device refresh policies to last another year or two. Still, demands for new devices to support new hybrid work models could put pressure on budgets as IT teams are asked to modernize conferencing rooms. For organizations adopting mixed reality headsets, cutting-edge capabilities will come at a premium. Operating costs of devices may also increase as inflation increases costs of the electricity and bandwidth they depend on.
CASE STUDY
Leverage your influence in vendor negotiations
Denise Cornish, Associate VP of IT and Deputy COO,
Western University of Health Sciences
Since taking on the lead IT role at Western University in 2020, Denise Cornish has approached vendor management like an auditable activity. She evaluates the value she gets from each vendor relationship and creates a list of critical vendors that she relies upon to deliver core business services. "The trick is to send a message to the vendor that they also need us as a customer that's willing to act as a reference," she says. Cornish has managed to renegotiate a contract with her ERP vendor, locking in a multi-year contract with a very small escalator in exchange for presenting as a customer at conferences. She's also working with them on developing a new integration to another piece of software popular in the education space.
Western University even negotiated a partnership approach with Apple for a program run with its College of Osteopathic Medicine of the Pacific (COMP) called the Digital Doctor Bag. The partnership saw Apple agree to pre-package a customer application developed by Western that delivered the curriculum to students and facilitated communications across students and faculty. Apple recognized Western as an Apple Distinguished School, a program that recognizes innovative schools that use Apple products.
"I like when negotiations are difficult.
I don't necessarily expect a zero-sum game. We each need to get something out of this and having the conversation and really digging into what's in it for you and what's in it for me, I enjoy that. So usually when I negotiate a vendor contract, it's rare that it doesn't work out."
CASE STUDY
Control cloud costs with a simplified approach
Jim Love, CIO, IT World Canada
As an online publisher and a digital marketing platform for technology products and services companies, IT World Canada (ITWC) has observed that there are differences in how small and large companies adopt the cloud as their computing infrastructure. For smaller companies, even though adoption is accelerating, there may still be some reluctance to fully embrace cloud platforms and services. While larger companies often have a multi-cloud approach, this might not be practical for smaller IT shops that may struggle to master the skills necessary to effectively manage one cloud platform. While Love acknowledges that the cloud is the future of corporate computing, he also notes that not all applications or workloads may be well suited to run in the cloud. As well, moving data into the cloud is cheap but moving it back out can be more expensive. That is why it is critical to understand your applications and the data you're working with to control costs and have a successful cloud implementation.
"Standardization is the friend of IT. So, if you can standardize on one platform, you're going to do better in terms of costs."
From priorities to action
Go deeper on pursuing your priorities by improving the associated capabilities.
Improve Cost and Budget Management
Take control of your cloud costs by providing central financial oversight on the infrastructure-as-a-service provider your organization uses. Create visibility into your operational costs and define policies to control them. Right-size the use of cloud services to stay within organizational budget expectations.
Take Control of Cloud Costs on Microsoft Azure
Improve Business Value
Reduce the funds allocated to ongoing support and impose tougher discipline around change requests to lighten your maintenance burden and make room for investment in net-new initiatives to support the business.
Free up funds for new initiatives
Improve Vendor Management
Lay the foundation for a vendor management process with long-term benefits. Position yourself as a valuable client with your strategic vendors and leverage your position to improve your contract terms.
Prepare your data pipeline to train AI
Priority 02
Keep pace as the market adopts AI capabilities, and be ready to create competitive advantage.
Today's innovation is tomorrow's expectation
During 2022, some compelling examples of generative-AI-based products took the world by storm. Images from AI-generating bots Midjourney and Stable Diffusion went viral, flooding social media and artistic communities with images generated from text prompts. Exchanges with OpenAI's ChatGPT bot also caught attention, as the bot was able to do everything from write poetry, to provide directions on a cooking recipe and then create a shopping list for it, to generate working code in a variety of languages. The foundation models are trained with AI techniques that include generative adversarial networks, transformers, and variational autoencoders. The end result is an algorithm that can produce content that's meaningful to people based on some simple direction. The industry is only beginning to come to grips with how this sort of capability will disrupt the enterprise.
Slightly more than one-third of IT professionals say their organization has already invested in AI or machine learning. It's the sixth-most popular technology to have already invested in after cloud computing (82%), application programming interfaces (64%), workforce management solutions (44%), data lakes (36%), and next-gen cybersecurity (36%). It's ahead of 12 other technologies that IT is already invested in.
When we asked what technologies organizations planned to invest in for next year, AI rocketed up the list to second place, as it's selected by 44% of IT professionals. It falls behind only cloud computing. This jump up the list makes AI the fastest growing technology for new investment from organizations.
Many AI capabilities seem cutting edge now, but organizations are prioritizing it as a technology investment. In a couple of years, access to foundational models that produce images, text, or code will become easy to access with a commercial license and an API integration. AI will become embedded in off-the-shelf software and drive many new features that will quickly become commonplace.
To stay even with the competition and meet customer expectations, organizations will have to work to at least adopt these AI-enhanced products and services. For those that want to create a competitive advantage, they will have to build a data pipeline that is capable of training their own custom AI models based on their unique data sets.
Which of the following technology categories has your organization already invested in?
Which of those same technologies does your organization plan to invest in by the end of 2023?
Tech Trends 2023 Survey
Data quality and governance will be critical to customize generative AI
Data collection and analysis are on the minds of both CIOs and their supervisors. When asked what technologies the business should adopt in the next three to five years, big data (analytics) ranked as most critical to adopt among CIOs and their supervisors. Big data (collection) ranked fourth out of 11 options.
Organizations that want to drive a competitive advantage from generative AI will need to train these large, versatile models on their own data sets. But at the same time, IT organizations are struggling to provide clean data. The second-most critical gap for IT organizations on average is data quality, behind only organizational change management. Organizations know that data quality is important to support analytics goals, as algorithms can suffer in their integrity if they don't have reliable data to work with. As they say, garbage in, garbage out.
Another challenge to overcome is the gap seen in IT governance, the sixth largest gap on average. Using data toward training custom generative models will hold new compliance and ethical implications for IT departments to contend with. How user data can be leveraged is already the subject of privacy legislation in many different jurisdictions, and new AI legislation is being developed in various places around the world that could create further demands. In some cases, users are reacting negatively to AI-generated content.
Biggest capability gaps between rated importance and effectiveness
IT Management and Governance Diagnostic
Most critical technologies to adopt rated by CIOs and their supervisors
CEO-CIO Alignment Program
Opportunities
Enterprise content discovery
Many organizations still cobble together knowledgebases in SharePoint or some other shared corporate drive, full of resources that no one quite knows how to find. A generative AI chatbot holds potential to be trained on an organization's content and produce content based on an employee's queries. Trained properly, it could point employees to the right resource they need to answer their question or just provide the answer directly.
Supply chain forecasts
After Hurricane Ian shut down a Walmart distribution hub, the retailer used AI to simulate the effects on its supply chain. It rerouted deliveries from other hubs based on the predictions and planned for how to respond to demand for goods and services after the storm. Such forecasts would typically take a team of analysts days to compose, but thanks to AI, Walmart had it done in a matter of hours (The Economist, 2022).
Reduce the costs of AI projects
New generative AI models of sufficient scale offer advantages over previous AI models in their versatility. Just as ChatGPT can write poetry or dialogue for a play or perhaps a section of a research report (not this one, this human author promises), large models can be deployed for multiple use cases in the enterprise. One AI researcher says this could reduce the costs of an AI project by 20-30% (The Economist, 2022).
Risks
Impending AI regulation
Multiple jurisdictions around the world are pursuing new legislation that imposes requirements on organizations that use AI, including the US, Europe, and Canada. Some uses of AI will be banned outright, such as the real-time use of facial recognition in public spaces, while in other situations people can opt out of using AI and work with a human instead. Regulations will take the risk of the possible outcomes created by AI into consideration, and organizations will often be required to disclose when and how AI is used to reach decisions (Science | Business, 2022). Questions around whether creators can prevent their content from being used for training AI are being raised, with some efforts already underway to collect a list of those who want to opt out. Organizations that adopt a generative AI model today may find it needs to be amended for copyright reasons in the future.
Bias in the algorithms
Organizations using a large AI model trained by a third party to complete their tasks or as a foundation to further customize it with their own data will have to contend with the inherent bias of the algorithm. This can lead to unintended negative experiences for users, as it did for MIT Technology Review journalist Melissa Heikkilä when she uploaded her images to AI avatar app Lensa, only to have it render a collection of sexualized portraits. Heikkilä contends that her Asian heritage overly influenced the algorithm to associate her with video-game characters, anime, and adult content (MIT Technology Review, 2022).
Convincing nonsense
Many of the generative AI bots released so far often create very good responses to user queries but sometimes create nonsense that at first glance might seem to be accurate. One example is Meta's Galactica bot – intended to streamline scientific research discovery and aid in text generation – which was taken down only three days after being made available. Scientists found that it generated fake research that sounded convincing or failed to do math correctly (Spiceworks, 2022).
CASE STUDY
How MLSE enhances the Toronto Raptors' competitiveness with data-driven practices
Christian Magsisi, Vice President of Venue and Digital Technology, MLSE
At the Toronto Raptors practice facility, the OVO Athletic Centre, a new 120-foot custom LG video screen towers over the court. The video board is used to playback game clips so coaches can use them to teach players, but it also displays analytics from algorithmic models that are custom-made for each player. Data on shot-making or defensive deflections are just a couple examples of what might inform the players.
Vice President of Digital Technology Christian Magsisi leads a functional Digital Labs technical group at MLSE. The in-house team builds the specific data models that support the Raptors in their ongoing efforts to improve. The analytics are fed by Noah Analytics, which uses cognitive vision to provide real-time feedback on shot accuracy. SportsVU is a motion capture system that represents how players are positioned on the court, with detail down to which way they are facing and whether their arms are up or down. The third-party vendors provide the solutions to generate the analytics, but it's up to MLSE's internal team to shape them to be actionable for players during a practice.
"All the way from making sure that a specific player is achieving the results that they're looking for and showing that through data, or finding opportunities for the coaching staff. This is the manifestation of it in real life. Our ultimate goal with the coaches was to be able to take what was on emails or in a report and sometimes even in text message and actually implement it into practice."
How MLSE enhances the Toronto Raptors' competitiveness with data-driven practices (cont.)
Humza Teherany, Chief Technology Officer, MLSE
MLSE's Digital Labs team architects its data insights pipeline on top of cloud services. Amazon Web Services Rekognition provides cognitive vision analysis from video and Amazon Kinesis provides the video processing capabilities. Beyond the court, MLSE uses data to enhance the fan experience, explains CTO Humza Teherany. It begins with having meaningful business goals about where technology can provide the most value. He starts by engaging the leadership of the organization and considering the "art of the possible" when it comes to using technology to unlock their goals.
Humza Teherany (left) and Christian Magsisi lead MLSE's digital efforts for the pro sports teams owned by the group, including the Toronto Raptors, Toronto Maple Leafs, and Toronto Argonauts. (Photo by Brian Jackson).
Read the full story on Spiceworks Insights.
"Our first goal in the entire buildup of the Digital Labs organization has been to support MLSE and all of our teams. We like to do things first. We leverage our own technology to make things better for our fans and for our teams to complete and find incremental advantages where possible."
Humza Teherany,
Go deeper on pursuing your priorities by improving the associated capabilities.
Improve Data Quality
The performance of AI-assisted tools depends on mature IT operations processes and reliable data sets. Standardize service management processes and build a knowledgebase of structured content to prepare for AI-assisted IT operations.
Prepare for Cognitive Service Management
Improve Business Intelligence and Reporting
Explore the enterprise chatbots that are available to not only assist with customer interactions but also help your employees find the resources they need to do their jobs and retrieve data in real time.
Explore the best chatbots software
Improve Data Architecture
Understand if you are ready to embark on the AI journey and what business use cases are appropriate for AI. Plan around the organization's maturity in people, tools, and operations for delivering the correct data, model development, and model deployment and managing the models in the operational areas.
Go all in on zero-trust security
Priority 03
APO08 STAKEHOLDER RELATIONS
MEA03 EXTERNAL COMPLIANCE
Adopt zero-trust architecture as the new security paradigm across your IT stack and from an organizational risk management perspective.
Putting faith in zero trust
The push toward a zero-trust security framework is becoming necessary for organizations for several different reasons over the past couple of years. As the pandemic forced workers away from offices and into their homes, perimeter-based approaches to security were challenged by much wider network footprints and the need to identify users external to the firewall. Supply-chain security became more of a concern with notable attacks affecting many thousands of firms, some with severe consequences. Finally, the regulatory pressure to implement zero trust is rising following President Joe Biden's 2021 Executive Order on Improving the Nation's Cybersecurity. It directs federal agencies to implement zero trust. That will impact any company doing business with the federal government, and it's likely that zero trust will propagate through other government agencies in the years ahead. Zero-trust architecture can also help maintain compliance around privacy-focused regulations concerned about personal data (CSO Online, 2022).
IT professionals are modestly confident that they can meet new government legislation regarding cybersecurity requirements. When asked to rank their confidence on a scale of one to five, the most common answer was 3 out of 5 (38.5%). The next most common answer was 4 out of 5 (33.3%).
Zero-trust barriers:
Talent shortage and lack of leadership involvement
Out of a list of challenges, IT professionals are most concerned with talent shortages leading to capacity constraints in cybersecurity. Fifty-four per cent say they are concerned or very concerned with this issue. Implementing a new zero-trust framework for security will be difficult if capacity only allows for security teams to respond to incidents.
The next most pressing concern is that cyber risks are not on the radar of executive leaders or the board of directors, with 46% of IT pros saying they are concerned or very concerned. Since zero-trust requires that organizations take an enterprise risk management approach to cybersecurity and involve top decision makers, this reveals another area where organizations may fall short of achieving a zero-trust environment.
How confident are you that your organization is prepared to meet current and future government legislation regarding cybersecurity requirements?
54%
of IT professionals are concerned with talent shortages leading to capacity constraints in cybersecurity.
46%
of IT professionals are concerned that cyber risks are not on the radar of executive leaders or the board of directors.
Zero trust mitigates risk while removing friction
A zero-trust approach to security requires organizations to view cybersecurity risk as part of its overall risk framework. Both CIOs and their supervisors agree that IT-related risks are a pain point. When asked to rate the severity of pain points, 58% of CIOs rated IT-related business risk incidents as a minor pain or major pain. Their supervisors were more concerned, with 61% rating it similarly. Enterprises can mitigate this pain point by involving top levels of leadership in cybersecurity planning.
Organizations can be wary about implementing new security measures out of concern it will put barriers between employees and what they need to work. Through a zero-trust approach that focuses on identity verification, friction can be avoided. Overall, IT organizations did well to provide security without friction for stakeholders over the past 18 months. Results from Info-Tech's CIO Business Vision Diagnostic shows that stakeholders almost all agree friction due to security practices are acceptable. The one area that stands to be improved is remote/mobile device access, where 78.3% of stakeholders view the friction as acceptable.
A zero-trust approach treats user identity the same regardless of device and whether it is inside or outside of the corporate network. This can remove friction when workers are looking to connect remotely from a mobile device.
IT-related business risk incidents viewed as a pain point
CXO
Business stakeholders rate security friction levels as acceptable
CIO Business Vision Diagnostic, N=259
Opportunities
Move to identity-driven access control
Today's approach to access control on the network is to allow every device to exchange data with every other device. User endpoints and servers talk to each other directly without any central governance. In a zero-trust environment, a centralized zero-trust network access broker provides one-to-one connectivity. This allows servers to rest offline until needed by a user with the right access permissions. Users verify their identity more often as they move throughout the network. The user can access the resources and data they need with minimal friction while protecting servers from unauthorized access. Log files are generated for analysis to raise alerts about when an authorized identity has been compromised.
Protect data with just-in-time authentication
Many organizations put process in place to make sure data at rest is encrypted, but often when users copy that data to their own devices, it becomes unencrypted, allowing attackers opportunities to exfiltrate sensitive data from user endpoints. Moving to a zero-trust environment where each data access is brokered by a central broker allows for encryption to be preserved. Parties accessing a document must exchange keys to gain access, locking out unauthorized users that don't have both sets of keys to decrypt the data (MIT Lincoln Laboratory, 2022).
Harness free and open-source tools to deploy zero trust
IT teams may not be seeing a budget infusion to invest in a new approach to security. By making use of the many free and open-source tools available, they can bootstrap their strategy into reality. Here's a list to get started:
PingCastle Wrangle your Active Directory and find all the domains that you've long since forgotten about and manage the situation appropriately. Also builds a spoke-and-hub map of your Active Directory.
OpenZiti Create an overlay network to enable programmable networking that supports zero trust.
Snyk Developers can automatically find and fix vulnerabilities before they commit their code. This vendor offers a free tier but users that scale up will need to pay.
sigstore Open-source users and maintainers can use this solution to verify the code they are running is the code the developer intended. Works by stitching together free services to facilitate software signing, verify against a transparent ledger, and provide auditable logs.
Microsoft's SBOM generation tool A software bill of materials is a requirement in President Biden's Executive Order, intended to provide organizations with more transparency into their software components by providing a comprehensive list. Microsoft's tool will work with Windows, Linux, and Mac and auto-detect a longlist of software components, and it generates a list organized into four sections that will help organizations comprehend their software footprint.
Risks
Organizational culture change to accommodate zero trust
Zero trust requires that top decision makers get involved in cybersecurity by treating it as an equal consideration of overall enterprise risk. Not all boards will have the cybersecurity expertise required, and some executives may not prioritize cybersecurity despite the warnings. Organizations that don't appoint a chief information security officer (CISO) role to drive the cybersecurity agenda from the top will be at risk of cybersecurity remaining an afterthought.
Talent shortage
No matter what industry you're in or what type of organization you run, you need cybersecurity. The demand for talent is very high and organizations are finding it difficult to hire in this area. Without the talent needed to mature cybersecurity approaches to a zero-trust model, the focus will remain on foundational principles of patch management to eliminate vulnerabilities and intrusion prevention. Smaller organizations may want to consider a "virtual CISO" that helps shape the organizational strategy on a part-time basis.
Social engineering
Many enterprise security postures remain vulnerable to an attack that commandeers an employee's identity to infiltrate the network. Hosted single sign-on models provide low friction and continuity of identity across applications but also offer a single point of failure that hackers can exploit. Phishing scams that are designed to trick an employee into providing their credentials to a fake website or to just click on a link that delivers a malware payload are the most common inroads that criminals take into the corporate network. Being aware of how user behavior influences security is crucial.
CASE STUDY
Engage the entire organization with cybersecurity awareness
Serge Suponitskiy, CIO, Brosnan Risk Consultants
Brosnan provides private security services to high-profile clients and is staffed by security experts with professional backgrounds in intelligence services and major law enforcement agencies. Safe to say that security is taken seriously in this culture and CIO Serge Suponitskiy makes sure that extends to all back-office staff that support the firm's activities. He's aware that people are often the weakest link in a cybersecurity posture and are prone to being fooled by a phishing email or even a fraudulent phone call. So cybersecurity training is an ongoing activity that takes many forms. He sends out a weekly cybersecurity bulletin that features a threat report and a story about the "scam of the week." He also uses KnowBe4, a tool that simulates phishing attacks and trains employees in security awareness. Suponitskiy advises reaching out to Marketing or HR for help with engaging employees and finding the right learning opportunities.
"What is financially the best solution to protect yourself? It's to train your employees. … You can buy all of the tools and it's expensive. Some of the prices are going up for no reason. Some by 20%, some by 50%, it's ridiculous. So, the best way is to keep training, to keep educating, and to reimagine the training. It's not just sending this video that no one clicks on or posting a poster no one looks at. … Given the fact we're moving into this recession world, and everyone is questioning why we need to spend more, it's time to reimagine the training approach."
CASE STUDY
Focus on micro-segmentation as the foundation of zero trust
David Senf, National Cybersecurity Strategist, Bell
As a cybersecurity analyst and advisor that works with Bell's clients, David Senf sees zero-trust security as an opportunity for organizations to put a strong set of mitigating controls in place to defend against the thorny challenge of reducing vulnerabilities in their software supply chain. With major breaches being linked to widely used software in the past couple of years, security teams might find it effective to focus on a different layer of security to prevent certain breaches. With security policy being enforced at a narrow point/perimeter, attacks are in essence blocked from exploiting application vulnerabilities (e.g. you can't exploit what you can see). Organizations must still ensure there is a solid vulnerability management program in place, but surrounding applications with other controls is critical. One aspect of zero trust, micro-segmentation, which is an approach to network management, can limit the damage caused by a breach. The solutions help to map out and protect the different connections between applications that could otherwise be abused for discovery or lateral movement. Senf advises that knowing your inventory of software and the interdependencies between applications is the first step on a zero-trust journey, before putting protection and detection in place.
"Next year will be a year of a lot more ZTNA, zero-trust network access, being deployed. So, I think that will give organizations more of an understanding of what zero trust is as well, from a really basic perspective. If I can just limit what applications you can see and no one can even see that application, it's undiscoverable because I've got that ZTNA solution in place. … I would see that as a leading area of deployment and coming to understand what zero trust is in 2023."
From priorities to action
Go deeper on pursuing your priorities by improving the associated capabilities.
Improve Asset Management
Enable reduced friction in the remote user experience by underpinning it with a hardware asset management program. Creating an inventory of devices and effectively tracking them will aid in maintaining compliance, result in stronger policy enforcement, and reduce the harm of a lost or stolen device.
Implement Hardware Asset Management
Improve Stakeholder Relations
Communicate the transition from a perimeter-based security approach to an "Always Verify" approach with a clear roadmap toward implementation. Map key protect surfaces to business goals to demonstrate the importance of zero-trust security in helping the organization succeed. Help the organization's top leadership build awareness of cybersecurity risk.
Build a Zero Trust Roadmap
Improve External Compliance
Manage the challenge of meeting new government requirements to implement zero-trust security and other data protection and cybersecurity regulations with a compliance program. Create a control environment that aligns multiple compliance regimes, and be prepared for IT audits.
Engage employees in the digital age
Priority 04
Lead a strong culture through digital means to succeed in engaging the hybrid workforce.
The new deal for employers in a hybrid work world
Necessity is the mother of innovation.
The pandemic's disruption for non-essential workers looks to have a long-lasting, if not permanent, effect on the relationship between employer and employee. The new bargain for almost all organizations is a hybrid work reality, with employees splitting time between the office and working remotely, if not working remotely full-time. IT is in a unique position in the organization as it must not only contend with the shift to this new deal with its own employees but facilitate it for the entire organization.
With 90% of organizations embracing some form of hybrid work, IT leaders have an opportunity to shift from coping with the new work reality to finding opportunities to improve productivity. Organizations that embrace a hybrid model for their IT departments see a more effective IT department. Organizations that offered no remote work for IT rated their IT effectiveness on average 6.2 out of 10, while organizations with at least 10% of IT roles in a hybrid model saw significantly higher effectiveness. At minimum, organizations with between 50%-70% of IT roles in a hybrid model rated their effectiveness at 6.9 out of 10.
IT achieved this increase in effectiveness during a disruptive time that often saw IT take on a heavier burden. Remote work required IT to support more users and be involved in facilitating more work processes. Thriving through this challenging time is a win that's worth sharing with the rest of the organization.
90%
of organizations are embracing some form of hybrid work.
IT's effectiveness compared to % working hybrid or remotely
High effectiveness doesn't mean high engagement
Despite IT's success with hybrid work, CIOs are more concerned about their staff sufficiency, skill, and engagement than their supervisors. Among clients using our CEO-CIO Alignment Diagnostic, 49% of CIOs considered this issue a major pain point compared to only 32% of CXOs. While IT staff are more effective than ever, even while carrying more of a burden in the digital age, CIOs are still looking to improve staff engagement.
Info-Tech's State of Hybrid Work Survey illuminates further details about where IT leaders are concerned for their employee engagement. About four in ten IT leaders say they are concerned for employee wellbeing, and almost the same amount say they are concerned they are not able to see signs that employees are demotivated (N=518).
Boosting IT employees' engagement levels to match their effectiveness will require IT leaders to harness all the tools at their disposal. Communicating culture and effectively managing organizational change in the digital age is a real test of leadership.
Staff sufficiency, skill, and engagement issues as a major pain point
CXO
Opportunities
Drive effectiveness with a hybrid environment
IT leaders concerned about the erosion of culture and connectedness due to hybrid work can mitigate those effects with increased and improved communication. Among highly effective IT departments, 55% of IT leaders made themselves highly available through instant messaging chat. Another 54% of highly effective leaders increased team meetings (State of Hybrid Work Survey, n=213). The ability to adapt to the team's needs and use a number of tactics to respond is the most important factor. The greater the number of tactics used to overcome communication barriers, the more effective the IT department (State of Hybrid Work Survey, N=518).
Modernize the office conference room
A hybrid work approach emphasizes the importance of not only the technology in the office conference room but the process around how meetings are conducted. Creating an equal footing for all participants regardless of how they join is the goal. In pursuit of that, 63% of organizations say they have made changes or upgrades to their conference room technology (n=496). The conferencing experience can influence employee engagement and work culture and enhance collaboration. IT should determine if the business case exists for upgrades and work to decrease the pain of using legacy solutions where possible (State of Hybrid Work in IT: A Trend Report).
Understand the organizational value chain
Map out the value chain from the customer perspective and then determine the organizational capabilities involved in delivering on that experience. It is a useful tool for helping IT staff understand how they're connected to the customer experience and organizational mission. It's crucial to identify opportunities to resolve pain points and create more efficiency throughout the organization.
Risks
Talent rejects the working model
Many employees that experienced hybrid work over the past couple of years are finding it's a positive development for work/life balance and aren't interested in a full-time return to the office. Organizations that insist on returning all employees to the office all the time may find that employees choose to leave the organization. Similarly, it could be hard to hire IT talent in a competitive market if the position is required to be onsite every day. Most organizations are providing flexible options to employees and finding ways to manage work in the new digital age.
Wasted expense on facilities
Organizations may choose to keep their physical office only to later realize that no one is going to work there. While providing an office space can help foster positive culture through valuable face time, it has to be used intentionally. Managers should plan for specific days that their teams will meet in the office and make sure that work activities take advantage of everyone being in the same place at the same time. Asking everyone to come in so that they can be on a videoconference meeting in their cubicle isn't the point.
Isolated employees and teams
Studies on a remote work environment show it has an impact on how many connections each employee maintains within the company. Employees still interact well within their own teams but have fewer interactions across departments. Overall, workers are likely to collaborate just as often as they did when working in the office but with fewer other individuals at the company. Keep the isolating effect of remote work in mind and foster collaboration and networking opportunities across different departments (BBC News, 2022).
CASE STUDY
Equal support of in-office and remote work
Roberto Eberhardt, CIO, Ontario Legislative Assembly
Working in the legislature of the Ontario provincial government, CIO Roberto Eberhardt's staff went from a fully onsite model to a fully remote model at the outset of the pandemic. Today he's navigating his path to a hybrid model that's somewhere in the middle. His approach is to allow his business colleagues to determine the work model that's needed but to support a technology environment that allows employees to work from home or in the office equally. Every new process that's introduced must meet that paradigm, ensuring it will work in a hybrid environment. For his IT staff, he sees a culture of accountability and commitment to metrics to drive performance measurement as key to the success of this new reality.
"While it's good in a way, the challenge for us is it became a little more complex because you have to account for all those things in the office environment and in the remote work approach. Everything you do now, you have to say OK well how is this going to work in this world and how will it work in the other world?"
Creating purpose for IT through strategy
Mike Russell, Virginia Community College System
At the Virginia Community College System (VCCS), CIO Mike Russell's IT team supports an organization that governs and delivers services to all community colleges in the state. Russell sees his IT team's purpose as being driven by the organization's mission to ensure success throughout the entire student journey, from enrolment to becoming employed after graduation. That customer-focused mindset starts from the top-level leadership, the chancellor, and the state governor. The VCCS maintains a six-year business plan that informs IT's strategic plan and aligns IT with the mission, and both plans are living documents that get refreshed every two years. Updating the plans provides opportunities for the chancellor to engage the organization and remind everyone of the purpose of their work.
"The outcome isn't the degree. The outcome we're trying to measure is the job. Did you get the job that you wanted? Whether it's being re-employed or first-time employment, did you get what you were after?"
From priorities to action
Go deeper on pursuing your priorities by improving the associated capabilities.
Improve Leadership, Culture, and Values
Help leaders manage their teams effectively in a hybrid environment by providing them with the right tools and tactics to manage the challenges of hybrid work. Focus on promoting teamwork and fostering connection.
Prepare People Leaders for the Hybrid Work Environment
Improve Organizational Change Management
Assign accountability for managing the changes that the organization is experiencing in the digital age. Make a people-centric approach that takes human behavior into account and plans to address different needs in different ways. Be proactive about change.
Master Organizational Change Management Practices
Improve Enterprise Architecture
Develop a foundation for aligning IT's activities with business value by creating a right-sized enterprise architecture approach that isn't heavy on bureaucracy. Drive IT's purpose by illustrating how their work contributes to the overall mission and the customer experience.
Shape the IT organization to improve customer experience
PRIORITY 05
Tightly align the IT organization with the organization's value chain from a customer perspective.
IT's value is defined by faster, better, bigger
The pandemic motivated organizations to accelerate their digital transformation efforts, digitalizing more of their tasks and organizing the company's value chain around satisfying the customer experience. Now we see organizations taking their foot off the gas pedal of digitalization and shifting their focus to extracting the value from their investments. They want to execute on the digital transformation in their operations and realize the vision they set out to achieve.
In our Trends Report we compared the emphasis organizations are putting on digitalization to last year. Overall, we see that most organizations shifted fewer of their processes to digital in the past year.
We also asked organizations what motivated their push toward automation. The most common drivers are to improve efficiency, with almost seven out of ten organizations looking to increase staff on high-level tasks by automating repetitive tasks, 67% also wanting to increase productivity without increasing headcount, and 59% wanting to reduce errors being made by people. In addition, more than half of organizations pursued automation to improve customer satisfaction.
What best describes your main motivation to pursue automation, above other considerations?
Tech Trends 2023 Survey
To what extent did your organization shift its processes from being manually completed to digitally completed during past year?
With the shift in focus from implementing new applications to support digital transformation to operating in the new environment, IT must shift its own focus to help realize the value from these systems. At the same time, IT must reorganize itself around the new value chain that's defined by a customer perspective.
IT struggles to deliver business value or support innovation
Many current IT departments are structured around legacy processes that hinder their ability to deliver business value. CIOs are trying to grapple with the misalignment between the modern business structure and keep up with the demands for innovation and agility.
Almost nine in ten CIOs say that business frustration with IT's failure to deliver value is a pain point. Their supervisors have a slightly more favorable opinion, with 76% agreeing that it is a pain point.
Similarly, nine in ten CIOs say that IT limits affecting business innovation and agility is a pain point, while 81% of their supervisors say the same.
Supervisors say that IT should "ensure benefits delivery" as the most important process (CEO-CIO Alignment Program). This underlines the need to achieve alignment, optimize service delivery, and facilitate innovation. The pain points identified here will need to be resolved to make this possible.
IT departments will need to contend with a tight labor market and economic volatility in the year ahead. If this drives down resource capacity, it will be even more critical to tightly align with the organization.
Views business frustration with IT failure to deliver value as a pain point
CXO
Opportunities
Define IT's value by its contributions to enterprise value
Communicate the performance of IT to stakeholders by attributing positive changes in enterprise value to IT initiatives. For example, if a digital channel helped increase sales in one area, then IT can claim some portion of that revenue. If optimization of another process resulted in cost savings, then IT can claim that as a contribution toward the bottom line. CIOs should develop their handle on how KPIs influence revenues and costs. Keeping tabs on normalized year-over-year revenue comparisons can help demonstrate that IT contributions are making an impact on driving profitability.
Go with buy versus build if it's a commodity service
Most back-office functions common to operating a company can be provided by cloud-based applications accessed through a web browser. There's no value in having IT spend time maintaining on-premises applications that require hosting and ongoing maintenance. Organizations that are still accruing technical debt and are unable to modernize will increasingly find it is negatively impacting employee experience, as users expect their working experience to be similar to their experience with consumer applications. In addition, IT will continue to have capacity challenges as resources will be consumed by maintenance. As they seek to outsource some applications, IT will need to consider the geopolitical risk of certain jurisdictions in selecting a provider.
Redefine how employee performance is tracked
The concept of "clocking in" for a shift and spending eight hours a day on the job doesn't help guide IT toward its objectives or create any higher sense of purpose. Leaders must work to create a true sense of accountability by reaching consensus on what key performance indicators are important and tasking staff to improve them. Metrics should clearly link back to business outcomes and IT should understand the role they play in delivering a good customer experience.
Risks
Lack of talent available to drive transformation
CIOs are finding it difficult to hire the talent needed to create the capacity they need as digital demands of their organizations increase. This could slow the pace of change as new positions created in IT go unfilled. CIOs may need to consider reskilling and rebalancing workloads of existing staff in the short term and tap outsourcing providers to help make up shortfalls.
Resistance to change
New processes may have been given the official rubber stamp, but that doesn't mean staff are adhering to them. Organizations that reorganize themselves must take steps to audit their processes to ensure they're executed the way they intend. Some employees may feel they are being made obsolete or pushed out of their jobs and become disengaged.
Short-term increased costs
Restructuring the organization can come with the need for new tools and more training. It may be necessary to operate with redundant staff for the transitional period. Some additional expenses might be incurred for a brief period as the new structure is being put in place.
Emphasize the value of IT in driving revenue
Salman Ali, CIO, McDonald's Germany
As the new CIO to McDonald's Germany, Salman Ali came on board with an early mandate to reorganize the IT department. The challenge is to merge two organizations together: one that delivers core technology services of infrastructure, security, service desk, and compliance and one that delivers customer-facing technology such as in-store touchscreen kiosks and the mobile app for food delivery. He is looking to organize this new-look department around the technology in the hands of both McDonald's staff and its customers. In conversations with his stakeholders, Ali emphasizes the value that IT is driving rather than discussing the costs that go into it. For example, there was a huge cost in integrating third-party meal delivery apps into the point-of-sales system, but the seamless experience it delivers to customers looking to place an order helps to drive a large volume of sales. He plans to reorganize his department around this value-driven approach. The organization model will be executed with clear accountability in place and key performance indicators to measure success.
"Technology is no longer just an enabler. It's now a strategic business function. When they talk about digital, they are really talking about what's in the customers' hands and what do they use to interact with the business directly? Digital transformation has given technology a new front seat that's really driving the business."
CASE STUDY
Overhauling the "heart