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July 9, 2015

Are US State CIOs Investing In The Right IT?

Posted by John Santucci (View Profile | View All Posts) at 11:18 AM

Components of Effective IT Decision Making
Infosys and NASCIO survey assesses the four key components that are essential for effective IT decision-making  

As opportunities multiply and technology advances, US state CIOs face numerous options to support the core missions of their states. The challenge they face is to make sure that Information Technology (IT) investments are directed towards 'the right things.'

To understand this space, Infosys Public Services collaborated with the National Association of State Chief Information Officers (NASCIO) to survey state CIOs on their organizations' ability to identify and invest in the right IT. We assessed state IT organizations on four key components essential for effective IT decision-making - alignment, operating structure, infrastructure and applications, and investment management. The results were very interesting indeed.

Effective IT decision-making requires high degree of consistency between what state IT is executing and what the state's business community needs are. Our research found that state IT and business teams are strongly aligned. However, 38 percent of the CIOs said that new projects, which are not aligned to a state's business strategy, often get approved. This disconnect indicates that the business strategy may be out-of-date. It also leads to an increase in complexity of the IT environment. Addressing this disconnect requires state CIOs to identify areas of fundamental stakeholder disagreement and involve executive leadership to establish direction.

Half of the state CIOs polled said their organizations understood which data and processes were common to the enterprise and how should they operate to share these common processes and data. While this understanding should help make IT investment decisions, only 21 percent are actually able to operate like this in practice. One of the reasons cited was that the existing IT systems are too complex to easily support shared services. In such a scenario, CIOs can set up the right operating model by simplifying their systems. They also need to communicate the benefits of enterprise-wide shared investments more effectively to improve collaboration among agencies.

Years of decentralized decision making has resulted in complex IT landscape in many states. 44% of CIOs said they spend 80% of their IT budgets in maintaining existing systems, instead of investing in new technologies that can help improve outcomes. As such, many CIOs are upgrading and transforming their IT landscape to become more effective and efficient. Business platforms can help state CIOs accelerate IT simplification. Platforms allow CIOs to 'acquire' core IT capabilities 'as-a-service,' enabling them to shift focus back to service delivery and away from technology.

Investment management is essential for prioritizing IT investments. This ensures that the return on IT investment is optimized. About 70 percent of the CIOs polled said that they have a process of evaluating and prioritizing prospective projects, but nearly two-thirds said that they struggle to measure benefits and value after they complete a project. To tackle this, CIOs need to institute a robust value realization methodology to measure benefits. Doing so can provide a feedback loop for controlling the benefits estimation process and the prioritization of future IT investments.

Study findings indicate that state CIOs understand the shortcomings in their IT investment decision-making process, but find it difficult to address those in practice. Why? Maybe because they are still not sure if they should operate like an enterprise or like a collection of independent agencies. Finding an answer to this question should to be the starting point as state CIOs try and build the right foundation to identify and invest in the right IT.

For the full results of the survey, please click here.

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