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Survey Highlights Shifts in IT-enabled Business Innovation, Changing Role of the CIO

It is no surprise that businesses are being transformed by new technologies, especially those that bring more intelligence and mobility to their operations and products. Some companies – known as “Innovation Accelerators”– are driving this transformation by pursuing IT-enabled business innovation as a core strategy throughout their organization, according to the results of the “Business Transformation and the CIO Role” survey announced today by Red Hat, Inc. (NYSE: RHT), the world’s leading provider of open source solutions.

The survey of 420 global business leaders, commissioned by Red Hat through Harvard Business Review Analytic Services, found that these Innovation Accelerators (32 percent of survey respondents) are anticipating significant change over the next three years, particularly in how they engage with and learn about customers, as well as in their business models, products and services, and end user processes.

Specifically, Innovation Accelerators are more than twice as likely to invest in the creation of new applications compared to peers in companies where innovation is not a priority (72 percent vs. 34 percent). They are also more likely to focus on revenue generating opportunities with new customer experience strategies (71 percent), business model innovation (69 percent) and service innovation (68 percent). By contrast, companies for which innovation is not a priority will focus more internally on the automation of business processes (70 percent).

The way organizations engage with and understand their customers leads the list of areas that will be changed the most by IT-enabled innovation, with 55 percent of all survey respondents saying it will be changed significantly and 20 percent saying it will be completely transformed (rating it a 10 on a scale of 1-10). Respondents also believe IT-enabled innovation will change the way employees do their work (48 percent say it will be significantly changed; 15 percent say it will be completely transformed); the company’s products/services (46 percent say it will be significantly changed; 11 percent project it will be completely transformed); and business models (42 percent expect it will be significantly changed; 13 percent say it will be completely transformed). For Innovation Accelerators, the numbers are significantly higher: 70 percent say their approach to customer engagement and insight will be significantly changed, and 33 percent indicate it will be completely transformed.

These changes translate to a number of specific projects that respondents expect to engage in over the next three years. More than half of survey respondents are planning to automate business processes (67 percent); execute customer experience strategies (66 percent); create new applications (60 percent); and innovate their services (57 percent) and business models (56 percent).

Additional survey findings include:

  • Business intelligence/analytics and mobile technologies and apps lead the list of technologies that survey respondents expect to drive business innovation over the next three years, at 66 percent and 53 percent, respectively. These are followed by process automation (44 percent), collaboration tools (29 percent), cloud computing (28 percent) and social media (24 percent).
  • C-level leadership plays a significant role in driving technology-driven business innovation. According to survey respondents, CIOs lead this type of innovation in 41 percent of organizations (25 percent alone and an additional 16 percent in tandem with another executive), CEOs lead technology-driven business innovation in 16 percent of organizations, and other C-level executives account for 16 percent. In approximately one-fifth of organization (18 percent), a senior cross-functional committee or innovation board leads IT-driven business innovation.
  • According to survey results, Innovation Accelerator organizations value this cross-functional collaboration, with nearly half (48 percent) reporting that IT and the business typically engage together to identify innovation opportunities.
  • While CIOs have a mandate to help drive this innovation, daily responsibilities of running IT and limited resources may be hindering their ability to do this. According to survey respondents, while 57 percent believe the CIO should drive innovation and strategy, only 12 percent say their CIO actually does that. Survey results indicate that CIOs at Innovation Accelerator companies perform more strategic roles, developing and refining business strategy (26 percent), driving business innovation (30 percent), and identifying opportunities for competitive differentiation (26 percent).

“It is clear from survey results that every organization should strive to become an Innovation Accelerator,” said Lee Congdon, CIO, Red Hat. “These companies have moved from a ‘keep the lights on’ strategy to one where they are driving strategic initiatives like customer experience and service innovation. It is clear to me that the role of the CIO is changing as a result too, now playing an essential role in IT-driven business innovation.”

See the results of the Business Transformation and the CIO Role survey in an infographic, available at http://enterprisersproject.com/hbr-infographic, or download Harvard Business Review Analytic Services report, available at http://enterprisersproject.com/hbr-report.

Methodology and Demographics

Harvard Business Review Analytic Services conducted an online survey on behalf of Red Hat to examine business transformation and the role of the CIO, followed by 12 phone interviews with 12 hand-selected survey participants. The survey polled 420 individuals in executive management or board-level positions in companies with 500 or more employees. Forty-five percent (45 percent) of respondents were from organizations of 10,000 or more employees. Respondents represented major sectors, including technology, financial, manufacturing, healthcare, and government. Respondents were from North America (40 percent), Asia (24 percent), and Europe (23 percent). Thirteen percent (13 percent) were from the rest of the world.

Connect with Red Hat

About Red Hat, Inc.

Red Hat is the world's leading provider of open source software solutions, using a community-powered approach to reliable and high-performing cloud, Linux, middleware, storage and virtualization technologies. Red Hat also offers award-winning support, training, and consulting services. As the connective hub in a global network of enterprises, partners, and open source communities, Red Hat helps create relevant, innovative technologies that liberate resources for growth and prepare customers for the future of IT. Learn more at http://www.redhat.com.

Forward-Looking Statements

Certain statements contained in this press release may constitute "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements provide current expectations of future events based on certain assumptions and include any statement that does not directly relate to any historical or current fact. Actual results may differ materially from those indicated by such forward-looking statements as a result of various important factors, including: risks related to delays or reductions in information technology spending; the effects of industry consolidation; the ability of the Company to compete effectively; the integration of acquisitions and the ability to market successfully acquired technologies and products; uncertainty and adverse results in litigation and related settlements; the inability to adequately protect Company intellectual property and the potential for infringement or breach of license claims of or relating to third party intellectual property; the ability to deliver and stimulate demand for new products and technological innovations on a timely basis; risks related to data and information security vulnerabilities; ineffective management of, and control over, the Company's growth and international operations; fluctuations in exchange rates; and changes in and a dependence on key personnel, as well as other factors contained in our most recent Quarterly Report on Form 10-Q (copies of which may be accessed through the Securities and Exchange Commission's website at http://www.sec.gov), including those found therein under the captions "Risk Factors" and "Management's Discussion and Analysis of Financial Condition and Results of Operations". In addition to these factors, actual future performance, outcomes, and results may differ materially because of more general factors including (without limitation) general industry and market conditions and growth rates, economic and political conditions, governmental and public policy changes and the impact of natural disasters such as earthquakes and floods. The forward-looking statements included in this press release represent the Company's views as of the date of this press release and these views could change. However, while the Company may elect to update these forward-looking statements at some point in the future, the Company specifically disclaims any obligation to do so. These forward-looking statements should not be relied upon as representing the Company's views as of any date subsequent to the date of this press release.

Red Hat and the Shadowman logo are trademarks of Red Hat, Inc., registered in the U.S. and other countries.

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