Korean CIO Survey 2008 Korean CIO Survey 2008 Innovation through IT for Business Results A comparison of Korean and global views on the role of the IT function in business innovation Innovation through IT for Business Results Table of Contents Foreword 1 Participating Companies and Organizations 2 Executive Summary 4 Innovation - A Definition 5 Business Innovation through IT for Delivering Results 6 Areas Where Innovation Delivers Results 8 Strategic IT Capabilities Beyond the IT Fundamentals 12 Building a Relationship for Business Innovation 16 Expanding the Network to Include External Partners 18 A New Start for the CIO as a Leader of Innovation 22 About the Survey 24 About Samsung SDS, OpenTide and Capgemini 25 Copyright © 2008 Samsung SDS, OpenTide and Capgemini. All rights reserved. Korean CIO Survey 2008 Foreword With the global economy changing rapidly, For that reason, this survey addresses the and uncertainty growing in the Korean role of the CIO and the IT function in market, it becomes more important, yet business innovation and proposes strategies more difficult, for organizations to make the that can put CIOs in a better position to right investment decisions. drive business innovation. Focusing on the right decisions and choices We thank all the CIOs who participated for is particularly critical during the current sharing their opinions with us. We value global economic turmoil. Because of the your effort and commitment. We hope considerable amount of investment and that this report will stimulate discussion costs involved in IT, it is more important about the role of the IT function in Korea, now than ever for CIOs to ask questions its relationship to the business and how it like: “is the IT function focused on business can add value by participating in business values and performing well against business innovation. priorities?” and: “does the IT function have sufficient IT capabilities, and make sufficient use of internal and external resources, to achieve this objective?” We feel that it is the right time to survey In Kim the views of CIOs in Korea in order to Samsung SDS CEO discover the answers to questions like these. The Korean CIO survey is based on one- to-one interviews with 100 Korean CIOs, representing all industry sectors. It is the result of a close collaboration between Samsung SDS, OpenTide and Capgemini Eui Noung Han Consulting. We have also taken the OpenTide opportunity to make comparisons with 400 CEO of our respondents’ global counterparts, interviewed for Capgemini’s 2008 Global CIO Survey. During this critical period, global CIOs are making efforts to participate proactively in corporate decision making, to act as drivers Eric Monnoyer Capgemini Consulting of innovation and to stake a claim to be the Vice President focal point for sustainable growth within the BIS Global Leader corporation. Innovation through IT for Business Results 1 Participating Companies and Organizations Samsung SDS, OpenTide and Capgemini Consulting would like to thank all 100 participating CIOs and senior managers who gave time to be interviewed for this CIO survey: Business Services Samsung Investments SungShin Cement Ajou University Medical Center Samsung Life Taekwang Asiana Airline Samsung Securities Cheil Worldwide Shinhan Financial Group Public, Government & Social Hallym University Medical Center Ministry of Environment Hansol PNS Manufacturing Korea Securities Depository Hotel Shilla Cheil Industries Korea Tourism Organization Korea Enterprise Data Dong-A Pharmaceutical Military Manpower Korea University Hospital DongBu HiTek-SemiConductor Division Administration Postech Doosan Heavy Industries & Construction Ministry of Foreign Affairs and Trade S1 Eugene Ministry of Public Admin. and Security SungKyunKwan University Green Cross The Bank of Korea Halla Climate Control Consumer Products & Retail Hynix Telecom, Media & Amore Pacific Hyosung Entertainment CJ CheilJedang Hyundai Steel LG Telecom CJ Corporation Il Dong Pharmaceutical Samsung Everland Resort Dongsuh Foods IlYang Pharmaceutical Taekwang systems Pulmuone LS Cable MagnaChip Travel, Transport & Logistics POSCO Energy & Utilities Charmzone Renault Samsung Motors KEPCO GS Homeshopping Samsung BP Chemical Hmall Samsung C&T - Construction Financial Services IMK Samsung Corning Precision Glass Incheon International Airport Corporation Heungkuk Life Insurance Samsung Electronics KORAIL Industrial Bank of Korea Samsung Electro-Mechanics Lotte Mart Korea Development Bank Samsung Engineering Samsung C&T - Trade Korea Securities Finance Corporation Samsung Fine Chemicals Kyobo Life Insurance SK Networks Samsung Heavy Industries Additional companies participated in the survey MetLife Korea Samsung Petrochemical but requested to remain anonymous. Mirae Asset Life Insurance Samsung SDI Mirae Asset Samsung Techwin National Health Insurance Samsung Total Petrochemicals National Pension Service SeAH Besteel NHNonghyup SeAH Steel Prudential Life Insurance Korea SK Engineering & Construction Samsung Card SsangYong Motor 2 Korean CIO Survey 2008 Business Innovation through IT “ ” Innovation through IT for Business Results 3 Executive Summary Business innovation is not a new mission Currently, domestic CIOs1 lag behind for CIOs in Korea. In fact, they already international ones in enterprise-level contribute to business innovation, for activities, such as participating in corporate example, by improving efficiency through IT. strategy development, while there also seems to be a lack of participation and Despite this achievement, CIOs are having interest from Korean business management to respond to ever-growing demands in IT strategy and decision-making. One of from top management, because of the key the key concerns for Korean CIOs is how role played by information technology in they can help the CEO, and the business business innovation today. They are well as a whole, to increase their understanding aware that the ability of the CIO and of the of IT. For this, CIOs must secure their IT organization to create business value position as a partner to the business. This, is critical and that the business expects together with strong sponsorship from top the CIO to deliver results. As to how well management, will allow CIOs to discuss they have met these expectations, CIOs ideas and work together with the business themselves admit to some gaps. in pursuit of innovation. We canvassed the views of Korean CIOs Rapid changes in the technology about the actual and potential role of the IT environment can lead to resource function with respect to business innovation. constraints and can impair a company’s We then compared the responses of our 100 ability to innovate. Many international Korean CIOs with Capgemini’s survey of companies have already established a wide 400 CIOs worldwide. network of IT suppliers, clients, universities and other partners to adopt new ideas and We found that, up until now, Korean CIOs technologies and to develop professional have focused on basic IT performance in knowledge for innovation. To do this in an areas such as infrastructure management effective and timely manner, Korean CIOs and business support. Korean IT must also have the ability to combine and functions were more successful than their utilize different channels as needed. international counterparts in these areas. However, current capabilities are insufficient The unique selling point of CIOs is their to drive innovation further. First, companies combination of deep understanding of must build their strategic IT strengths, such the business, technology market insight as the ability to identify IT-based innovative and their ability to deliver the value of opportunities within and outside of the technology to management and business. company. Organizations must also invest in If they can capitalise on these attributes to these innovation-oriented strengths. deliver business value, then Korean CIOs will be able to secure their position as leaders of innovation. 1 Throughout this report we will use terms like “domestic CIOs” and “domestic companies” to refer to the respondents to our Korean survey; “global CIOs” refers to the respondents to Capgemini’s Global CIO Survey. 4 Korean CIO Survey 2008 Innovation - A Definition A definition of innovation is needed here, because what is innovative to one person can be a minor change to another, and what is innovative today is business as usual tomorrow. For the purposes of this survey we have adopted the definition famously put forward by Peter F. Drucker (writer, sociologist and management theorist, who died in 2005): “Change that creates a new dimension of performance” This report is concerned with a specific type of innovation: business innovation and its relationship to the CIO2 and IT function. Innovation in the way that IT is delivered is outside the scope of the report. 2 The Chief Information Officer (CIO) title is not consistently used across organizations and geographies. For the purposes of this report, we have taken it to mean the person who is ultimately responsible for the IT function. Innovation through IT for Business Results 5 Business Innovation through IT for Delivering Results Figure 1 Until now we have IT’s key role in business Innovation is a top priority for your business focused on building IT innovation capabilities as a foundation. CIOs, both in Korea and globally, agree that Global 73% “ From now on, we have to innovation is a cornerstone of corporate Korea 88% make the effort to create strategy, and that information