New-Gen IT Requiring CIOs to Think More Like CFOs

By Chris Preimesberger  |  Posted 02-11-2014
WSJ CIO Network summit

New-Gen IT Requiring CIOs to Think More Like CFOs

By Chris Preimesberger

DEL MAR, Calif. -- Nobody likes to talk about the danger of their jobs evolving into something they do not like, least of all highly compensated enterprise C-suite executives. But a group of Fortune 500 CIOs did just that several days ago.

The occasion was the second, and possibly annual, The Wall Street Journal CIO Network conference, held at The Grand Del Mar resort near San Diego, Calif. About 120 CIOs were in attendance for the one-day meetup that featured several open sessions and cloistered private meetings that enabled the CIOs to speak freely among themselves. Privacy, one of the true conundrums in today's IT world, was a key request by the attendees: Guards stood outside the meeting room entrances. The open sessions, which provided plenty of insight in their own regard, were observed by a small group of journalists.

Go here to see the agenda and a list of those who attended. Speakers included Google Director of Engineering Ray Kurzweil, Intel Chief Economist and Manager of Market Sizing and Forecasting Paul Thomas, VMware CEO and former Intel CTO Pat Gelsinger, and several other highly recognizable IT stars.

If there was one key takeaway from this daylong get-together on the Southern California coast, it was this: CIOs need to start thinking more like CFOs, or else they will slowly forfeit their power to other colleagues.

All the trends we see in IT business evolution ultimately end up as real tasks on the CIO's desk. Some of the more recent developments, such as BYOD and BYOC (bring your own device and cloud), consumerization, and gamification, have caused even more headaches than usual for these often-embattled professionals.

It's a clear trend that, with more and more cloud services being appropriated to operating budgets controlled by chief marketing officers, the CIO's power—and IT budget—is being usurped. CIOs need to develop a more financially aware approach and take back the control of a company's  IT if they want to remain relevant, Thomas said during his time onstage.

Peter Sondergaard, Senior Vice President at Gartner, told the audience that about half of all CIOs now report directly to CFOs in mid-range companies and large corporations. "This is a trend that we see continuing for the next few years, at least," he said.

Four Key Summit Takeaways

Some of the more cogent points of the open sessions include:

—CEOs are now asking CIOs to think more like CFOs. This year, CIOs will be required to better convey their value in pure financial terms, because they are competing with a multitude of shadow IT services, including standard cloud services such as Google Docs, Salesforce, Dropbox and others, but also about lesser-known open source and specialized cloud services such as Tucow and FileHippo.

—CIOs will not permit do-it-yourself IT simply for its own sake or because it's easier, ostensibly more efficient, and unshackled to corporate red tape. New-gen CIOs are rapidly becoming technology brokers. The fallback strategy now in IT is to buy a tried-and-tested solution. Even among mid-range and smaller enterprises, the idea of building a custom solution is becoming more and more a liability.

—2014 is clearly the Year of the End User. Steve Jobs, never himself a CIO but perhaps one of the best big-picture thinkers of our time, was right: IT is all about the user interface and how to make it work effectively and efficiently for each consumer—and the enterprise. Look at all the attention on mobile devices and the pivot to personal clouds. CIOs must cater to those using their services—or else they will lose to easy-to-use and free-to-obtain external services.

—CIOs will also need to become more advanced marketers within their own realms. Some may go so far as to hire internal marketers to keep end-user market share within the company.

From the looks of all these observations, enterprises will have to look for potential CEOs to place into CIO positions.

Being a CEO was Pat Gelsinger's goal all along, even when he was 30 years old and a budding star at Intel. Gelsinger was the first CTO at Intel and was president and chief operating officer at EMC before moving to VMware in 2012. As CTO of Intel he started the Intel Developer Forum conference.

New-Gen IT Requiring CIOs to Think More Like CFOs

"It's really incumbent upon CIOs to step it up a notch," Gelsinger told the audience of fellow and former CIOs at the summit. "They really have to. IT systems are morphing into new entities that involve CMOs, in addition to CIOs and CTOs. The democratization of IT, thanks to the cloud and mobile devices, is requiring new skills from CIOs if they intend to be successful."

Constellation Research President Ray Wang told CIO Insight that "as technology democratizes across the organization, the key new question for CIOs is this: How will your organization prepare for a world where consumer technologies may be more powerful than those in the enterprise? Another key question, according to Wang, is How will you harness the innovation without suffering from an external disruptive force?

CIOs are facing big changes in how they must manage core capabilities, and these are being driven primarily by cloud and packaged cloud apps, Coca-Cola CIO Rob Cain said.

"We are faced now with fundamental decisions that feel more like buying services than the traditional orientation of building capabilities," said Cain. "This also poses a huge talent and skills challenge—away from build and run, toward internal consulting and complex vendor management."

Looking Ahead, With Optimism

Key issues for 2014 and beyond that CIOs talked about at the summit include:

—While IT budgets are slowly moving higher, investment in new services is also rising. IT budget growth levels are also returning to pre-recession levels, with 43 percent of CIOs operating with bigger budgets in 2013. Analysts have projected that half of CIOs will have larger budgets in 2014, and a spot poll at the WSJ event was right in line, reporting that 51 percent of attendees believe 2014 will be better budget-wise at their organization than 2013.

—The war for recruiting IT development and administrative talent is getting even more nasty. Despite the move toward 21st century talent, the classic technology skills of business analysis, enterprise and technical architecture, and project management remain the most in-demand overall.

—Demand continues for mobile development skills: About 40 percent of CIOs are now seeking mobile solutions talent, which represents an 11 percent increase in demand over the last two years.

—Security concerns remain high on the list. Only twenty-six percent of CIOs believe they are well positioned to deal with current or near-future security issues, down from 29 percent in 2012 and 37 percent in 2011.

—Employees' usage of social networks and the general consumerization of IT are seen as problematic for security reasons. CIOs remain wary of shadow IT and BYOD trends, believing that the advantages they bring are outweighed by the disadvantages. Nonetheless, with new-gen software coming to the fore, such as Cloud Cruiser and others, in this area, CIOs are increasingly looking for new management solutions.

—Big data is officially a big deal. Half of all CIOs are encouraging big data development, and about the same number expect to invest more in big data-related solutions in 2014.

Photo credit: WSJ Editor Jerry Baker (left) interviewing Google Director of Engineering Ray Kurzweil at the summit.

About the Author

Chris Preimesberger is editor of features and analysis at eWEEK. You can follow him on Twitter via @editingwhiz