Transforming Banks for a Digital Future: The Winners, The Losers, and the Strategies to Beat the Odds
Four years ago, in our analysis of CIO Insight's 2005 Role of the CIO survey, we wrote, "The Hybrid CIO is alive and well." What had been brewing for years and commented on widely was now clearly an active reality: The CIO was becoming as much a business leader as a technology leader. Because of the proven impact of technology on revenue and business processes--not just productivity--a largely administrative and operational function had morphed into a true crossover position.
Today, this is equally (if not more) true. But steadily increasing business expectations of technology, and the resulting demands on the executive who runs it, are creating stresses few anticipated. Some are even wondering if the CIO position itself will exist much longer.
The possibility of the demise of the CIO position seems overblown, to say the least. But the fact that nearly 16 percent of our survey respondents this year agreed with the statement, "The CIO position will have virtually disappeared in 10 years," represents a profound crisis brewing for IT leaders. They're required to provide fundamental business improvements but are relegated to the second tier of corporate management. They're eager to align IT with business needs, yet wedded more than ever personally and departmentally to technology. The CIO today is a walking, talking contradiction, and the strain is showing.
"We are deploying many of the same tools in IT that we use to make manufacturing lean and efficient," says Gary Meister, CIO at Western Digital. "Concepts like business as a process, cycle time, first pass right, uptime, mean time to repair, total cost of ownership, or pipeline management--surprisingly, I've found these concepts to be quite foreign in IT."
These should be high times for the CIO, particularly during the current economic climate, because nearly every business problem has a solution based at least partly on technology, especially when investment in IT so clearly leads to cost savings. The issue comes down to background and resources: Despite their increasing business roles, CIOs paradoxically tend to have lighter business backgrounds today than they did four years ago.
And though top IT executives almost universally decry the lack of business talent in the IT ranks, there is, if anything, less business-related activity and staffing going on in IT organizations now than there was two years ago. The hiring of IT middle managers with non-IT backgrounds has decreased in roughly one-quarter of the firms we surveyed; it's increased in only one-tenth. One in four IT organizations has increased its use of business consultants to help align its operations better with business needs; but it's decreased in a quarter of the firms as well.
Our survey demonstrates with quite specific trends that the number and importance of CIO business tasks will only increase, but these trends will necessitate a skill and experience set that is not usually associated with IT: finance, modeling, writing and communications, and even sales and marketing. The likelihood of finding both technology capabilities and this new skill set seems low. That may be why CIOs are getting greater and greater tenure-- and nicely improving their compensation: Qualified candidates are in short supply.
To succeed today, the CIO needs "a very unique skill set," says William Richards, infrastructure solutions architect at H.R. outsourcing and consulting firm Hewitt Associates. "Superb public speaking and leadership skills, well-grounded in technology, an understanding of corporate finance, and a deep understanding of--and the ability to directly relate to--the business."
Where CIOs have proved their business worth most of late is in their ability to address business and management tasks and to go far beyond the infrastructure support that was all they were once known for. Today, cost reduction is such an obvious function of the IT organization that it's hard to remember that just a few short years ago it meant only cutting IT budgets. But now technology enters the cost-cutting conversation at a strategic level--with hybrid IT/line-of-business initiatives that affect business expenditures as a whole.
Other business roles have come to the fore as well. Over half of our survey respondents named strategic use of information and enterprise change leadership as top functions of today's CIO, and significant numbers also cited business model innovation and the improvement of business processes.
The survey also shows that the CIO's business tasks are expected to grow much more quickly in prominence than technology tasks over the next two years. This is where technology-related skills begin to fade and business experience becomes critical. To build information strategies or change how your organization works fundamentally, as CIO you need to know the technology (that's fundamental), but you also have to be able to design the business processes, assess them in hard-dollar terms, describe them cogently and evangelize them--requiring modeling, financial, writing and sales skills, respectively.
It's significant, then, that 70 percent of our survey respondents said the CIO is not looked at as being on par with other top executives at their firms--even while 19 out of 20 of them say that the CIO is expected today to change the way business works. "In many cases, senior executives in the business do not have the respect for CIOs that they should have," Richards says.
How can a position with such influence be kept on the second team? Certainly, this is partly because business organizations haven't yet caught up with the new CIO role. The reporting structure hasn't changed much, and the day-to-day workings look the same as it did in years past. "Some organizations don't include their CIOs early enough in business processes by virtue of the fact that they typically report though finance departments," says Ken Lamoureux, executive director of strategic services & innovation for the government of the province of Manitoba, Canada.
The result is a position that must break many of its ties to past practices and quickly build a new knowledge set. Essentially, the talent and qualifications of the CIO of the future don't seem to exist in great frequency today. And while most organizations don't fully appreciate the change that's taken place, the day of reckoning is sure to come.
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