Conclusion 05By Terry Kirkpatrick
Role of the CIO 2002
For years, CIOs have been told to be businesspeople as well as technologists. Our first survey on the role of the CIO finds that they no longer need reminding. Although most come from IT backgrounds, they have the mentality and often the experience of businesspeople. That's not to say that all IT executives are strategists. Strategy is critical for CIOs in large companies, but CIOs in smaller companies and IT executives below the CIO level are still primarily problem solvers. We also found a CIO skills gap: Many admit to needing improvement in the most important skills CIOs need to succeed, including business understanding, leadership ability and communications skills.
Among the survey's surprises: IT execs feel technology savvy is only a minimal requirement for the job, and recruiting and retaining IT talentuntil recently a dominant issuerarely registers as one of the top priorities. The same is true for maximizing revenues or improving customer service. In addition, being a strategic thinker is considered a critical attribute by IT execs at about 40% of large companies, but by just 21% at smaller firms.
We also found that the average IT executive has many years of experience in fields other than IT, and many have substantial international experience. And contrary to the techie stereotypes, more appear to be extroverts, not introverts. Technology still takes up more than half of their time, but not much more; IT executives devote a substantial portion of their working lives to business issues.
CIOs were once the consummate corporate insiders, focused on internal systems, internal customers and internal IT staff. But today's CIOs are out in the wider world, doing work that has more in common with a secretary of state than a systems developer. Just ask David Shea. As the CIO of Imerys SA, a global mining and manufacturing company, Shea recently spent two weeks in Frankfurt, Germany, meeting with the IT staff of a local operating unit. His job today he says, requires not only his technical expertise, but his people and leadership skills as well. "We not only encountered cultural issuesthings like language and vacation practices that differ country by countrybut we had to work with local operations that are accustomed to being autonomous," Shea says.
CIOs are being asked to confront a much wider range of issues today, many that extend past the technical and into the economic, political and even social areas of business. At times, the job can resemble that of a political office, with constituencies that are often far-flung.
The shift to a more global approach to IT management is evident, and Shea is not the only CIO whose passport is seeing action. More than half of CIOs in large companies have held international responsibilities. Jack Cooper, now a consultant, traveled abroad often as CIO at Bristol-Myers Squibb Co. for seven years and prior to that at Joseph E. Seagram & Sons Inc. for six years. "There are cultural differences, country by country," he says. "And there are cultural differences in the U.S., state by state. There are cultural differences within an enterprise, from sales to manufacturing to research. A good CIO can adapt to those differences. The key is to be able to put yourself in the shoes of the other person and to look at the problem from his perspective."
With overseas units and a host of other constituencies to keep happymanagement, IT staff, customers and othersthe CIO of 2002 resembles a gladiator now vying in a much more complex political arena. In school, Gregory Coan, vice president and CIO at Textainer Equipment Management (U.S.) Ltd., majored in political science and history, and every day, he says, he uses the skills he learned in those disciplines. "The number-one skill is the ability to communicate, but also how to think critically and write well. We could stand to have fewer computer science majors and more social science majors as CIOs, because of the people skills, the ability to use rhetoric, to establish positions and sell them. Part of your job is being a salesperson. The success of any endeavor is ultimately perception. You have to win the hearts and minds of end-users and make them believe it was their idea."
Of all the attributes a CIO needs, our respondents rated leadership and communication among the most critical. "A lot of the CIOs out there are trying to improve these skills," says Anton Hios, who runs a Giga Information Group Inc. program for CIOs. Interest in this among his members has been growing steadily for several years, he says, because their nontechnical advice is increasingly sought at the executive level in such matters as how the company can be more innovative, build better strategic alliances, even make decisions about facilities. "CIOs probably deal with more people across the whole organization than other executives," he says.
Our respondents rated business understanding as the most important attribute, technical acumen the least. "We find lots of CIOs who don't come from technical backgrounds," says Ellen Kitzis, group vice president for executive programs at Gartner Inc. "They're transferred from business units where they've proved their skills as business executives. The role of communication and financial management is as important as technology management. We assume a good business leader can find the right technical talent and put it in the right place."
Given the increasing complexity of their roles, it's not surprising that six in 10 of our respondents think their jobs are more difficult than a year ago. "Yes, it's gotten harder," says Mark Endry, senior vice president and CIO at J.D. Edwards & Co. in Denver. "As companies use more technology just to run the company, technology becomes a must-have and not a nice-to-have24x7 is required, it's not an option. You could come in under budget this afternoon and something somewhere goes down tonight and erases all your brownie points. You never get a break. Cost and budget pressures are always there."
Few respondents ranked cost-cutting as a top priority. This, Coan says, may reflect the fact that CIOs see cost-containment as a given, "as the price of admissioncost control is always an issue."
"I'm surprised costs don't get more attention from the CIOs. Don't they get it?" says Dudley Cooke, CEO of Ardmore, Pa.-based consulting firm Liberty Business Strategies Ltd. Cooke is a former CIO and now heads up The Conference Board's Council of CIO Executives. "The big pressure I see today is that the CEO is concerned with costs."
Perhaps, Kitzis says, they see costs as only half the equation. "Simply being a cost reducer isn't being seen as an effective executive. You have to deliver valuefor example, introducing a new business process to support a marketing initiative, while holding costs down."
One thing that seems to have eased is the recruitment and retention problem. "Things have settled down and become a lot more reasonable," Coan says.
"Recruiting talent right now isn't a top priority," Kitzis says, "although they continue to have the problem of finding the right skills." And, she says, CIOs are increasingly looking for untraditional people, from marketing and communications, for example, who can work with the business units and market IT within the company.
Given all the issues before them, however, our respondents seem to relish their work; only a tiny percentage see themselves in a future role away from technology.
"I'll always be staying close to technology," Endry says. Shea agrees: "I'm having so much fun I don't know that I want to shake it."
They're on to something, Cooper says. The next big thing is bridging information systems across the enterprise, from supplier to customer. "This is going to take a lot of infrastructure and IT systems, but it has enormous payoffs," he says. "It's going to be big. This is a very exciting time to be a CIO."
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A CIO's Role
Conclusion 01: Background
The typical CIO reports to the CEO, and earned his or her most advanced college degree in business rather than computer science. Still, most CIOs are career technologists. The majority have risen through the IT ranks, have twice as many years in IT than in business roles, andespecially in large companiescame from another IT position. Given that "technology acumen" is the least important of the 13 personal attributes we ranked, it suggests that most CIOs have outgrown their technology backgrounds.
The IT execs in our survey maintain high positions on the corporate ladder. Most respondents, 64%, are the top IT executives in their companies, and 82% are in a centralized IT group. Of our CIOs (defined as the top IT executive in a company or business unit), 58% report to the CEO and another 38% report to the COO or CFO. Fifty-six percent of all respondents report on a dotted-line basis to the CEO, CFO or COO.
CIOs are more likely to have advanced degrees and business diplomas than other IT executives: Forty-nine percent of CIOs have a master's or Ph.D., compared with 40% of other IT executives, while for business degrees the figures are 49% and 32%, respectively.
IT execs have climbed the IT organization ladder: They were in IT positions immediately before their current job 75% of the time (69% for CIOs). The lion's share of their IT experience is as an IT exec (30%) or IT manager (29%).
CIOs have considerable IT experience. They have been in the IT department for a mean of 15 years16 for large companies, 14 for smaller firms. CIOs on average have 8 years of experience in fields other than the IT department; this includes CIOs whose last position was in a non-IT role.
Of the 25% of IT executives whose last job was in a non-IT position, 26% held director positions and 21% were vice presidents of a business unit or division, with only 8% holding another CXO position such as CEO or COO. As for functional area backgrounds, of those coming from non-IT positions, 20% came from finance, with operations and consulting each at 14%.
Many IT executives have international experience. A surprising 44% of IT executives have had substantial international responsibilities, with 37% having actually worked overseas.
Conclusion 02: CIO Skills
There's a gap between the skills IT execs need and those they actually have. IT execs say their jobs require business understanding, leadership ability and communications skills. Yet they rate their own skills in these areas much lower than the value they place on these abilities. And a related attribute, interpersonal skills, ranks extremely low on the lists. There is no skills gap in more traditional IT capabilities: IT execs feel they have stronger analytical skills and technical acumen than the job demands. Strategic thinking proves to be an attribute more likely found in larger company IT executives.
The most important skills are where we find the largest IT exec skills gapthe difference between how many place high importance on a particular personal quality, and how many claim to possess it. Forty-five percent rate business understanding as important, but just 32% claim to have it. With leadership ability, the figures are 45% and 37%; with communications skills, 37% and 26%.
IT execs have years of IT experience, but consider technological acumen the least critical attribute to have, at 9%. Integrity and interpersonal skills were cited as important by 10% and 11%, respectively.
Large companies have strategists, smaller ones have problem solvers as IT executives. Being a strategic thinker is a much higher requirement in a larger company, at 40% versus 21% in small firms. Smaller companies require problem solvers 31% versus 14% in larger, and analytical ability in 19% of companies, versus 9% in larger ones.
The Myers-Briggs profile of the respondents counters the traditional "tech geek" image. (The Myers-Briggs Type Indicator is a well-researched analytical tool for assessing personality types along several axes: Extraversion/Introversion, Sensing/Intuition, Thinking/Feeling and Judging/Perceiving.) Of the 66% of respondents who know their type, 53% report themselves to be extroverts. The most likely Myers-Briggs types for the sample are INTJ (introvert-intuition-thinking-judging) and ENTJ (extrovert-intuition-thinking-judging), together totaling 37%. These are types commonly found in people who devise strategy, establish plans and direct others.
Conclusion 03: Roles and Tasks
The priorities of a CIO are a mix of everything from high-level strategy setting to simply watching costs. But CIOs who report to the CEO differ from other IT executives in two significant ways: Their corporate role is more centered on business issues, yet they are far less likely to focus on aligning IT with the business. It may be that the reporting relationship has helped to create, or is a sign of, a better aligned IT function.
IT executives say their role has changed from last year. Sixty-seven percent say they are becoming more focused on business needs, 57% on creating strategy, and probably due to tough economic times, 66% on budgets and cost-cutting. The additional focus on business needs is especially true for CIOs who don't report to CEOs, where the 67% figure jumps to 77%.
Technology has just a slight edge over business when it comes to how IT execs spend their time. On average, they devote about 57% of their work hours on the former, and 44% on the latter.
IT execs feel strategy and alignment are their raison d'etre. Primary roles include determining technology strategy (65%), proactively aligning IT with the needs of the business (55%) and leveraging technology for business advantage (49%). Least important roles include overseeing outsourcers (2%), overseeing major technology vendors (2%) and responding to the needs of business units (18%), though it's not clear with this last if IT execs perceive such response as fighting fires or as partnering with their business constituents.
Our respondents admit, however, that their bosses want them to focus more on other nonstrategic concerns. Determining technology strategy and leveraging technology for business advantage don't rate as high but still top the list, at 56% and 42%, respectively. But operational concerns score higher: Managing costs increases 15 percentage points to 35%, and managing systems rises to 32%. For CIOs reporting to the CEO, advising top executives on using technology jumps to second place, at 46%.
Alignment plays a bigger role for CIOs who don't report to the CEO than those who do. Forty percent of CIOs reporting elsewhere say their boss expects them to proactively align IT with the business, compared with only 25% of those with a CEO as their direct supervisors. This is confirmed by the response to a separate question on current priorities, which also found that aligning IT is a top priority for 52% of CIOs who don't report to CEO, versus just 33% of those who do.
Conclusion 04: Priorities and Compensation
CIOs haven't changed their major prioritiesa mixture of high strategy and low-level supervisionsince last year. This mix of priorities seems in large part connected to how they're evaluated and paid. Compensation clearly explains why understanding and contributing to business strategy ranks as a top priority.
Top priorities for last year were a mix of the strategic and tactical, including aligning IT with the business (41%), ensuring major projects were successfully completed on time and on budget (31%), and developing strategies to leverage new technology (31%). Least important were maximizing revenue (4%) and leadership development (7%).
In another indication that business focus is related to reporting relationship, 17% of CIOs reporting to the CEO say maximizing revenue is a top priority, versus 5% for those who don't.
IT executives are primarily evaluated on their contribution to achieving business strategy (35%), operational performance (25%), and interaction with their peers and superiors (13%). Seventy-one percent say they're eligible for a performance-based bonus this year, based on company financial performance (51%), overall company performance (38%), and completing projects on time and under budget (32%).
Conclusion 05: Tenure and Direction
For CIOs, reporting to the CEO doesn't just provide prestigeit correlates with greater longevity and perhaps company loyalty. These CIOs have held their job longer but spent fewer years as CIO at other companies. CIOs typically log more than 15 years in the IT department and, despite saying the job is getting tougher, seem eager to remain CIOs.
The old myth that CIOs last just 18 months in their jobs is just thata myth. The mean tenure in their current role is 4.3 years, increasing slightly for those reporting to the CEO to 4.9 years. And the mean time spent in their current role, be it at their current company or another, is 7.1 years. Seen another way, 65% of those who report to the CEO have been in their job three years or more, but only 47% of those who don't report to the CEO can make the same claim.
CIOs reporting to the CEO have spent fewer years being a CIO at other companies than those who don't2.1 years versus 3.5 years.
Most CIOs want to stay CIOs. Staying put rates 42%, while becoming CIO at another company rated 14%. Only 6% want to start their own company, 4% want to be a CEO, and a mere 2% want to be a consultant.
Only 31% of CIOs have a written succession plan for themselves.
Sixty percent of IT executives say their job has gotten harder over the past year; the need to accomplish more at lower cost may well have contributed to that. But today's CIOs seem well prepared for the task, and aren't shying away from the burden. It seems that the old debateshould CIOs come from IT or businesshas been resolved, and the answer is "both." Most CIOs are IT veterans with at least 15 years of experience in technology and substantial experience in technology management roles. But they also have many years of experience with other fields, and 41% claim solid international experience. IT executives who wish to thrive should improve their leadership and communications capabilities, boost their knowledge of the business and pay more attention to cutting costs. IT executives would do well to look at their own skills, the requirements of their jobs, their incentives and the expectations of their bosses, and work to ensure that all of these are as much in alignment as possible.
How the survey was done: CIO Insight designed this survey in partnership with Survey.com, a San Jose, Calif.-based supplier of custom research services. CIOs, chief technology officers, and vice presidents of information technology and services gathered from a number of sources, including third-party lists and other Ziff Davis Media publications, were invited to participate in the study by e-mail. The questions were posted on a password-protected Web site, and 305 executives with these titles responded from Feb. 5 to Feb. 11, 2002.