Communications has emerged as an essential skill for CIO success, in North America at least.
That fact has been confirmed by two recent surveys delving into the primary challenges CIOs face, one conducted in Canada, and the other in the US. Both emphasize that strong communications and relationship-building skills are increasingly critical in the CIO’s role.
The American study surveyed over 500 IT executives across the US, and the Canadian study surveyed 250 IT executives.
Both studies note a recent improvement in the standing of CIOs within the enterprise, and effective communications is a key ingredient contributing to this trend.
Bottomline: CIOs are no longer merely IT experts; they have become relationship builders among business and professional communities within their organizations.
The State of the CIO 2006, CIO Magazine’s fifth annual exclusive report, finds CIOs in better shape than ever before. IT budgets are strong, and pay and job tenure are up. They are usually part of the management team, and report more often to the CEO than to anyone else, ending a three-year shift toward reporting to CFOs. They spend the bulk of their time interacting with other CXOs and business executives and taking part in strategic business decisions. (To see the complete results for 2006, read The Survey: It’s All About You.) Canadian trends are largely in tune with the results of “State of the CIO 2006”. CIO Magazine’s sister publication, CIO Canada, conducted a similar survey, the “CIO Insider Survey” in August 2005.
Since 2002, communications has been highlighted as the most important skill for success in both Canada and the US. And since 2002, the majority of a CIO’s time has been spent interacting with the company’s CXOs and business executives. CIOs are no longer merely IT experts; they have become essential relationship builders among business and professional communities within their organizations. But many small shifts in survey responses indicate that a transformation has occurred in how CIOs approach their jobs.
The recent improvement in the CIO’s standing within the enterprise is likely the result of a slow progression along several fronts rather than the consequence of any single factor. Indeed, some aspects of the job have changed little. The take on IT’s most significant organizational impact – reducing the cost of doing business through increased efficiency and productivity – has been remarkably consistent, the number-one response since 2004.
Perhaps most significantly, the CIOs’ strategic role has grown. In “The State of the CIO 2006” survey, making strategic systems decisions and strategic business planning come in a close second and third in how CIOs spend their time. And they named strategic thinking and planning as the number-two personal skill required for success. Nearly three-quarters of CIOs say IT’s proper role in the organization is proactive: to envision business possibilities and realize them with technology, rather than to simply support business initiatives. For insights into what strategy really means for CIOs—and how that definition has changed since 2002 read “The Changing CIO Role: The Dual Demands of Strategy and Execution.”
There has been a corresponding change in the CIO’s place on the org chart. Just over three-quarters sit on the company’s management committee. The most prevalent reporting relationship is to the CEO. That’s been true in all of our “State of the CIO” reports, but since 2002, in response to the cost-cutting fixation that gripped many companies, the percentage of CIOs reporting to the CEO had been going down while the percentage reporting to CFOs had been going up. This year, however, the percentage of CIOs reporting to the top boss rose from 40 percent to 42 percent, while those reporting to their CFOs dipped sharply from 30 percent to 23 percent.
The significance of this shift is both personal and professional and can be seen in the diverging circumstances of these two groups of CIOs. Of those CIOs who report to their CEOs, 91 percent sit on the company management committee, whereas only 61 percent of CIOs who report to their CFOs do so. The CFO reports say they struggle more with alignment and spend more time putting out fires than do the CEO reports. The CEO reports have much more money to spend (their average annual IT budget is $27.5 million versus $12.5 million for the CFO reports), and they take home more money as well ($196,800 in average annual compensation versus $180,700).
An interesting finding emerged in the Canadian survey. While most CIOs cite lack of time as a major impediment to their effectiveness, the majority said budgeting takes the least amount of their time. This suggests that there’s little radical change happening in Canadian organizations around operational and capital allocations for IT, and few are undertaking any major revisiting of their existing IT budgets. So for most CIOs, IT investment is continuing its business-as-usual path. This is corroborated by another interesting finding: time spent with vendors has dropped from a top three activity last year to eighth position this year as an area where Canadian CIOs spent most of their time. This is further validation that IT investments remain unchanged.
Up with People Back in 2002, finding people with the right skill sets and retaining key employees were the CIO’s biggest challenges. Companies competed for star performers in a long-running talent war. But economic hard times ended the hostilities. The pressure to do more with less knocked staffing way down the priority list and turned attention toward outsourcing. Staff development and retention ranked 13th out of 14 spending priorities in “The State of the CIO 2003” survey.
Yet in 2006, the emphasis on internal IT department is back. In this year’s survey, 55 percent plan to increase IT headcount during the coming 12 months. Outsourcing still plays a role in staffing decisions, but outsourcing practices have matured. Sending work to outside contractors has become a standard part of the CIOs’ arsenal. But CIOs tend to avoid the complications of offshoring; 57 percent outsource locally, and 25 percent don’t outsource at all. The work that is outsourced tends to be straightforward, repeatable processes: hosting services, application maintenance or support, and some types of application development. Conversely, the skills sought in-house are for business-oriented tasks such as project management, business process management and complex, business-facing application development. For profiles of the IT skills that companies need the most, turn to The New IT Department: The Top Three Positions You Need.
In Canada, an almost unanimous need for project managers was identified, and superseded the more traditional demand for technical skills. CIOs cited project management as the skill they were most in need of, and in greatest demand. This speaks to the need to bring in better organizational skills to the IT department. Moreover, demand for emerging technology skills ranked significantly lower than in previous years. The need for IT staff is driven by pent-up business demand. An overwhelming backlog of requests and projects was a new entry on this year’s roster of the most difficult chall
