A recently released global study of the CIO, undertaken by London Business School and executive search firm Egon Zehnder International, looks at how the CIO role has changed over the past few years, how it may evolve in the early years of the new millennium, and what key factors will likely determine success for today’s CIOs.
The study, entitled The New CIO — A study of the Changing Role of the IT Director, reflects the responses of 77 CIOs of some of the world’s largest corporations. CIO Canada presents some of the highlights of that survey.
In the world’s largest organizations, there is no longer any doubt about the importance of the role of Chief Information Officer or CIO. Almost 60 per cent of the CIOs surveyed report to the Chief Executive Officer or Chief Operating Officer and 70 per cent are members of the top executive team, 14.5 per cent being on the board. This reflects the increasing business dependence on IT, the strategic contribution expected of IT, and the widening scope of the CIO role, especially in leading business change and influencing business strategy.
Furthermore, the organizational context in which CIOs have to work is becoming more positive all the time. Top management are perceived to have been much more willing to support IT standards or initiatives in the last five years and to get more involved in IT discussions and decisions. Indeed, compared with the past, CIOs are not particularly vocal about their frustrations. To be sure they have several challenges, but there is no longer a sense that the world is against them.
The critical success factors for a CIO have not changed much since a similar study we conducted in 1993. Building effective relationships with peers and executives, and with the CEO; constructing and maintaining a shared vision for IT’s contribution to the business; being a credible provider of services; developing a quality management team; and showing sound business acumen and judgement still matter. What is clear, however, is that today the primary role of the CIO is “Technology Policy-maker”.
However, as we enter the new millennium, two quite new roles are being demanded of, and assumed by, the CIO. One can be described as “Change Master”, namely leading, managing and facilitating business change. But the most important new role predicted for the next five years is that of “Business Strategist”, influencing business strategy and helping the business work out and respond to technology-enabled threats and opportunities in the world of e-commerce and beyond.
Developing the New CIO
Today, organizations have four performance expectations of their CIOs. They are required to have a technology orientation, a service orientation, a strategic orientation and a change orientation. These expectations, together with detailed analysis of role descriptions, competences and perceived critical success factors, suggest that the modern CIO must score highly in three knowledge and skill sets. He or she needs technological expertise and experience, business know-how and judgement, and behavioural skills of a high order, especially in leadership, communication, teamwork and facilitating change.
This may seem obvious, but how to develop these competences is not always evident. Our survey data show that there is no substitute for substantial experience in the IT function — and if you have been CIO once before, even better. However, CIOs really value any time they have spent as a senior executive elsewhere in the business. And having run a business or business unit is valued highly in terms of competence development for the role of CIO. The message is clear about executive development programs for CIOs — both technological and business experience matter.
Analysing how CIOs spend their time provides an acid test of where their priorities lie. Today’s CIOs spend roughly half their time within the IT function and half outside. The balance may swing a little more towards external matters in the next few years, especially on the more business-oriented issues, namely integrating IT with the business, leading business change and contributing to business strategy development. However, the intent remains more that of ensuring that business embraces and responds to the promise and potential of IT, rather than taking on more non-IT responsibilities.
Recipes for Success as CIO
Analysis of roles, expectations and competences all suggest “what CIOs must be outstandingly good at”, otherwise known as critical success factors. Respondents were invited to rank on a five-point scale 14 possible critical success factors which had been suggested in preliminary interviews.
Only two out of the 14 factors earned a mean score of less than four. These were “being seen as cost conscious” and “taking on responsibilities outside the IT function”, although 73 per cent of CIOs did agree with the former. Not surprisingly, the 12 critical success factors that do score highly appear to match the range of roles performed by CIOs, the expectations their organizations have of them, and the competences required. More interestingly, they are similar to the critical survival factors we identified in 1993.
Most important is “building a relationship with, and gaining trust of, the executive team”, while “building a good relationship with the CEO” is ranked third. This confirms two of our top critical survival factors from our 1993 study. Perhaps the deepest reason for these success factors was expressed by one respondent this way: “You must be trusted in terms of having the interests of the business at heart.”
Ranked second is “building a top class IT management team”, and when combined with “being responsive to business and executive needs and wants”, “being open and honest with business about what the IT function can do and is doing”, and “maintaining a high reputation for reliable service and delivery”, this can be seen as equivalent to “the pursuit of credibility”, the fourth of our 1993 survival factors.
“Being willing to take a lead on important IT policies and initiatives” and “being able to set direction for, and gain commitment of, the IT function” are ranked fourth and fifth and these can be seen as equivalent to “building a shared vision for IT’s contribution to the business”, another of our top survival factors in 1993.
“Sensitivity”, our fifth survival factor in 1993, does not emerge this time per se although the ninth ranked critical success factor, “showing by example how IT can enable business change”, does suggest the need for identifying with the business and demonstrating what can work in the organization’s particular context.
In other words, the critical success factors of 1999 can look like motherhood statements, but two aspects are worth emphasizing. First, they generally confirm the picture we built in 1993; success in IT continues to be a matter of getting the basics right. Second, the basics are about building relationships, capabilities, visions and track record.
CIOs and Their Relationships
Building relationships with other senior executives, including the CEO, ranks very high as a critical success factor and was seen as critical to survival in our 1993 study. So respondents were asked to assess the quality and frequency of interactions with others on a five-point scale. Such self-evaluations are of course subjective and prone to upwards bias, but the results are encouraging.
On the basis of both percentile and mean scores, the relationship with one’s boss seems sound and frequency of interaction good enough. As might be expected, frequency of interaction with one’s own IT managers is high and the relationships are perceived to be good. And the two crucial sets of relationships — with business peers and superiors and with the CEO — on average are good, although only a minority of CIOs would describe them as excellent.
Given the traditional love-hate relationship between CIOs and the IT industry, it is not surprising that relationships with IT vendors score lowest, although on average they are not a cause for concern. It is perhaps refreshing to note, given the pressures on CEOs’ time, that the quality of interaction with the CEO is considered significantly better than its frequency. The reverse, predictably perhaps, is true for relationships with IT managers.
In our 1993 study, it was noteworthy that survivor CIOs invested time in building good relationships outside the IT function as well as within. In contrast, non-survivors tended to complain about the impediments to external relationship-building but prided themselves on their internal orientation. It seems that modern CIOs have learnt their lesson — at least in their own eyes.
The New Millennium CIO
Our CIOs were asked to select one of four possible scenarios for the model CIO in the new millennium. They were invited to select the most preferred scenario and one they thought was most likely to prevail.
The preferred scenario selected by 41 per cent of CIOs was for the new millennium CIO to be “a senior executive with IT experience and business experience able to focus on business strategy and IT delivery…looking groomed for the job”. We might call this model the hybrid CIO. However, a different model is seen to be marginally more likely. Here the CIO role is split into two, “one concentrating on strategy and change, more concerned with information and systems than technology and infrastructure” and the other “a chief technology officer, or CTO, responsible for technology, infrastructure and operations”. We might call this model the dual CIO. However, we should note it is less preferred than the hybrid, perhaps for reasons of status-preservation.
The other two scenarios are thought to be less likely to happen and are less preferred. One is the technologist CIO who is “a functional executive with sound technology know-how focusing on reliable delivery and improvement, and building a sound infrastructure, having a lifelong career in IT”. The other is a generalist CIO who is “a general manager with strong business know-how relying on good IT deputies and partners but active in business development and change, enjoying open career possibilities”.
What stands out, therefore, is the view held by 70 per cent of respondents that there are two major facets of the millennium CIO role: a business-facing mission of leading change and influencing business strategy together with a technology-focused mission of leading the IT function and overseeing IT infrastructure and policies. Indeed, in the age of e-commerce it is already becoming apparent that organizations must both embrace the potential for doing business differently and ensure that the underpinning technology works. The issue is whether one person can and should take on these two missions — the hybrid model — or whether the CIO role is factored into two jobs — the dual model.
One answer is that both scenarios are likely. In the interview phase, two organizations seemed to be moving towards the dual model, but we suspect because of the particular candidates available. Several CIOs, however, were taking on wider strategic and change responsibilities and could be seen as hybrid CIOs. We suggest that this is the more viable model. It has more chance of creating and preserving integration between IT and the business, and there is no ambiguity in scope and responsibilities. Our data suggest that some CIOs already are fulfilling this new role, and that relevant career development programs can be constructed to develop them in the future.
The survey data do not suggest any regional or situational differences in outlook for the CIO role. However, in the in-depth interviews conducted, there were some CIOs who appeared to be taking on wider responsibilities quite fast. There were others who were quite frustrated at being positioned as “technologist”, feeling they could contribute more widely to the business and that the business was not responding to technology-created threats and opportunities fast enough. One CIO, however, described the new millennium CIO thus: “The CIO needs to be a respected business confidante across executive management of the company, as well as a general manager in charge of a large delivery function and ensuring an effective infrastructure is in place.”
What this survey has shown is that the CIO of the new millennium is a change-oriented business executive as well as a specialist functional manager, a strategist as well as a deliverer. This is not just the felt need or aspiration of the modern CIO, it is what organizations are now expecting and demanding of the CIO. And this is being signalled by the fact that typically the CIO is now a member of the executive management team or the board. This new CIO is quite different from the CIO or IT Director of old and the expectations of top management are likely to rise still further.
This new CIO is in many ways the model CIO that both the business world and the IT profession have yearned for for some time. The good news is that the new or model CIO has arrived.
Michael J. Earl is Professor of Information Management at the London Business School.
Philip D. Vivian is a Partner with Egon Zehnder International. One of the largest executive search firms in the world, it employs more than 250 professional consultants in 53 locations around the globe, covering all major economies and industries sectors including high technology.