The State of the CIO

The State of the CIO

CIO magazine's 2003 State of the CIO survey challenges numbers of the stereotypes which have gained currency about CIOs over recent years. Our exclusive assessment shows Australian CIOs are maturing and their expectations shifting, even while the frustrations that have most potential to mar their job satisfaction levels continue to gather force.

It is also clear most CIOs got to where they are today from a strong technology background, defying all the talk about corporate demand for CIOs with business savvy, and that relatively few aspire to move directly to the CEO’s chair from their current position. Rather, they are first and foremost looking for challenges in their work; better remuneration comes a very poor second.

And that is, perhaps, just as well. In a period of turmoil in Australian business, with stock prices under pressure, growing shareholder and customer disillusionment with business and the fate of even some blue chip companies looking less than certain, challenges abound for CIOs trying to do their duty.

“One of the things my members talk to me about is the challenge of doing some of this strategic planning in such turbulent corporate times,” says Peter Hind, IDC manager of User Programs and InTEP Forum, and a CIO columnist. “If you were the CIO of AMP, you wouldn’t feel very comfortable about doing long-term strategic planning, would you? And that seems to be very much the mood — that there is a short-termism abroad.”

And it is not just short-term thinking that causes problems. Australian CIOs are clearly more troubled by lack of staff, low budgets and insufficient time for strategic thinking than their US counterparts. Hind says that probably reflects the differences in scale between organisations in the two countries. Most US organisations, with much bigger IT departments and arguably more resources at their disposal, tend to be more insulated from the impact of cost reductions.

And as Gartner EXP research director Andrew Rowsell-Jones points out, the difference in the role of the CIO in North America and Australia is that in general the North Americans exploited “the IT thing” on a much grander scale. This saw an enormous ramp-up during the dotcom mania, made Americans very bullish about technology and has seen CIOs appointed to corporate committees and boards.

“Many service companies in America, many of the soft industries, took to these technologies like a duck to water,” he says. “Now if you look at Australia, we have many fewer of those institutions that benefit hugely from technology, and there are fewer banks and insurance companies. The Australian economy is principally an exporter of raw material, an exporter of agricultural product — it’s a real market with real products. If we didn’t see the boom on the run up to the dotcom bust the way the Americans did, neither did we see Australian companies becoming quite as overtly enthusiastic as many of the American corporations were in appointing and expecting very high things of their CIOs.”

But everything is relative. Time-short and constantly fighting for money, Australian CIOs know the sometimes unjustified levels of cynicism about the value of IT have harmed their chances of delivering to the organisation and made putting the case for new IT investment much more difficult.

“Proving value is a very big problem,” Hind says, “because a lot of IT can be subjective, and sometimes IT is a component in, say, a process change, and maybe the IT element doesn’t get credit for it. It may be the cog behind the whole sort of thing, but it is not the only element. And I think that sort of thing can cause problems as well.” Perhaps reflecting Australia’s role as a branch office economy, and particularly the relative unimportance to vendors of the Australian marketplace, Australian CIOs seem to find significantly greater barriers blocking their path to success than do their US counterparts. US CIOs seemingly have been better able to integrate themselves into the corporate culture than their Aussie peers.

View the State of the CIO 2003 survey here.

The exclusive Australian CIO survey State of the CIO was administered at CIO’s annual conference and by telephone, and replicates exclusive surveys conducted in the US and Singapore. The aim of all three surveys was to better understand the careers and the roles played by CIOs, examining their responsibilities, executive relationships, challenges, skills, career path and spending. The results detailed here are based on the responses of more than 250 heads of IT from a broad range of Australian organisations, making the Australian results particularly comprehensive. The US CIO survey for instance — despite a considerably larger population in the US — was based on slightly less than twice as many responses (500) as our Australian survey (257).

So much thinking to do . . . The results make one part of the picture starkly clear: CIOs face significant challenges in meeting their organisation’s strategic goals, with the biggest being a lack of time for strategic thinking and inadequate budgets. These twin menaces were cited by more than 60 per cent of Aussie CIOs as being among their biggest barriers to job effectiveness. That almost twice as many Australian CIOs complain about a lack of time for strategic thinking as their US counterparts (31 per cent) would seem to indicate local CIOs are spending much of their time with their sleeves rolled up.

The time and budget restrictions, along with the continuing slowdown in IT development since the dotcom bust, worry Macquarie Bank CIO Nigel Smyth, less because of the impact on the bank’s ability to move forward than for the effect on staff development opportunities and career progression. “It’s been a tremendous boom period for the last five or six years,” says Smyth, “and I think that’s meant accelerated career opportunities and accelerated development opportunities, [more] than would be normal in a normal market.

“Suddenly we’ve come off that. We’re in a very flat period now and people are looking around and saying: ‘Okay, I’ve been doing this job for six months or a year and I’m used to going on to do the next job.’ And the next job isn’t there, because the group isn’t growing at the rate it was growing. So that’s something that we’re working on quite a bit here,” he says. “Our staff has enjoyed good development opportunities and career progression over the last 10 years in terms of IT because of the level of IT growth. But how do you continue to do that in a low IT-investment period? So the business has continued to expand, but maybe not at the rate it has done in the past, and also they’re not spending the money on IT that they may have done in the past as well.”

. . . so little time. The increasing business orientation of the job is also reflected in what CIOs do with their time. The survey found that they spend almost half of it communicating with fellow senior executives; department heads; customers and suppliers; and IT vendors, and only 14 per cent of their time learning about technology. It’s no wonder CIOs find little time for strategic thinking and planning. Yet with strategy being an important part of the CIO role today, it’s imperative to find the time.

For BankWest CIO Joe Deragon, one of the most satisfying aspects of the CIO role comes from knowing operational areas and infrastructure are working at optimal levels of efficiency and performance, day after day, with little management attention. Another is being able to say he now understands a part of the business he had not focused on before, and he has put required technology support in place so effectively that it has now become an integral part of the bank’s operation. It comes from being aware of the “details” of his part of the business and how it impacts the business both operationally and financially.

“Frequently it’s easy to operate at too high a level and become unaware of this information. In our current economic environment I think this is an aspect of our roles we’ll have to get closer to,” Deragon says.

Putting all the pieces together. When it comes to IT spending priorities, integrating systems and processes leads the field. Almost 70 per cent of Australian CIOs say systems integration remains their biggest spending priority, whereas 36 per cent of US CIOs indicate integration as a main concern.

“The infrastructure play is a classic defensive play,” Rowsell-Jones says. “We are not freeing up money to embark on new projects, what we’re doing is we’re taking the asset that we already have and trying to unlock the value. It came out very clearly in our [Gartner’s] survey as well, which is the importance that everybody is placing this year on joining up the internal bits and pieces.”

Rowsell-Jones says the Australian numbers suggest survey respondents see this as a time to pause and catch breath, and to concentrate on getting value out of the existing technology. Many Australian companies have lost their appetite for big speculative investments.

Prove IT, and prove it again. The potency of another perennial bugbear remains strong, with about 48 per cent of local CIOs complaining about the difficulty they have proving IT’s value to the organisation. But if Australian CIOs think proving the value of IT is tough right now, they should try living in the US.

Americans are telling Gartner they are under much higher pressure to demonstrate the value of information technology systems, almost as if the boom time has led to a bigger bust in the US than here, according to Rowsell-Jones. “We see much more temperate response in Australia,” he says. “The good times were not so good, and the bad times aren’t being so bad. “On the other hand, developing leadership in terms of building capabilities of the enterprise is of much greater importance to the Australians than it was on our [Gartner’s] survey to the Americans,” he says. “It seems to me one of the ways of interpreting this is that the Australians aren’t taking the short-term a view of the things so much as compared to the response the Americans are adopting.”

Rowsell-Jones also points out a major difference between the North American and Australian view comes because of the difference in scale and maturity reflected by the fact that in the US much of the technology is “indigenous” because so many IT suppliers are US-based.

“In a sense, because [the US] is a big market, they’re very highly tuned to that marketplace. Now, if you step away from that, particularly down here into Asia Pac, from the perspective of the vendors it’s an interesting market but it’s not their principal market. They certainly would be focusing principally on the United States, then on Europe, and then, because we in Australia are fortunate enough to speak English, they can take some of the North American products and use them here. But we are very much in Australia a branch office economy, particularly from the vendors’ perspective,” he says. With that “rest of the world” mentality, it’s not a big reach to see why Australian CIOs have a bigger bone to pick with the vendor community than US CIOs do. Locally, 30 per cent of the CIOs surveyed cite poor vendor support, service levels and product quality versus 16 per cent of the US CIOs.

The Incredible Shrinking Budget. And in a reflection of the real effect the spending cuts of the past few years have had on CIOs’ thinking, lowering costs and meeting budgets is the number two IT spending priority in the survey, with 54 per cent of the CIOs ticking this box. Issues with shrinking budgets is further evidenced by the 61 per cent of local CIOs who say inadequate budgets are the biggest barrier to job effectiveness.

“I think in the near term we’re all probably looking at a slowed economic situation and very tight purse strings on IT spending,” says David Boyles, COO, ANZ Banking Group. “And [there is] probably a lot of pressure in most companies to focus more on the short-term aspects of IT than the longer term. I think you’re seeing that in Australia with some of the stories about the number of IT jobs that are shrinking in Australia. So I think in many companies there’s a decreasing appetite to engage in strategic projects, and more of a focus on tactical projects.”

Aligning IT with business goals gets a tick from just over half of those surveyed as the third-biggest priority for local CIOs. Probably reflecting the limits on IT budgets rather more than it does attitudes to the usefulness of the technology, knowledge management is in last place when it comes to allocating precious IT dollars.

Talking (and taking) IT up. CIOs may have made some progress with their push to sit at the executive table — the data shows 28 per cent now report directly to their CEO, while 29 per cent report to the CFO — but for many the conversations they have there remain severely strained.

“The CIOs . . . who have very difficult jobs in large corporations, would argue that the senior level CIOs tend to be more politically connected because of the relevance of what they’re doing and the fact that as people, they tend to be well-grounded, well-rounded people,” says Rowsell-Jones. “There is a distinct difference between the CIO of a major corporation who is every bit the general manager or every bit the business unit leader, and the CIO of a smaller corporation.”

Whatever the true impact of those distinctions, the data shows a real disconnect with executive peers plagues many Aussie CIOs (36 per cent), while only 12 per cent of US CIOs report the same problems. Even so, some 31 per cent of local CIOs say the executive with whom they have the best working relationship is their CEO. “There’s no doubt about it, though,” says Hind, “that when CIOs do have a good relationship with the CEO the wonders it does for the organisation and the IT department are significant. And because CIOs get a feeling they know where the CEO is going, his or her ideas for the business, there is all that empathy there.”

But for Australian CIOs challenges extend beyond the hallways of Mahogany Row, with 33 per cent and 24 per cent of them citing disruptive office politics and ineffective communication with users respectively as barriers to job effectiveness. Local CIOs are also more overwhelmed by the pace of technology change than their US brethren (31 per cent versus 14 per cent, which is probably again an indication of being distanced from the technology hubs of the US and Europe.

Everybody’s talking at me. The results show that more than ever before, being an effective CIO is largely about getting your message across. For a great many CIOs the bulk of the average day is spent communicating with business executives or managing IT staff. It’s hardly surprising then that a whopping 79 per cent of local CIOs say effective communication is the most important personal skill a CIO can have for success, a number not dissimilar to their US counterparts.

“It’s the ability to translate sometimes complex technology into business terms,” says Macquarie’s Smyth. “It means above all being just as open as we can be. I think there’s been a tendency for technologists to assume people don’t understand. What we’ve discovered is that we’re dealing with very smart people, and really, they understand this stuff the same way that we do. We just have to help them with some of the jargon and also the application of it to their business so that we’re not talking about technology in an abstract; we’re actually using it as it is applied to their business.

“So we don’t just say we’re going to buy XYZ because it can do great things — it’s what great things can it do for me. It’s those ‘What can it do for me?’ discussions that we have to have.”

After communication skills, the skills Aussie CIOs deem as most important are understanding of business processes and operations (60 per cent), followed by strategic thinking and planning (56 per cent), with technical proficiency a fair distance back at 11 per cent.

For the Joy of IT. The State of the CIO survey clearly illustrates CIOs are increasingly motivated by job satisfaction: while almost 45 per cent say they moved on from their last job to advance their career, and more than 35 per cent were looking for fresh challenges, they are now seeing their world through rather differently-coloured glasses.

When they left their last jobs, only a minority of Aussie CIOs were motivated by better pay (15 per cent), or said they had left because they were unhappy where they were, either because they felt disconnected from their CEO or other senior executives (6 per cent), or because of unfavourable reporting structures (3 per cent). But a look at their next likely career move shows their shifting expectations. Better monetary compensation is looking more tempting now than it was before: compensation is now twice as important (some 30 per cent want more money from any new employer).

But the real significance lies in the substantially greater number (more than 50 per cent) of CIOs keen to face new challenges in their next position.

“I think the issue for a lot of people is job satisfaction,” Hind says. “I’m seeing a growing trend of people who have been CIOs in what has been regarded as blue chip top 100 companies electing to move to smaller SME environments, with the feeling that they’re closer to the decision makers. They’re not so at the mercy of the whims of the stock market and that maybe there is more forward thinking in those organisations.”

If their last jobs are any guide, any moves to those new positions may not be imminent. Surprisingly, 35 per cent held their last position for between three and six years, 26 per cent for between one and three years, and 17 per cent were in that position for between six and 10 years. So much for the typical portrayal of CIOs as restless, job-hopping fly-by-nights who cannot be expected to stay with the job for more than a couple of years. It would also appear to disabuse the notion that CIO means “career is over”.

Moreover, 35 per cent of the CIOs surveyed expect to remain in their current job for between three and six years. Thirty-two per cent expect to remain for between one and three years, with 6 per cent planning to stick around for more than 10 years. There were even 10 respondents who intend to hold out for the gold watch, all saying they aim to keep the CIO reins until retirement.

And what CIOs did in that last job, and the functional areas which had an impact on their path to the CIO spot, puts the lie to all the talk about the supposed push to put people with broad business experience into CIO positions — at least Australia. More than four out of five CIOs in both Australia and the US have IT experience, but US CIOs have more widespread business experience than their Aussie counterparts. The next most common route to the CIO’s chair both here and in the US is clearly consulting (24 per cent versus 50 per cent). Other noteworthy functional areas where experience was gained were customer service (22 per cent versus 34 per cent) and administration (34 per cent in both Australia and the US). A financial background helped 25 per cent of US CIOs, but only 18 per cent of local CIOs indicated the disciple as a career enhancer.

Some of the results also challenge other stereotypes about CIOs. Asked about their preferred next role, three of five Aussie CIOs (57 per cent) say they want to continue doing just what they are doing today. Slightly more than 25 per cent are angling for another executive suite role, while 4 per cent will retire once they leave their current position. Just 14 per cent are angling to become CEOs next time around. Far more US CIOs aspire to senior corporate management (35 per cent) than do their Australian counterparts, but that urge may be waning in the current US climate as more and more CEOs are ousted or gaoled.

Australian corporations demand much from their CIOs, and are prepared to determine remuneration by performance. Our CIOs tell us that how they perform, particularly their effectiveness in keeping IT budgets within forecast restraints, is a big determinant of salary rates. Forty-one per cent of CIOs say the main factor in determining their remuneration is how their actual IT budgets compare with plans. Keeping within those budgets and the impact of their initiatives on the company are even more so (44 per cent). But leadership and demonstrated value are almost as important — at 38 per cent each — as those determinants, while only 10 per cent are judged in the light of stock performance.

The future belongs to me. Whether or not the definition of the CIO role will change over the next few years is academic. The job is certainly changing, with strategic planning becoming ever more central to the CIO skill-set. Some observers contend that business-IT alignment will be a no-brainer, while others believe understanding business will be the skill that makes or breaks careers. CIOs will focus more on strategy — or they’ll stay attuned to operations. While reading CIO tea leaves isn’t an exact science, one thing is clear: the job won’t be boring. Not that it ever was.

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