Now You're the Chief Strategy Officer
Our annual State of the CIO reports are based on annual surveys of more than 250 heads of IT. Each year we query these executives about their positions within the organization and the path they followed to the CIO job. We ask them about their IT staffs and their outsourcing practices, their priorities, their difficulties and the ways they perform their jobs. They tell us about IT's overall impact within their companies. We use this data, along with many one-on-one interviews, to identify and define best practices, analyze trends and develop an agenda for all CIOs.
The improvement in CIOs' standing within the enterprise this year is 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. Your 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. What you believe to be your most important skill for success, your ability to communicate, is unchanged since our first survey in 2003. And each year you indicate that more than 50 percent of your time has been spent interacting with your company's CXOs and business executives. But many small shifts in survey responses illustrate that a transformation has occurred in how you approach your job.
Perhaps most significantly, the CIOs' strategic role has grown. In The State of the CIO 2006 survey, making strategic systems decisions tops the list of how you spend your time, with strategic business planning among the top five. And you named strategic thinking and planning as the number-two personal skill required for success.
There has been a corresponding change in your place on the org chart, with nearly two-thirds of you now sitting on the company's management committee. Your most prevalent reporting relationship is to the CEO. This year the percentage of CIOs reporting to the top boss remained steady at 35 percent, with a quarter of all our respondents reporting to their CFOs. The numbers are even better when we drill down to the CIO title exclusively; in this instance 53 percent of CIOs report to the CEO, 13 percent report to the CFO, with the remainder reporting to a mix that includes the COO, a corporate/regional CIO and even the board.
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, 75 percent sit on the company management committee, whereas only 42 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 $27.3 million versus $14.6 million for the CFO reports), and they take home more money as well ($245,300 in average annual compensation versus $174,300).
It's good to report to the CEO, and it's good to report that this year more of you do.
Commonalities Beneath the Contrasts
Who you report to is an important factor in the content of your job, but not the only one. The industry you work in also makes a difference. On the whole, CIOs in financial services and insurance earn more, have bigger IT budgets, dedicate more time to strategic planning, and will grow their staffs in 2006 to a greater degree than CIOs in most any other sector.
Alone among IT executives in the seven industries we examined, finance CIOs seem to have solved the business-IT alignment puzzle. Health care and government CIOs are at the other end of the spectrum. They report to their CEOs far less often than other IT execs, and more of them struggle with what they term inadequate budgets.
Many of the distinctions between CIOs in different industries have to do with the particular business challenges their companies face. For instance, inventory management is a top concern for CIOs in manufacturing and retail; accounting and finance are most important to health-care, insurance and government CIOs. Customer support tops the list for financial services and educational CIOs. In coming months, we'll run a series of snapshots of the CIO role and situation in these and other industries.
Underlying the differences between industries, however, are many commonalities among CIOs. No matter what industry you work in, in 2006 you will be focusing on either innovating or reducing business costs. And to do that, you will need to use your ability to communicate and think strategically. If you think your industry defines you and separates you from your peers in other industries, think again.
Another factor in the nature of the CIO role is the size of the company. Those in small companies tend to be more hands-on than their peers in larger enterprises; the number-one use of small-company CIOs' time is leading projects, which is way down the list for CIOs in midsize and large companies. Big-company CIOs outsource more than the others, both domestically and offshore (although, not as much as many might suspect or trumpet), and they plan to increase their outsourcing in 2006 at a greater rate than do CIOs in small and midsize companies. But again, as was the case in all industries, the similarities in the CIO role across companies of all sizes outweigh the differences. The top management priority in all three categories is alignment, and the top technology priority is integration. CIOs at companies of every size plan to increase the size of their IT staffs.
An important underlying message of The State of the CIO 2006 is that CIOs can and should learn from each other. Circumstances vary; the job doesn't.
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