Up with People
Back in 2003, finding people with the right skill sets and retaining key employees were among your biggest challenges. Companies competed for star performers in a long-running talent war. But the cost-cutting attitudes of CEOs and boards ended the hostilities. The pressure to do more with less knocked staffing way down your priority list and turned your attention toward outsourcing. Staff development and retention ranked 10th out of 14 spending priorities in our last two The State of the CIO surveys.
Yet in 2006, the emphasis on your internal IT department is back. In this year's survey, 37 percent of you plan to increase your IT headcount during the coming 12 months. That's not to say the shine is off outsourcing. Sending work to outside contractors has become a standard part of CIOs' arsenal, but a noteworthy 50 percent of CIOs said that they outsource less than 10 percent of their labour.
Certainly outsourcing practices have matured, with selective sourcing gaining favour over the large-scale deals of years past. Moreover, unlike your US peers, you are avoiding the complications of offshoring like the plague; 83 percent of you indicated that you will outsource only within Australia.
The work you outsource tends to be straightforward, repeatable processes: hosting services, application maintenance or support, and some types of application development. Conversely, the skills you're seeking in-house are for business-oriented tasks such as project management, business process management and complex, business-facing application development.
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 your most difficult challenges - and it jumped right to the top of the list. You need people to get this work done, you need them to hit the ground running (your greatest demand is for mid-level employees with some experience, see chart above), and you need them yesterday. (For stories of how CIOs are dealing with their application backlogs, see "The Number-One Problem: The Project Backlog", page 58.)
Where you'll find the talent to get all this work done remains an open question. There are fewer IT people around than when we did our first survey back in late 2002 - many got out of the field when organizations stopped hiring. And enrolments in domestic IT education programs are down. You could be looking at a return of the IT talent wars in 2006 and beyond.
Your Agenda, 2006
Taken together, the findings of The State of the CIO 2006 report point to an evolving agenda for IT execs. You've got to solve the staffing problem and take care of that application backlog. You need to pay attention to integration and alignment, which are this year's top technology and management priorities, respectively. But you need to do more than that to be a strategic CIO and realize the full potential of IT within the enterprise. You say that IT's role in the organization is to envision business possibilities and get them growing through technology. So that's the goal. To get there, first use your increased access to the CEOs, CXOs and business executives to deepen your understanding of the business. Use your strategic capabilities to develop programs that fulfil the needs that you and your business peers identify together. Then put your communication and leadership skills to work in bringing these programs to life.
All this will take discipline and a sustained effort from you and your IT department, but it's a shoe that fits and you're happy - if not always comfortable - to wear it.
Edward Prewitt, Linda Kennedy, and Sue Bushell contributed to this report
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