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Out of the Primeval Swamp

Out of the Primeval Swamp

Remember when CIOs were but a ripple in the primeval IS swamp and their forebears, the primitive IT managers, spent all their time on planning and implementation of data processing systems? Well, in the evolutionary march that might make Charles Darwin smile, genus CIO is, in its turn, evolving - only this time it's mutation not natural selection that's driving the process of evolutionary change.

In biological terms, says GartnerGroup vice president, executive programs worldwide Marianne Broadbent, genus CIO is neither dead nor obsolete; instead it's mutating into a number of species with different characteristics. "There is increasing differentiation between organisations," Broadbent says. "As with other executives, what is required and expected of a successful CIO is changing and evolving, along with the shifts and changes in the enterprise and its environment." Or as Gartner executive programs fellow Bruce Rogow puts it, "The CIO role is often being driven more by external pressures than an internally generated sudden burst of IT enlightenment. Few self-respecting CEOs, managing directors or public leaders want to face the capital markets or their constituents without the CIO or e-initiatives clearly visible."In effect, Broadbent says, the CIO from New York to Perth is mutating into several quite-distinct species or combinations of species. Exactly how the evolution is manifesting at individual organisation levels depends on a series of factors. These range from the extent to which the CIO is focused on demand and/or supply management to the nature of the enterprise drivers and initiatives. At the same time, just which of the new species of CIO is needed in a particular enterprise is being shaped by a series of organisational and situational factors. These range from the current investment climate to perceived and actual organisational capabilities, Broadbent says. And the pattern of roles and responsibilities is endless.

Broadbent should know. Gartner's Executive Programs now include more than 1400 chief information officers (CIOs) from around the world, whose priorities for the coming years formed Gartner's May ITEP findings for North America, Europe and Australasia: "Shaping CIO Agendas in an ‘E' World". And the priorities of leading CIOs toward 2001 can be summarised with four "e" words:- Energising enterprise strategy and initiatives- Enabling new business and initiatives - Executing cost-effective solutions - Exploiting technologies, sourcing opportunities and benefits.

"Integral to these priorities are the intertwining of the enterprise, the external environment and, of course, the pervasive influence of e-business. The nature of CIO priorities is being shaped more than ever by the environment of which they are a part: the industry, enterprise business drivers, the investment climate, positioning for e-business and the perceived benefits of information technology (IT) investment in the enterprise," the report says.

Dynamic Fusion

There is little mention of alignment of business and IT as a priority among today's CIOs - rather it is an underlying assumption of most executive teams.

The key focus, fuelled by the penetration of technologies like the Internet and the emergence of e-business, is a concern for dynamic fusion between business objectives and IT capabilities.

"In the world of physics, the term fusion refers to a thermonuclear reaction in which nuclei of light atoms join to form nuclei of heavier atoms. This results in the release of large amounts of energy," the report says. "As the impact and penetration of e-business becomes more pervasive, the fusion of business and IT is necessary to release the energy and creativity to develop and sustain new personal competencies and organisational capabilities. As e-business becomes just business, fusion becomes essential to stay in business." The quest for fusion revolves around issues like enabling greater enterprise speed, innovation, adeptness and customer-centricity. And implementing such fusion requires that all executives learn a new and sometimes challenging set of languages, perspectives, decision rules and cultural values.

In Australia, Broadbent says, this need for fusion is well illustrated in the public sector where, with Australian governments running well ahead of the pack in wholesale IT outsourcing initiatives, the trend to outsource is forcing the public service to develop new competencies and organisational capabilities.

"When you are ahead of the curve in outsourcing, you don't always realise the skills that you require or how the game is different," Broadbent says. "If you look at some of the challenges that our organisations face, and this has come up particularly in the public sector earliest, then there are a whole set of skills that are not in many IT organisations to do with management of service providers. Internal IT organisations haven't necessarily had that capability well developed because before they were the service providers." And the call for fusion also manifests, as a factor of our geography and industry, in a greater need for what Broadbent calls "vendor development".

GartnerGroup has numbers of Australian clients who complain their large service providers are not used to dealing with a headquarters group here in Australia.

It can mean that some CIOs are forced to maintain multiple relationships within Australian and perhaps at the vendor's headquarters. It all adds to the complexity facing Australian CIOs, she says, and means many are struggling to develop important new skills.

These days smart CIOs know they have to take vendors into their confidence much more than they used to, Broadbent says, because of the value closer vendor relationships can bring to the organisation. "Just as with business and government, with business and higher education, with large organisations and vendors, there needs to be a better relationship. Many businesses now will be more dependent on IT for their cash flow and much more dependent on IT for creating new businesses; the organisations able to develop really good relationships with their providers and their vendors actually may be ahead of the curve.

"So the interactions between vendors and service providers and CIOs need to be more mature," she says. "They're heading that way; but if you're a CIO who's always been in a low-cost organisation or you've prided yourself on screwing the vendors, then you'll find that won't necessarily lead you to the best kind of relationship because you need those people to be in business as well." And Broadbent says senior IT executives in large organisations that are headquartered here but operate globally also tend to face a greater level of complexity than many of their US counterparts. She points out that many large commercial organisations operating from Australia tend to do more business in emergent countries than their European or US counterparts, and also enter into more joint ventures. "If you've got a business model that includes a whole bunch of joint ventures, a whole bunch of partnerships and business alliances, you've got another complicating factor for how you manage the IT organisation," she says.

Evolutionary Path

Just how genus CIO is mutating becomes apparent when the different contexts of CIOs - their enterprise drivers and enterprise initiatives - are overlaid with the requirements of demand vs supply management.

Enterprise drivers include the pervasive impact of the Internet, dissolving industry structures, the emergence of new business models, new investment and capital expectations, technology commoditisation, information transparency, skills shortages and a greater variety of opportunities and expectations in work and lifestyles.

The report says Gartner's Executive Program clients are responding to the volatility and uncertainty in their environments with a number of enterprise initiatives that can be summarised as: - Start with the customer - Shorter cycle time - Create innovative products and services - Streamline business processes- Improve risk management - Optimise supply chain - Build flexible business architectures - Partner and make alliances - Take care of your people - Actively manage physical and intellectual capital assets "In mid-size to large enterprises, there is now a cluster of executives with predominantly IT or business-and-IT-fusion responsibilities," the report says.

"That cluster represents a number of species of the genus CIO. The role and responsibilities are diverging. But each of those diverged species is required to stimulate and deliver IT-enabled capabilities. The responsibilities of demand-driven CIOs and business visionaries are increasingly hard to distinguish from other business executives. However, without strong supply-oriented leadership, the delivery of enabling IT capabilities is jeopardised and strategic and business initiatives cannot be realised," the report says.

Two Faces Have I

CIOs have traditionally enjoyed a dual role embracing management of both demand and supply. The demand management challenge has always been about shaping and managing informed expectations about the business use of IT. The supply management challenge concerns delivery of timely, efficient and cost-effective services to meet those demands.

Or to put it another way, GartnerGroup says demand management is about understanding and influencing business directions through IT leadership in: - articulating business needs;- shaping and informing those needs; and - identifying opportunities for linking business performance through leveraging of information and IT.

Supply management is about managing IT capabilities to deliver necessary services: - gathering and integrating IT resources and services to meet business needs, and - managing multiple sources of supply to get value for money.

Now GartnerGroup finds more and more CIOs having to choose whether to focus solely on demand or to concentrate on supply into the future. Broadbent says in Australia as elsewhere there are now a number of CIOs whose role is entirely concerned with demand.

"They've got a high-level strategic role in the organisation. They don't actually deliver the stuff," she says. "One of our top 20 organisations in terms of revenue is just going through the process of really deciding that demand side is a critical role. It has not had someone in that role previously," Broadbent says. "It is, if you like, splitting the CIO role such that the CIO is the top-level person for managing that strategic processes go ahead and [there will be] another person who will be managing the actual systems and managing the service providers going forward."Indeed, CIOs in many larger enterprises are finding several people are now involved in fulfilling the many roles and tasks that once were assigned purely to the CIO.

"The message is that we have to be careful about the expectations we have for ‘the CIO role'," Broadbent says. "I get nervous when I hear people talk about ‘the CIO role' when they mean a whole series of responsibilities which these days cannot be done by one person in mid-to-large organisations." In some larger organisations, CIOs will continue to manage only supply - either because someone else is already handling demand or because the organisation isn't sufficiently mature to have someone effectively handling demand. But GartnerGroup is familiar with organisations that have at least four clear types of positions:- A demand-oriented CIO operating across the enterprise (or perhaps a large city or state government);- A supply-driven chief technology officer operating across the enterprise, sometimes referred to as chief infrastructure officer;- A chief technology opportunist heavily involved in stimulating new business opportunities, particularly in the e-business arena; and - Line-of-business CIOs, or business information executives, who combine demand and supply functions for their business units (or government agency or department).

"A mid- to large-size organisation requires a cluster of senior executives where the roles and accountabilities are quite clear. An organisation has to make sure that what they have covered are the roles of the demand side CIO; the supply side CIO; the opportunistic CTO as well as the either mini CIOs or the business information executives required in each line of business," Broadbent says. "There is no doubt that increasingly mid-to-large organisations are finding they need people performing all the above roles, and that one person cannot fill them all." In this context, it is important to note that these days there are two different kinds of CTO, and we need to be very careful about what each one does. (For a closer look at the CTO role, see, "Wolf at theDoor", CIO July.) "The chief technology officer in large clicks ‘n' mortar organisations tends to be the person who delivers stuff; tends to be the person who manages what we call the supply side; tends to be the person in charge of services to the organisation," Broadbent says. "But CTO can also mean chief technology opportunist, where the CIO may hand that CIO role over to someone else and, as part of the executive, focus on opportunities for the organisation to win new business and support initiatives differently through emerging technologies." Chief technology opportunists are still in the minority and will remain so, Broadbent says. But she says anywhere where there is a significant penetration of business to consumer e-business is where you really start to see some of those technology opportunistic roles coming into their own. Meanwhile CIOs in small - to medium-sized Australian companies will always continue to manage both demand and supply.

Integrated Decision Making

The penetration of the Internet and the emergence of e-business is increasingly forcing companies to integrate business and IT decision-making. The results are proving dramatic.

GartnerGroup says the increasingly pervasive impact of the Internet is creating new businesses, new channels to customers, different types of business interactions, new communities and behaviour patterns, and different reach and richness in services and product offerings. The impact is generally greatest in countries where the telecommunications industry is very competitive and costs are low, such as the US. Recent competitive moves by providers in the UK and the penetration of mobile technologies in Europe and the Asia-Pacific area are resulting in considerable catch-up activity.

But Broadbent says in Australia relatively slower rates of Internet penetration provide a great opportunity for Australian CIOs to learn from the mistakes of others. "In the clicks 'n' mortar area, what we are learning quite quickly is the need for a balance between innovation and discipline and between enterprise-wide strategies and specific line-of-business strategies," she says.

"So what we've learnt is that, yes, it's really important for the organisation from an enterprise vision perspective to have a good grasp of what they're trying to achieve over the longer term. On the other hand a lot of the initiatives need to be done in the lines of businesses - and even by product, by service, by customer segment - because there's much more granularity in terms of the customer behaviour that we're perhaps used to experiencing." And Australian customers also have different expectations of e-business than others around the world. With some of the leading government organisations in the world technological arena, including the Australian Taxation Office, the Australian Bureau of Statistics and Brisbane City Council, Broadbent says Australia has a much higher penetration of e-government and government-to-citizen services than in many other countries.

"For the private sector that just raises the bar and raises the expectations," she says. "There are a lot of things in our business world that are done online that are not done online elsewhere. It raises the benchmark for business, and it's quite iterative in that respect, I think."Nonetheless, so far there has been less activity in Australian than some other regions in the "market maker" arena. "That's partly a factor of size and dominance and so on, where we don't have as much development in our region of businesses that are coming together and creating the B2B supply chain grouping, because we're feeding off some others to some extent," Broadbent says. "Down the track, some of that will happen as a trickle-down effect from the large groupings that we're now seeing in the computer industry and the car industry.

Some of it will be mandated externally, where a parent company is doing it so the local organisation needs to be part of that. But I think we're yet to see some of the developments amongst what I would call regional companies in the region." Where Australian CIOs are involved in energising enterprise strategy initiatives, it is important they fully understand the technological infrastructure available both to consumers and to businesses and the differences between Australian and non-Australian Internet users, Broadbent says.

"I think we tend to be a little bit more sceptical here. We're a little more wary; we're a little less willing to jump in and do things completely differently unless there's a real advantage to us," Broadbent says. "We will certainly jump in and try, but if we try and it doesn't work, I think we probably tend to get a bit jaded. And I do think that perhaps some of our consumers, myself included, are a little more wary and a little more thoughtful in terms of what is the real convenience on offer." She adds that the price of broadband telecommunications to the home has only recently become realistic in Australia. "We're only now starting to slowly - and it is quite slowly - see the penetration of higher bandwidth into the home and into small business. So I think that has certainly slowed us as well, and the pricing of that has been a negative for many of us," Broadbent says.

As a result, CIOs have until recently had less flexibility in providing services to remote users and executives wanting access to systems out of hours.

But she says a combination of cheaper bandwidth and increasing penetration of mobile devices will result in different and newer ways of doing business.

"It's interesting that in the US, penetration of Internet and of mobile phones is about the same. In Asia-Pacific and in Europe penetration of the Internet is lower, but penetration of mobile phones is about three times higher," she says.

"So it's where you then get that combination of the higher bandwidth, plus the penetration of mobile devices and people accustomed to using them for more sophisticated or even simpler things than they do now, but things which add value in terms of convenience. That's where we'll see a big take-up. And depending on the bandwidth issue here and the telecommunications costs here, we may well see that take-up in the top 10 per cent globally, because of our penetration of mobile devices." Next month: Crunch time for CIOs

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