The CIO's role has been globalised, and that's proving a mixed blessing for Australia and for Aussie CIOs. With international demand for CIOs skyrocketing, companies around the world are facing a seemingly intransigent problem: there simply aren't enough experienced people out there capable of leading the teams that are building and running their IT systems.
It's pushed the competition for CIOs - good ones, from any corner of the planet they can be enticed from - to Grand-Final pitch. So while Australia remains a net exporter of skilled individuals, when it comes to filling the positions at the top of the IT hierarchy there's an equal and opposite tendency for big Australian companies to bring in high-profile CIOs with overseas experience to take the helm. Meanwhile, smaller companies that would like to do the same are being stopped in their tracks, because they simply haven't the kind of money they would need to tempt global aspirants to Australian shores.
" . . . the great struggle in the 19th century was empire, the great struggle in the 20th century was land, and the great struggle in the 21st century is going to be a battle over skills and people," says Brendan Ryan, lead partner, PricewaterhouseCoopers commercial immigration practice. "The shortage of skilled individuals and their international mobility is shaping up to be one of the big issues of the first century of the next millennium. It really is becoming an issue and it's going to have some quite wide-ranging ramifications for Australia."
Ryan says there's now a new class of high-earning professionals, particularly in computing and telecommunications, who travel the world building their career globally, owing allegiance to no nation, but considering themselves internationalists. Australia is just one stop on the circuit these people travel as they build their career on intercontinental stepping stones. "Often computing professionals in particular see themselves almost as world citizens. They don't have any particular allegiance other than football matches. I always equate it to Ôhave computer, will travel'," Ryan says.
There've been plenty of high-profile examples over recent times, and not just at the helms of the banks and telcos. Aristocrat's CIO Bob Marnell is serving a one-year stretch in Australia after retiring from US behemoth AT&T in January 1997. Steve Bennett, Booz, Allen & Hamilton Australia's Asia Pacific IT manager, is here on a two-year contract, with an option to extend. Last year US-born Loran Fite returned home to the US after a five-year stint at Westpac. David Burden, Qantas' executive general manager corporate services, joined Qantas from Air Canada. The list goes on.
UK-born Bennett is a case in point. He spent five years with Booz, Allen & Hamilton in the UK, before becoming its Sydney-based Asia Pacific IT manager recently. He says to fill the local post Booze, Allen & Hamilton needed someone with a strong global focus, as well as a strong focus on customer service and a good understanding of the company. "At the time there was no one like that in the organisation down here, so they had to cast a little bit further afield, but they didn't want to recruit outside the company," Bennett says.
Bennett is one CIO who says he's enjoying the role so far and wants to stay on in Australia, but is actively transferring skills to Australian aspirants for lead IT position. Others see their spell in Australia as a far more temporary thing and their obligations to their Australian team members as optional and less binding. Meanwhile, plenty of Aussie CIOs are heading up IT shops overseas, and some of them will take up several international positions before they even consider returning home.
None of this is necessarily bad for Australia in itself. Ryan says organisations benefit from an introduction to new skills and business practices, and the exporting of their own take on, and approaches to, technology in a cross-fertilisation of ideas. But he says too many organisations work on the premise that they will be able to keep their expat CIO forever, when they should be thinking shorter term, and accepting they will have to refill the position on a fairly regular basis. "What they've got to do is structure the package in a way that gets everything they possibly can get out of that person's experience in the time that they've got. So they should assume that they're going to have them for three or four years and structure their work accordingly," he says.
The globalisation of the CIO's role means next time you try to land a job as CIO with an Aussie company, you could be up against a host of applicants from overseas. And when successful foreign-born applicants move on after serving their fixed term here in Oz, they may or may not have groomed an Australian to be their successor.
From Ryan's perspective, the trend to recruit CIOs from overseas is a natural and reasonable response to the particular shortage he says Australia faces of IT professionals with strong management experience. "Finding that combination is quite difficult in Australia," Ryan says, "and you often have to look overseas, because the countries overseas look to Australia as one of the sources of finding exactly those people themselves. They [companies] attract them overseas with the lure of an overseas assignment and they also offer significantly higher salary packages. Australia just cannot compete with the salary packages being offered in North America and Western Europe."
Hays Personnel Services managing director Nigel Heap agrees, saying his company is transferring a lot more people between Europe and Australia than it did three years ago. If Westpac and the others could find an Australian CIO, they would, he says. It's just that the right people simply don't live here yet. "This is a problem specific to Australia; and again we're seeing this in other disciplines than just IT - such as finance, general management, and the like," Heap says. "In certain other countries in the world there is a harder degree of commercial reality which probably is not as prevalent in Australia as it should be."
But former Australian Computer Society president Prins Ralston emphatically rejects those claims. He argues the phenomenon is, instead, yet another symptom of a problem which has been plaguing this country since well before federation - our cultural cringe. Ralston, who is a partner in law firm Clayton Utz and managing director of Business Management Consulting, takes strong issue with claims that there's a paucity of Australian technologists with business acumen. He insists that relative to their equivalents elsewhere in the world Australians are significantly better equipped to fill the CIO's role. "My view is that in Australia we have proportionally much, much better trained and exposed people that are able to take on the roles than you can get overseas. I would have no reservations in terms of saying that," Ralston says. "The people that we've got over here are superb."
For one explanation of the phenomenon, he says we should look to the natural tendency of foreign-born CEOs and CIOs to hire fellow expatriates, an understandable strategy from their point of view that mirrors the Australian phenomena. "In recent months, there have been several cases where CEOs have taken their CIO with them when they changed jobs," Ralston says. "The rationale for this is clear - a CEO's package is usually tied to increases in productivity and motivation within an organisation, and a good CIO will play a critical role in helping to deliver those results."
The trouble is that it not only means CEOs recruited from overseas are more inclined to bring their former CIO with them to fill the job than to try to recruit locally, it also sees Australian CEOs appointed to overseas positions doing the same. "We are finding a lot of our guys are going overseas now and that's the real pity," he says.
For now, Ralston says, at least large telcos and software companies, in particular, see Australia as not only an attractive place to deploy first-line technologies and develop software but also as a training ground for younger CIOs. But he insists he's confident the next generation of CEOs, more comfortable themselves in matters IT&T, will take a different stance.
Terasys is a US IT services company whose local office, in a fine exercise in irony, is hitting back at the tendency for US companies to undercut the marketplace by coming to Australia and offering potential employees almost double their salary to take up posts in the US.
Terasys client services director Mark Vollmer, himself a foreign national who is about to get his Australian citizenship, says his company is embarking on an intensive program to do remedial work on the white-collar skills gap, not just at the CIO level, but for many white-collar roles in Australian business.
Vollmer says the IT skills shortage is badly hurting Australia, with five of the biggest US recruitment companies having established offices in Australia with the primary aim of farming local talent and exporting it to North America. What's more, he says, other foreign organisations are also sending representatives to Australia to directly recruit local IT talent - like the leading European bank that in 1998 recruited 70 senior Australian IT professionals over a two-week period.
And with demand rising for professionals, the US and other countries are actively easing immigration restrictions for people with much needed IT&T skills. "It looks like everyone is a winner - except that it is creating a huge vacuum here in Australia," Vollmer says.
Meanwhile, Terasys president Greg Sutton warns that organisations now accept that skills in business, communications and leadership are mandatory for IT professionals, in order to fully understand their companies' mission statements and the role of technology in supporting them. He says unless companies do better at giving IT professionals business skills, there is likely to be an escalating failure rate in technology investment, leading to a high rate of failure for organisations as a whole.
If there is a lack of Australian CIOs with solid business skills, as Ryan insists but Ralston denies, Terasys plans to address it under its TeraTrain program. The plan offers people with business experience an opportunity to gain expertise in technology. Those who have done the program so far include numbers of MBA graduates who had been in business for years but who wanted to pick up an understanding of technology to revive their careers. The courses are winning the hearts and minds of prospective employers.
"Our clients are saying: ÔHoly cow, if you can give us [a person with] 15 years of experience plus absolutely cutting-edge technology knowledge, my goodness, we'll take them and make them a second line manager in an instant'," Vollmer says.
Australian companies that want to recruit CIOs from overseas may not have to match the high salaries US companies are offering to tempt Aussies over there, but they will have to pay a lot to stay in the game. Global executive search company Korn/Ferry International says global demand for senior executives earning more than $US150,000 soared during the second quarter of 1999, climbing 22 per cent over the comparable 1998 quarter.
"This is a stunning quarterly gain, the highest in nine quarters and four times as large as the first quarter 1999 increase," says Windle Priem, president and chief executive officer of Korn/Ferry International. "Based on the fact that our index has been a reliable indicator of business confidence for 25 years, there can be little doubt that the global economy is going to ride into the 21st century on a wave of rising expectations."
Korn/Ferry says North American executive demand rose 26 per cent on the back of the long-running US economic surge; Europe's demand rose 19 per cent, while in Asia-Pacific there was a 40 per cent gain. "In another sign that technology is dominating executive demand as it is most sectors of the US economy, demand for information technology managers climbed to 10 per cent of the total, up from 7 per cent last year. The market for competent IT managers is almost unlimited," Priem says. That makes life tough for Australian companies wanting to attract CIOs from overseas without matching the huge salaries on offer elsewhere.
According to Slade & Partners managing director Geoff Slade, those companies have to be persistent, and they have to sell the lifestyle benefits of living in Australia. "There's no doubt living in Australia is a pretty attractive thing to do for a lot of people, particularly coming from the US, say, where crime is substantially higher than it is in Australia and it is not as safe to walk on the streets," Slade says. "Family considerations for a lot of them would have meaning. So if you can sell that concept, there's no reason why they can't be attracted. They certainly wouldn't come for the money."
But long term, that solution may not be viable, Hays Personnel Services' Heap says. At least in part, the Australian culture of poaching skilled staff from others rather than training existing staff is to blame for the problem, Heap says. "I can say that with a heartfelt plea, because we as an organisation train most people from scratch. We don't employ recruitment consultants from other recruitment companies. We train them up. And I find it frustrating that by and large our competitors don't do any training of consultants and just poach ours."
Heap says it is essential that Australian organisations recognise the importance of training their staff. But, he adds, the criticism is one that can be directed at as many international organisations as Australian ones. "I think again the economic and the commercial world and the business world tend to be becoming more global," Heap says. "It's becoming a case of whether you work in Asia or whether you work in South America or whether you work in the US, the way one does business is increasingly similar. And, therefore, everybody's standards are being brought up to those of the US and to a lesser extent Europe."
But the training need is undoubtedly becoming more acute. A recent report by Deloitte Touche Tohmatsu for the Industry Task Force found Australia will have to increase its 360,000-strong technology workforce (at 4.2 per cent of the total workforce) by 10 per cent in the next year just for a start. It will then have to increase it by 50 per cent within the next four years just to meet demand. To compound the problem, a survey by DDI Asia Pacific has found that between 40 and 50 per cent of executives are likely to retire within the next five years, while the pool of middle management is tiny from which organisations can draw executives.
If the skills crisis isn't addressed, Australia stands at risk of becoming a technological backwater. That could see far more of our home-grown CIOs trekking overseas in search of good jobs, and far fewer overseas CIOs showing interest in coming in to replace them.
In the meantime, love them or hate them, we will continue to see people like Westpac's Fite coming in for a few years then leaving without too much of a backward glance. One can only hope that during their time here they actively engage in the kind of skills transfer and cross-fertilisation of ideas that will see a new breed of Australian CIOs filling their shoes when they're gone.