There is no shortage of information available regarding the chief information officer (CIO) – whether it is their influence at board level or their ability to do more than just ensure IT keeps the lights on. But it is not very often we get the chance to really look at what drives today’s CIO, what their concerns are or what they feel they bring to a business.
That’s what IBM has done with its The Essential CIO study, taking the pulse of more than 3,000 CIOs from across the world, working in a variety of different industries, both public and private. The previous study was carried out two years ago, right at the height of the economic crisis. The results then suggested that CIOs were very much aware of the need to ‘do more with less’, which was undoubtedly the hottest phrase at the time.
Analytics came out as the CIO’s top priority as they realised the benefit of extracting as much intelligence as possible from their biggest asset – all the data a business holds. "CIOs are investing in business analytics capabilities to help them improve decision-making at all levels," said IBM’s CIO Pat Toole at the time.
"In addition, in this challenging economy, CIOs understand that analytics can be key to new growth markets, whether it’s new ways to manage a utility grid or smarter healthcare systems. Managing and leveraging new intelligence through analytics is something that today’s CIO is pursuing to gain competitive advantage in these new markets," Toole added.
And this time? Well, the subject of analytics is still at the top of the pile when it comes to what CIOs are looking at to increase competitiveness over the next three to five years (see Figure 1), with 83% of respondents picking that option, the same figure as 2009.
Figure 1 – CIOs are recalibrating their tool sets:
While the top three priorities remain the same, mobility and cloud computing made the biggest leap among their visionary plans.
Rising cloud
Cloud computing shot up the list, moving from just 33% in 2009 to 60% this year, suggesting more CIOs are looking at the delivery model as a way of improving company performance. Luke Robertson, executive partner – UKI head of technology strategy at IBM Global Business Services, tells CBR that this result is an indication of cloud’s rise up the corporate agenda.
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"You have to look at the figures in context," he says. "The question is around what they are thinking about, not necessarily what they are doing." It is likely that with the maturing of cloud services – and issues surrounding cloud adoption such as security and vendor lock-in – more CIOs are considering moving some systems and services to the cloud.
The other big winner in terms of what CIOs are looking to was mobility, climbing from 68% to 74%. Virtualisation rounded off the top three on 68%, dropping down from 75% in 2009.
There are a couple of results here that at first glance may seem surprising – BPM, risk management and compliance, and self-service portals all dropped down the list of CIO priorities. Why? Well, it’s unlikely that they are no longer important, particularly risk and compliance in this climate of increased regulations for many industries, and these technologies are now mature.
As IBM’s Robertson points out it is very likely that these technologies and processes are so well ingrained at a company that they are no longer top of mind for CIOs; they are simply part of the day-to-day running. It will not be a surprise if cloud and analytics also drop down the list over the next few years. As Robertson says: "It’ll just be how companies do business."
Figure 2 – Seeing eye-to-eye with the CEO:
CIOs’ views of the most significant external forces impacting their organisations now align more closely to that of CEOs.
Robertson says that what he finds most interesting about 2011’s The Essential CIO is the integration of technology and business, and that a CIO’s thinking today is much more aligned with that of a CEO than 2009’s study. In particular, CIOs and CEOs are now in general agreement about the most significant external forces impacting their organisations (see Figure 2, above), with market, technological and macroeconomic factors among the top answers.
This is driven, Robertson says, by the way our everyday lives are being consumed by technology. "Integration of technology and business has been talked about for years, but it’s now happening," he says. "Technology is now a fundamental part of day-to-day life and younger people use technology by default.
"Enterprises are now accepting that technology is a key part of business and that you have to use it to move things forward."
This has resulted in Robertson seeing a rise in the number of CIOs that come from a business background rather than simply a technological one. "CIOs have to understand business to have influence," he explains, "and they are in a unique position in that they get to see the end-to-end results of the technology infrastructure across the organisation."
With CIOs having more of a business background it is inevitable that their plans going forward will match up with those of the CEO. As shown in Figure 2, their thoughts on what’s impacting the business at the moment are aligned, and Figure 3 shows that agreement stretches to what they’ll be focusing on over the next five years CEOs believe their focus will be on client intimacy, people skills and insight, and intelligence; it’s the same for CIOs albeit in a different order with insight and intelligence at the top, followed by client intimacy and people skills in third.
Figure 3 – Priorities in sync:
CIOs and CEOs both aim to focus on insight and intelligence, client intimacy and people skills over the foreseeable future.
As IBM points out, this convergence is not just because of CIOs having a better understanding of business; it is also because CEOs now realise the value tech can bring to the business. "They increasingly rely on CIOs to turn data into usable information, information into intelligence and intelligence into better decisions," the report says.
Mandates
While the study picked up on similarities between CIOs and CEOs, it also revealed differences within the CIO camp even though they all have to spend time on the fundamentals such as managing the digital infrastructure, which IBM defines as "setting standards, determining architectures, selecting vendors and enforcing security, data integrity and system availability".
Beyond that IBM noticed four distinct CIO mandates, based on how each organisation views the role of IT: leverage, expand, transform and pioneer (see Figure 4). A CIO is placed in a mandate depending on the needs and expectations of the business unit, agency or corporate, IBM says.
Figure 4 – The CIO mandate:
Effective CIOs know and deliver on a mandate that is defined by the predominant goals of the enterprise.
The first of the mandates is leverage. CIOs in this category are expected to help the company make do with what it has, with an emphasis on streamlining and simplifying technology to enhance effectiveness. This group seems to be the ‘do more with less’ bunch.
Interestingly, just 6% of businesses in this category see IT as a critical enabler of business/organisation vision, and CIOs here have less freedom to take the risk of adopting new technologies. It is therefore no surprise to see that these businesses come from mature industries such as education, aerospace and defence, and chemicals and petroleum.
Expand and enhance
Next up is the expand mandate, which focuses on enhancing internal collaboration and improving existing business processes. They are still expected to be a provider of fundamental technology services (as all are to a greater or lesser degree) but CIOs in this bracket have a bit more freedom to use technology to improve the competitiveness of the organisation through streamlining what is already there.
The transform mandate is where we begin to see CIOs fulfil their potential. Just 14% of the companies with this mandate view IT as a provider of fundamental technology services. These companies tend to look outside the organisation for a competitive edge.
One of the key elements of this group is the reimagining of the way both public and private sector organisations use data (see ‘Case study: Opportunity Peterborough’). CIOs operating with this mandate will increasingly look to analytics and master data management (MDM) to improve performance over the next few years.
"There are immense possibilities with business intelligence," says Robertson. "Things like virtualisation, cloud computing and cheap storage are combining to make companies realise just what they can do with data."
But it is the final mandate, called pioneer, that really gives CIOs a chance to shine. Businesses operating here overwhelmingly see IT as a critical enabler of business vision (see Figure 5, right) and a real opportunity to drive innovation and gain a competitive edge. Sadly, it represents only 13% of the CIOs represented in this study, suggesting there is a way to go before many other businesses see IT as an innovation enabler.
Figure 5 – The pioneer mandate:
Businesses operating here see IT as a catalyst for change.
So what are pioneering companies doing to earn this tag? It’s all around data analysis, says IBM. They generally view social network analysis as a top priority and use this information to drive efficiency and innovation. They also rank adding new sources of revenue to the business as IT’s highest impact on the company over the next few years, showing them to be truly integrated with a business.
The future
If the past two years have seen CIOs and CEOs starting to sing from the same hymn sheet, what can we expect from the next two? Robertson expects more of the same, with the integration of IT and business becoming more prevalent, with insight and analytics driving this as companies look to exploit their vast hoards of data.
And that can only be a good thing. IBM’s The Essential CIO study shows that the ‘outperforming’ companies (those doing well at the moment) are using technology as a business enabler; it is not just there for keeping the lights on. They are innovating, analysing, collaborating and driving new revenue streams through their use of technology.
Case study: Opportunity Peterborough
Peterborough, in eastern England, is leading the way when it comes to making UK cities more sustainable. Opportunity Peterborough, a not-for-profit-company established in 2005, has been working closely with the city council to promote Peterborough’s regeneration and growth.
To help it achieve this aim it is joining forces with Peterborough City Council and a collaboration of public and private organisations to build a website that will monitor and analyse the city’s energy, water and transport usage and recycling rates. It is a theme that fits with IBM’s Smarter Planet initiative.
Water and energy use is first up, with other environmental data set to follow. All the information will eventually be pulled together to create a real-time map of Peterborough’s environmental performance.
Residents of the town will be able to log on and get ideas about reducing their consumption as well as providing feedback and suggestions themselves. The council will be able to team up with the utility companies to plan the long-term energy and water infrastructure that is required for a sustainable future. It is a very rare example of utilities, government agencies and local businesses will be able to share information, creating a comprehensive view of the city’s ecosystem.
Essential CIO actions: Start here
- Collaborate beyond what is currently imagined: Get everyone talking, via new channels, on new schedules and with new tools. Teach and enable your entire enterprise to connect as often and as effectively as possible with their own most important stakeholders
- Live simplification as a daily goal: Establish a culture of refusing to let complexity be a burden. Be relentless in the pursuit of easier ways to get work done. Solicit and act upon ideas to eliminate bureaucracy and inefficiencies, both internally and across the value chain.
- Embrace the power of analytics: Educate yourself, your team and your organisation about extracting meaning from unstructured data sources, predictive intelligence, social network analysis and sentiment mining.
- Help grow profitability and seek new revenue: Know the most you can about your customers and potential customers. Think like an entrepreneur every day. Model and measure reactions to product, service and business model changes.
- Provide unparalleled IT expertise: Learn exactly what your internal customers need most, now and in the future. Then, develop or acquire the necessary skills. Become the ultimate expert at understanding and integrating the newest technologies.
A special Dining Club event: The Essential CIO Study
Great John Street Hotel, Manchester, 29 September
The Institute of Directors, London, 5 October
The Corinthian Club, Glasgow, 13 October
At the heart of these special events you will be given an insight into the 2011 IBM Global Chief Information Officer study: the unique result of more than 3,000 face-to-face interviews in 71 countries representing 18 industries, relaying their experiences, accomplishments and future plans.
Please join us to find out how CIOs, in organisations such as yours, are earning – or sustaining – the authority to help their organisations fulfil critical strategic objectives. In a complex global environment where demand is high for creative business leaders, understand what today’s CIOs are doing to remain vital, no matter what type of business they support.
These evenings will feature a fabulous complimentary three-course meal and drinks reception and we will be joined by speakers who will give a different but incredibly valuable insight into the role of the CIO, views which can only be added to by your presence on the evening.
If you are interested in attending any of these special events, please contact Jamie Finlinson on +44 (0) 0207 936 6892 or jfinlinson@industryreview.com.
