Human Capital Group

By Human Capital Group
Feb. 9, 2017

A leading analyst company recently came to the conclusion that 60% of the CIOs will no longer be in the same position in five years. In addition to this insight, the average length of employment for a CIO is three years. This is not new information, but nevertheless it is a strong indication of expected changes to come. It also reveals the misalignment of expectations between the CIOs (Chief Information Officers) and their general management teams.

The Evolution of the CIO Role

Some CEOs state that above all their CIO needs to organise basic deliveries such as daily operations, maintenance of existing systems and implementation of applications. These responsibilities support the processes and tasks that the company deals with in the present. With digital moving into every aspect of the business, the CIO is evolving as a role and is expected to contribute to businesses development and identify new technological opportunities. In many companies, the CIO is responsible for ensuring that the IT department will optimally and efficiently support existing business structures. However, this baseline responsibility of the CIO role limits the possibility for, and potential focus on, innovation.

Some large companies accept that the CIO plays a more supportive and operations-oriented role. In this case, an organisation appoints one or more CDOs (Chief Digital Officers), whose responsibility is developing digital strategies. In many types of companies, the CDO focuses on client and customer satisfaction, retention, service, loyalty and the customer life cycle. In addition to the customer centric experience, many organisations also charge the CDO with digitalisation of the value and supply chains.

However, this organisational structure is rare due to the fact that very few companies are large enough to resource it. This means that for most companies securing a CIO who is innovative is vital. Regardless of size, most organisations lack the ideal CIO and CDO structure, which solve the following questions:

  • How do you ensure that management and the Board continuously receive information about and are involved in the technological opportunities?
  • How will the Board and the management achieve certainty about what can be expected from the IT department?
  • How will the CIO and the CEO ensure that IT-related ideas are not only tied to the existing context?
  • How will the CIO and the CEO ensure that the CDO or anyone else related to strategy and innovation does not develop plans that are too unrealistic or expensive technologically?

The CIO of Tomorrow

Several CIOs have witnessed this disconnect and wish to change the future of the role to one that develops and propels digital strategy. In some cases, the CEO will begin to move in this direction to own the digital strategy, but not many are capable of managing and focusing on this area. One clear opportunity is to reshape and redefine the role of the future CIO. The CIOs of the future will need to cover a wide range of responsibilities including:

  • Running the main portfolio of applications, systems and operational environments in an efficient and transparent way
  • Ensuring agility and flexibility to optimize IT deliverance and performance
  • Being at the disposal of management to communicate information about IT technology related opportunities and risks
  • Having a strong foundation concerning technological opportunities, resources and access to vendors
  • Understanding the company’s strategy, business and value proposition
  • Staying in close contact to best support management and the business units
  • Developing ideas that create value and combine business with technology
  • Managing large and crucial projects
  • Becoming a desirable employer for IT talent that are difficult to recruit
  • Creating a culture of innovation

As IT operations will increasingly become subject to outsourcing, the CIO must focus on identifying the services needed and be able to successfully procure and manage external vendors. In addition to the vital competence of enabling innovation, a CIO is charged with the general capability of building supplier partnerships that create value for the business.

From these new responsibilities arises the question of whether all tasks can be fulfilled by just one person, especially in small and medium-sized companies. This is the new challenge for the CIO of tomorrow and demands future technology leaders to be multidimensional.

Building Leadership Capabilities for Future CIOs:

This multidimensional future CIO role concept will be known as the “CIO-Plus”, where the CIO takes on extra responsibilities beyond their classical domain. This may result in a migration of talent away from the CIO role and into other aspects of leadership management. CIOs that have capabilities within areas such as process, execution and management may follow the route to COO. Whereas, CIOs that can improve business and client insights can be asked to oversee functions such as CRM, customer service, after service, call centres, etc.

We expect to see an increasing number of CIOs spend their first years of their career in an IT consultancy. This environment exposes talent to many industries, business models and training methodologies. Analysis, development and project execution will also foster a well-rounded skill set for future CIOs. In addition to these core competencies, CIOs with business experience in supply chain management or sales and marketing will also prove to be effective leaders.

The consequence of this development will see CIOs moving into COO roles and ultimately the CEO role. This transition will easily be seen in the financial services, telecommunications and retail industries. These are all industries where the potential of digital strategy is significant and critical to the business. By bringing the CIO to the general management level, these companies can remain competitive and keep the pace needed to maintain an efficient and effective supply chain.

Technology Remaining Key To Governance

Companies can also expect Boards to focus more on digital strategy in the future. This makes it even more critical to develop a governance model where Boards and general management can productively understand and discuss potential and strategic technology enablers. In small and medium-sized companies, it is essential to implement an IT governance model that aligns with the general governance model of the company.

This will ensure a level of integration between business needs, overall strategy, digital opportunities and other priorities. Working together with the CIO, general management teams must integrate and balance technology-driven opportunities with strategic organisational development. The CIO must play a strong role in this, if not as the source of innovation, then at least as the facilitator.

In some cases, general management teams have limited technological competence and may seek external advice periodically to make sure digital opportunities are presented. The CIO should be able to recognise this gap in oversight and assure technological concerns and issues are properly voiced at the Board level.

The 3 Cornerstones of The 'CIO Plus':

The future CIO role is changing from operational IT leader to business leader. This is not a case of operational requirements diminishing, but rather new demands requiring additional layers of skill and partnership within the role.

  • Innovator. Bringing new opportunities to the business, either directly or by revealing technology-driven opportunities and risks to the general management of an organisation.
  • Partner. In the future, outsourcing will be a vital part of an organisation’s strategy. The focus on the customer will constantly challenge businesses to mobilise their resources. This means that the operational side of IT management will be an increasingly vital task, but non-core. Tomorrow’s CIO must be capable of building an eco-system to meet the demands of rapidly evolving customers and business models.
  • Change Leader. It will not suffice for a CIO to be able to handle change, but rather turn it into competitive advantage. IT and digital strategy will be crucial to how companies evolve and the future CIO must be able to lead.

 

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