Hiring was hot in the fin de siecle 1990s, as CIOs threw money around trying to find and retain top technical talent. But as the new millennium wore on, hiring fizzled, and CIOspressured to cut costs and do more with less—outsourced much IT work and even fired employees.
Now CIOs are staffing up again. According to "The State of the CIO 2006" survey, 55 percent of IT executives expect to increase their IT staffs in the coming year, by an average of 11 percent.
But hiring needs have changed since the last boom. The IT staff is being reincarnated as a more flexible corps of business-savvy technology professionals who can meet the growing—and increasingly complex—demands of the business. "In the last year or two, CIOs' bosses have told them that IT must become a major contributor to innovation again. They looked around at their survivor collection of IT staff and realized they had a skills problem," says Laurie Orlov, VP and research director for Forrester. Technical prowess, so all-important in the past, is no longer sufficient for the IT professional. In fact, it's taking a backseat to business understanding, as CIOs are staffing up to hire those with project management and business-process management skills—which, along with application development, are the top three skills desired most from new hires, according to our survey.
The preferred educational background for IT employees today is more often an MBA than a computer science degree, says Orlov. New IT hires are as likely to be brought over from the business side as they are to have been groomed in IT. Even some programming jobs—once purely technical positions—now require candidates to spend time working in the business function first before ever designing systems for that function, she says.
"The big picture is that IT here—and perhaps everywhere—has become ever more integrated into all aspects of the business," says Judy Stahl, CIO at Harvard Business School. "As more and more IT is being used in every nook and cranny of the business, it not only means our staffing needs are growing but it's also causing some real changes and shifts in IT roles."
According to Gartner's 2005 report on the IT professional outlook, six out of 10 IT employees will assume business-facing roles by 2010. And there's pressure from the business to make this transformation quickly, say IT leaders and analysts. So in assembling this more versatile IT workforce, CIOs are hiring those with experience. Sixty percent of all new hires are midlevel employees with three to 10 years of experience, according to our survey." After four years of hunkering down, there's a lot of pent-up demand. Bringing in junior employees is just not going to get you there that fast," explains Andrew Wihtol, principal of Andrew Associates Executive Search and an executive board member with the Society for Information Management. Andrew Associates recently helped the new CIO of a $1.4 billion manufacturing, distribution and retail company bring in a new head of IT architecture, a project management leader skilled at training others in project management, and a business analyst. "All three of those positions were much more seasoned professionals who not only had the ability to get the job done but also to spread the word and tutor others," says Wihtol.
The need for these knowledgeable and flexible IT professionals isn't limited to one type of IT organization; such demand permeates organizations across the IT spectrum—from the Wal-Marts that keep all IT work in-house to the GMs that outsource on a large-scale basis, from multinationals with thousands of IT workers around the globe to midsize businesses with a handful of local IT talent.
In sum, the IT workforce is more important to business than ever before. For CIOs, it can become a full-time job to define the new business-facing IT roles, find the right candidates and use their skills in the right way. Three roles in particular have emerged as critical: the project manager, the relationship manager and the business analyst. Experienced candidates in these areas are inordinately hard to find. And some roles, like that of the relationship manager, are hard to define. And there are other difficulties: determining how to compensate these new specialists in a shifting job market, training and deploying them, and—once you've figured all that out—keeping your top talent on board. But CIOs must confront and conquer these challenges if they are to meet the increasing IT demands of today's business environment.
"I would be surprised to find any CIO or IT employee who's not more business-focused today or doing more in the areas of relationship management, business analysis and project management," says David McCampbell, VP of worldwide information services at Immucor, a $144 million manufacturer of diagnostic products for blood banks. "With IT and the business becoming more dependent on each other and the need in IT to control spending and show value, the IT staff needs to work more closely than ever before with the business to do that. It's a fundamental shift."
Where the project managers are
IT has always been project-focused. However, project management skills are becoming increasingly important, as IT departments take on ever more complex jobs (such as integrating supply chains) and the businesses they serve tire of the overblown budgets and missed deadlines that have plagued IT projects in the past.
Yet good project managers are hard to come by. One reason is the high failure rate of IT projects. Rarely does project management alone cause a project to fail, but project managers often take the heat. It's no wonder that skilled professionals might be wary of taking on the IT project manager role. "There's not a lot of people out there saying, 'I want to do that job,' with all the stress and time commitment involved," says Phil Zwieg, vice president of IS at Northwestern Mutual, who predicts there will be even more emphasis on project management skills in the next three to five years.
Another issue: Project management is not a skill that's quickly acquired. "You can't hire a project manager out of school," says Zwieg, who is studying the changing IT workforce for the Society of Information Management. "It takes at least three years of experience to create a good project manager." Political adroitness as well as technical skills enter into the skill set. Consequently, many of today's project managers are baby boomers, says Zwieg, less likely to pull up stakes to take on that next huge project or a new program management office to steer.
But skilled project managers are out there, says Stephen Hassell, vice president and CIO of Emerson Electric, a $17.3 billion electronics manufacturer. "You can't look in the traditional IT places," he says. "People who have been excellent network engineers and developers are not going to be very good at or very interested in the types of things that a manager of large, complex projects does," such as coordination and communication.
Hassell gets most of his project and program managers from the business side. Some are part of the "Emerson MBA Program," which plucks students from leading business schools and deploys them on several tours of duty throughout the business. Others come directly out of business functions, including operations, finance and marketing, or divisional IT departments. Those employees tend to possess the right mix of people and management skills to handle the project or program manager role, Hassell says.
A problem for many CIOs, however, is that a lot of talented businesspeople who also have an understanding of technology just don't see the appeal of working in the IT department. "I can't say there isn't a certain amount of cringing when they first hear about IT," says Hassell, who tries to emphasize to them the unique value of working in IT where all areas of the business converge. "But you can open up the IT profession to a whole host of people who might not have considered themselves a candidate for an IT career."
Two years ago, when McCampbell joined Immucor, the president gave him free rein to build a new, more efficient IT organization. He hired a project manager from the manufacturing side of the business. Not only did this manager possess the skills IT needed to roll out a host of new systems, he also had a depth of knowledge about manufacturing. "He's a project manager who understands the business," McCampbell says. "He has helped IT gain that domain knowledge. And because he also has a relationship with people in manufacturing, that's helped with adoption as we've rolled out new systems."
McCampbell's project manager is able to fulfill other roles too. On Immucor's small staff of 21, no one can have just one job. The project manager, because of his deep understanding of Immucor's processes, is also able to serve as the primary point of contact for all internal and external compliance audits for everything from FDA regulations to Sarbanes-Oxley to quality initiatives.
Not lost in translation: the relationship manager
Stahl has an open position at Harvard Business School for what she calls a client services technology adviser. Other CIOs may refer to this job as the relationship manager or account manager. Whatever the title, the role is a focal point for today's IT departments. Straddling IT and the business, the relationship manager must keep a foot in both camps. Demand for relationship managers will double in the next five years, according to Diane Morello, VP and research director for Gartner.
In the past, the relationship management role was focused on marketing the value of IT to the business. Today, it means framing IT value in business terms and understanding business process management (one of the top three skills needed in IT, according to "The State of the CIO 2006" survey). The liaison role of old had little clout and even less perceived value to the enterprise. But the new relationship manager role "has crystallized as a critical link in the business's need to be heard and the IT organization's capacity to fulfill business demand," according to a recent Gartner report, "The IT Relationship Management Role Advances," that Morello coauthored.
Stahl says that without a client services technology adviser, she could have a great technical team and still fail to meet the needs of the school. These specialists "partner with the business to figure out the right uses of technology to address business needs," she says. "They have to balance between advocating for the department in the business and arguing for the right use of IT resources." Relationship managers need basic business acumen—communication, critical thinking, presentation and collaboration skills—but they also must have a broad understanding of the technologies important to the business. In Stahl's department, this means a specific knowledge of Web-based software, for example, but the client services technology adviser must also be capable of understanding the processes and operations of IT's various customers.
"It's been a tricky spot to fill," says Stahl. "And super important." In the past, she's found relationship managers at technology consulting companies and in product management positions at technology vendors. A background in higher education isn't important. Rather, what Stahl looks for is whether a candidate has the ability to absorb new things about the business side fairly quickly. "Most [staffers] here have a learning curve, because the customer can be anything from the MBA program to admissions to more specialized business functions like facilities management," says Stahl. "That's why I find consultants are good. They've worked on projects where they must have some business aptitude to succeed."
Finding someone to fill the relationship manager position is just half the battle. "It's really difficult to figure out how to compensate them," Stahl says. "It's fairly easy to figure out how much to pay a DBA or a Java programmer, but finding market comparisons for these roles is very difficult." So far, Stahl has been paying those in relationship management roles on par with market values for software project managers.
Zwieg of Northwestern Mutual currently has a handful of employees working as relationship managers, but each one's role is a little different. He's hired most from within his IT department, some having moved up from project management into relationship management. "Part of the key to being a good relationship manager is the acquisition of the skills required to work with the business, like marketing and communications," he says. Zwieg also tries to give relationship managers—or potential relationship managers—the opportunity to develop their functional knowledge through rotational programs in business areas or by allowing personal development time to complete training programs within the business. Right now, Zwieg (who oversees an internal staff of 1,100) offers such enrichment opportunities on a case-by-case basis—typically, after successful project efforts. But, he says, "I see a much stronger need for this kind of cross-pollination between business and IT in the future."
The bilingual business analyst
Systems analysts have been around for years, most often working in conjunction with application development professionals to convert business requirements into technical specifications for systems. But application development skills (one of the top three hiring needs for CIOs today, according to our survey) have changed. What CIOs increasingly demand is a business analyst—someone who can use a rich knowledge of the business end of things to develop applications that actually work well for the business.
Though business analysts share soft skills with the more senior relationship managers, these professionals spend most of their time in the role of translator between business process owners and application developers. Business analysts focus on specific projects, while relationship managers take the enterprise perspective.
McCampbell of Immucor recently brought in two new senior business analysts to support his company's finance department. Rajneesh Sharma and Verna Bush actually sit in the finance building, although they report to McCampbell's director of development. Sharma is more technically minded by nature (he's a programming whiz) but also has an MBA. Bush has a business background (she was a consultant) and a strong understanding of finance and systems. "Between the two of them, they make quite a tag team," McCampbell says. The combination of skills is not something he might have looked for—or found—a few years ago. "Analysts used to be either technical or functional, but now they can do it all," he says. Both employees are bilingual, not only in the sense that they're conversant in languages of business and technology but also in the literal sense. Sharma speaks Hindi, while Bush speaks Finnish (plus a little German). McCampbell finds foreign language skills increasingly valuable (others on staff speak Bosnian, Cantonese, French, Gujarati, Italian, Japanese and Urdu) since Immucor has locations and users in eight countries. He's also found that analysts with command of a second language tend to have better communication skills across the board.
Determining compensation for the two senior business analysts was difficult—not because there's a lack of benchmarks but because of the varying skills and backgrounds these professionals bring to the table. "You can look at salary surveys, but everyone is so unique now," McCampbell says. Because of their experiences, Bush and Sharma "were not cheap, but I could bring them in and they could hit the ground running in finance, which is what I needed," McCampbell says.
Some CIOs struggle with how to best utilize business analysts, says Forrester's Orlov, though she notes that larger IT organizations often have a better handle on how to deploy them most effectively. At Emerson Electric, business analysts in procurement, for example, "can't set the IT strategy for where procurement is trying to go," says Hassell. Instead, "they can say to procurement, 'Here's the types of things that can be brought to bear.' And they can take procurement's requirements back to IT and be its voice on the execution side."
The business analyst's liaison role is a key to successful IT, Hassell says. "The problem [with applications] is almost never with the technical specs, the coding, the IT 101. It's the communication about how something will work in the business," he says. "That's been the stumbling block in every IT organization I've ever been in."
Potholes on the road to the new IT workforce
The ongoing transformation of the IT department has focused largely on bringing in experienced professionals to quickly ramp up for the increased demand from the business. Hiring midlevel employees who can get IT where it needs to go fast is a good short-term fix. But CIOs face a looming staffing crisis. While "The State of the CIO 2006" survey shows an uptick in every level of hiring, including entry-level jobs (which accounted for 37 percent of new hires), it's not clear how these junior employees and the roles they're being given will fit in with the larger picture of an IT organization populated with versatile business-facing professionals.
Many entry-level positions in IT remain the same purely technical roles they have always been: network administrators, junior programmers, help desk administrators. And often there are no clear career paths within IT leading to the increasingly important roles of project management, business analysis and relationship management. "Most CIOs today are hiring to fill a hole," says Morello. "Not to build an organization for the future."
Hassell is an exception. He hires for the traditional entry-level IT positions at Emerson Electric. "But as the corporate CIO, I also oversee the IT procurement and IT finance departments," he says. "Junior employees can join IT in these areas and develop into project managers. And our architecture groups bring people in at more junior levels and let them work up the ladder of the architecture role. Or if they're not sure, they can try out a few different types of roles, some more hard-core technical and others more business-oriented."
Another staffing problem could be the difficulty of attracting any entry-level employees at all. Much has been written about declining university enrollment rates in computer science and other technology-related programs. At the same time, business school graduates—who are getting a good background in technology at school—often don't want to join IT departments, says Orlov of Forrester. "It's going to be an interesting double whammy for CIOs who need to keep their departments supplied with people."
But for now it seems most CIOs have their hands full just staffing up for today's needs. "They aren't worried about the entry-level problems," says Orlov. "That's a problem waiting to happen."
Senior Editor Stephanie Overby (firstname.lastname@example.org) covers outsourcing and staffing issues.