January Issue

CIOs Need to Snap Out of Complacency

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Your business colleagues aren't as impressed with you as you are. Our 14th annual State of the CIO research rewrites your priorities for 2015.

As CIOs cope with digital disruption, the good news is that personal indicators lean positive. Compensation is up 7 percent, tenure holds steady, at about six years, and so does the portion of CIOs reporting to the CEO, at 44 percent, according to our 14th annual State of the CIO survey.

But don't rest easy. This year's results also reveal a collection of alarming disparities between what business colleagues want from IT and what CIOs think they're providing. That gap came to light when we worked with market research firm IDC, a sister company of CIO, to survey 304 non-IT business decision-makers on some of the same questions the State of the CIO survey posed to 558 IT leaders.

When conceiving big projects, CIOs often talk about finding the "pain points" in a process and fixing them. That's IT Management 101. But it seems CIOs haven't identified all of the pain points in the interaction between IT and the rest of the company. For example, 54 percent of business leaders see the IT group as an obstacle to getting things done, but only 33 percent of CIOs have the same impression. Business leaders want the CIO to simplify technology; it's the most important thing CIOs can do to improve relations, they say. They also say it's much more urgent than CIOs think for the IT group to reorganize, to be easier to work with and to train IT people to focus on external customers.

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Some CIOs have already pointed their departments in the direction of customers. At Deutsche Post DHL, the German logistics and delivery company, a five-year transformation to unified digital systems worldwide was conceived for one constituent: the customer, according to Pablo Ciano, CIO of DHL Express Americas. "It's an entire philosophy of a customer-centric culture we are promoting," he says.

CIOs are spending more time overseeing the nitty-gritty of digital transformation work, such as implementing new systems and re­designing business processes, according to our survey. In some cases, that means a diminished role in big-picture strategic activities such as identifying new commercial opportunities. Specifically, 27 percent of our CIO respondents can be classified as business strategists this year, down from 34 percent last year. And 36 percent of CIOs admit they are fighting turf battles against others in the C-suite--a kind of tumult that can arise in times of big change.

What this means for the future of the CIO will depend on how CIOs manage today. When asked to project where the position is headed, 59 percent of business leaders said they see the CIO role becoming that of cloud wrangler, mostly orchestrating various IT service providers. CIOs themselves are almost evenly split on the prospect: 49 percent said they agree, 51 percent did not.

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Pablo Ciano, CIO of DHL Express Americas, says visiting customers has two benefits. It builds warm relationships between IT and sales and it boosts customer loyalty.

There's still time, of course, to plot a more palatable future. Minding the gaps we've identified can provide touchstones for 2015 and beyond.

Make IT Easier

Thanks to the consumerization of the enterprise, employees today not only want technology that's so easy to use that it requires no training; they also want the IT team to be easier to work with. Some CIOs recognize that and are taking innovative steps to meet that demand. At The AES Corp. last year, IT overhauled help desk processes and remodeled the group's physical space to create the Connection Corner, which is similar to Apple's Genius Bar. Help desk staffers are stationed at counters, and colleagues can pull up a stool to talk about technology problems and try out new gadgets. "We want people to walk by and just stop and ask questions," says Elizabeth Hackenson, CIO and senior vice president of global business services at the $15.9 billion utility.

Moving traditionally back-office workers out into the open, among the people they serve, has helped make IT more accessible. "At first the guys were uncomfortable, but now they love the attention and the interaction," Hackenson says.

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Employees want IT to be easier to work with. So AES CIO Elizabeth Hackenson remodeled the help desk to foster interaction between techies and end-users.

At least one age-old IT practice appears to have lost its impact. Many business leaders are no longer impressed by the quick win. Pick a small but high-impact project and do it fast to prove IT's value and generate goodwill, says conventional wisdom. But while 51 percent of CIOs named the quick win as a key tactic for improving relations with other departments, just 31 percent of business leaders said they think it's an effective tactic. Ouch.

Sustainable change works better, says Jack Wood, CIO of Wayfair, a $916 million online retailer. Wood has a number of approaches. Each month, IT fans out to business groups for informal talks about technology or ideas. Late last year, IT created an offshoot support organization that works like a customer service group. There's an 800 number and a single point of contact to make working with IT easier, Wood says. IT is held accountable for meeting agreed-upon service levels, such as efficient handling of trouble tickets. If the point of contact isn't reachable, calls go right to Wood.

For CIOs struggling to correct bad relationships, Wood recommends creating an interdisciplinary staff. For example, when a new project starts, he goes to the business group sponsoring it to find candidates interested in moving to IT to manage the project. He likes those built-in relationships, he says, because they can ease communication and collaboration. The project managers, he says, "go back to those teams and say, 'I'm now your advocate in the technology organization. What can I do to serve my old colleagues?'"

Similarly, Armstrong World Industries embeds senior IT people in business groups as relationship managers. "They're not as concerned with the technology pieces as what capabilities they deliver," says Tony Lombardi, CIO and vice president of global business services at Armstrong, a $2.7 billion manufacturer.

Lombardi takes seriously IT ideas that arise from non-IT colleagues. Last year, for example, marketing and sales people asked for an automated way to pass customer leads on to distributors and retailers via Armstrong's website. IT also built a mobile tool to let customers visually match older Armstrong products with new ones, to order replacement parts easily. "We can save costs all day long, but IT should also build the company," he says.

Make IT Smarter

For some years, CIOs have created opportunities for the IT group to learn about customers and envision news ways to keep them happy and help them spend their money. But business colleagues clearly want more. They cited the training of IT staff to focus on customers as an important way to elevate the IT-business relationship nearly twice as often as CIOs did, 30 percent to 16 percent. There was a similar breakdown on the subject of having IT staff call on external customers, 21 percent to 9 percent.

Ciano at DHL says visiting customers produces two major benefits. One is warm relationships between IT and sales. The other is customer loyalty which, when cultivated, results in revenue. He himself visits midsize and large customers with DHL's field sales team, and he sometimes participates in phone calls with telesales staff. These interactions give him a chance to help solve customer problems.

Recently, a DHL sales rep was talking to a company about regularly shipping packages to multiple countries. The company wanted to present its own customers with shipping rates that include taxes and other destination fees. Ciano's group had already built a tool that offers such information in real time, but the salesperson didn't know about it. Ciano explained that the tool could be integrated into the shopping cart function of the customer's website.

There was no extra revenue in it for DHL, but the customer was impressed and is now piloting another DHL product for international logistics. "Nothing compares to sitting in front of a customer and really understanding the opportunity," he says.

At Wayfair, in the days before and after Cyber Monday, the IT staff works in customer service. Such "plug-ins," as the company calls the rotations, often reveal tactical fixes IT can make. Wood recalls that during one of his rotations, he took a call from a woman who had ordered a sofa that turned out to be too big for her room. She hadn't seen the complete product specifications when she was shopping on Wayfair.com. Wood had his team move the specs nearer to product images on the Web page.

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