CIO 100 analysis – digital disruption

The CIO is emerging as the default digital leader with the Chief Digital Officer (CDO) role yet to make significant inroads in the UK, responses to the 2015 CIO 100 suggest. In the 2015 CIO 100 more than half of respondents (53%) said their organisation did not have a separate digital leader, while 23% of CIOs expressly said that it was themselves that had responsibility for the digital agenda.

One in 10 responded that their organisation contained a CDO, while another 10% said it was a cross-business responsibility or the remit of a different department. Another 4% said a separate digital chief reported into the CIO role. Furthermore, the latest CIO 100 included technology executives with a CDO title, including The Economist CDO Jora Gill – who has been recognised in a previous edition of the CIO 100 as the Elsevier CIO.

In 2014 only 36% respondents revealed there was no separate CDO at their organisation, with 22% saying it was the CIO fulfilling the digital role. While 12% of the CIO 100 last year said CDO reported to them, many responded it was an emerging function being investigated, a CIO-CMO collaboration, or that it was shared among the entire C-suite.

CIO 100 alumnus and judge Ian Cohen says: “It’s no surprise that in a list that celebrates the most transformation CIOs in the UK – 79% of those leaders work in organisations where there isn’t a CDO or where the CIO has embraced the digital agenda themselves.

“During times of disruption organisations look for strong and clear leadership and that doesn’t necessarily come from hiring another C-level executive to the board. Certainly some companies will need the impetus of a fresh perspective; however, the best and most transformative CIOs already understand the nature of disruptive forces and the impact they have on technology, processes and people. They understand how to embrace changes, learn from them, adapt to them and lead.”

Fellow CIO UK columnist Jerry Fishenden warns about the semantics of the job title and insisted organisations should not get sidelined thinking along these lines, and nor should CIOs lacking the “strategic and technical leadership in the use of data, information and digital technology”.

“If people are fussing about job titles, I worry about the focus and viability of their organisation and the quality of their leadership team,” he argues.

“You don’t solve the problem of inadequate post holders by creating new job titles just because everyone else is. The focus must be on organisational and user needs, on roles that bring direct value to an organisation. It’s about finding the right person with the right skills – who cares what you call them?

“If a CIO isn’t doing what they need to do – bringing strategic and technical leadership in the use of data, information and digital technology to improve and reform an organisation’s performance – get rid of them.”

At the end of 2014, analyst house Forrester predicted that CIOs will build their reputations as digital innovators and kill off the CDO role in 2015 – or risk being replaced by a new CIO more qualified for the challenge.

Reporting lines

Nearly half of CIOs in the 2015 CIO 100 report directly to their organisation’s chief executive, fewer technology leaders are being managed by the Chief Finance Officer (CFO) and are instead reporting to a head of strategy, a more senior global CIO, or as part of a matrix system involving the CEO and another strategy or operations leadership role. 49% answer to their CEO, a small increase from 48% in 2014 – with just 19% reporting to the CFO, 8% to the COO and 24% to another role.

The CFO reporting line represents a significant drop from the 30% of 2014 – when 10% of CIOs reported to their operations chief and 12% to other positions.

Strategy reporting lines usurping the CFO are well demonstrated at Channel 4 and rail project HS2, with CIOs Kevin Gallagher and James Findley both reporting to a strategy director.

The CIO 100 judging panel agreed that while it was generally desirous to have a direct reporting line to the CEO, being able to influence the business transcended reporting lines. The increase of those reporting to a strategy role confirms that technology is no longer being seen as a cost centre.

CIO coach Catherine Stagg-Maceyargues that: “A shift from reporting into the CFO to a head of strategy is perhaps reflective of a recovering economy, with an increasing focus on IT making a contribution to expansive business strategies.

Fellow CIO UK columnist and CIO 100 judge Ian Coxsays: “There does seem to be a general trend across all the statistics that indicates the CIO role is becoming more strategic in organisations that are looking to transform and invest in digital initiatives.

“And, not surprisingly, this is particularly notable in the top 20, which are, of course, the most transformational CIOs.” Even without a direct reporting line, the CIO 100 shows that most senior technology executives enjoy a high degree of proximity to their chief executive, with 44% telling us they meet with their CEO at least once a week to discuss business strategy.

This is lower than the 49% we reported in 2014, we asked expressly this year about meeting to discuss overall business strategy.

Board level representation among the CIO 100 is down from 50% in 2014 to 37% – although an overwhelming 93% told us they sit on some kind of executive leadership board. In 2013, 78% of CIOs told us they held a position “sitting on a leadership board driving business decisions”.

The panel again noted the ability to influence the business was perhaps more praiseworthy if they did not formally have the same CEO and board proximity.

Former CIO Matt Ballantine comments: “A great business leader will have influence and be able to achieve what they need to do irrespective of reporting lines; ultimately they need to be able to win the trust and minds of just about everyone at board level.”

Cohen adds: “Certainly if you report to the CEO you have a formal route, but equally there are CIOs who report functionally and have developed a great relationship with the CEO and other leadership executives.

“You could argue, in this regard, they exhibit greater influencing skills and transformational qualities as a result.”

However, advisor Ade McCormack warns against complacency and suggests IT leaders needed to evolve to stay relevant and guide the business in the digital age.

“I think the radical shift in respect of the CIO’s relationship with other CxOs is in line with digital disruption,” McCormack explains.

“This is uplifting, but may only be temporary given that many CIOs signed up to manage the technology rather than leading digital. The extended remit may either not appeal, or even be a competence too far.”

Recruitment

An overwhelming 88% of CIOs have pushed IT recruitment up their management agenda with 58% revealing they are finding it difficult to recruit the talent they need to drive transformation – and almost half of the CIO 100 are looking to talented workers in the EU to fill the UK IT skills shortage.

Only 34% of organisations in the CIO 100 responded that their technology departments did not include skilled workers from the EU. Among those already employing talent from Europe are blue chip UK organisations, including British Gas, Jaguar Land Rover, Channel 4, The National Trust, infrastructure projects HS2 and Crossrail, the Royal Mail, Save the Children, Gatwick Airport, De Beers, Paul Smith, JCB and Virgin Atlantic.

And with nearly six in 10 organisations struggling to recruit the right talent to drive transformation, 47% of the CIO 100 said that they were actively looking to recruit skilled workers from the EU to support their business. 62% of the CIO 100 also said that their organisation offered an apprenticeship scheme to train the technology workers they required.

The findings of the CIO 100 confirm a number of recent CIO profiles where business and technology leaders have expressed their worries about finding, retaining, and training the right candidates to support their businesses.

Diversity

Women make up 13% of the 2015 CIO 100, the highest proportion since its reboot in 2012, but still below the percentage of women working in the technology and IT sector in the UK.

In 2014 only 7% of the CIO 100 were female, while the figures in 2012 and 2013 were both just 5%. Last year, Gartner reported a global average of 13.2% – a number which it said had remained static for around a decade – while recruiter Harvey Nash reported a 2014 figure of only 7% in the UK, a decrease from the previous year.

And while Halfords CIO Anna Barsby is placed at the top of a 2015 CIO 100 that shows more gender diversity than previous years – with three women placed in a top 10, including Christina Scott and Sarah Flannigan, CIOs of the Financial Times and National Trust respectively – more than 19 in 20 representatives from the CIO 100 are white and the 13% female representation is still less than the 17% of technology professional who are female reported by the Tech Partnership recently.

CIO 100 judge and columnist Ian Cox says: “The increase in the number of female CIOs in the CIO 100 is to be welcomed, but women are still under-represented in the IT profession generally and at senior levels in particular.

“This is an ongoing challenge for IT and is something that needs to be addressed in a consistent and sustainable way. Until the overall ratio improves, it is hard to see how the proportion of women in technology leadership roles is going to change significantly.”

But Cox suggests the changing business landscape could benefit a new style of CIO leadership, which might in turn lead to balancing the gender ratio in the technology sector.

“Organisations are beginning to look for a different type of CIO with different skills and experience and a different way of working to the traditional CIO of the last 20- to 30 years,” he explains.

“Increasingly organisations want their CIOs to also have non-IT experience, business and commercial skills, to be good at influencing and collaborating and to have strong communication and networking skills. This shift to a broader skill set could help change the proportion of female CIOs further.”

In his capacity sitting on the CIO 100 judging process, CIO UK Online Editor Edward Qualtrough says that Halfords CIO Barsby arguably had to do even more than her peers to top the list precisely because of her gender.

“The insinuation that there could ever have been any tokenism in Anna’s placement at the top of list would have been too injurious to both Barsby as a business and technology executive, and the CIO 100.”

Vendor management

Microsoft is still the supplier of choice to CIOs in the UK. 57% of the CIO 100 name Microsoft as one of their main suppliers in a list dominated by technology powerhouses Oracle, HP, IBM, SAP and incumbent networking supplier BT. Last year, Microsoft was named by 55% of IT executives as leading supplier representing a small increase.

Despite the threat posed by digital disruption and startups, Oracle (36%), BT (27%), HP, SAP (both 23%) and IBM (20%) were still the leading suppliers to CIO 100 organisations.

Vodafone customers increased from 10% in 2014 to 19% this year, while Dell jumped from 7- to 12% since its private buy-back by owner Michael Dell last year.

CIO 100 judge Ian Cox reiterated some of the themes from his latest column; that despite the evolving market and plethora of smaller suppliers scrapping for a piece of the action many large organisations can be somewhat committed to their technology architecture.

“The fact that the traditional IT companies still dominate the vendor lists of most organisations in not totally surprising as companies have invested significant sums in their platforms over many years and the long-standing IT providers would have been key to building these platforms,” Cox says.

“However, much of the real, game-changing innovation and thinking is increasingly coming from smaller technology companies, particularly start-ups. CIOs need to be engaging with these other companies on a regular basis, learning from them and introducing them to the rest of the business to stimulate thinking and prompt new ideas. Hopefully we will see this shift in future submissions with more CIOs listing newer and/or smaller vendors alongside the more traditional IT suppliers.”