CIOs told to be disruptive

CIOs are being invited to disrupt the organisation by the CEO. According to the Harvey Nash CIO Survey for 2011, which is now in its 13th year and which CIO UK had exclusive access to, CIOs are being given carte blanche to disrupt processes, markets, departments and structures in order to give their organisations a leading advantage.

Following the credit crisis CIOs are today in a more strategic position within their organisations and CEOs, desperate to find an advantage in competitive markets, are requesting that CIOs adopt disruptive technologies and rid themselves of leaden partnerships with the mega-vendors and instead htey are being asked to create multiple supplier relationships to ensure that organisations gain access to the latest technology and thinking.

PA Consulting, which partners with the recruitment and outsourcing specialists Harvey Nash to assess the results of the annual CIO blood pressure check, says of these findings:

“It is pleasing to note the changing role of the CIO. Many commentators harboured concerns for the role of the CIO during the economic downturn, fearing they would be marginalised in the desperate race for cost savings but the results this year show that the recession created an environment for the CIO to thrive.

“Having led their technology teams through the worst of times, often adding great value to their organisation and keeping them operational, more CIOs than ever have a seat at the top executive table. Their strategic input is unprecedented.”

CIOs well perceived by CEOs

Harvey Nashfound that 50 per cent of the CIOs who responded were on the operational or executive management boards of their organisations, an eight per cent increase on last year.

As you would expect the perception of the CIO and the role that IT can play in aiding the organisation has improved significantly. Harvey Nash believes the CEO’s desire for greater disruption could stem from their personal comfort with the latest disruptive consumer technologies such as smartphones, tablets and social media sites. Recent CIO UK round tables and interviews back this up, with CIOs informing us of boardroom interest in tablets and a keen interest in social media.

For the 2011 CIO Survey Harvey Nash sought to gauge the perception of IT and asked: ‘Does IT help shape business goals?’ Over 50 per cent of CIOs believed their IT operation was “proactive in understanding and adapting to the needs of the business”. The remaining 48 per cent believed their teams were reactive to requests.

Although 52 per cent of respondents believed they were shaping business goals, 66 per cent said that their IT was focussed on their customers within the organisation, not working consumers, suppliers or partners.

Innovation

The opportunity to disrupt the organisation does place the burden of change management on CIOs, although the appetite for change is dependent on the organisation’s vertical market Harvey Nash found.

Although the financial sector created the credit crisis that has affected all other vertical sectors, it is also the one that is most willing to innovate and take risks. Seventy seven per cent of CIOs in the City Markets were being asked to innovate, closely followed by retail at 74 per cent and Financial Services at 71 per cent and IT providers at 70 per cent.

Interestingly, and perhaps reflective of rising oil prices, the transport and logistics CIOs were next in line to innovate with 68 per cent being asked to disrupt. Those sectors not asking their CIOs to be so innovative were engineering, construction and manufacturing. This again could because as the lowered values of the pound and euro have driven up demand companies are keen to make hay while the sun shines. A number of CIOs have already seen major changes to their organisations as a result of increased oil prices affecting shipping costs.

With this licence to disrupt, CIOs are assessing their own personal skills differently. Leadership and communications skills remain important, but CIOs also realise that they require strengths in managing strategic relationships with suppliers, which is the key skill in this year’s survey. CIOs are placing customer service skills further up their list of importance.

So what will the disruptive innovation that CIOs will present to their CEOs look like? A shortening of product-to-market time was highlighted as well as developing new consumer channels and striving towards greater transparency as demanded by new regulations.

Harvey Nashfound that 31 per cent of CIOs were piloting social networking and that private cloud is of far more interest than public cloud technology. The debate about how private and public clouds shape up is now about the suppliers, with specialist services selling to particular verticals and CIOs are happy to co-locate with market rivals.

CIO Priorities

Although there is much optimism in the 2011 CIO Survey, cost reduction remains the number-one priority for CIOs followed by operational efficiency and then a stable IT platform for the business.

“The intensity of focus is dropping,” Harvey Nash say of the CIO’s priorities and driving revenue growth has increased in importance. Following the credit crisis the CIO’s role has become a balance of cost controlling and guaranteeing the ability to ramp up services when growth opportunities arise.

This is reflected, in the stasis of IT budgets according to the survey with 49 per cent managing a budget of $10m, but there is an overall belief that budgets will increase and 39 per cent had a budget increase. This year the survey also asked CIOs to reveal what percentage of their IT budget is actually controlled by a department other than IT. For 21 per cent of the respondents 10 per cent was not under their direct control.

Outsourcing and offshoring

Application development remains the most intensively used outsourced service by CIOs. The survey found that 62 per cent of CIOs make application development an outsourcing priority and that service desk was growing as an outsourced requirement again. Cost reduction and access to unavailable skills just not available were cited as the two main reasons for outsourcing application development by 39 and 34 per cent of respondents respectively. Offshoring is set to increase as 2011 continues with 50 per cent looking to increase their use of offshore service providers, an increase of 50 per cent.

Despite its wage inflation India still dominates the CIO’s outsourcing demands due to its excellent levels of education, but markets such as Malaysia and Russia are growing rapidly. However CIOs have told CIO UK that India is becoming challenging as its own economy grows, in turn creating market demand that is in competition with UK CIOs.

A changing behaviour highlighted in the 2011 survey was a move away from signing major outsourcing deals with big vendors and instead looking for a multi-source IT set up to get the most from a wide variety of vendors. Harvey Nash found that 39 per cent of responding CIOs plan to move to multi-sourcing in the next 12 months.

Innovation demands by the organisation are the cause of the change in behaviour as CIOs look for greater opportunities that niche providers offer in areas like mobile, utility, web and social media technologies.

The CIO of one of the UK’s largest retailers recently told CIO UK that it was already seeing the benefits from extracting itself from an all-encompassing deal with a big ticket vendor and moving to multiple vendors.

Staff and skills

Business Analysts (BA) are still eagerly required by CIOs with 35 per cent of respondents seeking greater BA skills and 34 per cent looking for enterprise architects. With disruption and innovation in demand, so too are the skills of experts in change management and project management. Interestingly, security, social media and testing remained lower priorities.

To retain key talent, but cut costs during the credit crisis many CIOs told CIO UK that they had adopted flexible working approaches to their teams and this looks set to remain the modus operandi of IT teams. One in 10 respondents have a flexible workforce.

There remains concern about a skills shortage with 88 per cent of respondents reporting that they are worried about staff retention.

The CIO job

Half of the CIOs responding to the survey have had their salaries frozen, with 39 per cent of CIOs reporting that they had seen an increase in salary. The average global salary for a CIO stands at $198,031 (£119,897). But some commentators that CIO has talked to believe that this is on the low side of the CIO salaries they are seeing.

Despite this CIOs don’t seem to be suffering from itchy feet as the recruitment firm found that just 23 per cent of CIOs hoped to be a new job next year. Job fulfilment was being achieved by 83 per cent of CIOs, perhaps because of the new attitude towards disruption and change.

About the survey

The Harvey Nash survey was completed by 2,108 IT thinkers around the world with 42 per cent being C-level or an equivalent title. For the full report click here.