2020 State of the CIO, New Zealand

Over the past few years, CIOs have been forthright on their challenges around balancing their operational responsibilities with business innovation initiatives, including the vetting – and deploying of new, disruptive technologies.

The past 12 months are no different, with more than three-quarters of ICT leaders participating in the annual State of the CIO survey saying this is a reality for them still.

If at all, the survey reveals CIOs are contending with another layer in this balancing act.

The survey of 679 IT leaders and 250 line of business (LOB) participants – including those from New Zealand – finds CIOs continue to devote less time to traditional functional responsibilities such as optimising IT performance.

Instead, they are spending more of their focus and resources on areas not traditionally associated with the role, such as developing strategies and implementing customer facing initiatives, as well as revenue-generating activities.

In doing so, they inevitably find themselves working more closely than ever with C-level peers such as those who lead digital, customer experience, and human resources, as organisations continually transform for the digital era.

It is a shift David Kennedy is experiencing first-hand at Transaction Services Group (TSG). 

TSG, with head office in Auckland, provides payment services and value add services to a range of industries across the globe.

“I have been asked to take a step forward, to be more accountable for the value generation for our clients, because it is technology that drives that value,” says Kennedy, who took on the global CIO role at TSG five years ago.

“Majority of my time is spent collaborating with many stakeholders, interpreting their requirements and spending a lot of my time coaching leaders and teams to deliver an excellent product/service.”

“Everything we do is to make our clients’ business easier,” explains Kennedy.

This means speaking with heads of departments and leaders of TSG subsidiaries across the globe around what they need from products and services in order to better serve their clients. They also ask the end users what they need and involve them in the development of products and services.

Kennedy believes external stakeholder management will become part of the CIO remit. “CIOs in the future will be very well connected to a cohort of client customers and internal stakeholders.”

He is bracing for more changes ahead for him and his team, for as he puts it: “Never before has the business strategy been so tightly coupled with the technology strategy, for the success of the business.”

Treading new grounds

In the latest survey, an overwhelming majority of respondents (91 per cent in ANZ, and 95 per cent across the globe) cite how their roles are expanding.

The top remits are in cybersecurity, followed by data privacy and compliance, customer experience, operations, and physical security. 

Nearly half of ANZ CIOs (47 per cent, compared with 67 per cent globally) state they are tasked with creating revenue generating initiatives.

For ANZ CIOs, the top five initiatives in this space are creating business case scenarios (cited by 47 per cent), creating teams focused on innovation (44 per cent), developing customer journey (44 per cent), direct customer interaction (42 per cent), and building “test labs” or spaces to evaluate ideas that are not “fully baked” (33 per cent).

Pete Yates, chief technology officer at Entrada Travel Group, shares a different, but related experience supporting these findings.

“I am reluctant to call it digital transformation,” says Yates, on the raft of initiatives he is working on. “It is just what all businesses do these days…It is just transformation.”

He says the group has two strategic goals – to double the revenue in the next three to five years and expand its portfolio across New Zealand and Australia in the transportation and tourism space. 

“It is driving the bits around technology to meet that strategy,” he emphasises. “I have created a catalogue of solutions that we can then deploy to those new businesses so they have a clear idea of what it would take to bring them on board.” 

“A couple of years ago, that is not really what I have been looking at,” he states. 

“This is really trying to drive change across the business and trying to do it in a lean agile way.” 

He adds, “I don’t need a big team, because we automate as much as we can, and we put [cloud-based] systems and processes in place.”

Snapshots and long-term views

So, what are other key concerns for CIOs today?

This depends on how CIOs define their remits.

Majority of respondents (67 per cent in ANZ compared to 46 per cent globally) see themselves as transformational; with 13 per cent (29 per cent globally) as business strategist and 20 per cent (25 per cent globally) as functional. 

Those who described their focus as transformational cited implementing new systems and architecture as their main concern, followed by cultivating IT and business partnership and aligning IT initiatives and business goals. 

Security management is the top focus of CIOs in functional roles, followed by improving IT operations, systems and performance, and then cost control and management. 

Those who identified themselves as a business strategist, meanwhile, say their top concerns are driving business innovation and developing and refining business strategy, and identifying opportunities for competitive differentiation. 

Interestingly, the business strategist CIOs do not see themselves changing their top focus in the next three years.

As to what they think are their respective CEO’s top priorities for them in the coming year, CIOs across the globe state these are to lead digital business/digital transformation initiatives; upgrade IT and data security to boost corporate resilience and strengthen IT and business collaboration skills.

CIOs across the globe also agree on the top skills needed by the organisation to support ongoing digital business initiatives – technology integration/implementation; strategy building and formation, such as mapping out a digital business plan; and change management.

The last one is the topmost skill cited by local CIOs but is only the third choice for the rest of their colleagues across the globe.

The nuances of finding talent that can work across the organisation on an ongoing digitalisation mode, as well as equipping the current workforce for the shifting environment, are prompting CIOs to work closely with the heads of human resources (“chief people officer” among a growing number of corporates).

CIOs, for instance, say new and disruptive technologies are joining cybersecurity protections in driving the top ICT investments for the coming year:

These are also the same areas where they expect to find the most difficulty in finding appropriate skill sets – data science/analytics, cybersecurity, and artificial intelligence/machine learning/robotic process automation.

For Shayne Tong, part of the CIO’s responsibility is building the augmented workforce and being cognisant of not only managing human staff but also digital assistants.

“There is a strong responsibility of the CIO and the CDO around what I call the augmented workforce,” says Tong, chief digital officer at the Auckland District Health Board.

The CIO must work closely with the strategy executives and the HR executives, in the people strategy of any organisational change. 

“This area does not necessarily sit in one space, it is a co-design, a partnership among key executives around the workforce,” explains Tong. “It is really the blending of people and technology to achieve your strategic outcomes whatever organisation you are in.”

Tong applies this to the health sector. He says the Northern region district health boards have a long-term investment plan, which includes the health facilities needed over the next 20 years.

“Obviously, underpinning all that is people,” states Tong, and how technology will impact healthcare delivery.

“From a technology perspective, our function is changing because of new and emerging technologies. We need different skills for the future as we look at AI and machine learning, it is about the data science component, it is about being able to tell a story with the business to understand their need.”

One of these technologies is robotic process automation (RPA), which is listed together with artificial intelligence and machine learning as among the top three most sought after skills.

“How do we work with them and the organisation to say this is not about headcount, this is about how do we free up people to be doing more value added activities particularly in the health sector where we are constrained for resources?”

Building strategies, transforming the business

Looking into their own remit, CIOs believe the role is becoming more digital and innovation focused (95 per cent of ANZ respondents, 91 per cent globally). 

They are also more involved in leading digital transformation activities compared to their business counterparts (85 per cent in ANZ and 89 per cent globally) 

Craig Columbus, CIO at TR Group, sees the role as both strategic and transformative.

TR Group provides trucks and trailers for rental or lease. Columbus says their vehicles generate a tremendous amount of data on telemetry around how they operate.

“When we understand that well, because we provide management maintenance services, we reduce the operational costs of the truck. We can keep it on the road.”

He adds, “The more efficiently we can operate our fleets and help our clients operate our fleets, the more profitable our clients can be and the more reason they will come back to us.”

The company is currently building a data science team that will report to the CIO. 

This setup works at TR Group as the leaders work as an interdisciplinary team, he says. “I have the luxury or benefit of understanding what is going on in the business units because we work together.”

“I know the data side, they know the business side, so when we come together it is very powerful,” he explains.

“We have the data,” he states. “These trucks produce a mountain of data, our customers produce a mountain of data, what are we going to do with it? How are we going to turn them from numbers on the screen into actionable material? Data science is key to that.”

He says there are also many components to the things they can do with data, such as emissions reduction.

“The world needs freight to be moved but we can do it in a smart way.”  

“There is a whole new wilderness there to explore,” he says. 

“How do we operate this efficiently? How do we make sure we are accomplishing what we want to accomplish, that we are being sustainable, that we are offering value to our customers and reducing our [carbon] footprint?”

Maturing discussions

Claire Govier, CIO at the Ministry of Business, Innovation and Employment, observes over the past five years how discussions around digital strategies have changed.

“I saw a lot of frenzy around [how] you need a ‘digital-something strategy’.”

“My point of view has always been, you need a business strategy about how we embrace and live in a digital world. That sounds like semantics, but it is actually quite different.”

“If you set up to do a digital transformation or digital strategy or a digital something, you are almost bolting it on the side or on top of whatever else you are doing.”

“Today,” she shares, “there is an understanding that digital is just the way the world is, and what we have to do to enable things is to drive the efficiencies, drive the customer, and the user experience, and the shareholder value.”

“The maturity is coming through to recognise that actually, the digital world is the world and what we got to do is help organisations manage, protect, and leverage the data, their insights, and their technology assets to deliver better value and better customer experience and better shareholder value.”

“You are bringing a set of tools and a set of data to the table to look at the problem, not just a piece of it.”

“It is quite a shift from the traditional days of IT.”

Richard Raj, head of digital and mobility at healthAlliance, observes there is no necessity to push the business transformation agenda uphill anymore. “Everybody realises they have to do it.”

An area that calls for introspection, however, is how advanced enterprises are in their business and digital transformation programmes, as this will impact a lot of areas like innovation and new digitally-enabled products and services.

For instance, the State of the CIO survey finds 27 per cent of respondents in Australia and New Zealand are driving business innovation inside their organisations. In Asia Pacific, this is 32 per cent, and globally, 34 per cent.

“I believe the end result of this transformation is to bring new ways of working, or true Agile and DevOps, through to new ways of funding, and new ways of supporting and using fast underlying technologies like cloud or ‘everything as-a-service’,” says Raj.

“I strongly believe that if they do not have those enabling capabilities, they have not done the transformation properly to enable innovation ‘commercialisation’.

However, if a company has fully transformed into digital ways of working, such as having Agile DevOps or bi-modal operations, these will enable them to take an innovative idea, propagate it and pilot it and scale it for production use or for sale.

“Alternatively, if you are a technology vendor, you can send it out to your customers because your Agile DevOps team will be able to develop it in an iterative way and be able to support and maintain it.”

According to Raj, part of the innovation programme is to showcase ideas and proof of concepts. But taking it from pilots to commercial and industrial use is where companies struggle because these require fast and nimble approaches, that are also the result of digital transformation.

“The realisation is it is very challenging to do full scale digital transformation at once, because the old ways of working are so ingrained both in the ways people act, mind-set and in the company processes.”

“Technology is less of an issue,” he stresses. “All technologies are now mature to operate in a digital environment, but it is the people and process that is the hard part.”

There are two ways to approach this, says Raj. 

“One is to take a long strong approach and transform the company altogether. That requires top support and money,” he adds. 

“Or, organisations can take a bi-modal approach. The organisation will select three areas that will go into the newer ways of working and will be catalysts in moving the rest of the organisation.

“That way people can see what good looks like at a lower cost and faster pace,” says Raj.

“The problem is companies are trying to do what they have done for many years before, which is doing continuous improvement of existing processes.” 

He says, however, that a digital process is not a small improvement of existing or old ways of working. “It is a complete change in the way of thinking.” 

He notes that this is demonstrated by Air New Zealand through its mobile app, for example. They did not say you have to go back to your travel agent to make changes to your booking; you can use the app to do those things, he states.

“You have to rethink the whole thing because digital innovation enables you to do your business process completely differently.”

“In any company, you may have leadership convinced you need to change but you also need to change the mind-set of the people,” says Raj.

“Sometimes you bring consulting companies to help with this, but this is not a sustainable model,” he explains.

“This why process mind-set is the first thing to tackle, because you can recruit internal people to help you improve.”

“You must start with mind-set change and combine it with practice,” he says. 

“Then, people will start to free themselves from the shackles of the way they used to do things and start to open up their minds because they have a good idea of products of the business and the new ways of working. That is the start of true transformation, if you have people, process and technology coming together.”

Thus, Raj believes that it is imperative for companies to build internal competencies in the digital space.

“The advantage of internal people is if you train and upskill them, they know your business already.”

Sounding boards, strategic advisers

Jen Cherrington outlines another role for CIOs outside their organisation – as independent advisor to boards.

“I can ask the technical questions in a meeting that the rest of the board cannot,” says Cherrington, an independent business consultant, who also acts as a digital advisor to corporate boards and start-ups.

In this case, she can also be a ‘sounding board’ for the organisation’s own CIO or CTO, says Cherrington, whose previous roles include executive GM technology and digital (CTO) at Genesis Energy and vice president – digital technology and innovation, at Electrocomponents Plc in the UK.

“For advisory boards, I think no matter what you do these days you need to have tech leadership,” and this could be provided internally, by their respective CIO, or an external person, says Victor Vae’au, former Defence Force CIO and now director of Sterling Group.

“If they have a board and one of the things they miss is digital leadership, they will not have the technologies coordinated and delivered properly in a well-planned fashion, they will have myriad integration risks.”

“Heads of organisations are trying very hard to leverage digital capabilities so they can do their business at a faster way, and disrupt the marketplace,” he states. “But if you haven’t got the CIO engaged at your level in the strategy, that is challenging.”

“A lot of people use technology but it is a very different skill set between knowing a technology terminology versus the effect of the technology, and I think that is the critical skill a CIO has developed over time.”

The CIO, in this case, can approach the discussion from a risk perspective, says Vae’au. 

One of the things you learn on the role is looking at multiple business challenges and seeing the commercial and security risks, says Vae’au.

“You can have a more informed conversation.”