CIOs adjust to their new reality

As technology grabs the lead role in modern business, all eyes are on the CIO’s ability to lead initiatives that radically transform how companies sell products, reach customers and drive opportunities for new revenue streams. At the same time, the digital era’s wholesale dependence on technology means there’s little room for the slightest hiccup in operations — resulting in another mandate on the CIO’s agenda.

If you’re hoping for a break, you’d better strap in for a lengthy ride, because neither dynamic shows any sign of abating, according to CIO.com’s 2017 State of the CIO survey, which found the bimodal role clearly established as the next chapter in the CIO journey. The balancing act that CIOs started to take on last year has shifted into overdrive, putting pressure on IT leaders to master this game of double duty or risk being marginalized.

Seventy-two percent of respondents to the State of the CIO survey said they were struggling to strike the right balance between business innovation and operational excellence. An even greater number, 87 percent, said they found the CIO role to be more challenging than ever before, in part because juggling transformational and functional responsibilities has become a permanent job requirement, not a short-term challenge.

“This current model of keeping one eye on the strategic and the other on keeping the lights on is a matter of course now,” says Andrew Ho, vice president of technology for the Global Strategy Group, a public affairs agency and political consulting firm. “Making sure both these paths are intertwined is a balancing game for any CIO or senior IT role.”

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Embracing the role

While acknowledging the challenges of their new reality, a majority of respondents to the State of the CIO survey said that they’re embracing the bifurcated role with enthusiasm, relishing the heightened visibility from top executives and eyeing a potential upside for their careers.

Rather than feeling overwhelmed by the responsibilities, 62 percent of those polled said they see the job, in its current form, as more rewarding than it was in the past. The changes have also sparked a shift in how CIOs view their role: Just 20 percent of survey respondents identified their roles as strictly functional this year, down from 27 percent last year.

Meanwhile, more CIOs categorized themselves as transformational or strategic this year: 50 percent of the respondents said they view themselves as transformational, up from 45 percent last year, and 31 percent identified their roles as strategic, compared to 27 percent in the 2016 State of the CIO study. Moreover, 63 percent of the CIOs who identified as transformational and 71 percent of the strategic CIOs said they strongly or somewhat agree that the CIO job is more rewarding today than it has been in the past. In contrast, only 46 percent of functional CIOs said they feel that way.

“The role of the CIO is changing, and it’s a good thing,” says Kevin Vasconi, executive vice president and CIO at Domino’s Pizza. “Most of us like the change and embrace it, but it’s difficult at times — like having to run two different businesses.”

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The dividends

The added responsibilities appear to be paying dividends. The survey results show that CIOs are getting paid more money these days and have more involvement with top management and more interaction with customers.

Nearly half (46 percent) of the CIOs polled said they report directly to the CEO, the same percentage as last year and the highest since 2004. Moreover, 29 percent of the respondents reported that they frequently meet with customers, up substantially from last year’s 19 percent, and 61 percent said they are communicating with their organizations’ boards of directors more than they did in the past, up from 58 percent in 2016.

Those results are a testament to how integral IT leaders are to defining and executing strategic business objectives. And the fact that the CIO has become a more strategic position could be leading to new opportunities: The average tenure of CIOs participating in the 2017 State of the CIO survey was 5.47 years, down slightly from 6.47 years in the 2016 report.

A seat at the table

For Vasconi, who’s been CIO at Domino’s for five years, being recognized as a full-fledged member of the executive team is the payoff for covering both strategic and functional roles. “It still amazes me that some CIOs don’t report into the C-suite and are buried in another part of the organization,” he says. “That says to me that technology is not strategic to that organization, because if it was, the CIO would have a seat at the table.”

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Vasconi’s turn at double duty has him spearheading the vision for Domino’s ongoing digital transformation and groundbreaking efforts like the AnyWare ordering technology while also retaining responsibility for security, corporate financial systems and sophisticated data warehouse and analytics efforts related to building a multichannel customer profile. Aligning IT initiatives with key business goals and cultivating IT-business partnerships is as much a priority as controlling costs, improving IT operations and handling day-to-day crisis management.

Vasconi doesn’t see that multifaceted workload changing over the next three to five years. “We’re maybe midstride through disrupting the entire corporate business model, so we’re still going to be juggling both sides of the business,” he says. “The reality is you still have to close the books and pay people. That’s never going to go away.”

The CIO at work

Functional IT duties may not be going away, but they’re being minimized to some degree, perhaps due to automation or because CIOs are just more seasoned in handling those responsibilities.

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The 2017 State of the CIO survey found that CIOs are spending less time on activities like cost control, vendor negotiation, IT operation improvement and IT crisis management while devoting more time to strategic and transformational activities like driving business innovation (cited as a focus by 33 percent of the CIOs who identify their role as strategic this year, up from 26 percent in 2016), cultivating the IT-business partnership (a focus of 38 percent of transformational CIOs this year, up from 35 percent last year), and developing new go-to-market strategies and technologies (a focus of 17 percent of strategic CIOs this year, up from 12 percent last year).

Asked to look ahead three to five years, survey respondents anticipated spending less time on functional and transformational activities and more time on strategic undertakings: 20 percent of those polled said they currently spend time on functional activities, but only 7 percent said they’d like to spend more time on functional activities in the next three to five years. Similarly, 50 percent said they currently spend time on transformational activities, but 28 percent said they’d like to spend more time on such initiatives in the next three to five years. On the other hand, 31 percent said they currently spend time on strategic initiatives, while 65 percent said they’d like to spend more time on such activities in the future.

One functional responsibility that CIOs don’t expect to spend less time on in the future is security management: 26 percent of the respondents to this year’s survey said they expect to devote more time to that task in the next three to five years, up from 21 percent in last year’s survey.

Priorities

Improving customer experience, increasing operational efficiency and transforming business processes will be among CIOs’ top priorities this year, though the first two have declined in importance since last year. Asked to name business initiatives that will drive IT investments, 40 percent of respondents cited improving customer experience, down from 45 percent last year; 35 percent chose increasing operational efficiency, down from 46 percent in 2016; and 34 percent named transforming business processes, up from 25 percent.

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CEOs’ top objectives for their CIOs remain consistent with last year: Helping to drive corporate revenue growth and upgrading IT security infrastructure were at the forefront. Security, in particular, is still a hot topic and a hotbed of activity in light of the recent high-profile cyberattacks.

Security and IT strategies continue to dovetail more closely: 51 percent of respondents to this year’s survey described the two as tightly integrated, compared to 37 percent last year. Security also represents a healthy share of IT spending, accounting for 11.58 percent of the average IT budget this year, which is about the same as in 2016. More executives are getting involved with security — 81 percent of CIOs and 66 percent of business executives this year said they are more involved in security initiatives than they have been in the past.

Beyond the security and revenue growth mandates, CEOs are also tasking CIOs with fostering partnerships with business executives — 17 percent of the CIOs polled said collaborating with the CMO or chief digital officer (CDO) was a major directive from their CEOs. And 46 percent of the CIOs responding to the survey described the CMO-CIO relationship as much or somewhat closer than it had been a year earlier.

Tech investments

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To get all of this work done, companies are making a variety of technology investments, with big data/business analytics and cloud computing capabilities grabbing top billing: 33 percent of respondents named big data/analytics and 28 cited the cloud when asked what tech initiatives will drive IT investments at their organizations.

Analytics ranks high on the agenda at Haggar Clothing, which hopes to make better use of data to drive a more personalized, richer customer experience, says David Walsh, vice president of technology at the men’s apparel company. “We’re collecting a wealth of data, and we’re not getting all of the value out of it that we can,” says Walsh. “Data is coming to us faster and faster, and the window we have to respond is getting smaller and smaller. We need to understand what’s going on across all of our customers — that’s the chore.”

Despite the emphasis CIOs place on improving customer experience, the 2017 State of the CIO survey indicates that spending on technologies to achieve that goal will decline: 20 percent of respondents said customer experience initiatives are driving IT spending, compared to 27 percent last year. The gap could indicate that companies have already made IT purchases in this area and are now in the throes of deployment, or that another department (such as marketing) has taken ownership of that piece of the technology stack.

While cutting-edge technologies like artificial intelligence and wearables generate lots of hoopla, they account for only a fraction of the IT budget. For example, only 13 percent of this year’s respondents said that they’re investing in mobile application development, and even smaller numbers are making purchases related to machine learning and cognitive systems (5 percent), AI (4 percent), virtual reality/augmented reality (2 percent) and wearables (1 percent).

Struggles ahead

Business alignment isn’t the only organizational challenge confronting CIOs in 2017.

The share of respondents who said they feel that IT is scapegoated by other departments rose to 58 percent this year from 54 percent last year. Moreover, CIOs continue to face turf battles as they duke it out for technology control: 26 percent of the IT leaders polled this year said they agreed that the CIO is being “sidelined” in their organizations — a viewpoint shared by just 15 percent of business executives. Moreover, 36 percent of CIOs said they believe that people in other departments see IT as an obstacle to the corporate mission, while 31 percent of business executives agreed with that sentiment.

The ongoing talent crunch is another thorn in the side of CIOs. Last year, 49 percent of respondents to the State of the CIO survey said they expected to face challenges related to an IT skills shortage in the coming 12 months; that number rose to 60 percent this year. Just like last year, CIOs expect it to be most difficult to fill jobs related to big data/data science/business intelligence and security: 38 percent of respondents cited big data and 30 percent chose security when asked to name the areas in which it will be hardest to find IT professionals with the necessary skills. Other IT pros with in-demand skills may not be as hard to come by: Just 16 percent of respondents said they expect to have trouble finding people with mobile expertise, and 15 percent said DevOps specialists will be in short supply.

A third dimension

Moving forward, CIOs envision a third dimension being added to their bimodal role: Manager of outside services. Slightly more than half (51 percent) of CIOs surveyed and 48 percent of business executives said future CIOs will have to manage contractors, cloud vendors and IT service providers.

As part manager, part strategist and part agent of transformation, the CIO will continue to wear multiple hats. “It’s the new reality, but it’s very positive,” says Todd Finders, CIO of the Commercial and Residential Solutions group of Emerson Electric. “Technology has never been more important to the business, so we can do more if we do our jobs right.”