The State of the CIO 2003 Survey Results

This year’s State of the CIO 2003 survey reveals a very different set of challenges confronting our readers and a new set of priorities for IT leaders. Even as companies continue to struggle with a sputtering economy and weak corporate performance, and CIOs continue to wrestle with budget cuts and scarce resources, the demands the enterprise places on IT have been ratcheted up. Today, CIOs are being asked to cut costs, increase productivity, and find new ways to generate revenue and profits. In this dollar-anxious environment, alignment between business and IT, between the CEO and CIO?always important?is more critical than ever.

What’s Changed

Last year, chief information officers told us that the biggest hurdles they needed to overcome were inadequate budgets and a lack of time for strategic thinking (see last year’s State of the CIO issue at www.cio.com/ state). CIOs reported that their energy went into staffing their departments, retaining employees and implementing new technologies, such as wireless.

This year, based on the responses of 539 heads of IT from a broad range of industries including manufacturing, government, health care, technology, education and finance, we can see that both staffing and new technologies have taken a backseat to finding best practices for partnering with business units and delivering the greatest value to the organization. While CIOs will continue to deal with tight budgets in 2003, their greatest challenges for the coming year are prioritizing demands from the various business units and aligning IT with business goals.

This year’s study also finds shifts in spending priorities. Security has moved from the bottom half of last year’s spending list to become the fourth highest IT spending priority for CIOs. Systems and process integration remains CIOs’ top spending priority as companies continue to try to squeeze efficiencies out of their operations.

In terms of the skills CIOs believe they need to succeed in their jobs, effective communication and understanding business processes and operations remain important. However, strategic thinking and planning, which was listed as a critical skill by less than half (46 percent) of the CIOs surveyed last year, rocketed up this year’s list with 76 percent of IT executives saying they considered that essential. Clearly, the pressure cooker of today’s corporate world has forced CIOs to redefine their roles and their jobs. It’s either that or get cooked. (See "The Importance of Being Strategic," Page 58.)

Another skill that more CIOs need to hone is financial-speak. The percentage of CIOs reporting to their CFOs doubled?from 11 percent last year to 22 percent.

What’s Stayed the Same

In a time of uncertainty, it’s nice to see that some things haven’t changed. The majority (73 percent) of IT heads are corporate officers with C-level titles, and roughly half of them still report directly to the CEO?a good thing. On average, CIOs manage IT budgets that represent 6 percent of total company revenue, which is also consistent with last year’s findings. That indicates that while IT budgets have been cut, at least they’ve been cut proportionately.

CIOs still spend the biggest chunks of their days meeting with senior executives and department heads (26 percent), managing their staffs (24 percent), and developing leadership within their departments (13 percent). They’ve been in their current jobs for four years on average?challenging the widely publicized notion that CIOs hop from job to job.

During good times and bad, certain IT best practices endure (see "The Six Best Practices: What Leading CIOs Do," Page 74). Whether the CIO’s objective is to lower costs or drive business opportunities, our survey identifies certain key practices critical to every CIO’s success: Be part of the executive team; involve leaders and users at all stages of IT initiatives; and have an executive or steering committee oversee IT investment decisions to get buy-in early and avoid surprises later.

Whether you conceive of your role as being operational or strategic, it’s obvious that IT continues to grow evermore central to the business, and that the CIO’s focus on partnering with the business units and aligning IT strategy with corporate strategy will increase productivity, reduce costs, improve customer satisfaction and drive innovation.

So what are you waiting for? Take your vice president of sales to lunch!

Who You Are

CIO surveyed 539 IT executives to bring you "The State of the CIO 2003" results. Here’s what we found out about you.

CHART

Note: Percentages may not add up to 100 because of rounding and because respondents who did not answer are excluded. Slightly fewer than 539 survey respondents answered certain questions; visit our website at www.cio.com/state to see exact sampling numbers.

The Survey: How You Do Your Job

Governance

You are part of the organization’s executive management team/committee

You set the IT architecture and standards that guide the independent IT decisions of divisions, business units and departments

A high-level group in the organization governs IT investment decisions

user involvement

Your IT budget is determined in part by the business units or functions

Your IT department communicates with the user community at large

Weekly 23%
Monthly 35%
Quarterly 18%
Semiannually 5%
Annually 2%
Only for new employees/orientation 6%
Never 11%

Your IT department regularly measures customer satisfaction with IT services

Yes, internally?internal employees 42%
Yes, externally?business partners, customers 4%
Yes, both internally and externally 17%
No 36%

You assign IT liaisons to each major business unit or function

Senior business unit leaders or managers from affected departments or functions are involved with an IT initiative in the following stages

Initiation/authorization 89%
Planning 77%
Executing 56%
Controlling/monitoring/measuring progress 63%
Post-completion assessment 63%

User representatives from affected departments or functions are involved with an IT initiative in the following stages

Initiation/authorization 72%
Planning 85%
Executing 80%
Controlling/monitoring/measuring progress 70%
Post-completion assessment 73%

SKILLS The personal skills most pivotal for your success as a CIO

Ability to communicate effectively 78%
Strategic thinking and planning 76%
Understanding business processes and operations 66%
Ability to influence/salesmanship 35%
Thorough knowledge of technology options 26%
Negotiation skills 14%
Technical proficiency 13%
Other 1%

TIME MANAGEMENT

How you spend your time

Communicating with business executives and department heads 26%
Managing IT staff, including hiring 24%
Developing leadership within your IT department 13%
Learning/understanding technologies 13%
Interacting with outside business partners/suppliers (not IT vendors)/customers 12%
Negotiating/meeting with IT vendors 10%

STRATEGIC FUNCTION

How you view the IT department’s role in the organization

To enable business initiatives
To envision business possibilities and initiate with technology
How the IT function is budgeted
As a cost center that generates planned expenses
As an investment center that generates new business capabilities
Your approach to managing IT projects
As a portfolio or suite of investments/interrelated activities
Separately, according to each project’s specified budget and schedule

I.T. IMPACT

Your ranking of IT’s impact on the enterprise

1 Increased productivity
2 Reduced costs
3 Increased customer satisfaction
4 Drove business innovation
5 Created competitive advantage
6 Grew existing revenue streams
7 Generated new revenue streams

I.T. VALUE

The IT practices you rate as highly effective in adding value to the business

The CIO is part of the executive management team/committee 71%
User representatives from the affected departments or functions are involved at all stages of an IT initiative 64%
Senior business unit leaders or managers from the affected departments or functions are involved at all stages of an IT initiative 59%
The company has a high-level group (executive council or IT steering committee) that governs IT investment decisions 44%
The CIO assigns IT liaisons for each major business unit/function 41%
The IT organization communicates with its user population at large on a regular basis 39%
The IT organization measures customer satisfaction on a regular basis 36%
The IT budget is determined in part by the business units/functions 34%
The IT function is budgeted as an investment center that generates new business capabilities rather than a cost center that generates planned expenses 33%

SPENDING

Your top 14 IT spending priorities for 2003

1 Integrating systems and processes
2 Lowering costs
3 Strategic planning/aligning IT and business goals
4 Implementing data security and privacy measures
5 Automating/optimizing the supply chain
6 Enabling/enhancing e-commerce
7 External business-to-business customer service/relationship management
8 Knowledge management/leveraging intellectual assets
9 Project management improvement
10 External business-to-consumer customer service/relationship management
11 User training/education/satisfaction
12 Implementing new technologies
13 Staff development/retention
14 Managing IT globally

HURDLES

Your 15 biggest barriers to effectiveness

1 Inadequate budgets and prioritizing
2 Conflicting business priorities among business units
3 Aligning IT efforts with business goals
4 Shortage of time for strategic thinking/planning
5 Risk and uncertainty due to volatile economic conditions
6 Lack of key skill sets
7 Difficulty proving the value of IT
8 Weak corporate performance/ reduced revenue
9 Ineffective communication with users/unrealistic customer expectations
10 Disconnects with executive peers
11 Leadership/business knowledge within IT department
12 Overwhelming pace of technology change
13 Poor vendor support and service levels/product quality
14 Managing staff/building
15 Inability to wield effective influence with technology vendors

On Sale at the CIO Store

? Focus Guide on Strategic Planning: How to Develop and Align IT Strategy

? Focus Guide on The Elite CIO: Principles and Practices of Top-Tier IT Leadership

? The full results of "The State of the CIO 2003" survey identify the key practices that are critical for every CIO’s success. The complete survey, geared to both operational and strategic IT, presents the numbers you need to know, analyzed by industry. It will be available for purchase in May.

For all these items, visit www.theciostore.com.

The State of the CIO 2003 Survey Methodology

CIO’s second annual "State of the CIO" survey was administered online from Nov. 18 to Dec. 6, 2002. CIOs, CTOs and vice presidents in charge of IT were randomly selected from our circulation file and invited to take the survey. The survey findings shown are based on the responses of 539 heads of IT from a broad range of industries, with close to half (45 percent) representing companies with greater than $500 million in annual revenue. The results of the study are statistically valid. The margin of error for the survey is plus or minus 4.3 percent.

Much like last year, this study asked top IT executives about their career paths, including functional background, tenure, salary and the key skills needed for the role. We surveyed respondents about the job of CIO?reporting structure, greatest challenges, budget and staffing responsibilities and the user environments supported by their IT organizations.

This year’s survey went further in examining the CIO role and identified the best practices for effectively managing IT and partnering with the business units. -L.C.W.

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Copyright © 2003 IDG Communications, Inc.

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