The 2002 State of the CIO Survey

CIO magazine?s study, ?The State of the CIO,? set out to explore trends of the CIO role. Our survey findings highlight the fact that the CIO?s time is spent more on strategy than pure technology. CIOs spend the bulk of their time meeting with other senior executives and managing IT staffs of 70+ employees on average.

CIOs must rely on a range of skills?including communication, business savvy, management and technical proficiency?to continue to elevate the role of CIO in the organization. Among the keys to CIO success are:

Communication. CIOs spend a bulk of their time meeting?whether with the executive team, their IT staff or business partners. The ability to clearly communicate ideas, give direction and negotiate will grow in importance to elevating the role of the CIO in organizations.

Hiring/retention. The CIO?s ability to recognize, cultivate and retain IT talent will continue to be tested, regardless of an easing labor market. While a greater number of candidates are applying for jobs, finding qualified personnel with the right balance of skills and experience in key technology areas, including database management and application development, will continue to be a challenge.

Strategic thinking. Understanding the company?s business strategy and its competitive landscape add greatly to the CIO?s ability to bring value to the organization. Additionally, strong business sense will help the CIO develop good relationships with the other Os.

Highlights of the study include:

• CIOs aren?t aiming for the corner office. Almost half prefer to be CIO in the next phase of their career while only 20% want to move on to CEO.
• Staffing and getting key skills are biggest challenges.
• Communication skills and strategic planning are more critical to success than technical proficiency.
• Budget issues persist.
• The CIO?s job doesn?t change much from large to small companies in terms of skills and how they spend their time.
• For the most part, CIOs do not have strong business backgrounds. Over the course of their careers, CIOs have worked most frequently in IT, consulting, administration, customer service, sales and research, and development.
• CIOs are responsible for corporate IT (vs. a division?s IT only), and close to half of IT heads report to the CEO.
• CIOs listed lack of key staff/skill sets/retention, inadequate budget and prioritization of budget, and lack of time for strategic thinking/planning as the biggest hurdles or barriers to their effectiveness.
• Ability to communicate, understand business processes and operations, and strategic thinking and planning are the three skills that are most pivotal for the CIO?s success.

Key FindingsCIO Profile [link to/jump down to]CIO Job Description [link to/jump down to]CIO Challenges [link to/jump down to]Compensation [link to/jump down to]CIO Profile Head of IT TitlesThe majority (63%) of IT heads have the title of CIO, while 13% are chief technology officers (CTOs). Roughly 9% hold EVP, SVP or VP titles and the remaining 15% answered ?other.?

Previous Experience

Not surprisingly, 82% of the IT heads surveyed listed IT as a functional area that they worked in previously and that had an impact on their career path to CIO. Other areas most frequently listed included consulting (50%), administration (34%), customer service (34%), sales (30%), research and development (27%), finance (25%), and engineering (25%). When asked to provide their previous title (prior to their current job as CIO or head of IT), respondents most frequently listed director of systems or applications, administrator, controller or planner (in that order).

Gender

91% of the survey respondents are male and 9% are female. This was noted by observation or recorded and not asked directly in our questionnaire.

Next Career Steps

CIOs appear to enjoy the role of CIO. When asked what role they?d prefer in their next career move, close to half (44%) said that in the next phase of their career they?d prefer to be a CIO. Roughly 20% said they?d like to be CEO, while 14% listed COO. The remaining 21% listed other, citing ?retired? or positions in academia as the next phase of their career.

On average, survey respondents have held the CIO or head of IT title for four years and eight months. Approximately one-third (34%) of those surveyed have held a head of IT position for between one and three years, and 29% have been in the role between three and six years. Slightly more than one-quarter (26%) have been IT heads for six years or more. 11% of the IT executives surveyed have held the head of IT title for less than one year.

Tenure

More than one-third (39%) of IT executives surveyed have been in their current job between one and three years while 29% have been at their current job between three and six years. Sixteen percent of IT heads in our survey have held their current job for less than one year, while 15% have been in their current job for six years or more.

For the most part, CIOs plan to remain in their current jobs longer when compared to their previous jobs. When asked how long they plan to stay in their current job compared to their previous job, 40% of those surveyed intend to stay three to six years. Slightly more than one-quarter (28%) will stay in their current job for one to three years, while 27% plan to stay more than six years. Only 5% of IT executives surveyed said they would spend less than one year in their current job.

When asked how long they were at their last job, 27% of the survey base spent one to three years in their previous job. Close to one-third (31%) were in their previous position for three to six years and 38% of IT heads spent more than six years in their previous job. Only 4% held their previous job for less than one year.

CIO Job Description

IT Budget

Organizations with less than $100 million in annual revenue have IT budgets of $8 million on average. CIOs in medium to large organizations (annual revenue between $100 million and $499 million) are responsible for average budgets of approximately $12 million. In organizations with revenue of $500 million to $1 billion, IT budgets average $26 million. IT heads at very large companies (revenue of more than $5 billion) report IT budgets of $114 million and higher.

On average, IT budgets represent approximately six percent of the organization?s annual revenue. IT budgets as a percent of total company revenue ranges from 8% in smaller companies to 4% in very large companies. IT budgets as a percent of company revenue is higher in smaller companies (8% in companies with less than $100 million in revenue) and lower in large organizations (4% in companies with revenue of $5 billion or more).

IT Staff/User Community

On average, CIOs are responsible for supporting internal user communities of about 5,300, and they have 78 IT employees reporting to them. This yields a user/IT staff ratio of 1:69, meaning there are 69 users for every one IT employee.

IT StructureWhen asked about the organization?s IT structure, 61% of respondents said the company?s IT was centralized (large corporate headquarters with in-house application development and support capabilities). A much smaller percent (22%) of survey respondents said their IT is decentralized (independent subsidiaries with application development and support provided locally as well as from a central headquarters), and 14% indicated their IT is distributed (small sites with no local application development or support capabilities that rely heavily on a centralized location for these services).

Responsibilities

In terms of how their professional time is spent, close to one-third (33%) of the CIO?s time is spent meeting with senior management and department heads, and 28% of their time is spent managing the IT staff. Approximately 15% of the CIO?s time is spent interacting with outside business partners/customers/suppliers (not IT vendors), while 15% is spent meeting with IT vendors. Only 10% of the CIO?s time is spent learning about technologies. Approximately three-quarters of the survey base (74%) said they do not share leadership and responsibility with somebody else, such as a CTO or deputy CIO.

CIO Challenges

Spending PrioritiesCIOs, expected to do more with less money, have shifted their spending attention to areas that provide more immediate payback and pain relief, such as linking legacy systems to Internet interfaces and retaining key skills in-house.

According to the 500 survey respondents, the top spending priorities going into the fourth quarter are integrating systems and processes (36%), implementing new technologies (26%) and staff retention/hiring/training (25%). External customer service/relationship management (24%) remains on the CIO?s radar, followed by lowering costs and keeping IT expenses within budget (22%).

Hurdles

When asked what their biggest hurdles are, CIOs listed lack of key staff/skill sets/retention (40%), inadequate budget and prioritization of budget (37%), lack of time for strategic thinking/planning (31%), volatile market conditions (22%), and ineffective communications with their users (18%) most frequently.

Critical Skills

When asked what three skills are most pivotal for success in their head-of-IT role, respondents answered: ability to communicate (70%), understanding business processes and operations (58%), and strategic thinking and planning (46%). Slightly less than one-third (31%) listed thorough knowledge of technology options, while only 10% listed technical proficiency as a key skill needed for the CIO job.

Reporting Relationships

Roughly half (51%) of the CIOs included in the survey report directly to the CEO, while 12% report to the COO. An additional 11% report to the CFO, and 4% said they report to a corporate CIO. Close to 22% listed ?other.?

When asked with whom they had the best working relationship, 43% of the CIOs answered CEO/president/owner while 21% answered COO. Close to one-fifth (19%) answered CFO and 15% listed ?other.?

CIO Compensation

Average total compensation of IT executives in our survey, including base salary, bonuses and stock options, is $183,245. More than one-third (36%) of IT heads earned between $100,000 and $150,000 last year. An additional 29% earn between $151,000 and $225,999, while 17% earn more than $226,000. According to the 500 CIOs surveyed, roughly 80% of their compensation is base salary while close to 15% is bonus and 5% is paid in stock options.

Key Factors Affecting CIO Salary

Factors that have the biggest impact on the CIO?s salary or performance appraisal are their ability to manage the IT budget (67%), followed closely by their leadership (66%) as viewed by their boss. The perceived or demonstrated value of IT investments (53%) was also cited as a key factor in a CIO?s appraisal.

Big Company Paychecks

CIOs in larger companies are bringing home larger paychecks. On average, CIOs at companies with annual revenue of $5 billion or greater earn at least 50% more than their counterparts in organizations with less than $100 million in annual revenue.

The Highest Paying Industries for CIOs

Insurance, computer-related, and manufacturing companies pay their CIOs the most, while education and government institutions pay the least. On average, CIOs in these three top-paying industries earn 40% more than CIOs in medical/dental/healthcare, education and government sectors. CIOs in finance and business consulting companies are paid 22% less than heads of IT employed in insurance, computer-related and manufacturing companies.

Methodology

CIO?s survey, titled ?The State of the CIO,? was administered online and by telephone from September 24 through October 12, 2001. CIOs, CTOs and vice presidents in charge of IT were selected from CIO?s circulation file and invited to take the survey. The results shown here are based on the responses of 500 IT heads. The margin of error for this study is +/- 4.4%.

In terms of company size, approximately 18% of the survey respondents work at companies with annual revenue of $1 billion or greater. Roughly 37% are from companies with annual revenue between $100 million and $999.9 million, and 45% listed 2000 estimated revenue at less than $100 million.

Respondents represent a wide range of industries. Approximately 15% work in computer-related industries, and 12% represent manufacturing/process industries. Close to 11% are employed in the medical/dental/healthcare field, and 10% work in finance/banking. Other sectors represented are government (9%) and education (8%).