State of the CIO 2014: Treading new ground

“Historically, the CIO role has been internally facing, it has been about servicing internal customers,” says Mark Baker, director of MIH Consulting. “As the world has gone more digital – with various incarnations of cloud, software-as-a-service, platform-as-a-service– companies are looking for the digital edge.”

“Innovative companies” like Amazon and Air New Zealand are seen as having this edge. “Now, it is expected that companies have an element of their competitive strategy around digital.”

“CIOs are now spending more time on competitive business propositions, strategies, how they embrace the 700 new things that have turned out this week because in the digital age everything is moving so fast.”

“As a consequence the technology discussions that used to stay in the backroom is coming to the executive table.”

The important thing to stop shadow IT getting completely out of control is to be the person who helps people get things done. Robin Johansen

This is how Baker, a business strategy consultant following a succession of CIO and chief operating officer posts in New Zealand enterprises including Foodstuffs Auckland and Fletcher Distribution, sums up the changed landscape CIOs operate in today – and how these shifts are affecting the role. His insights provide a relevant backdrop to the 2014 State of the CIO report, where CIOs across the globe, including New Zealand, reveal their current and future challenges.

Based on the survey findings and interviews with New Zealand business-technology leaders, this year’s report highlights some key trends that are rearranging the CIO portfolio and moving them into areas not traditionally associated with IT.

Topping the list of disruptors are digitisation as customers, suppliers and business units embrace digital platforms, and the continuing rise of ‘shadow IT’ brought by consumerisation of technology and the ease of moving to cloud services without IT involvement.

It is expected that companies have an element of their competitive strategy around digital. Mark Baker, MIH Consulting

The State of the CIO
The State of the CIO survey covered 722 CIOs across the globe, including 43 from New Zealand. A third of the New Zealand CIOs report each to the CEO and the CFO, while 16per cent report to the chief operating officer. Half of them are members of the business executive management committee. When asked about their focus and how they spend their time in their current role, the greatest number of New Zealand CIOs (30 per cent) said it was on negotiating with IT vendors, followed by redesigning business processes (23 per cent). Only7 per cent reported spending time studying market trends and customer needs to identify commercial opportunities.
In the next three to five years, though, they would like spend more time driving innovation (56 per cent of respondents), followed by defining and developing business strategy and leading change efforts (at 47 per cent respectively), and identifying opportunities for competitive differentiation (44 per cent). Identifying market trends and customer needs jumped to 28 per cent, and only 14 per cent wish to spend more time on negotiating with IT vendors.

As to which groups or business functions have budgets specifically earmarked for technology projects, the following are the top four: Operations (47 per cent), marketing (37 per cent), human resources (30 per cent) and finance (28 per cent).
When asked what steps they are taking to enhance their relationships with executive peers, New Zealand CIOs say the top three ways are through frequent communication for IT transparency (81 percent of respondents); provide advice on initiatives, strategies and management (70 per cent); and attending each other’s meetings (65 per cent).

Shadow IT is clearly a concern for CIOs across the globe. When asked whether they see shadow IT on the rise, 40 per cent said yes – with 7 per cent strongly agreeing and 33 per cent ‘somewhat’ agreeing. This sentiment is not far from the global results, with 9 per cent strongly agreeing and 31 per cent somewhat agreeing.
But when asked whether these projects developed without IT involvement are running into problems, 21 per cent strongly agreed, and 56 per cent somewhat agreed, or a total of 77 per cent. The global figure is not far off, 76 per cent.
New Zealand CIOs also admitted the challenge of balancing business innovation with operational excellence, with 9 per cent strongly agreeing to this, and 65 per cent somewhat agreeing.
Each year, the report tracks the continuous pathway of the CIO to increasingly become strategic partners and trusted peers in the executive suite, and to be seen less as a cost centre. The graph above shows CIOs’ views on how their business colleagues see them.

Simultaneous reinventions

New Zealand business technology leaders share pointers on thriving in this environment.

The mind-set of a CIO has got to be around stepping beyond the traditional boundary of IT, looking after applications or infrastructure, says Andrew Crabb, head of enterprise solutions and services at Vodafone New Zealand.

“How can I add value? How do I support the organisation in all they want to do in a totally different business market?

“Traditional businesses are reinventing themselves, everyone is on that mode,” Crabb continues. “A lot of the existing organisations will be swamped or surpassed by these new technologies.”

Crabb cites, for instance, that in the last five years, the major organisations have been online or virtual business, the likes of Google, Yahoo or Facebook.

“You still need those traditional organisations but these organisations have to embrace new technologies in order to grow,” says Crabb. Countdown supermarket, he says, is one such organisation that has done this by embracing online shopping. “They are taking a virtual business model and embraced new technology to move forward in a digital world.

“The role of the CIO is moving away from systems and platforms, to data and analytics,” Crabb notes. “It is about finding different ways of using information that is available to us that will be where a lot of new business models are emerging.”

He says this is a positive development for the CIO role, but they need to evolve with the times.

The role of the CIO is moving away from systems and platforms, to data and analytics. Andrew Crabb, Vodafone

“Today’s CIOs are looking at the online market and mobility, particularly if the organisation has staff who are working remotely or working anywhere,” says Crabb. “We are talking not just location, but virtual offices, virtual organisations.”

The latter does not even have a physical address. “Because of that, everything they do relies on technology, whether that be mobility, the Internet, the online side of things.”

Take charge of evolving your role

Brett Hobbs, group IT manager, BCS Group, says he keeps track of change management strategies using Amazon as a benchmark.

BCS Group provides logistics hardware, automation controls and software solutions for the aviation and logistics sector. It is not Amazon’s cloud technologies, but its strategy around developing the business that interests him, explains Hobbs. The lesson from Amazon, he says, is “always looking for ways to do something new or refine something; continually looking at what you are doing and trying to be better”.

It is an insight he applies to his own career. Hobbs started as an IT support engineer looking after kiosks for printing photos BCS was running for a client. He then became and IT engineer and then infrastructure manager. The CEO Patrick Teo assigned him to work with one of the managers, as part of his leadership training, and a year ago he became group IT director.

Always look for ways to do something new or refine something. Brett Hobbs, BCS Group

Today, he says, he has dual roles: as manager for internal IT and consultant to the project side of an affiliate company. “I make sure I take every opportunity to create as many opportunities as I can for driving innovation in the company and that I am not just here to show up Monday morning to make sure everyone’s computer is working.

“I am really looking to make a difference to the company and make this company what our competitors look to.”

Checking future trends – for today

David Moss is a CIO for a technology company that is very much into checking out trends that could impact their respective enterprise and those of their customers.

The CIO at Vodafone New Zealand says these include developing new products and services that Vodafone could offer to customers, simplifying operations or providing new capabilities for the group.

The photo of the number plate will be emailed to the owner within 30 seconds. Moss says in a few months, these technologies may be adopted in this part of the world.

‘Preparedness, not prediction’

“Aligning the IT strategy to the business strategy is what every IT executive is aiming for in the first instance,” says Deloitte CIO Tim Fleming. “It really comes down to understanding what the business strategy is, and making sure that what we are doing is not just IT for IT’s sake but to help deliver the business strategies.

“Our business strategy is all about agility [and] flexibility and what my CEO calls ‘preparedness, not prediction’,” says Fleming. “It is not about making the big long-term bets, it is about being positioned to move quickly and so we need an IT architecture that is quickly flexible, scalable and agile.

It is about being positioned to move quickly and so we need an IT architecture that is quickly flexible, scalable and agile. Tim Fleming, Deloitte

“In the IT world, change is an accelerated curriculum,” says Fleming, and keeping up with trends is increasingly important for CIOs. “Things are only moving faster and faster and so being able to understand the concepts and the mega trends helps you shape what you are doing now.”

For instance, five years ago, Fleming spoke with his CEO when the first iPhones were becoming popular. “I said, we have a choice here: We can either attempt to lock this down, guard the walls and continue to only let authorised devices get anywhere near our network. Or we need to start thinking about BYOD,” says Fleming.

“He very quickly came into the view that we need to educate our people on what is appropriate in terms of how we use the device, what we do with data, and we would be crazy not to ride that wave.

“And so from the start, we adopted a BYOD approach and we think it is important not the least for employee engagement,” says Fleming. “If people have got much better technology at home and in their personal lives and then they come to work and they are heavily restricted, it becomes an engagement issue for us.”

Trusted peers and advisors

Rhoda Phillippo, director of technology at Infratil Group, says when an organisation starts a transformation program, the most successful CIOs are the ones that team up strategically with the business unit owners of the change they are trying to make.

She says another thing CIOs can do is to set aside a budget every year for “play money”. This money, can be spent, for instance, on trialling smart marketing ideas. “Have at least a couple of those running in a year and see how it works,” says Phillippo.

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6 digital transformation success stories