Heads of IT are optimistic that the global economy is emerging from the downturn, worried about security in an increasingly insecure world, believe the business needs IT more than ever and that they are going to have to work even harder, but possibly not as chief information officers.
These are some of the key findings from CIO Connect's census of more than 100 heads of corporate IT in the UK, sponsored by Vodafone and published last week.
The CIO Connect survey finds that CIOs are undoubtedly more cheerful about the economic outlook, but remain cautious. This general optimism is reflected in that 66% expect significant growth in the innovative use of IT by businesses, although this optimism is tempered by realism - only 45% expect easier access to new IT investment.
Where will this investment go? CIOs would like some of it to go into more IT security, with 75% concerned about malicious attacks. Views are more divided when it comes to investing in e-business. Half of respondents are confident it adds new value to business and half are not.
Industry sectors will spend differently on IT. The financial, retail and distribution sectors will have customer loyalty as a key IT focus, and the financial sector will target regulatory compliance. For 33% of all respondents, IT infrastructure investments are becoming more difficult to justify, says the report.
However, any investment in IT requires money, so will CIOs be getting any more this year? Of the respondents, 30% say they will not and that IT spending will decrease this year. The same number think quite the opposite, that IT spending will increase this year. And 40% say it will stay the same.
"Differences by company size and industry sector were negligible," says the report. "In 2001, 32% of CIOs expected an increase, 26% a decrease, and 43% no significant change. Little appears to have changed in two years."
Achieving lower costs
But statistics do not tell the whole story. "Subtle but important changes in how IT investment is targeted and managed are emerging," says CIO Connect. Companies increasing IT expenditure, for example, are those either launching specific projects, undergoing strategic reorganisation, or catching up with previous under-investment in IT. Where IT spending is expected to shrink, it is because CIOs are able to do more with IT with less money. They, therefore, regard lower expenditure as a source of pride and achievement, not of despondency, says the report.
But whether budgets are going up, down or nowhere, one thing is clear: the general order of the day for IT remains do more for less and do it all.
"It is no longer about choosing the most important challenges from alternatives such as innovating or reducing costs, having business acumen or technology knowledge, demonstrating change leadership or running existing systems reliably," says the report. "Effective CIOs will need to replace the 'or' with 'and'."
The cold war between CIOs and suppliers is still going strong, says the survey. CIOs recognise their critical dependence on IT suppliers and will hand out selective praise, "but suspicion and even open hostility are uncomfortably common," says the report.
Nearly 80% report some bad experiences with suppliers, 75% say it is hard to find suppliers with the right attitude and 60% say finding suppliers with the right competencies is difficult.
Nick Bellenberg, group IT director at Haymarket Publishing, says, "It is easy to find suppliers with solutions to problems that we either do not have, or that are not a high priority to solve. Very few suppliers understand our business at an appropriate level."
CIOs are trying hard not to just sit back and moan. Nearly 80% say they are putting more senior management attention into fewer, key supplier relationships, and that things are improving; and 45% say suppliers are getting more responsive to users' needs. Even more, 70%, say it is currently easier to negotiate or renegotiate more favourable terms.
Supplier management now includes a broad swathe of practices, involving hard skills, such as paying more attention to contracts, separating technical and commercial responsibilities and setting measurable targets, and soft ones, such as understanding expectations and encouraging informal contacts at senior level.
"We put a lot of effort into managing the relationship with our enterprise software partners," says Greg Meekings, CIO at Reuters. "They are critical to our business."
For some, especially those in the financial sector, regulation is driving the way IT relates to its suppliers. "Supplier relationships are changing, particularly given the regulation over service level agreements from the Financial Services Authority," says Margaret Smith, head of IT at Legal & General.
Conversely, some heads of IT keep the relationship as simple as possible, thereby freeing up IT management time to focus on IT's relationship with the business, rather than with suppliers.
"Commoditisation of IT followed by outsourcing is the focus for supplier management, so that our own [internal] resources can be used most effectively to provide business benefit," says Owen Williams, head of IT at property company Knight Frank.
Another method of simplifying the task of supplier management, says one CIO, is to eschew large suppliers as much as possible. Smaller suppliers, which are more financially dependent on each customer, are simpler to manage effectively. "My strong preference is to establish relationships with niche suppliers, where our business is meaningful to them and with whom we can establish strong personal relationships," he says.
CIO: Career Is Over?
The typical CIO, according to the census, is male - only 11% of respondents are female - and in his 40s and 50s - only 25% are under 40. He has spent most of his working life in IT - 33% have spent nearly all their time in IT and 45% more than two-thirds of their career in IT- but has been in his current job less than three years - 66% of respondents. The average CIO has a salary of between £100,000 and £200,000 a year - 35% earn up to £150,000, 16% up to £200,000 and 27% receive more than £200,000 a year.
So have CIOs reached the top and come to a stop? No, finds the survey. For many CIOs, a seat on the board has been the long-standing goal and 51% have reached it. Overall, 42% report directly to the chief executive, although there is a large variance across sectors. In the financial sector it is 70% and in manufacturing, mining and construction only 15%. In the largest companies the figure is just 25%.
Board-level representation and direct reporting to the CEO emphasises that being CIO is not about IT, it is about business. "It is becoming vital for all parts of the business, including IT, to work to solve business problems," says Smith.
"You have to understand business processes and how to improve them, whether that is with or without IT changes," says John Odell, group IT director at the BBA Group. "It is not about IT any more. You have to have the ear and trust of the CEO and the board."
Alan Walker, CIO at Black & Decker, agrees, "Strong business partnerships and alliances with peers on the board of directors are essential."
For a lot of CIOs career advancement is not necessarily about becoming a CIO at a bigger company. Some 90% express an interest in becoming a CIO in another company, but this is not the limit of their ambitions, according to the survey. Many are thinking laterally. For more than 40%, the most obvious move is from CIO to chief operating officer. "As IT becomes, in effect, another way of managing the business, the role of COO is a natural next step for many CIOs," says the report.
One leadership role that CIOs do not regard as being a natural progression is that of chief financial officer. More than 90% said they were not interested in becoming a CFO. However, they showed no such reticence about the top corporate job of all - almost half said they were interested in being CEO.
"The qualities expected from CIOs are becoming similar to those of CEOs - business vision, people leadership and readiness to take risks," says CIO Connect. "For many respondents, taking on the top job is clearly looking to be within reach and an increasingly possible target to aim for."
One route into general management also stands out among CIO aspirations. "The most coveted non-CIO role is a non-executive directorship in another company," finds the survey. It appeals to nearly half of CIOs, but there are still relatively few opportunities for non-executive posts, says the report.
General management is clearly an option for CIOs, but one they may or may not wish to take up. "I think some CIOs want general management roles, but some still want to be career CIOs," says Smith.
"You make your own opportunities and have your own ambitions - [you] do not feel you have to fit into someone else's box," says Williams.
Brake or enabler?
IT's view of its contribution to business might be that it is an enabler, but business often sees IT as a brake mainly because of the time taken to implement IT systems.
To change this point of view, good relations between the CIO and the rest of the business are essential. So is an appreciation by the rest of the business of IT's contribution.
About 60% of CIOs in the survey believe that general awareness of IT at board-level is high, and more than 50% of CIOs think they interact effectively with their CEOs. CEO support is important in ensuring the success of major projects for 75% of respondents.
However, CEO support for IT's endeavours may not extend to the rest of the senior management team. "It can be hard to overcome [their] perception that IT is an inhibitor rather than an enabler," concludes the report.
"Many CIOs clearly have the delicate task of managing expectations, but for true sharing of responsibility, the other parts of the business also have to be realistic and redeploy staff or hire more people and have their costs placed under the same scrutiny as IT."
What is CIO Connect?
CIO Connect is the networking forum for top CIOs. The organisation draws its members from some 175 major UK-based companies, many of which are in the FTSE 100 list. Membership is by invitation.
How the survey was produced
The CIO ConnectCensus is designed to be a barometer on the factors that determine where CIOs and their businesses are heading in the next 12 months. The survey was sent to CIO Connect members and to CIOs of significant-sized firms based in the UK.
This was first published in April 2004