For corporate IT, the future presents an irony. IT has never been more pervasive or more critical to business, yet technology will not be the key concern for future chief information officers (CIOs) or their departments.
“The role of the CIO is expanding,” says Nick Kirkland of CIO networking group, CIO-Connect. Fundamentally, IT is heading up the value chain, and the future lies less in doing technology than in being at the heart of business.
“Only a relatively few organisations are now getting serious strategic advantage from IT,” says Dave Aron, vice-president of research at Gartner’s executive programme.
For Aron, the key to making this the norm rather than the exception lies with the role of the head of IT – and with his or her title.
“I believe IT organisations are going to change substantially, and I see the role of the CIO bifurcating,” he says. “On the one hand is the CIO in the historical role as IT leader and supplier of IT.”
Such a CIO is a classic chief technology officer. But Aron claims that the role that will emerge in the future will be much broader, with a focus less on technology and more on the business processes that are underpinned by the technology.
It is these underlying processes that CIOs should embrace as their remit, taking on, in fact, the role of chief process officer, says Aron.
“The chief process officer will advise the board on information and process flows within the organisation, and how they can be exploited for strategic advantage. We believe organisations that move towards having a chief process officer are likely to be more successful.”
A chief process officer will not just understand business processes and information flows, but will “help the business with the opportunities it has to innovate those processes”.
The CIO is best placed to take the role of chief process officer, Aron argues, because it will require the holistic understanding of the organisation which the CIO already has.
“CIOs have a very good overview of all the corporate processes,” says Aron. “Some heads of IT already get called chief process officer, or are changing their title. We will see the title of chief process officer happening substantially over the next decade.”
Ian Taylor, head of Forrester’s leadership boards, favours the title chief business technology officer to denote the new focus the CIO will need in the future. He also stresses the need for the IT function and its head to evolve from merely being responsible for delivering technology to being responsible for managing and innovating business processes and change.
“But to do that, they will need a different skill set from the traditional CIO,” he says.
Whether or not the CIO’s title changes, there will still be a change to the CIO remit, both in terms of key functions and most valued skills, reflecting the increasing strategic importance of the business exploiting IT fully.
A key skill for CIOs will be the ability to wield influence at the highest corporate level, says Brinley Platts, chairman of IT executive development company CIO Development. To do that effectively, they will need to develop their soft skills – “their ability to communicate more powerfully and more persuasively with their colleagues and their customers”.
Taylor says, “CIOs will need to excel at relationship management and negotiation, translating and putting forward ideas to business about things like process innovation, which are softer skills than they are used to.
“They will also need to be able to evaluate and communicate IT performance, not just against the IT performance of similar companies, but against business measures.” These will provide much more useful metrics, Taylor argues.
Another key skill that CIOs will need, according to Taylor, is the ability to market IT internally. All too often, the business does not know what IT contributes – unless it breaks down.
Aron agrees that in future, “CIOs will need to enhance certain skills. They will need high business acumen – even higher if they are a chief process officer – in areas like enterprise governance, and develop general leadership characteristics. Classically, a manager is skilled in command and control, whereas leadership is far more about influencing skills.”
These are the skills that will be required to earn not just the CIO’s place on the board, but also the interest of the chief executive, says Taylor. “If the CIO is a true business executive, they will be someone the CEO is happy to discuss any business issue with.”
Something that is already evident in leading-edge CIOs is the ability to influence two key aspects of the strategic exploitation of IT, says Aron.
“They must split their job into delivering to current expectations and acting to influence those expectations among the movers and shakers of the organisation.”
But to do the latter effectively, CIOs must keep their fingers on the pulse of new technology. This will be a challenge, says Platts, simply because the pace of technology-driven change is accelerating.
“It will drive everything,” says Platts, which means that CIOs will need to keep abreast of the “pace, volume and sheer welter of changing technology and the opportunities that creates”.
The role of the CIO will therefore be to understand the implications and possibilities that technology advances affords business, and then to communicate them effectively and persuasively to board-level management.
“They will need to talk to their business leaders about, say, nanotechnology, or any other such technology that will fundamentally transform their business,” says Platts.
“The CIO will not necessarily have to be a futurologist, but they will need to be able to make that input. Who else could do that? Not the CEO or the finance director or the chief operating officer. Who else can claim the mantle for the future success of the business but the CIO responsible for technology? They need to be able to step up to that level.”
But it will be a difficult call, he warns. “When it comes to exploiting new technology, you do not want to be too far ahead of the curve.” Leading edge is too often bleeding edge, and it is the pioneers who get the arrows in their backs.
Kirkland agrees. “It is critical that CIOs be aligned with business needs. It is a risk if they are too far out ahead of business,” he says.
At the same time, business itself will be subject to accelerating change, which the CIO must anticipate and plan for.
The future CIO will also need to be adept at understanding how changes and new developments in the structure of the IT industry and profession should be exploited.
“With the way that the IT industry is developing so quickly in terms of services, costs and globalisation, organisations will need to be far, far better at using technology to go forward,” says Platts.
The CIO will need to be able to orchestrate an increasingly complex cocktail of IT multisourcing – whether the mix is via in-house delivery, IT outsourcing, offshoring, business process outsourcing or any combination – where both demand and supplier management skills will be paramount, as will the ability to see the business advantages or risks of each.
Kirkland says it will be up to CIOs to assess what kind of sourcing will work best for their company. “There will still be a statistical normal distribution when it comes to outsourcing, with most companies having some in-house and some outsourced,” he says.
But Taylor believes outsourcing – and offshoring in particular – will eventually become the normal way for companies to source systems development and operations, although the rate of migration will depend on the
“It will be driven by margins. For financial services, say, where margins are higher and IT is more critical, migration to offshoring will be slower. But sectors like travel and manufacturing have very tight margins and very robust processes, and so will take advantage of the labour arbitrage that offshoring allows.”
The offshore market will also differentiate. “It will specialise geographically, and that will keep it going longer. For example, the Philippines will specialise in graphics, and India in call centres,” says Aron.
“However, offshoring will continue to raise complex legal issues and trigger political recoils.”
Although globalisation will eventually erode labour arbitrage, that is a long way off yet, says Taylor. “It will not happen any time soon. China and India are continuing to educate their huge populations, and as yet we have hardly exploited Eastern Europe, let alone places like Brazil.”
But even if outsourcing predominates, an internal IT department will remain essential. “Corporate IT has to retain its responsibility for providing technology-enabled business capability, or else it is just a talking shop,” says Platts.
“The ticket for the future of the CIO is the provision of this capability.” This will require not just procurement and supplier management skills, but also an internal core competence in technical architecture.
The IT department will also need to be more proactive in undertaking executive rotation, says Taylor. “It will be an imperative, especially as the number of traditionally educated IT graduates is decreasing, and the industry is calling for the syllabus to be less about learning to cut code and more about learning project management skills and implementing technology.”
Kirkland adds, “IT skills will be far more about things like business analysis and programme management than about technology.”
The same is true up the line, says Platts. “It will not require a technology background to be an effective CIO, and it will become increasingly rare.”
But he says, “It will still be a specialist role. IT will need a specialist way of thinking, and the ability to know enough not to have the wool pulled over your eyes. The IT department of the future will be a hard-bitten business department.”
Skills for the CIO
- Supplier management
- Outsourcing/offshoring management
- Demand management
- Business analysis
- Project and programme management
- Business process innovation
- Change management
- Business performance measurement
- Enterprise architecture
Comment on this article: email@example.com
This was first published in January 2007