With more and more CIOs coming from outside IT, the challenge is to nurture good managers - combining IT skills with commercial know-how - from within the department
When Margaret Smith steps down as director of business information systems at Legal & General next month, she will not be replaced by anyone in the IT department. Instead, Mike Berry, Legal & General's managing director of retail investment, will become the head of IT.
Smith, for one, is not surprised by the appointment. "The old career path for an IT director was to start out cutting code and work your way up through the ranks," she says. "But more and more IT directors are being recruited from outside IT because that is where you find the skills and qualifications that are needed to do the job well."
Legal & General is one of a growing number of firms looking outside the IT department for senior technology executives. As many as a third of new chief information officers in the UK come from a non-technology background according to Dave Pye, managing director of recruitment group Spring.
The last two CIOs the company recruited for clients were finance managers - a trend Spring sees gathering pace. An increasing number of companies are recruiting directors to head both finance and IT functions. One company even recruited a combined human resources and IT director.
"IT directors used to be hired based on what projects and platforms they had worked on, but we are now being asked to identify people with strong negotiation, communication and marketing skills," Pye says.
The career path for IT directors has changed, Smith says, "The old model was that you were a techie, then a manager and then you worked up through the ranks. More IT directors are now from other disciplines."
Smith recently appointed a program manager into an IT operations position at Legal & General, despite some initial resistance from colleagues. "There was some concern he did not have an IT background and how he would run IT systems," she says. "But he was bright and he knew business and in six months he was doing a great job."
Paul Broome, IT director at online directory service 192.com, freely admits that his programming skills were never particularly impressive. "I certainly was not hired for my technical credentials," he says. "I think a good IT director is probably someone like me - not a great programmer, but someone who has a good understanding of how business works and how technology can be used to help the company work better."
Similarly, when Tony Eccleston was appointed IT director of DHL two years ago, it was not his knowledge of application development that got him the job. Although he had worked with technology for more than 20 years, it was not until he accepted a position in business operations that his career really took off.
"I was working at Glaxo when it merged with Wellcome and I was offered the chance to work in business integration," Eccleston says. "It was a rare opportunity to work in logistics, sales and marketing and research. I gained a real understanding of the business I would never have achieved by staying in the IT department. I would never have become an IT director without that experience."
When it comes to filling an IT director's shoes, IT staff are now competing against other departmental staff. "In some cases, the finance guy might make the better IT director," he says. "Yes, it is important that someone on the board has an awareness of IT, but does that have to be an IT person? Absolutely not."
The increasing trend towards appointing IT directors from outside the IT department is down to two factors, says Denise Plumpton, chairman of user group the Corporate IT Forum (Tif). "On the one hand there is a shortage of experienced IT professionals who want to be IT directors, and on the other hand the role of the IT director is more business-focused," Plumpton says.
Many experienced IT workers simply do not want the hassle that comes with being an IT director. She believes this is because the job is widely seen as stressful, underpaid and low status.
What is more, becoming an IT director might be bad for your career. "The average tenure of an IT director is only three years. Understandably, some people would rather stay in a more junior role with more job security," says Plumpton.
The pressure on IT departments to cut costs has made the profession less attractive to those on the middle rungs of the career ladder, adds Cliff Kurn, IT director at Parity, a recruitment and training company.
Salary increases in IT simply have not matched the pay rates of other professionals in the boardroom, he believes. "When business constantly reduces spend on IT, people realise they can make more money elsewhere. You end up with a natural migration out of the industry because people do not want to be IT directors."
This view is shared by Smith, based on her experience at Legal & General. In 2002, the company conducted a survey with respondents' anonymity guaranteed to explore the aspirations of IT managers. The results were extremely surprising: of the 60 staff surveyed, only 12 wanted their boss' job and only five employees said they hoped to become an IT director. "Basically, the pay differential was not considered enough to compensate for the hassle that comes with the IT director's position," she says.
Smith has found that this attitude is most prevalent among IT professionals in their late 20s and 30s. These employees are increasingly concerned about work/life balance and do not put the same value on promotion at work as the previous generation. People that age are more likely to make decisions about their priorities in life and money is not the big driver in their career, says Smith.
Skilled IT workers with 15 years' or more experience in the industry are increasingly attracted to contracting and consulting. "I see people who are with companies for a long time leaving in droves to become self-employed consultants," says Plumpton. "If you are in your 40s and your IT department is outsourced, it is tempting to take the redundancy cheque to pay off the mortgage and then take the opportunity to work on your own terms, consulting or doing project management."
Where IT staffers do want to become IT directors, it seems they may not have the skills to do so. A good IT director needs a working knowledge of risk management, commercial negotiation, contract management, marketing and governance, says Dawn Marriott, managing director of Capita IT Resourcing.Those skills can just as easily be learned in finance or operations. "I definitely think in five years' time it will be far more common to recruit CIOs from outside IT," she says.
Part of the problem is that new recruits are increasingly taking qualifications that focus on technology at the expense of business. House of Fraser does not have a problem recruiting technical staff, but IT director Frank Berridge has noticed a definite shortage of skilled business analysts.
"People coming into IT do IT courses which focus too much on programming and software rather than the business stuff," he says. "You end up with an IT department with lots of technically-minded people. We already have a shortage of good business analysts and that will work its way up to more senior positions over time."
Given the increasing shortage of IT professionals who are willing and able to take on an IT director's role, Berridge believes it is only a matter of time before marketing, finance and operations managers begin to take on the CIO's role. "Being an IT director is all about asking the right questions and being able to ask those questions of people who can give you the answers. So to a certain extent, does it matter who asks the questions?"
But he still firmly believes that the best possible IT director is someone with their roots in the IT industry, someone who can offer the best of both worlds. "Working in IT means you have an appreciation of just how long things take, or the kinds of things that can and do go wrong on projects," he says.
Berridge has some experience of working for an IT director who was technically illiterate. In the 1970s, he was working in a bank that had just installed computer systems, and was explaining to a group of trainees how information was read from disc and written to tape. He was immediately taken to one side by the company's IT director.
"He told me not to use phrases such as read and write, because the tape actually 'remembered' information," says Berridge. "This bloke had attended a crash course in computers and that is what he came back with."
Becoming an IT director
Got your eye on the IT director's office? Future IT directors will need to focus on business and commercial skills more than technical know-how. An IT professional who can tick both boxes could edge out the competition. Here are some strategies to improve your chances:
- Consider joining a networking or leadership forum such as the Prince's Trust Leadership Forum. This shows you can communicate outside IT and have good business awareness
- When working on IT projects, ask to be involved in commercial parts of the project, including setting service level agreements and tracking budgets
- Try to work in all areas of the IT function ending up in the front office, developing solutions to business problems
- Ask if your company has a secondment scheme so you can work in different business roles for a short period. Six months in marketing or finance can make all the difference to your outlook and prospects
- Try and network inside the company to get a senior sponsor to champion your cause.
Developing an IT director
The very best results come from a professional who can combine commercial and technical skills. To help develop the next generation within your IT department, consider the following:
- Think about implementing flexible hours or benefits for senior IT staff to prevent them moving into consulting or contracting
- Eradicate ageism in the IT department. Candidates in their 30s and 40s are often seen as "too young", but many of the best IT directors took on the role at this stage of their careers
- Consider recruiting non-IT graduates and managers. If a candidate is bright enough, they will pick up the technology know-how on the job
- Assign mentors and business coaches to new IT recruits to ensure the right skills are being developed in the IT department.