CIOs in 2014 - disruptors or disrupted?

Jon Reed Profile picture for user jreed January 8, 2014
Summary:
As 2014 kicks in, we're already bogged down in the usual CIO clichés about disruption. I went looking for some fresh answers.

Businessman with bow and arrow
As 2014 kicks in, we're already bogged down in the usual CIO clichés about disruption and whether the CIO can be an agent for change. We've heard about the supposed shift of tech budgets to the CMO, CIOs losing control to the lines of business, the loss of control to 'Shadow IT', and even the revenge of the CIO - if indeed there is a security backlash caused by cloud data privacy concerns. But what's the reality on the ground?

I went looking for some fresh answers and fresh data. What I found confirmed my view that CIOs need to pursue change or face irrelevancy, but there were some surprises worth noting.

CIO.com: different types of CIOs have very different 2014 outlooks

Results from CIO.com's 13th annual 'State of the CIO" survey provide a good starting point. For the 2014 edition, CIO.com surveyed 722 CIOs spanning geographies (41 percent of respondents hailed from Europe, the Middle East, or Africa).  The survey found three distinct groups of CIOs with very different outlooks for 2014:

  • 25 percent of the 722 CIOs surveyed reported that the IT group is perceived by colleagues as a true business peer, or in some cases a 'game changer'.
  • 48 percent of CIOs conceded that their IT groups are viewed by fellow employees as a cost center or service provider.
  • 28 percent  - a substantial minority - say the CIO role is being 'sidelined' at their companies.

My initial response? CIOs at most companies face an uphill battle to business relevancy. As expected, the views from each group come off as if they are working entirely different jobs that happen to have the same job title. Perhaps there is some truth to that. Of the 25 percent who see their role as a peer of business,  Kim S Nash of CIO.com comments:

These first-class CIOs identify their top activities as driving business innovation, cultivating partnerships and developing business strategy. They control the majority--65 percent--of spending on IT. They have an excellent relationship with the CEO, reporting to him and sitting on the executive committee. They draw on deep bench strength in the IT group and focus on external activities, such as meeting with customers. And like the CEO and the rest of the C-suite, these CIOs enjoy extra pay when the company reaches sales and profit goals.

Day-to-day life isn't so spiffy according to the 'IT-as-cost center' group of respondents. As Nash says: 'Their top activities are improving IT operations, deploying new systems and controlling IT costs. Managing IT crises is also high on the list. That sounds like a CIO job description from 1995.'

But even that retro-feeling job description pales compared to the predicaments of the substantial minority of CIOs surveyed who indicated they are 'sidelined.' CIO.com reports that those CIOs who feel sidelined were more likely to say they're asked to be innovative, but aren't sure how to do that (52 percent of sidelines CIOs felt this way, versus 37 percent of the rest surveyed).

Not surprisingly, sidelined CIOs also controlled less of the IT budget than others surveyed. and they are much more likely to cite concerns about the increase in Shadow IT. Nash concludes: 'Overall, they spend more time on cost control, security and negotiating with vendors, and less time leading change and driving business innovation.'

2014 priorities and skills gaps

CIO.com's State of the CIO: 2014 slideshow includes a breakdown of CIO priorities for 2014:

cio.com priorirites

Source: State of the CIO: 2014 slideshow

I was not surprised to see skills development figure prominently on the 2014 agenda. The lack of skills for next-gen IT projects is a common refrain whether you are talking big data/analytics (#1 on this list), mobility, or cloud infrastructure management.

Perhaps most concerning for CIOs: the shift to a customer-orientation is also imposing skills pressure. 47 percent of the CIOs surveyed reported difficulties getting their IT staff to be more business-oriented and customer-facing. (There was some regional variation here, with 50 percent outside North America citing this challenge, compared to 42 percent within North America).

One tidbit on the much-hyped CMO angle noted in the survey writeup: 'Despite the talk from Gartner and others that the CMO and marketing group are poised to take dollars away from IT, our survey finds that CIOs expect the portion of tech-investment money under IT's control will remain pretty much the same in the next three years: 65 percent now and 66 percent in 2017.'

The IDC view: cloud momentum will force risk profiles to shift

As a basis of comparison, I reviewed IDC's research from their Top Ten Market Predictions for 2014 (most of these were also CIO-related). The IDC predictions hit on similar themes, including:

  • In two years, over 70 percent of CIOs will change their primary role from directly managing IT to becoming an innovation partner.
  • Before 2017, only 40 percent of CIOs will rise to produce business enhancing insights from Big Data and analytics.
  • Enterprise business mobility will require 60 percent of CIOs by 2017 to support an agile architecture with next-generation mobile applications.
  • By 2016, 80 percent of the IT budget will be based on providing broad portfolio of IT and business services.

And, the one that really jumped out: 'Seventy percent of CIOs will increase enterprise exposure to risk in order to accelerate business agility through increased cloud adoption.'

Verdict

Disruption hype aside, perhaps the only generalization we can make about CIOs in 2014 is that complacency is a recipe for career obscurity. Claiming that CIOs are under pressure may be a given, but who in the enterprise is not under some kind of performance pressure as companies square off against nimble competitors?

The data I've seen (including what I cited here) indicates that CIO generalities fail when subject to the filters of geography, industry and corporate risk profile. Not every company sees IT as a competitive advantage; not every manufacturer is working on smart products with embedded technology. But - most are.

I would not advise CIOs who find themselves stagnating in IT-as-cost-center culture to wait for organizational change. Not when there are so many examples of CIOs shifting to a customer orientation and adding to the bottom line.

The CIO.com report includes a number of examples, such as Rick Roy, CIO of CUNA Mutual Group. Responding to customer needs, Roy's team built a smart phone app that lets customers get a car loan from their credit unions while they are sitting at the car dealership (many customers don't want to work out a loan with the dealer and they don't want to drive back and forth to their own bank).  Roy reports that $1 billion in loans have been issued via the mobile app his team built.

It's worth questioning whether being perceived as a service provider is a predicament - it could be an opportunity. As I explored with Sina Moatamed in the CIO Cloud Disruptions piece, the future of IT could well be as a service broker and application storefront, providing on-demand access to services needed not only by the business, but by external constituencies.

For such CIOs, internal skills as a service provider can be shifted to a storefront consumption model rather than starting from scratch. As far as the skills development questions, there are no simple answers there. Savvy CIOs will develop skills models that go beyond classroom training and pricey consultants into the realm of online learning, informal knowledge transfer, and - not to be overlooked - a structured mentoring program.

My final recommendation to the CIO in transition: worry less about being social on channels like Twitter and LinkedIn - at least till the transformation to a business services broker is well underway. The 'social CIO' is overrated. The customer-driven CIO is not.

Image credit: Businessman with bow and arrow © alphaspirit - Fotolia.com

 

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