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CIOs join elite strategists club
With growing operational and strategic importance of IT,
the role of the CIO is undergoing a transformation. Here's how CIOs are embracing
change to become successful strategists. by Sandeep Ajgaonkar
For most corporations, the CIO or IT Director has been the most recent addition
to the senior management team. But while it may be the latest, the role of the
CIO designate is fast gaining significance and is evolving too.
Even as the business relevance of IT (both operationally and strategically)
has grown, the role of the CIO has undergone a drastic transformation. No longer
is a CIO perceived as a backroom technologist involved in managing the finer
aspects of IT implementation. The CIO now shares the table of corporate governance
with senior management, and shares the all-important task of evolving strategies
that would drive the business.
Indeed, the CIO has become a business strategist.
Facets of transformation
With the rapid pace of technology advancement, the CIO must continually refresh
his knowledge and fine-tune skills in order to remain effective. Add to this
the CIO's evolving role, and the need to focus on management soft-skills like
leadership, communication and strategic planning at the executive level.
Nobody said it would be easy.
In fact they say: "Every transformation is painful and involves a lot of
relearning."
Infrastructure Strategies 2004 captures the facets of this transformation and
on how CIOs are upgrading their skills to stay tuned with the changing dynamics
of management.
Technologist at the core
The CIO has always been a technologist at the core. Of the 250 CIOs surveyed,
nearly 81 percent had worked in the IT department prior to taking the mantel
of the CIO. The other areas in which the CIOs had functional experience are
in Administration (34 percent) and Consulting (24 percent).
While there is no ideal qualification or functional experience that can be specified
for a CIO, a brief stint in other departments—besides IT—like Finance,
Marketing and Strategic planning will help him understand the processes associated
with these departments.
Business process is key
Understanding of business processes plays a key role in the transformation process,
and Indian CIOs are tuned-in on this. 75 percent of the total respondents stress
the importance of understanding of business processes and operations as an integral
part of the CIO skill set.
This is closely followed by Effective communication (73 percent) and Strategic
thinking and planning (69 percent). In his role as a business strategist, the
CIO will have to develop new relationships with senior decision makers in the
organization. He also needs to harness IT to maximize corporate competitiveness
and growth.
While CIOs still stress the importance of technology expertise (thorough knowledge
of technology options at 64 percent, and Technical proficiency at 63 percent),
they have realized the significance of management, communication and strategy
skills.
Reporting structure
While understanding of business processes plays a key role in the evolution
of CIO as a strategist, the reporting structure needs to accommodate the change.
For being a successful strategist, a CIO needs to have direct access to the
CEO or Managing Director (MD). This would help him understand the business focus
and then tune his IT strategy to achieve these objectives.
Sometime back the CIO used to report to the CFO or the COO. But this reporting
structuring is undergoing a change. Now, more CIOs report directly to the CEO
or MD. As per the survey over 45 percent of the respondents report directly
to the CEO or MD. Another 16 percent of CIOs report directly to Corporate or
Group CIO, who in turn reports to the CEO.
Only 13 percent report to the CFO and 3 percent to the COO.
Career move
While the evolution of the CIO from a technologist to a business strategist
is underway, the question is, Where does this transformation lead to? If one
goes by the survey, CIOs while thinking about IT strategy and business objectives
still have their feet firmly fixed on the ground. They realize that understanding
business processes is not equivalent to managing the business itself—an
area that requires totally different skill sets.
Most of them (37 percent) plan to continue in their existing
role as a CIO while about 38 percent plan to move on to become the group CIO
(if such a post exists).
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- The CIO is a technologist at the core. Nearly 81 percent of those
surveyed have worked in the IT department prior to taking the mantel
of the CIO. The other areas in which the CIOs had functional experience
are in Administration (34 percent) and Consulting (24 percent).
- CIOs acknowledge the importance of understanding business processes
and learning management soft-skills. Technology expertise plays second-fiddle
to these areas.
- The top three skill sets necessary to be a successful CIO are Understand
business processes (75 percent), Effective communication (73 percent)
and Strategic thinking and planning (69 percent).
- Most CIOs (over 45 percent) report to the CEO. A majority feel they
share the best working relationship with the same.
- Frequent technological changes and lack of key staff/skill set retention
are the biggest hurdles faced by CIOs.
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 The
role of the CIO is evolving as more functions in business become dependent
on IT. Sanjay Govil, Director - IT, GIS, Cartography & CIO, Eicher
Group, says becoming a CIO should not be the end of the road.
What skill sets are necessary to become a successful
CIO?
The first thing that strikes the mind is good business acumen. Next is
an in-depth understanding of technology and technical trends. Finally,
in today's changing world, good leadership skills are extremely important.
These are the three most important skills that an individual needs to
acquire to be a successful CIO in an organization.
Leading teams, internally marketing IT projects to the board, motivating
the team and interacting with vendors requires a great amount of leadership
skills. Over time, the role of a CIO has been elevated to that of the
management cadre. Therefore, the CIO is expected to appreciate the business
issues and add value to them. Earlier, CIOs reported to other authorities
and were insulated from business processes. That's one reason why CIOs
are now asked to demonstrate good leadership skills. Secondly, Information
Technology has now moved out of the back office to the front office. That's
the biggest change since the days when computers were hidden somewhere
in the organization, and were confined to just accounting/finance purposes.
Now that IT is in the open, the skill set of a CIO has been redefined
accordingly.
How much exposure to the business's functional areas is
required before assuming the role of a CIO? Can you specify the functional
areas that a CIO should be familiar with?
Honestly, it would be unfair to expect a CIO to know the various functional
areas of an organization completely. I believe that a sound understanding
of business processes is critical. It is important for a CIO to understand
the end-to-end business processes of an organization, from interaction
with the business partners to processes within the company that lead to
the final product or service. At the same time, understanding customer
issues is also imperative for IT heads to function efficiently.
Traditionally it was felt that a CIO should have in-depth knowledge of
the financial process, but that is not true any more. Today a CIO is expected
to have an equally good knowledge of operations, finance, customer processes
etc. Therefore, as patterns increasingly seem to suggest, an understanding
of the customers is coming into focus. In certain areas, IT can have a
greater impact than anything else. Those are the areas a CIO should concentrate
on.
The question here is whether or not the CIO should have the same level
of knowledge of the functional areas as the respective functional heads.
I don't believe so. We keep talking about CIOs having a good understanding
of business needs of an organization. I say that in today's world there
is an equally compelling need for the functional heads to understand the
IT processes, and how they can improve the business processes to give
them a competitive advantage.
What hurdles does a CIO face? Are they purely technical
in nature or do business issues also come into the picture?
Technology is now becoming easier everyday and is more or less being used
as a commodity. Therefore the technology issues are slowly diminishing
as problem areas. The real challenges come from software issues. These,
I believe, are the issues relating to change management, which will continue
to occupy the maximum time and energy of a CIO. The second most important
issue is the talent management in any organization. If you are to manage
IT, particularly in India, the demand far exceeds supply. In such a scenario
your ability to manage talent is crucial. It starts right from acquiring
the right talent to grooming, training and retaining it.
Thus, change management, talent management and internal marketing are
the topmost challenges posed to a CIO. These days more technology is outsourced,
leaving little to worry about. That brings us to another area of concern:
managing technology partners and maintaining a healthy relationship with
them. Selecting a right partner itself is a challenge.
Last but not least, influencing the core management to pass IT initiatives
that you want to take in the interest of the organization. Educating the
top management about the role of IT in an organization can be tough.
Who do you believe a CIO should report to?
There is no dilemma here. A CIO should always report to the CEO of his
organization. Whom shall a CFO report to? Whom shall an HR head report
to? It's same as asking whom should a CIO report to? He too is a functional
head in the company, so he should also report to the CEO. The reason is
very simple. At the end of the day, the CEO has an overall perspective
of where he wants to take the business. The functional heads are created
to align to that direction. If the CIO reports to any other functional
head, it dilutes and diminishes the value of the term 'CIO.'
If we look at history, IT originated from the accounts department as EDP
or MIS. That is what most benefited from the automation process. However,
IT has now entered the front office and the IT department has to serve
not only the finance department but also the other departments equally
well. That can only happen if the CIO is reporting to the CEO.
A lot of companies are moving in that direction. You will observe that
IT has made a significant difference in organizations where CIOs report
directly to the CEO. The CFO, to whom many of the CIOs report, has a particular
focus, and then the CIO also becomes aligned to that focus—which
can prove dangerous in the long run.
Does a CIO's growth path lead to assuming a top role like
becoming a CEO? Or is the highest position that can be reached be that
of a group CIO?
I think a CIO, like any other functional head or a senior management executive
in a company, definitely would aspire to take the number one slot. Whether
he really should depends on the person's capability, business acumen and
leadership qualities. This branding is actually very damaging. We can
ask whether a CFO is fit to become the CEO? If a CIO has got it in him,
then why can't he become the CEO?
At the end of the day, we are still conservative. Nevertheless, if you
look around, things are changing, particularly in certain industry segments.
Before Compaq merged with HP, the Compaq CEO was a CIO of an organization.
Therefore, it's a challenge for a CIO to become a CEO, but not completely
impossible. As a CIO you are a part of the race. You have a major handicap
at the start, but accept it and move on.
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 What's
the career path like for a CIO? In rare cases, the CIO has become the
CEO. Becoming group CIO of a large enterprise itself is a big achievement,
and many CIOs aim for that. Sanjay Rawal, General Manager IT, GlaxoSmithKline
(GSK), tells Rahul Neelmani what skill sets a CIO needs to aim for the
top.
What are the skill sets necessary to become a successful
CIO?
Today the role of a CIO is undergoing tremendous change. The CIO has to
be more attuned to the business. He has to be not just well-versed with
technology but also have a sound understanding of the business. In the
past few years, there has been a great shift in how we perceive the role
of IT. Instead of being driven by IT, projects are now driven by business
needs.
Apart from that, the two major skills a CIO should possess are leadership
and project management skills to be able to lead and manage large projects.
A good understanding of the latest technologies should also be an integral
part. It may not be too in-depth, but at least he should be aware of the
changing technology and its proper usage. Knowledge of technologies like
CRM, SCM, SRM, business intelligence is handy in today's competitive world.
Beyond that, the core role of a CIO is overall management.
How much exposure to the business's functional areas is
required before assuming the role of a CIO? Can you specify the functional
areas that are essential for a CIO to be familiar with?
Knowledge of functional areas varies from industry to industry. To be
more specific, the prime areas the CIO should know well are: Supply Chain,
Sales and Marketing and Customer Relationship. If a CIO has done a number
of projects in these areas, it is obvious he'd have picked up sufficient
knowledge about them. This is why we are seeing another interesting trend:
companies appoint CIOs from functional areas such as Supply Chain, Marketing
& Sales etc. It all depends on the vision of an organization and where
IT fits in that vision.
To be specific about GSK, IT is taken very seriously amongst all the functional
areas of businesses. But at some places, IT is still considered just a
supporting area, which is not healthy.
What hurdles does a CIO face? Are they purely technical
in nature or do business issues also come into the picture?
The hurdles are a combination of various things including technical snags
and business issues. The biggest hurdle currently is to get the required
IT budgets. The other area where we have to work hard (although it's not
really a hurdle), is achieving the Return on Investment (ROI). It also
alters the way IT works in many ways. One has to attain higher goals with
a small amount of money. It is not as easy as it looks.
Who should a CIO report to?
Again, this varies in different organizations. It depends on how much
value IT has been able to create for a particular organization—whether
the organization sees it just as a strategic enabler or as a key factor
to make a difference. Even today, you'll find IT reporting to Finance.
A lot depends on the kind of finance person you report to. Does he have
the vision to take IT and business forward? Does he have some knowledge
of IT? The existing relationship between IT and business also matters.
Ideally speaking, the CIO should report to the CEO. The CIO is expected
to bridge the gap between IT and business. The business rarely understands
technology, so the CIO has to play the role of a catalyst. This can be
done well if the CIO reports to CEO, who has a clear vision of where he
wants his business to be.
Does a CIO's growth path lead to assuming a top role like
becoming a CEO? Or is the highest position that of a group CIO?
In a few cases the CIO has become a CEO, but it is the exception rather
than the rule. Normally, it is the marketing or the financial heads that
get the post. This trend is more prominent in IT organizations. But becoming
group CIO of a large enterprise itself is a big achievement, and most
CIO's aim for that. Increasingly now, CIOs are being made to assume the
role of other functional departments like Supply Chain, Marketing etc.
This should broaden the scope of the CIO.
In the past, the CIO has grown in a purely technical atmosphere. With
the changing environment, business people are also becoming CIOs of companies.
Even so, a CIO is still seen as a technical person, and unless a CIO can
prove his business acumen, the road ahead is rough.
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- The role of a CIO needs to change from a backroom technician to that
of a business strategist. Many CIOs are already undergoing that phase
of evolution.
- A CIO needs to have a brief stint in functional
areas besides IT. This would help him understand the nuances associated
with these departments.
- The key to becoming a successful strategist is the understanding
of business processes and learning management soft-skills (like effective
communication, strategic thinking and planning).
- The organizational reporting structure has to change to sync with
the CIO transformation. The CIO should report directly to the CEO.
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