Infrastructure Strategies '06

Evolution of the IT department

The IT team has metamorphosed into a multi-skilled entity over the years. A look at the IS survey's findings on the CIO and his team. by Anil Patrick R

The first aspect of a CIO’s job that IS 2006 explored, pertained to his tenure and experience. It was interesting to observe that a majority (79 percent) of Indian CIOs have an experience of 10 years or less. Only 21 percent of Indian CIOs have been a CIO for over a decade.

This is not surprising since the development of IT as an independent entity is relatively new. As Chinar Deshpande, CIO, Pantaloon Retail (India) rightly observes, IT started to have an independent identity only in the post-1990 timeframe.

We decided to slice and dice the ‘10 years and below experience’ segment a bit further. It was interesting to discover that a majority of these CIOs (29 percent) have been in that post for a period of three to six years. This is followed by 26 percent of CIOs with leadership experience between one and three years. Six percent of CIOs have been in the post for less than a year.

Though majority of CIOs are relatively young, less experience at the helm does not necessarily mean lack of skills. Talent counts more than experience for most Indian organisations. Having said that, further exploration is needed to find out these CIOs’ backgrounds.

Techies rule the roost

Most of today’s CIOs are hard core technologists. A whopping 80 percent of them have worked in the IT field before becoming a CIO.

Significantly, 29 percent of the CIOs have worked in administration. Consulting comes next with 21 percent. Finance (20 percent) and engineering (16 percent) come next as the CIO’s functional domain experience areas.

But are most CIOs pure-play IT professionals? Not always, since most organisations stress upon the need for CIOs to have cross-domain knowledge. So the typical CIO is more likely to have a core expertise in IT backed up by stints with other teams. However, CIOs with an IT background are on the increase.

“The CIO is an ambassador”

P J Jacob Deputy General Manager The South Indian Bank “The CIO is the ambassador of his organisation. That is why effective communication skills are important to become a successful CIO. The CIO should be aware of the business processes and operations of his organisation. In short, he must know the ins and outs of the entire operations as most respondents rightly pointed out. Lack of key staff and skill retention are among the biggest pain-points for CIOs. However, I do not subscribe to the view, ‘lack of time is the reason for lack of strategic thinking.’ For thinking is a continuous process and shortage of time is no valid excuse. On the work experience front, it is not the number of years but the CIO’s understanding of his organisation’s functioning which counts. Thus, whether the CIO has three years of experience or 25 years, he should first be able to understand the company and its operations. A new entrant will have problems with understanding this aspect, but a successful CIO will know that. Irrespective of whether the CIO is from IT or administration, he has to be a good leader and have excellent business knowledge. He should understand that IT is a facilitator for business growth. The banking sector is a good example where many of the successful CIOs are actually from non-IT backgrounds. When it comes to the CIO’s future career path, becoming a CEO is certainly one of the possibilities. There are many cases where CIOs have become CEOs. A successful CIO will already have the qualities necessary to become a CEO so he should not curb his ambitions.”

“Possibilities abound for the resourceful CIO”

Chinar Deshpande, CIO Pantaloon Retail (India) “The findings show that 70 percent of CIOs believe that a successful CIO should understand business processes and operations. I would say that if the CIO is from a large organisation, he should have the potential to be more of a business leader who is aided by technology. This is essential for the CIO to be able to influence business changes. For example, he will be able to effect process changes, come up with new business models, envision new business avenues and so on using technology as the backbone. In the organisation, he can don the role of a Chief Knowledge Officer. This will help him make a difference to aspects such as improving the organisation’s culture. He can execute things like trend identification, employee performance measurement under different conditions, knowledge management, discussion forums and so on. The CIO can even manage large scale projects which involve participation from multiple teams. So the possibilities for a CIO who understands the business are immense. I have some observations to make with regard to the survey where 20 percent of CIOs were from backgrounds such as administration and finance. If the CIO’s age is in the 40 to 50 range, there is a strong chance that he is from a non-IT background. This was because pre-1990, IT was just a support function that was ranked under finance or administration. So it was a natural progression for non-IT professionals who used to handle IT at that time to become CIOs later. If you take the CIOs in the 30 to 40 age group, you will find that they are professionals with strong IT backgrounds such as consulting and development. It is just a matter of time before the entire CIO community consists of people with hard core IT backgrounds. As the survey rightly points out, lack of key staff and skill retention are a CIO’s biggest problems today. That is why I feel that it is best to go in for a combination of outsourcing and creating a motivational environment within the IT team. It is not possible to outsource every function, so every CIO must figure out the mix that works for his organisation. In my opinion, the ideal combo is when 30 percent of the jobs are performed internally and 70 percent outsourced. This will help me pay more attention to my team as well as aid them to have a long-term career path within the organisation. At the end of the day, it is essential to project ourselves as the best organisation for IT professionals to work in. Otherwise talent retention will be impossible. While I can’t comment on the general mindset, I personally feel there is no need to restrict my ambitions of becoming a group CIO. My function requires me to know all aspects of the business. So I think I can evolve to become a good general manager of the business. This is becoming possible for CIOs these days. Take the case of organisations which spin off IT as a separate process centre that caters to the organisation’s internal requirements as well as that of other organisations. For the CIO this involves assuming the role of a CEO for the new business entity. He has to assume responsibility of managing the internal resource centre and slowly moving out. That is why I feel that there is no need for me to limit my horizons to just becoming a group CIO.”

The CIO must-haves

So what are the essential skillsets for a successful CIO? Understanding business processes and operations ranks highest with 70 percent of CIOs listing it as topmost priority.

Second on the essential skillsets list are effective communication skills according to 62 percent of CIOs. Strategic thinking and planning skills come third with 54 percent of CIOs rooting for them.

The most surprising finding was that thorough knowledge of technology ranks only fourth on the priority list with 48 percent of CIOs listing it as essential. This is followed by technical proficiency (40 percent).

Reporting relationship

Next on the IS ‘find out’ list was the reporting relationships that CIOs follow. There has been significant progress for CIOs on this front since 40 percent of CIOs report directly to the CEO.

The incidence of CIOs reporting directly to the CEO is highest in the services vertical (71 percent), followed by BFSI (47 percent). 45 percent of CIOs report directly to the CEO from the chemical & pharma and manufacturing & engineering/auto verticals respectively.

16 percent of CIOs report to the corporate/group CIO while 12 percent report to the CFO. Four percent of CIOs report to the COO while 23 percent report to officials other than mentioned above.

Small is beautiful

Small IT teams seem to be the order of the day considering the fact that 67 percent of organisations have a maximum of 25 employees in IT. This trend is easily explained by the fact that outsourcing as well as extracting the maximum from resources is the order of the day.

Larger IT teams are on the wane since only 13 percent of organisations have IT teams with 26 to 49 personnel. Just 5 percent of organisations have IT teams comprising 50 to 75 personnel. Two percent of organisations have teams of 76 to 100 members. Teams with higher head count than this are 5 percent for 101 to 250, 4 percent for 251 to 400, 2 percent for 401 to 500 and 2 percent for 1,000 and above.

Incidences of smaller IT teams are likely to increase over the years as outsourcing increases. Problems such as lack of skilled manpower and high attrition will be driving this trend.

CIOs have already started using a mix of internal teams and outsourced functions for better infrastructure management. Total outsourcing as in the case of HDFC Bank and Yes Bank is yet another trend which will trim down the size of enterprise IT teams.

Problems, problems

Being a CIO is not an easy task as all our respondents readily testified. According to the results, lack of key staff and skill retention is the biggest problem faced (49 percent).

Shortage of time is the second biggest problem that’s cited by 34 percent of CIOs. The third biggest challenge ranking is shared by inadequate budgets and prioritising, ineffective communication with users, and overwhelming pace of technology change (as per 27 percent of CIOs).

Talking to users

Communicating with users is essential if a CIO has to be successful. This is important to build trust levels and good working relationships with the rest of the company.

However, user communication does not seem to be high on the CIO priority list. Only 27 percent of CIOs communicate with IT users on a weekly basis while 13 percent communicate on a monthly basis. A mere 2 percent communicate with users on a quarterly basis. A large percent of responses (51 percent) were in the ‘others’ category, thus indicating that there is no specific process or frequency in place for most of India Inc. Two percent admitted that they do not have systems in place for communication with IT users.

On the user satisfaction measurement front, 66 percent of organisations measure it internally for employees. Four percent of organisations do it for external entities like business partners and customers. Organisations which perform both external and internal user satisfaction level measurements comprise 13 percent. Fifteen percent of organisations never go for measurements.

This is a bad trend which can cause problems for CIOs in the long run. While it is impossible to satisfy each and every user demand, the users have to be given forums to communicate with the CIO. This can be in the form of intranet portals or online discussion forums, poster campaigns or contests for users. Face-to-face meetings with different teams can be conducted at specific intervals to promote such communication.

In addition to keeping the CIO updated vis-à-vis ground realities and user satisfaction levels, these activities will help him get to grips with operational difficulties. In fact, many successful CIOs admit that communicating with IT users has helped them come up with innovative strategies and solutions.

Career planning for CIOs

Where will the CIO move on to? Does he wish to be the CEO, next?

From the IS 2006 results, it is evident that most CIOs do not harbour ambitions beyond their present role. Thirty-six percent of CIOs want to move on to being a group CIO while another 34 percent want to continue in the existing role.

Just 9 percent of CIOs have ambitions of becoming the CEO. This is surprising since many a CIO has already achieved sufficient cross-functional expertise to aim for the top job. Five percent of CIOs have dreams of becoming the next COO and CFO respectively.

It is high time that CIOs realised their strengths and started capitalising on them further.