EIU study: CIOs are top contenders for CEO role, but …
By Gabey Goh November 26, 2014
- 66% of respondents believe CIO should be potential candidate for CEO
- But only 41% said CIO role was strategically important to the business
FOR Neville Vincent, there was a slightly contradictory finding in the The Future for CIOs: Which Way Is Up? report by The Economist Intelligence Unit (EIU), sponsored by Hitachi Data Systems (HDS).
The senior vice president and general manager for Asia Pacific at HDS noted that 89% of respondents said the chief information officer (CIO) has a strategic role – yet only 41% said it was strategically important to the business.
In addition, one in five board- or C-level executives (and more than one in four chief executive officers) view the CIO as having a strategic role because they value their input, something that CIOs are less likely to appreciate.
“Senior management recognises that IT is important, but is it important enough to be strategically important to the business?
“Drilling down on the findings, only about 20% would actually seek out the CIO for valuable input. It shows that the CIO today is still being compartmentalised as being ‘the technology guy’,” Vincent said.
While technology has provided CIOs with plenty of opportunities to make their mark on their respective businesses, relatively few have moved on to become a chief executive officer (CEO).
According to the EIU report, CIOs have won the respect of the business, but reaching the next level will be difficult – it may take more than technical expertise to convince senior management that today’s successful CIO will be a good choice for tomorrow’s CEO.
In Singapore, responses are mixed and companies are not overly confident that a CIO can become CEO.
The EIU report surveyed 1,000 senior executives from 13 countries across Asia Pacific, including Australia, China, Hong Kong, India, New Zealand, South Korea, Taiwan and six members of the Association of South-East Asian Nations (Asean).
The findings reveal that the modern CIO has a strategic role that goes beyond just managing the IT function in nearly nine out of 10 (89%) organisations. In addition, the majority of respondents (84%) agree that the CIO should be involved in all business-critical decisions at an early stage.
Vincent said that research shows that CIOs are well respected by the business, particularly during the past year, when they helped firms cut costs by being more efficient.
“Looking forward, CIOs need to take the next step and contribute to business growth by developing new products or services and generating revenue,” he added.
The report also highlighted that 66% of respondents believe that the CIO should be a potential candidate for succeeding the CEO – demonstrating noticeable cracks in the glass ceiling (see table below).
CIOs and other IT executives seem to be aware of the areas where they will be required to deliver. However, they may underestimate the skills and experience needed to achieve this, according to the EIU report.
In Singapore, 91% of respondents feel that CIOs should have final decision-making authority on all IT expenditure, and that they should also be involved in business-critical decisions at an early stage.
According to CEOs, the top three areas where CIOs should develop their skills are a greater understanding of the business (41%); the ability to think strategically (26%); and an awareness of broader industry developments (23%).
However, none of the following feature at the top of the CIOs’ own development goals, which are demonstrating business case for IT investment (28%); technical skills to integrate new technologies (24%); and knowledge of emerging technologies (23%).
According to EIU senior editor James Chambers, CIOs have earned the right to be considered a candidate for CEO, alongside their C-level counterparts, but it will take more to secure the top job.
“Ambitious candidates will need to take the initiative to develop their own knowledge and spend time in other parts of the business as they explore ways of creating a competitive edge for their organisations,” he said.
CIO’s role to drive innovation and growth?
Innovation has been a major driver of revenue growth with almost 3 in 5 companies surveyed, a trend that is expected to continue upwards.
More than four out of five executives across all functions (85%) agree that the CIO should drive innovation across the business, even though IT is considered a driver of innovation at less than a third (28%) of companies.
Thus, technology may have thrust the CIO into the spotlight, but his or her career is not tied to IT.
In contrast, fewer than three out of five executives (56%) in Singapore consider innovation a revenue driver. Singaporeans, in fact, point towards the government (49%), the CEO (47%), the organisation as a whole (47%), and finally IT as a driver of innovation (42%).
HDS’ Vincent (pic) noted that while innovation is seen as important and as a revenue-generator generally across the region, IT is not viewed as the main driver.
“CIOs will need to take ownership and lead the innovation with their technical expertise and deep understanding of the business,” he said.
Particularly in Singapore, obstacles that CIOs will need to overcome include a lack of budget and/ or resources (24 %), businesses being reluctant to change (13 %), and the standard of existing IT infrastructure (11 %).
READ ALSO: Singapore IT depts struggling to meet employee expectations: Telstra research
Steps to stepping up
Until recently, it was believed that the rapidly changing IT environment would make the CIO irrelevant, or at least reduce his or her responsibilities to technology governance and information security. The EIU survey shows that in Asia Pacific at least, it is not the case.
To succeed, CIOs need an accurate idea of how existing IT assets can increase their organisation’s revenue, and not just focus on making better business cases for yet more technology.
The report suggests that CIOs can further drive revenue generation and business growth by following these five steps:
2) Better align IT with business needs: CIOs should be looking beyond their department, focussing on discovering new ways of harnessing technology to increase their organisation’s competitive offering.
3) Deliver return on IT investment: A CIO’s future prospects are likely to be determined by money made more than money saved. The vast majority of executives now expect CIOs to generate revenue – particularly among CIOs themselves.
4) Demonstrate leadership: Ambitious CIOs need to acquire additional knowledge and experience beyond their traditional IT skillset. This requires taking the initiative, such as immersing themselves in other parts of the business.
5) Drive the innovation instead of just contributing to it: Technology can facilitate or obstruct innovation, but it is no cure for all problems. CIOs need to invest in understanding the business and working closely with C-level colleagues to drive innovation and be involved in business-critical decisions at an early stage.
“Ultimately, for a CIO to follow in a CEO’s footsteps, they will need to take ownership of information, better align with business needs, and focus on driving innovation forward,” Vincent said.
To read The Future for CIOs: Which Way Is Up? report [PDF], click here.
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