Kathy Gibson reports from Gartner Symposium – As the digital business becomes a reality, the CIO is having to re-invent his role in the business in order to remain relevant.
Gartner’s Lee Weldon says the 2015 CIO Survey shows that CIOs are starting to find themselves positioned as a back-office player or enabler rather than a leader charge with transforming the organisation.
“So how do we as CIOs make sure we stay relevant as we address digital challenges?” he asks.
Weldon explains that we are now in the third age of IT. The first was the age of IT craftsmanship; the second was the age of IT industrialisation; and the third is the age of digitalisation. “Around 51% of companies believe they are entering the age of digitalisation,” he says.
The difference with this stage of IT, Weldon adds, is that digitalisation embraces the entire business. “It is no longer about technology as a back office enabler, but technology applied to a business model. It’s about rethinking products and services, what we do as an enterprise and how we distribute value to our customers and stakeholders.”
Although African CIOs are slightly behind the curve, with about 25% believing themselves on the cusp of the digitalisation age, Weldon says this is an opportunity for the market to learn from what’s happened in the rest of the world.
As we approach 2015, he says that expectations on the CIO are changing. CIOs need to determine what their aspirations are for the coming year, and African CIOs need to focus their agenda for 2015.
CEOs are focused on growth and IT-related priorities for the year ahead, so IT is a hot topic in the boardroom.
“There is a high expectation, but CIOs cannot necessarily take the same old path to growth,” Weldon says. “We are now looking to growth through innovation – using technology to enable new paths, open new opportunities, new customer groups and new market segments.”
The CIO is still perceived by the CEO as the natural leader for digital business innovation, but the lead isn’t significant, indicating that digital transformation is seen as a team sport and all leaders need to be involved.
New skills are going to be critical going forward, Weldon says, because when digitalisation starts to impact an industry or market it can hit hard and quickly. Today, only 41% of African CIOs believe their IT organisation has the right skills and capabilities to meet the coming challenges, down from 54% last year.
“The skills that made us successful in the industrialisation age are not necessarily the right skills for digitalisation,” Weldon points out. “CIOs really need to be thing about new skills profiles.”
In the new environment, the CIO has one of four types of relationships with his stakeholders: at-risk, transactional, partnering; and trusted ally.
The at-risk CIO has not met the business’s expectations or SLA, and doesn’t respond to new developments. The transactional CIO acts almost like a supplier to the business, managing demand and supplier relationships. This CIO happens to work in the organisation but is effectively it’s supplier of IT services.
The partnering CIO is respected as a credible leader of the IT organisation. He has a close working relationship with stakeholders, providing services that meet the needs of the stakeholders and understanding what the business needs.
The trusted ally CIO has a different relationship with the CEO and is essentially a business leader – one of the CXOs who also happens to have responsibility for IT. The trusted ally looks at the broader perspective of the enterprise and the industry it operates in and understands what’s needed for it to be successful.
In Africa, 54% of CIOs are considered to be partners, 25% transactional, 18% trusted ally and 4% at risk. With a higher than global average for partnering, African CIOs have done well to move out of the transactional role.
“But the challenge is, when you move to digitalisation, the expectation for the CIO shifts to someone who can not only respond to demands, but one of the business leaders working to shape the demand, what we need to do to be successful and how to use technology to do that.
“We all know that the push to digitalisation is coming, so this is where we need to focus.”
To become a trusted ally, CIOs need to take some action, Weldon says.
The CIO as trusted ally is perceived as a business leader who happens to be in charge of IT. His reputation is built on business impact one of the CXOs involved in shaping business strategy.
Trusted allies have a different focus and measure success differently. They focus on business value creation, business model innovation, enterprise performance, growth and transformation. There is less focus on business operational efficiency and performance against SLAs, IT operational metrics and IT cost optimisation.
Trusted allies create lighter, adaptive IT organisations that focus on innovation and growth.
The bimodal mind-set is agile by default, and trusted ally CIOs have a stronger and higher-performing use of the cloud, employing it in an agile way to respond to business needs and to ramp up innovation.
Their leadership style is different too, with trusted ally CIOs driving visionary leadership.
To meet the coming challenges and remain relevant, Weldon says the CIO agenda for 2015 should include five steps to becoming a trusted ally: measure outcomes not activities; regain control of the core; formalise the bimodal IT organisation; lead through vision; and extend leadership capabilities.
In terms of measuring outcomes, Weldon says the success of activities should be the new metric.
“Traditionally we measure by cost and service levels – as much as 85% of African CIOs still use these metrics. What we are really doing here is measuring activities, but impact on the business. Instead, we should look at the financial value generated from IT and the non-financial value generated from IT. We need to have a changing mind-set around how we communicate metrics.”
To regain control of the core, CIOs need to move from thin organisation with broad general skills, and a heavy reliance on large vendors, to an IT organisation that mixes strong cross-functional management capabilities with deep specialist skills in the areas that are core to business success, and a mixed profile of large and small suppliers.
Formalising bimodal capabilities to balance industrialisation with digitalisation means CIOs need to go from reactive agile project management capabilities to enterprise bimodal capabilities. In Africa, 45% of CIOs apply agile project management in response to the need for speed; while 46% see the need to overhaul their agile skills – to build more of a professional team. The enterprise bimodal mind-set moves beyond projects to include changes in governance, funding and adaptive sourcing.
The new leadership skills balance a pragmatic focus on execution with creating and communicating a clear vision, letting CIOs open up the minds and thinking of leadership colleagues.
“The new CIO focuses on communicating clarity in their vision for digital business growth and transformation – by scenarios, showcase, prototypes or digital business moments,” Weldon says. He then proceeds with small investments and experimentation, which allows for flexibility in executing the vision.
The final step is to extend leadership capabilities to address the new challenges. To help CIOs free up their time, three key new leadership roles are emerging: the IT COO to run the operation of the IT organisation; enterprise architecture – one of the most critical capabilities to achieve change; and the Office of the CIO to help with strategy and governance.
Additional roles and capabilities on the horizon are digital transformation lead and head of IT innovation.