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State of the CIO 2017: ‘Be prepared for anything’

State of the CIO 2017: ‘Be prepared for anything’

Our annual survey finds the CIO role becoming more challenging, but also rewarding and critical to the success of the business, or smooth running of the organisation.

Robin Johansen has observed the role of the CIO continue to broaden, as his contemporaries utilise ICT for better business today, while looking into the future.

CIOs are having to make some big decisions in an increasingly turbulent period, observes Johansen, who was CIO at Beca for 13 years and is now an independent ICT strategist and consultant in Nelson.

As he puts it, CIOs have to work through both a big picture and the local perspective of the market. How these will impact their role, their teams and their respective business or organisation, and the overall sector it operates in, must all be considered.

Johansen shares his insights on challenges and opportunities for ICT leaders, as a member of the panel of CIOs interviewed for the 2017 State of the CIO report.

The annual report is supported by the findings of an online survey in May to June this year, in conjunction with the CIO Executive Council in Australia and New Zealand.

The survey gathered a total of 201 respondents across Australia and New Zealand.

“From a technology standpoint, we have got an absolute explosion going on. The development of new technologies is just breathtaking,” notes Johansen.

“There are some real issues emerging, which are partly to do with and will be exacerbated by technology.”

The raft of issues include the expected loss of jobs due to automated technology enabled by artificial intelligence, cyberattacks that are becoming more sophisticated and business continuity concerns around events like earthquakes.

“How resilient will this system be if my world changes? Can you shift quickly? How vulnerable to cyberattack is this system I am creating?

“CIOs have got to be aware of these developments when they are conceiving their IT systems,” says Johansen.

“It is all very well having ‘everything in the cloud’ but ‘what if’ is the question modern CIOs need to think through,” he says, as well as “to have a fallback or a response, and to remain agile.”

The key message for CIOs today?

“Be prepared for anything.” 

‘What if’ is the question modern CIOs need to think through.

Robin Johansen

Facing the new reality

The 2017 survey shows the ongoing importance of the CIO role within companies - how the job has become more complex and complicated, but also more rewarding, and it highlights how critical the role is to the success of the business, or smooth running of an organisation.

An overwhelming majority (85 per cent) of respondents agree the role is becoming increasingly challenging, with just a small percentage (14 per cent) disagreeing.

The challenging aspects of the role is tempered by the revelation that nearly the same percentage (82 per cent) of CIOs find the role becoming more rewarding, and a higher percentage (92 per cent) saying it is becoming more important to the business.

Only less than a quarter of CIOs believe the CIO role is being sidelined in the business.

It is useful to note all of the New Zealand respondents stated they were the top ICT executive at their place of employment and more than half of them report directly to the chief executive.

A quarter of the Kiwi respondents are from government and not for profits, with the rest from the private sector including finance, hi-tech, manufacturing and retail.

The respondents had a wide range of tenure, with the majority having been in the role one to four years. There were also respondents who have been in the role up to seven years and above.

If the infrastructure doesn’t work and the IT support team doesn’t respond appropriately, why should the rest of the business trust IT to help transform their processes and practices?

Peter van Dyk

What matters most

The survey delves into how New Zealand CIOs are focusing on three different areas: strategy – strategic initiatives, growth and innovation activities; transformation – leading change efforts aligning IT initiatives with business goals, implementing new systems and architecture and cultivating the IT/business partnership; and function – managing expenses, security and IT crises, and improving IT operations.

For functional roles, respondents said over half of the time (58 per cent) is spent on improving IT operations and systems performance. This is followed by security management and cost control.

For their transformational focus, 62 per cent cited aligning IT initiatives with business goals as the leading task, followed by cultivating the IT/business partnership and implementing new systems and architecture.

As strategists, the top focus is on driving business innovation, followed by developing and refining business strategy and identifying opportunities for competitive differentiation. The latter is closely followed by developing new go-to-market strategies and technologies.

But the CIOs have different preferences on what they would like to spend more time on in the next three to five years.

In their functional role, they voted the top focus will be on security management, followed by improving IT operations and cost control/expense management a distant third.

As transformational CIOs, cultivating IT/business partnership and leading change efforts both came out equally on top, with redesigning business processes coming in third.

As strategists, driving business innovation was considered critical by the vast majority (80 per cent) of respondents. Identifying opportunities for competitive differentiation is second, followed by developing and refining business strategy.

Interestingly, studying market trends/customer needs to identify commercial opportunities is the fourth focus on the survey, a reflection of the results wherein CIOs say they are forging a closer relationship with the heads of marketing.

Collaborating across the organisation

The survey also focused on how CIOs are seen by the rest of the organisation.

New Zealand CIOs say the IT organisation is seen mainly as a business partner, followed closely as service provider. Being viewed as a business leader is a distant third, with only a small number of respondents saying the IT function is seen as a cost centre.

Liz Gosling, CIO at AUT University, has observed the ICT function move through these different areas.

“IT has definitely shifted from being an infrastructure provider, to service provider, to being a more strategic partner,” says Gosling.

In the case of AUT, the ICT team had to position themselves not just as the infrastructure provider, but also as the centre of knowledge and excellence for people who need technology to support their business unit.

This includes providing good support for university researchers and looking at what they can do in the teaching and learning space, to improve student experiences. She says the team is also looking at business process improvement and that is included in her portfolio.

Related reading: ‘Breaking down the barriers to ICT excellence’ Sarah Thirlwall of Counties Manukau Health talks about taking the ICT team from functional to transformational

Gosling says AUT was one of the first organisations in the country to decide against building a datacentre.

"I see no need to invest in lots of servers and hardware. We can get that service from a tech company in a way that is more scalable and can adjust up and down with the business cycle," she says.

The students depart in mid-November and don't return until the end of March. "It is a quiet time so we can turn everything down, so we are certainly moving more into that space, and investing more resources, people and money into the areas of real differentiation for AUT."

“If CIOs don't learn to adapt with the new way of doing things like cloud services, they will be sidelined,” says Gosling.

If CIOs don't learn to adapt with the new way of doing things like cloud services, they will be sidelined

Liz Gosling, AUT

She says the university ICT team gets to work on a lot of new technologies.  

One of these is the engineering, technology and design precinct, with her team working on building Internet of Things type of sensors to measure vibration rainfalls and all kinds of things. The building itself can be used as a teaching aid and the data collected can be used in teaching analytics and how to handle big data sets, she says.

She says AUT is one of the early adopters of business intelligence and analytics for a university .

“Five years ago, like all large organisations, we were providing individual reports, datasets out of individual systems. Whereas the real value comes from being able to meld that data,” she says.

"You can see both the timetabling and the student satisfaction data, and the teaching load data. You can actually look and see where the trends and the patterns are. We have an analytics group that reports to another assistant vice chancellor, who spends a lot of time looking at the way we can intelligently use that data to support AUT," says Gosling.

We work alongside the business. We are heavily involved in every activity that our staff and customers are doing with us

Mark McAtamney, Ravensdown

Mark McAtamney, CIO of Ravensdown says the business looks at the technology team as a partner.

“We are heavily involved in every activity that our staff and customers are doing with us.”

He says this has been a shift from his experience in the past, where ideas were thrown to IT and IT is asked to come out with solutions.

“That game has changed, where we are [now] alongside the business.

“You are part of the team that is creating an outcome. And that is particularly enjoyable,” he says. “People buy into it. That way they are part of our project, part of the initiative."

Amidst all the talk about digital transformation, McAtamney says, “The game has not changed."

We continue to look for what improves our customers experience and our staff experience, and what makes their lives easier. And if that falls back to a digital solution, well and good."

A widespread sentiment among respondents is the challenge of finding the right balance between providing innovation, while maintaining operational capability.

 “For me, it is reassuring in a way that it means our CIOs are staying involved in the future of the business, not only delivering the current operations," says Dr Benoit Aubert, head of school of information management, Victoria University of Wellington.

Aubert observes today’s high-level managers are really caught between those two sets of constraints and pressure, and not just CIOs.

“More and more of these roles have to combine those day-to-day very pressing questions, while at the same time keeping track of the future.”

More and more of these roles have to combine day-to-day very pressing questions, while at the same time keeping track of the future.

Dr Benoit Aubert, Victoria University of Wellington

For instance, the heads of operations in a manufacturing company still have to run the systems and to be very efficient. But at the same time, they have to understand how 3D printing and the Internet of Things, for instance, will change their operations, says Aubert.

He says keeping operations and innovation in one role depends on the organisation.

“If it is split, there should be a formal mechanism to ensure there is an ongoing discussion so you are doing operational stuff knowing what the vision is and where you are going. And, you are thinking about the vision and not forgetting what you have in terms of establishing the systems because that will constrain your future.”

Related reading:  The CIO as both visionary and pragmatic driver for change, an interview with Martin Catterall of HW Richardson Group

This is a balancing act that Pieter Bakker, group business technology director of Frucor is aware of.

As he explains, anything to do with technology is under his remit. His team takes lead roles in the group’s multi-year digital transformation programme and organises events that aim to show how disruptive technologies can be deployed across different business units.

He says the department being renamed to 'group business technology' reflects this expanded role.

The digital transformation journey is around customers, consumers and internal teams, he states. “Customer and consumer obsession is really at the heart of what digital is about.”

Customer and consumer obsession is really at the heart of what digital is about

Pieter Bakker, Frucor

The business technology team organises a big innovation showcase twice a year for their offices in New Zealand and Australia. They also work with external providers and the academe to work on innovation projects.

Results of the survey also reflect the imperative of CIOs and ICT teams working more collaboratively across business units, as other business functions are specifically earmarking their own budgets for technology.

When asked which groups or functions in the organisation will have budgets specifically earmarked for technology in three to five years, marketing, operations and human resources came out tops, with sales coming in at a close fourth place.

It is clear, however, that the CIOs are strongly involved in decisions on marketing technology, with 76  per cent of them stating they are consulting with the marketing team to determine needs and requirements for this space. More than 70 per cent of the CIOs said they oversee implementation of marketing technology and more than half (56  per cent) make the final vendor selection.

This involvement is critical as a third of the CIOs describe their relationship with the CMO has become much closer and collaborative in the last three years, with a quarter describing the relationship between the two functions as “somewhat closer or closer”.

Majority (83 per cent) of CIOs meet with their direct reports and internal customers frequently (either daily or weekly). A third of CIOs likewise meet with external customers daily or weekly with around half saying they meet with external customers occasionally or ‘as the need arises’. Five per cent say they never meet with external customers.

But a fifth of respondents believe these meetings with external customers will increase significantly in the next year both for them and their direct reports.

Julie Canepa, CIO for Cisco in Australia and New Zealand, explains how she and her team took on the concept of getting to know their customers a step further.

“We are an IT shop just like anybody else but we happen to be doing it for one of the world's largest tech companies,” she says. “So oftentimes, we are the first to get our hands on these technologies. We are early adopters.

“We are learning, we are way in front and we want to share that learning with our customers."

Early this year, her IT team organised a roundtable discussion with 15 of their customers in New Zealand to talk about the digital transformation that was happening at Cisco and some of their experiences in working on new technologies.

Canepa says she invited two other speakers from Silicon Valley - an expert on data centre and in security - who joined the roundtable discussion via telepresence.

We are the first to get our hands on these technologies. We are early adopters and we want to share that learning with our customers.

Julie Canepa, Cisco

Investment drivers and decisions

When asked to name the top three business initiatives that will be driving IT investment, improving customer experience came out number one, followed by transforming existing business processes and increasing operational efficiency.

For technology initiatives, cloud computing, big data and business analytics are the top two, and application modernisation in the third place.

When it comes to deploying emerging or disruptive technologies, artificial intelligence and machine learning is ranked first by the respondents. 

This relates to their revelation that skills around big data, business intelligence and analytics, followed by application development/programming/DevOps, will be the most challenging to fill in the next year.

Asked what they consider their CEO’s top priorities for ICT in the coming year, nearly half state completing a major enterprise project, followed by upgrading IT and data security, and help reaching specific goals for revenue growth.

Current and future career plans

Nearly half (43 per cent) of respondents see themselves continuing to hold CIO roles in the next three to five years, while a fifth are looking at moving into customer facing and digital strategy roles, such as chief digital officer or head of customer experience.The third choice is to become a CEO (14 per cent of respondents). Becoming an entrepreneur to lead a startup is the lowest preference for the respondents.

The survey also finds CIOs are proactively doing their own research on their career pathways.

In tandem with this research, more than half of the CIOs say they are tapping their personal and industry networks to discern changes and trends in the marketplace.

Over a quarter say they participate in their own organisation’s executive development programmes, while a fifth enroll in a range of courses, from getting an MBA to preparing to become a director. Sixteen per cent say they are working with a mentor, while 11 per cent say they are working with an executive recruiter.

Abinesh Krishan, client strategy director at recruitment firm Potentia, notes how forward thinking CIOs are taking on the range of opportunities in the digital era.

They supplement this with personal initiatives to train or get experience in areas not traditionally associated with ICT, he states.

“While a significant number of CIOs that we have engaged in the recent past remain committed to ensuring the continued effective management of technology domains within their remit, there is a marked trend whereby we are noticing CIOs engaging with business in a more defined manner,” says Krishan. "They are now part of the executive team working with the boards in deciding crucial business directions and outcomes."

CIOs are now part of the executive team working with the boards in deciding crucial business directions and outcomes

Abinesh Krishan, Potentia

“This has been coupled with the need to have some governance visibility where CIOs are taking on board advisory positions outside their organisations to gain this vital experience,” he adds.

In well-established enterprises that are embracing disruptive technologies and agile methodologies, he believes this evolution is naturally leading CIOs into defined C-suite opportunities such as chief transformation officer or chief innovation officer.

In more customer-centric organisations, we are noticing these manifesting as chief digital officer and chief customer officer roles.

Beyond the CIO role

Peter Mangin, chief operating officer of Realestate.co.nz provides a prime example to CIOs and their colleagues on how they can get to the next stage of their careers.

Mangin’s previous roles included CIO and creative technologist at Saatchi & Saatchi, and IT manager for Publicis Groupe brands in New Zealand. Thus, he has worked closely with management, creative and digital teams.

At realestate.co.nz, his title is COO, but also wears different hats, as CIO, CDO and CTO.

“I am working on a very broad capacity,” he says. “We are a technology company...technology underpins everything we do.

“To be called the chief operating officer gives me a remit to operate across everything.

“In our organisation, marketing, product and technology is all part and parcel of the same thing, hence the use of the word COO,” he explains.

Peter Mangin, chief operating officer at realestate.co.nz, is also its CIO, CDO and CTO.
Peter Mangin, chief operating officer at realestate.co.nz, is also its CIO, CDO and CTO.

Peter van Dyk summarises the challenges ahead for CIOs as they lead through a rapidly shifting environment.

In essence, the purpose of the IT department in any organisation is to accomplish two things, says van Dyk, an independent IT and general management consultant who has held CIO roles across education, retail and the food sector in New Zealand and overseas.

First is to establish and maintain a stable, cost-effective infrastructure that ensures the smooth, continuous operation of the business and second, to support the organisation’s strategy by dramatically improving business value delivered by business processes and practices.

“The premise is simple,” he states. “Arguably, the only way to implement strategy is through changes to business processes and practices, and technology is the key enabler. The problem is that the two goals are at odds with each other.

“The best way to maintain stability is to never change anything, but then you aren’t supporting your organisation’s strategic goals.

“The first of the two imperatives is about operational excellence and credibility, whilst the second is about business transformation,” he adds.

“Often CIOs expect to be invited to participate in business transformation when their own processes are chaotic. If the infrastructure doesn’t work and the IT support team doesn’t respond appropriately, why should the rest of the business trust IT to help transform their processes and practices?

“When you have built credibility, you will be able to participate more strategically, but only if you understand the business intimately.

“It’s not about implementing the latest technology’ It’s about solving real business problems using the appropriate tools. Technology is one of those tools.”

Skills around big data, business intelligence and analytics, followed by application development/programming/DevOps, will be the most challenging to fill in the next year.
Skills around big data, business intelligence and analytics, followed by application development/programming/DevOps, will be the most challenging to fill in the next year.

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Tags change managementCareer managementcareercareer planningAIboardsmentoringdisruptionceo and ciocio and ceoautfrucorRobin JohansenCIO100CIOS and the boardDXPieter BakkerLiz GoslingState of the CIO 2017Peter Mangin

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