EY: CIO critical for driving growth and productivity
Monday, 15 October 2012 — The dramatic shift towards a digital economy has put significant pressure on the leadership of many businesses to embrace technology as more than a support function and ensure the CIO is a key member of the executive.
According to EY’s DNA of the CIO report released today, less than one in five CIOs (17%) have a seat at the top table and less than half of CIOs (43%) are deeply involved in executive decision-making.
The report, based on a survey of more than 300 senior IT professionals globally, including Australia, also draws on in-depth interviews with CIOs and other executive management, to capture views about the changing role of the CIO.
EY IT Advisory Leader Jason McLean said: “If business is to effectively respond to challenging market conditions, and drive necessary cost reductions, productivity gains and shareholder value, then CIOs must have a seat at the top table.
“Unfortunately, we are seeing that in a number of companies the value of the CIO is not being exploited to its full potential,” Mr McLean said.
“Given current global economic pressures, CEOs are in clear need of ‘co-drivers’ who combine technology expertise with business knowledge, experience and insight.
“Surprisingly, this survey highlights there are still CIOs who are not regarded as true members of the executive management team. While they have obvious technological expertise, often they are not perceived to have the right level of business skill or experience,” Mr McLean said.
Mr McLean said the critical role technology has played in the evolution and growth of every industry and sector over the past two decades, particularly in digital services, exchanges and communities, emphasised just how big an opportunity some businesses may have already missed.
“The clear message from many business leaders is that things need to change and keep changing. To stay relevant in a rapidly evolving business landscape that relies so heavily on technology, CIOs will need to evolve to play a more significant role in shaping the future direction and performance of the business. Those who don’t, will run the risk of being further relegated down the corporate hierarchy, or sidelined altogether,” Mr McLean added.
The DNA of the CIO found some key characteristics of today’s typical CIO included:
- The average CIO is a 43-year-old male.
- Seven years is considered to be an appropriate tenure, although the rest of the management leans toward eight years.
- The most common level of education is a degree in IT (49%). Only 1 in 10 hold a Master of Business Administration (MBA) degree.
- The majority of their career has been spent in the IT function only.
Building relevance across the C-suite
Less than half (48%) of the C-suite executives think the standing of CIOs has improved in recent years on a range of issues from product innovation through to helping deliver on the operational agility of the company.
While 60% of CIOs think they add strong value to fact-based decision-making when setting corporate strategy, just 35% of their C-suite peers agree. Additionally, just 43% of CIOs report that they are deeply involved in strategic decision-making.
This low level of involvement is reflected in nearly four in 10 (38%) respondents reporting a lack of support from the executive management team as a major issue, particularly within larger companies.
“Some business leaders are missing the opportunity to leverage the strategic value of technology, and specifically technology’s role in helping them differentiate and compete in a world that is ‘always on’, where products and services are delivered anywhere, to anyone at anytime.
“We are seeing many examples of organisations where the opportunity to engage in a wider discussion about the value of technology and innovation to the business has been and continues to be overlooked.
“CIOs acknowledge that it will be difficult to change some outdated perceptions of being a purely cost control function, but doing so will be a prerequisite for recasting the role of the CIO, and IT, within the wider business in the future,” Mr McLean added.
Moving beyond IT budgets to strategic advisor
Previously, IT leaders have not done enough to reach out to the rest of the business to develop significant relationships that can support their wider change efforts. IT’s long-running history as a cost control function means CIOs hold the closest relationship with the CFO.
“CIOs know that they need to engage better with the CEO and the Board if they are to move the conversation beyond the basics and discuss how technology will enable new products and services, distribution strategies and business models.
“The future CIO will need to be a business executive that improves the awareness and understanding of how information and technology can be used as a unique source of innovation and competitive advantage.
“The value of the CIO role is clear. Working with the Board, CEO and other executives, the CIO has the potential to influence the business in a unique way that can work across organisational boundaries to unlock efficiencies and productivity advantages that can truly maximise shareholder value,” Mr McLean said.
To find out more information and download the report, visit www.ey.com/dna-cio.
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