EY: CIO critical for driving growth and productivity

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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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About EY
EY is a global leader in assurance, tax, transaction and advisory services. Worldwide, our 167,000 people are united by our shared values and an unwavering commitment to quality. We make a difference by helping our people, our clients and our wider communities achieve their potential. For more information, please visit www.ey.com

EY refers to the global organisation of member firms of Ernst & Young Global Limited, each of which is a separate legal entity. Ernst & Young Global Limited, a UK company limited by guarantee, does not provide services to clients.

This news release has been issued by EY Australia, a member firm of Ernst & Young Global Limited.

Liability limited by a scheme approved under Professional Standards Legislation.

Contact details:

Katherine Rellos
EY Australia
Tel: +61 3 9288 8322 or 0411 245 099

Key Findings

Industry spotlight
Ranked in order, the least wasteful industries based on how much time their workers say is wasted on a typical day were:

  • Professional, scientific and technical services (17%) and health care and social assistance (17%)
  • Financial and insurance services (19%)
  • Trade- retail and wholesale (19%), public sector (19%), manufacturing (19%), and
  • Construction and mining (20%).

Based on workers rating their organisation’s efficiency, the ranking changes to:

  • Financial and insurance services (68%)
  • Professional, scientific and technical services (66%)
  • Health care and social assistance (64%)
  • Construction and mining (63%)
  • Trade (retail & wholesale) (60%)
  • Public sector (56%), and
  • Manufacturing (55%).

State Spotlight
Ranked in order, the most productive states based on the least amount of time wasted on an average day were:

  • Western Australia (16% of day wasted)
  • South Australia (17%), ACT (17%) and Tasmania (17%)
  • New South Wales (18%)
  • Victoria (19%) and Queensland (19%), and
  • NT (29%).

Based on workers’ views about the efficiency of their organisation, the order changes to:

  • Western Australia (66%) and South Australia (66%)
  • Queensland (62%)
  • New South Wales (61%), and Victoria (61%)
  • NT (59%) and ACT (59%)
  • Tasmania (47%).

Productivity motivators

  • 68% of respondents are proud to work for their employer
  • 69% believe their work is valued
  • 78% have a clear vision of what is expected of them in their role.

Productivity barriers

  • 36% do not agree that their organisation’s processes and systems support role execution
  • 41% do not agree that their organisation has the right level of focus and attention on effectiveness and efficiency
  • 38% do not agree that their organisation operates effectively.

People

  • 32% say they are planning to leave their organisation in the next 12 months
  • Only 62% believe their skills are being strongly utilised by their employer
  • 35% are already pursuing external opportunities. Approximately half of all respondents do not agree that there is a clear direction for their career at their current organisation.

Innovation

  • 51% say further innovation would increase productivity
  • 44% do not agree their organisation gives innovation the right focus and attention
  • 41% agree that innovation is not adequately recognised and rewarded
  • 48% of people agree that there is a culture of continuous improvement in their organisation, 33% were neutral and 19% disagreed.

Technology

  • 62% of respondents agree technology is important to their role
  • 40% say technology has increased productivity levels
  • The professional, scientific and technical sectors fare best on the technology front, with 55% of employees acknowledging technology has increased productivity levels over the past 12 months.
  • 65% say additional, new or improved technology would make their organisation more productive over the longer term
  • 39% don’t have access to the right technology and 42% don’t have the right training to apply technology effectively
  • The construction and resources; and retail and wholesale trade sectors rank the highest in terms of technology wastage with at least 10% per week.