State of the CIO 2014: Treading new ground

State of the CIO 2014: Treading new ground

Our annual State of the CIO research reveals how digitisation is prompting CIOs to apply their skills in leading transformation programs to their own roles.

Disruption, a term describing the raft of technology trends around cloud, social and mobile is taking on a different meaning for CIOs as they realise it is also happening, faster than ever, in their respective roles.

“Historically, the CIO role has been internally facing, it has been about servicing internal customers,” says Mark Baker, director of MIH Consulting. “As the world has gone more digital – with various incarnations of cloud, software-as-a-service, platform-as-a-service– companies are looking for the digital edge.”

“Innovative companies” like Amazon and Air New Zealand are seen as having this edge. “Now, it is expected that companies have an element of their competitive strategy around digital.”

“CIOs are now spending more time on competitive business propositions, strategies, how they embrace the 700 new things that have turned out this week because in the digital age everything is moving so fast.”

“As a consequence the technology discussions that used to stay in the backroom is coming to the executive table.”

The important thing to stop shadow IT getting completely out of control is to be the person who helps people get things done.

Robin Johansen

This is how Baker, a business strategy consultant following a succession of CIO and chief operating officer posts in New Zealand enterprises including Foodstuffs Auckland and Fletcher Distribution, sums up the changed landscape CIOs operate in today – and how these shifts are affecting the role. His insights provide a relevant backdrop to the 2014 State of the CIO report, where CIOs across the globe, including New Zealand, reveal their current and future challenges.

Based on the survey findings and interviews with New Zealand business-technology leaders, this year’s report highlights some key trends that are rearranging the CIO portfolio and moving them into areas not traditionally associated with IT.

Topping the list of disruptors are digitisation as customers, suppliers and business units embrace digital platforms, and the continuing rise of ‘shadow IT’ brought by consumerisation of technology and the ease of moving to cloud services without IT involvement.

It is expected that companies have an element of their competitive strategy around digital.

Mark Baker, MIH Consulting

The State of the CIO
The State of the CIO survey covered 722 CIOs across the globe, including 43 from New Zealand. A third of the New Zealand CIOs report each to the CEO and the CFO, while 16per cent report to the chief operating officer. Half of them are members of the business executive management committee. When asked about their focus and how they spend their time in their current role, the greatest number of New Zealand CIOs (30 per cent) said it was on negotiating with IT vendors, followed by redesigning business processes (23 per cent). Only7 per cent reported spending time studying market trends and customer needs to identify commercial opportunities.
In the next three to five years, though, they would like spend more time driving innovation (56 per cent of respondents), followed by defining and developing business strategy and leading change efforts (at 47 per cent respectively), and identifying opportunities for competitive differentiation (44 per cent). Identifying market trends and customer needs jumped to 28 per cent, and only 14 per cent wish to spend more time on negotiating with IT vendors.

As to which groups or business functions have budgets specifically earmarked for technology projects, the following are the top four: Operations (47 per cent), marketing (37 per cent), human resources (30 per cent) and finance (28 per cent).
When asked what steps they are taking to enhance their relationships with executive peers, New Zealand CIOs say the top three ways are through frequent communication for IT transparency (81 percent of respondents); provide advice on initiatives, strategies and management (70 per cent); and attending each other’s meetings (65 per cent).

Shadow IT is clearly a concern for CIOs across the globe. When asked whether they see shadow IT on the rise, 40 per cent said yes – with 7 per cent strongly agreeing and 33 per cent ‘somewhat’ agreeing. This sentiment is not far from the global results, with 9 per cent strongly agreeing and 31 per cent somewhat agreeing.
But when asked whether these projects developed without IT involvement are running into problems, 21 per cent strongly agreed, and 56 per cent somewhat agreed, or a total of 77 per cent. The global figure is not far off, 76 per cent.
New Zealand CIOs also admitted the challenge of balancing business innovation with operational excellence, with 9 per cent strongly agreeing to this, and 65 per cent somewhat agreeing.
Each year, the report tracks the continuous pathway of the CIO to increasingly become strategic partners and trusted peers in the executive suite, and to be seen less as a cost centre. The graph above shows CIOs’ views on how their business colleagues see them.

Read more: CIO issues differ across regions, but all face digital data threats and opportunities: Gartner

Simultaneous reinventions

New Zealand business technology leaders share pointers on thriving in this environment.

The mind-set of a CIO has got to be around stepping beyond the traditional boundary of IT, looking after applications or infrastructure, says Andrew Crabb, head of enterprise solutions and services at Vodafone New Zealand.

“How can I add value? How do I support the organisation in all they want to do in a totally different business market?

“Traditional businesses are reinventing themselves, everyone is on that mode,” Crabb continues. “A lot of the existing organisations will be swamped or surpassed by these new technologies.”

Crabb cites, for instance, that in the last five years, the major organisations have been online or virtual business, the likes of Google, Yahoo or Facebook.

Read more: Fletcher Building tops CIO100 ranking

“You still need those traditional organisations but these organisations have to embrace new technologies in order to grow,” says Crabb. Countdown supermarket, he says, is one such organisation that has done this by embracing online shopping. “They are taking a virtual business model and embraced new technology to move forward in a digital world.

“The role of the CIO is moving away from systems and platforms, to data and analytics,” Crabb notes. “It is about finding different ways of using information that is available to us that will be where a lot of new business models are emerging.”

He says this is a positive development for the CIO role, but they need to evolve with the times.

The role of the CIO is moving away from systems and platforms, to data and analytics.

Andrew Crabb, Vodafone

“Today’s CIOs are looking at the online market and mobility, particularly if the organisation has staff who are working remotely or working anywhere,” says Crabb. “We are talking not just location, but virtual offices, virtual organisations.”

Read more: Fonterra standardises barcoding systems for its global operations

The latter does not even have a physical address. “Because of that, everything they do relies on technology, whether that be mobility, the Internet, the online side of things.”

Take charge of evolving your role

Brett Hobbs, group IT manager, BCS Group, says he keeps track of change management strategies using Amazon as a benchmark.

BCS Group provides logistics hardware, automation controls and software solutions for the aviation and logistics sector. It is not Amazon’s cloud technologies, but its strategy around developing the business that interests him, explains Hobbs. The lesson from Amazon, he says, is “always looking for ways to do something new or refine something; continually looking at what you are doing and trying to be better”.

It is an insight he applies to his own career. Hobbs started as an IT support engineer looking after kiosks for printing photos BCS was running for a client. He then became and IT engineer and then infrastructure manager. The CEO Patrick Teo assigned him to work with one of the managers, as part of his leadership training, and a year ago he became group IT director.

Read more: Words of wisdom from a serial outsourcer

Always look for ways to do something new or refine something.

Brett Hobbs, BCS Group

Today, he says, he has dual roles: as manager for internal IT and consultant to the project side of an affiliate company. “I make sure I take every opportunity to create as many opportunities as I can for driving innovation in the company and that I am not just here to show up Monday morning to make sure everyone’s computer is working.

“I am really looking to make a difference to the company and make this company what our competitors look to.”

Checking future trends – for today

David Moss is a CIO for a technology company that is very much into checking out trends that could impact their respective enterprise and those of their customers.

The CIO at Vodafone New Zealand says these include developing new products and services that Vodafone could offer to customers, simplifying operations or providing new capabilities for the group.

“We are looking at what do we do to support those technologies,” says Moss. These include wearable technology like Google Glass and new uses of camera technology. In California, for instance, cameras are being installed to be able to take a photo of vehicles running a red light.

The photo of the number plate will be emailed to the owner within 30 seconds. Moss says in a few months, these technologies may be adopted in this part of the world.

‘Preparedness, not prediction’

“Aligning the IT strategy to the business strategy is what every IT executive is aiming for in the first instance,” says Deloitte CIO Tim Fleming. “It really comes down to understanding what the business strategy is, and making sure that what we are doing is not just IT for IT’s sake but to help deliver the business strategies.

“Our business strategy is all about agility [and] flexibility and what my CEO calls ‘preparedness, not prediction’,” says Fleming. “It is not about making the big long-term bets, it is about being positioned to move quickly and so we need an IT architecture that is quickly flexible, scalable and agile.

It is about being positioned to move quickly and so we need an IT architecture that is quickly flexible, scalable and agile.

Tim Fleming, Deloitte

“In the IT world, change is an accelerated curriculum,” says Fleming, and keeping up with trends is increasingly important for CIOs. “Things are only moving faster and faster and so being able to understand the concepts and the mega trends helps you shape what you are doing now.”

For instance, five years ago, Fleming spoke with his CEO when the first iPhones were becoming popular. “I said, we have a choice here: We can either attempt to lock this down, guard the walls and continue to only let authorised devices get anywhere near our network. Or we need to start thinking about BYOD,” says Fleming.

“He very quickly came into the view that we need to educate our people on what is appropriate in terms of how we use the device, what we do with data, and we would be crazy not to ride that wave.

“And so from the start, we adopted a BYOD approach and we think it is important not the least for employee engagement,” says Fleming. “If people have got much better technology at home and in their personal lives and then they come to work and they are heavily restricted, it becomes an engagement issue for us.”

Read more: Massachusets Institute of Technology professors discuss the ‘impossible’ role of the CIO

Trusted peers and advisors

Rhoda Phillippo, director of technology at Infratil Group, says when an organisation starts a transformation program, the most successful CIOs are the ones that team up strategically with the business unit owners of the change they are trying to make.

It could be working with the CFO for a billing project, or with head of sales and marketing for an online digital program. “That partnership makes the CIO more effective other than just becoming the technology provider of a business plan.”

She says another thing CIOs can do is to set aside a budget every year for “play money”. This money, can be spent, for instance, on trialling smart marketing ideas. “Have at least a couple of those running in a year and see how it works,” says Phillippo.

Shadows on the landscape

With the rise of technology that can be bought as a service, a number of CIOs find they have to grapple with what is referred to as ‘shadow’ or ‘rogue’ IT.
So how do CIOs handle this?
“I have got a real policy, I really believe that you don’t say ‘no’ to a business unit for doing something unless you have a solution,” says Aaron O’Brien, CIO of Les Mills International (LMI). “I talk to my managers about this all the time.”
You can’t take somebody off something and make them less productive unless you have an alternative and better solution, he says. “I really encourage people to be upfront, to be honest with what they are working on – skunkwork type of projects – because I am going to find out anyway.
“And I am not going to close it down. I am going talk to them about an alternative and better solution and how long it will take.
I really believe that you don’t say ‘no’ to a business unit for doing something unless you have a solution. Aaron O’Brien, Les Mills International
“By doing that, people are more open about what they are working on. If they are worried they are going to shut it down, they are going to do it in secret.”
He says that approach is working well at LMI. “It does not mean it does not happen, especially as there are so many new cloud technologies all the time,” says O’Brien. “We always try to give them a better solution.”
“It really is a difficult and growing problem because it is so easy now to pull out their credit card and sign up” for these services, says Robin Johansen, former CIO of Beca and now an independent consultant. Then, the users find out they need to integrate it with other systems like HR, or they need customer information.
“The CIO has got to position himself or herself as the one who assists people to get the services they want,” he says. “Too often, CIOs unwittingly get themselves into a situation where they are seen as a blocker. CIOs traditionally have concerns about security, business continuity and DR.
“You still got [those concerns] but you have got to be an enabler,” says Johansen. “The important thing to stop shadow IT getting completely out of control is to be the person who helps people get things done.
“To do that, you can’t sit at your desk, you have got to be engaged out in the business, understanding what the business is trying to do,” he says. “You don’t stride into the office [of a business colleague] on your first meeting and say, ‘Tell me about your IT issues’,” says Johansen. “It has to be, ‘Tell me about your business, how things are going on for you, what is new and what is challenging for you.’ In so doing, you are learning about the business but you are also uncovering opportunities to use technology to be the enabler.”
Read more: Movers and shakers: Andrew Diver of Tower Insurance and Chris Poulter of Fastway Global

More CIO appointments?

Phillippo of Infratil says the CIO role is found in corporates, but when it came to small and medium enterprises they had IT directors instead. “They basically have somebody looking after their infrastructure.

“Whereas now, businesses are realising with this digital revolution it does mean if you do not have somebody focusing on technology in the same way that you have a specialist lawyer or specialist financial officer, then you are actually missing a huge business opportunity.

The CIO role should be focusing on how to better service the business so it can become faster. Luis Carselle, ISACA

She cites the case at Wellington International Airport, a part of the Infratil Group, which created a CIO role. The head of IT, Gavin Ng, was involved in getting the right infrastructure in place, but the airport could do so much more with the information it has from parking systems, airlines and retailers, among others. “They need a much broader BI [business intelligence] strategy,” says Phillippo. “They needed to be able to understand technologies that may help the airport compete more effectively. “That role could not have be buried under the CFO. It needed to be separate and given a voice at the table to optimise competitive opportunity.”

She sees more organisations doing this, and these need not be corporates.

For Luis Carselle, vice president of ISACA, there remains one key goal of the CIO across sectors. “Today, not just in IT, the organisations have to move fast because of all the competition,” he explains. “It is very hard to maintain competitive advantage, whether one is in financial or marketing. One day you invent something, the competition will catch up very fast.”

In whatever industry, “you need to move fast and the technology should be an enabler of that”, says Carselle. “To move fast, you need the foundation and the technology is one of those foundation. The CIO role should be focusing on how to better service the business so it can become faster.”

Divina Paredes ( is editor of CIO New Zealand.

Follow Divina Paredes on Twitter: @divinap

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