As information technology assumes an increasingly integrated role in most modern businesses, a shortage is looming of senior IT executives able to span areas of business capability, strategy and leadership.
Contractors and consultants have been brought in to fill the gaps while training programs catch up. Most companies with a heavy IT focus have excellent graduate programs and a good supply of people in the short-term--but may be facing longer-term challenges, particularly in the mid-level management.
In the words of one CIO: "While IT executives aspire to become business executives, there's not much traffic the other way."
Complicating the picture is an increasing legal and compliance burden, which is soaking up resources.
At Heidrick & Struggles, we see the future generation of CIOs as assuming greater responsibility for the profitability of their business, as well as the creation of analytical models to understand the behavior of customers in order to drive efficiencies and unlock cross-sell opportunities.
By 2010 the attributes of the CIO will encompass:
- Business acumen
- Communication and relationship-building
- Leadership skills
Within major corporations, CIOs themselves are actively involved in the identification and development of people with these skills.
Potential leaders are cycled through different divisions of the company to gain understanding of how the business works and to impart to the business leaders themselves knowledge of what technology can do for them.
Technology-dependent industries such as financial services are often at the cutting edge in terms of talent development.
Commonwealth Bank group services CIO David Boyle says demand for technology executives in the finance sector is being driven by ever-increasing business demands combined with new regulatory and compliance regimes like anti-money laundering and counter-terrorism.
"The modern financial services firm is under regulatory and competitive pressure to operate at a more granular level. Regulators want us to know our customer to help protect the country against terrorism.
"But guess what, we also want to know our customer better in order to optimize the way we sell to and serve
"Responding well to these sorts of challenges requires a CIO that is part of the leadership fabric of the organization both formally and informally, helping the organization use technology appropriately to respond to these challenges."
Boyle says the Commonwealth Bank has a strong pool of talent which initially developed around different facets of the business and which has now been assembled into a single community--"it's now one IT model for the corporation".
He believes the global supply of IT executives is sufficient to meet demand, but local shortages could arise if talent flows offshore in response to the Australian industry increasing its utilization of offshore IT.
"We've now gone beyond recruiting talent from technology firms, management consultancies and other financial services institutions to the point where we're growing a much larger proportion of our future leadership talent internally.
"We have enough scale in our model now to manage that pyramid rather than trying to build a pyramid from near-scratch, which was the case five years ago."
Boyle says the development programs include:
- Rotating people through the upfront phrases of different projects as well as rotating through various roles across the organization.
- Encouraging people in their development plans to consider not technology training and qualifications such as FINSIA (Financial Services Institute of Australasia) courses and post-graduate degrees in commerce and business.
Mid to senior-level shortages
Australia's Department of Immigration and Multicultural Affairs deputy secretary and CIO Bob Correll says that across the industry he has observed contractors being brought in to cope with peak loads of projects--but staff development at mid-level and senior levels has not been catching up with demand.
"What can happen is that you have a series of peaks in the load and no troughs. You get peaks upon peaks and effectively what you've done has increased the workload pattern across the board."
Many companies have good graduate programs but lack development programs at middle management level, Correll says.
He sees the CIOs of the future coming out of a high level of integration between technology and business.
"I don't necessarily support having something separate for potential leaders in the IT area, but rather the drive should be on getting a high level of integration between business and technology in your organization."
Australian Stock Exchange group technology executive Jeff Olsson sees the CIO of 2010 as someone with strong leadership capabilities. "They need to be knowledgeable and decisive, and to possess a good general knowledge of all aspects of the business they are serving," he says.
"They will also need to be capable of building rapport with business leaders in the organization and inspire confidence when they discuss the business either from an operational or a strategic bent."
He says potential leaders will need to show that they can build a strong relationship with the chief executive officer and will look for similar opportunities with key business managers in the organization.
"We look for opportunities to help them build confidence," Olsson says.
"Leadership qualities also include a blend of strategy and operational understanding. My own role is about 50 per cent operational and 50 per cent strategic, but in some organizations it might be a mix of 75 per cent strategy and 25 per cent operational."
Olsson says he is fortunate to have inherited two organizations--the ASX and the Sydney Futures Exchange (which have now merged) with strong cultures of building strong intellectual property based around retaining key intellectual property.
"Because the strategic direction of the ASX is inextricably linked to the direction of global financial markets, technology executives need to understand how the capital flows work and what the drivers are."
The right levers
Westpac consumer financial services division CIO Patrick Eltridge agrees that the complexity of the role of the CIO is being driven by competitive pressures flowing from globalization and the increased efficiencies in capital markets.
"These pressures have highlighted the need for leaders who can formulate competitive responses to market challenges--an integrated or synergistic pulling of levers if you will, as part of an integrated plan. We can no longer just pool disconnected individual levers such as cost or big bang investments. You now need a highly integrated plan which can be run over multiple years."
Strategy is a key skill for the new CIO, Eltridge says. "You can't just jump in and stir things up and say right, problem fixed. Your multiyear strategy needs to drive cost efficiency in some areas, invest systematically in others and make sure it all makes sense and that the individual moves aren't contradictory or self-defeating."
Westpac is "very deliberate" about its talent management and investing in grooming future CIOs, he says.
"Compared with where we were, say, five years ago, we are reaching deeper into our organization and developing multi-layered teams simultaneously--we have a fantastic IT graduate development program and we're also reaching into the layers between the CIOs' direct reports" Eltridge says. "We are actively looking for top talent and nurturing those people in different ways--fast-tracking development of promising talent and creating multiple paths for people's careers, moving them through the organization, giving them the breadth of skills."
At the senior level of IT executive, Eltridge believes there will be an under-supply by 2010 of the type of leadership that will be required. "Demand will definitely outstrip supply and many companies are going to have to have mitigation strategies in place," he says.
"It's absolutely critical that the CIOs of tomorrow have a strong foundation in technology and its execution, application, architecture, strategy, all of that stuff. But along the way, they absolutely have to develop more or learn more consulting-style engagement skills and business skills. But neither of those are a substitute for the grounding in the technology itself."
Former Citigroup CIO Donna Vinci says the role of the CIO has changed dramatically over the past five years and many businesses have introduced training to ensure technologists were "more rounded in their business and leadership skills."
She says IT executives find it important and a positive step forward to transition into business skills to provide the right direction for the organization.
"If you come from a development background as I do, business analysis and getting close to a business is part of your upbringing," says Vinci. "Technologists often find the business environment very interesting and as they understand how the business works, they are able to see more applicability and outcomes that can be generated. But they must learn to change their language from technical jargon to more business-type language. We found that really helped break down a lot of communication barriers and to build bridges across the business."
Vinci says that IT executives of 2010 should be people who are innovative--"but they must ensure that innovation is driven by a tangible business outcome and they must be able to adapt to change, to think up and across the organization and to understand the competitive environment of the business. "You need to be able to blend with any style of team and business, and bring together excellent communication strengths with technical, business acumen and analytical strengths."
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