Results from CIO magazine’s annual ‘State of the CIO’ survey, now in its 11th year, suggest many IT leaders anticipate a challenging year ahead for their business and industry. But they also remain confident about their team’s performance against outlined metrics and goals. While roughly one in five IT organisations are still perceived by the business as a cost centre, an equal number are now considered ‘business peers’ or ‘game changers’ engaged in developing business strategy or a primary driver of the enterprise’s competitive future. More CIOs are taking some action to improve or solidify relationships with business stakeholders but a good number are still falling short in this area with survey results suggesting a gap between CIOs’ perceptions and those of their non-IT peers.
CIOs predict challenging year ahead
The ‘State of the CIO’ survey was conducted among 596 IT leaders in September, 2011. The survey finds that 82 percent believe global recession will have a significant (38 percent) or a somewhat negative impact (44 percent) on their organisation within the next three years while 57 percent are concerned that stagnant US job growth will negatively impact their organisations (that figure climbs to 69 percent when looking at North American respondents).
Seventy percent of IT leaders expect the coming year will be challenging for their industry while 34 percent predict their organisation’s business outlook will be very challenging. When asked to rate their team’s performance against metrics and goals, however; the CIOs we surveyed are more upbeat with 63 percent anticipating a good year ahead. And four out of 10 respondents anticipate growing economic strength in emerging economies like China and India will have a positive impact on their business in the next few years.
Security threats still loom large
The growing threat to enterprise security is a concern for many IT leaders with 69 percent expecting a negative impact to their organisation within the next three years. CIOs in North American companies are significantly more likely to be concerned with threats to enterprise security than their non-North American peers (77 percent, versus 54 percent). CIOs in mid-size companies (75 percent) are more likely to believe their organisation will be negatively impacted by the growing threat to enterprise security than small and large company respondents (69 and 64 percent, respectively).
Perceptions of the IT department
CIOs fall across a spectrum of categories ranging from extremely tactical to highly strategic when it comes to how business stakeholders perceive their IT organisation. Nearly one in five of the CIOs we surveyed (21 percent) say their IT organisation is perceived as a cost centre - unappreciated, misunderstood and unfulfilled - while an roughly equal percentage are perceived as a business peer or game changer – engaged in developing business strategy or a primary driver of the enterprise’s competitive future. North American respondents are significantly more likely to be perceived as an IT partner (33 percent) while non-North American respondents are more likely to be perceived as a cost centre by business stakeholders (27 percent).
The game changers
CIOs in companies where the IT organisation is perceived as a business peer or business game changer are significantly more likely to predict a good year ahead for their business (48 percent versus 34 percent for total respondents) and for their industry (42 percent versus 28 percent). Other characteristics of business peers/business game changers include:
• Significantly more likely to report directly to the CEO (60 percent, versus 38 percent) and to sit on the business executive management committee (85 percent, versus 66 percent)
• More likely to have leadership-level responsibility in non-IT area (68 percent, versus 57 percent)
• Command the highest salaries of all groups (US$245k, versus US$218k)
• Highest IT budget as a percent of revenue (5.8 percent, versus 4.7 percent)
• Lower staff to user ratio (1:27)
• More likely to have completed major initiatives in social media (37 percent, versus 24 percent), cloud (36 percent, versus 28 percent) and ecommerce-digital strategy (25 percent, versus 16 percent)
• More concerned than other groups with competition against their products and services (66 percent, versus 50 percent)
• More likely to anticipate that innovative new market offerings or business practices (38 percent, versus 28 percent) will be among their team’s most significant business accomplishments in the year ahead and to have initiated new products and services for competitive advantage in an effort to solidify or elevate IT’s general relationship with business stakeholders (60 percent, versus 40 percent)
• Significantly more likely to say they are improving risk management processes with IT (40 percent, versus 28 percent)
• More likely to work in companies with smaller annual revenue
Room for improvement
A broader understanding of IT by non-IT colleagues will have a positive impact on more than three quarters of IT leaders’ organisations within the next three years (77 percent). However, survey results suggest a good number of CIOs aren’t making the effort to build relationship with their business peers; 43 percent report that marketing the IT department so the business has a better understanding of IT’s capabilities and processes is a low priority (31 percent) or not a priority at all (12 percent).
For CIOs that do make the effort to elevate or solidify IT’s general relationship with the business, more frequent meetings with influential stakeholders (59 percent) and major systems operations fixes (51 percent) are among the most commonly cited actions taken. A higher percentage of IT leaders this year are delegating more of their operations to trusted lieutenants (46 percent, up from 35 percent), developing IT leadership capabilities in senior managers to elevate the general relationship of IT with the business (38 percent, from 28 percent), and training IT staff to partner better with business stakeholders (41 percent, up from 36 percent). While relatively few CIOs are out calling on their customers in an effort to help business stakeholder relations, the percentage of them doing increased to 23 percent, from 18 percent last year.
Call to action
Actions IT leaders employ to build relationships with the business vary by company size. Large company CIOs (56 percent) are significantly more likely than their small and mid-size company counterparts (33 and 35 percent, respectively) to have created a portfolio approach to IT, created a project management office (41 percent, versus 17 and 26 percent), and deepened staff bench strength in management and leadership expertise (26 percent, versus 13 and 17 percent). Small company CIOs are more likely to have initiated new products and services for competitive advantage (49 percent, versus 37 and 34 percent for mid-size and large company CIOs, respectively).
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