Chief information officers are wise to keep an interest in what is on the mind of their chief executive and, in particular, in any issues that may be keeping them up at night. Even though our country has escaped the economic stresses experienced in many parts of the world, CEOs, especially those in global organisations, are still buffeted by mixed signals and concerned about business conditions. Several key CEO concerns have particular relevance to CIOs. Providing IT support to business operations in emerging markets is growing more important. This is because businesses directly and indirectly dependent on consumer growth are likely to push harder into emerging markets. CEOs will do a lot to go after new markets — scaling up operations in those regions and sometimes entering new countries by acquisition or distribution. Understanding where you and your suppliers could deploy IT if asked will be important.
Most CIOs should assume they will be given very limited increases in resources, in line with broader corporate caution, and that "making do with what we have" is still the right approach. Some more bullish initiatives from mid-2010 will make it through the budgeting cycle, but encounter rising business leader delay and hesitation in the first half of 2011.
A minority of CIOs face a different future. They will already be noticing that their CEOs are making unusually bold countercyclical entrepreneurial investments. These CIOs should argue strongly for IT's share of the funding and be prepared to go over the top — actively and visibly supporting their business leaders in breaking new ground, whether it's new product innovation, geographic expansion, acquisition or in another way.
The economic crisis was primarily caused by a severe banking crisis. Because banks were unable to lend confidently for an extended period, business leaders needed to quickly generate a cash cushion. The secondary impact, on consumer and business confidence, exchange rates and other factors, also raised volatility. So businesses needed a bigger cash cushion than usual to tide them over.
CEOs must now invest in growth while maintaining a cash surplus as a hedge against the volatility that the crisis aftershocks continue to generate. It's not surprising that cash flow measures are among the most important performance indicators on CEO's dashboards.
Financial returns on IT investments are often calculated using soft benefits such as the number of labour hours saved multiplied by a wage rate. As cash is a critically important factor, however, CIOs should ensure that, among the projects they pursue, the contribution to cash generation and cash flow acceleration is visible. This may require changing the weighting on cash-related criteria in portfolio prioritisation. Sample areas are pricing, fraud prevention, debt recovery support processes, faster bank processing options, more direct selling, supply-chain-related average inventory level reduction, and distressed and perishable inventory auctioning.
It has been said that smart leaders use a recession to invest in research and development, retooling and other activities, taking advantage of lower resistance to change, slack capacity and distracted competitors.
Gartner believes many businesses have continued with R&D through the recession, but have often held back launches, awaiting better market conditions. As the outlook stabilises, CEOs will need to start seeing returns on the innovation bets they have made. It will be crucial to wrap new products and services with high-quality electronic marketing and service capabilities that are fit for purpose in the online world, and that are right first time.
For businesses with no new products and services, the CIO can try to offer a different style of support. Is there a simpler, less expensive version of what you sell today that might be offered partially electronically to expand the total market in your sector?
The role of CEO is changing. The average CEO is appointed at 56 and spends six years in the job, Booz & Company reports. Most are internal appointments, so they probably knew the last two CIOs. If their attitude to IT is misguided, then perhaps an opportunity was lost.
We all want leaders who are technology-savvy and will work with their CIOs to understand the promise of IT, properly invest in it, and lead its full exploitation. Whose fault is it, then, if we still see CEOs who seem to dislike IT and treat it more like an unavoidable overhead than a value-creating tool?
CIOs need to identify the people around them most likely to rise to the top, and take time to help them in their professional development: teach, mentor, advise, persuade, nurture and generally cultivate the next business leader for whom you may be working.
For a few CIOs, the prospect of becoming CEO is realistic. Not all executives being considered for their potential to be the next CEO know they are candidates and the CIO role has become a more common staging post on the way to the top. The cynical jibe — "CIO stands for 'career is over' " — is no longer valid.
Linda Price (email@example.com) is vice-president of executive programmes at Gartner.
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