For the first time, this year, CIO Asia’s annual feeling of the pulse of senior IT executives targets the whole enterprise C-suite, including CEOs, CFOs, CTOs and CIOs, hence the change in the survey’s name from 2008. This broadening of our research focus is in line with the strategic shift in MIS Asia magazine — which has been happening for more than 12 months — towards a more enterprise-wide appeal than to just the CIOs, although you hardworking and sometimes taken-for-granted business technologists, as always, remain high in our thoughts.
Our State of the Asian CxO 2009 research was carried out from early June to July, at a time when most Asia enterprises were experiencing an historically bad second quarter and were turning to survival strategies. We surveyed the thousands of movers and shakers on our database and received a statistically relevant response of 165 fully completed questionnaires, from executives in Singapore, Malaysia, Thailand, the Philippines, Indonesia, Hong Kong and mainland China.
Consistently over the past three years, and also into 2010, two management priorities have topped the list; aligning IT and business goals and controlling costs. These remain top of mind and it’s interesting that controlling costs comes second, even in the despair of an economic downturn.
The holy management grail of business – IT alignment, something which has been hotly discussed for many years, remains number one and a priority as yet apparently unachieved by many Asia businesses. This year’s survey provided some interesting insights into corporate politics in Asia. When asked to rate the effectiveness of CIOs in communicating the financial impact of IT initiatives and value, as well as cost, the pendulum swung in favour, but only just. A total of 55.7 per cent of respondents felt that CIOs were ‘effective’, or ‘very effective’, at talking in money terms, while 44.4 per cent believed that CIOs were ‘relatively effective’ (30 per cent), ‘not effective’ (11.9 per cent) or ‘not at all effective’ (2.5 per cent).
Asked to rate how their CIOs develop IT staff with business and leadership skills, more than half the respondents (50.3 per cent) were lukewarm in their enthusiasm, choosing ‘relatively effective’ (37.1 per cent), ‘not effective’ (11.9 per cent) and ‘not at all effective’ (1.3 per cent).
On the plus side, more than two-thirds of respondents (66.9 per cent) chose ‘effective (46.5 per cent) and ‘very effective’ (20.4 per cent) when asked if their CIO ‘has healthy relationships with other CxOs’. Nevertheless, that’s still one in three Asia enterprises where there seem to be some relationship issues in their C-suite.
Overall, however, most of the other members of Asia’s executive teams seem well satisfied with their CIOs’ effectiveness in helping their companies meet core business objectives.
The current number one challenge to the effectiveness of Asian executives in their role is the ‘difficulty proving the value of IT’, followed by inadequate budgets and pressure for cost management and reduction.
The final two concerns in the top five were risk and uncertainty due to the volatile economic conditions and unknown/unrealistic expectations from the business.
Our respondents had consistent expectations for what benefits IT had for their business, for 2009 and 2010. Their top three choices were: reduce business costs, create competitive advantage and enable business innovation. Clearly, IT is now considered to have matured beyond being a ‘black hole cost centre’ to being expected to drive costs down and to increase efficiency.
This underlines the established importance of CIOs being able to promote the specific financial benefits of their IT systems. Indeed, the executives who responded to our survey said the top skill set (35.8 per cent) that was their primary strength was communication, leadership and management skills. This was followed by business and/or industry knowledge/experience (31.5 per cent) and project management/execution skills (17 per cent). Only 10.3 per cent of respondents indicated that their primary strength was a deep knowledge of technology and slightly more than four per cent believed their strength was in turnaround/change management skills.
One way you could read this would be to say that the vast majority of executives are uncomfortable with change, or at least acknowledge their shortcomings in dealing with it. Am I the only one who sees this as strange in an industry where change appears to be accelerating exponentially?
Other management challenges raised included a lack of competent local system integrators, a general shortage of qualified and experienced staff, the difficulty of changing organisation structure with IT management, and the task of convincing client (users) of the need to change.
As a management priority, process improvement ranked number four (39.4 per cent) on respondents’ concerns, but for 2010 this dropped significantly to just 30.9 per cent, so maybe senior executives are winning some battles on this front.
Improving internal customer (user) satisfaction ranks as the number five priority for both 2009 (38.8 per cent) and 2010 (33.9 per cent). Perhaps the fall in this focus for next year can be attributed to progress being made or maybe enterprises believe the time is for prompt action rather than being slowed by internal users’ concerns.
If this is the case, it would be a mistaken view because internal users, like clients and customers, are the ones who know best about what they need. Only dictators and despots arrogantly assume they know what’s best for their populations, and many of them have inevitably come to grief with this philosophy. Business is no different.
STAFF DEVELOPMENT A CONCERN
From the management priority perspective, it was perhaps disappointing that less than one third of enterprises (31.5 per cent), regarded staff development as a key need for 2010. It did, however, come in at number six on the list, so is registering as a concern.
Some key trends were revealed in the technology priorities of our surveyed executives. For 2010, business intelligence (BI) has jumped to the top of the list (52.1 per cent of respondents), de-throning integrating/enhancing existing systems and processes, which came in at the number two priority (49.7 per cent). The rise of BI has indeed been significant, representing an 11 per cent increase in priority from 2009 to 2010. The trials of the economic downturn seem to have forced decision-makers to commit to better understanding the intricacies of their operations. It’s said that ‘what you can’t measure you can’t improve’, so our executives appear determined to properly calculate their business metrics.
The other star performer in claiming higher priority mind space with executives is improving enterprise efficiency. Their focus on this (45.5 per cent) jumped by nearly 10 per cent from 2009 to 2010. No doubt, the economic downturn was a major catalyst here.
Interesting, despite all the vendor noise and hype about cloud computing, our research found that only 7.9 per cent of surveyed enterprises prioritised this approach; they are yet to be convinced. It ranked a lowly number 16 on the list of technology priorities for 2009, way below others such as enterprise IT security (40 per cent, ranked number six), virtualisation (26.7 per cent, ranked number seven) mobility/wireless, service-oriented architecture (SOA) and e-commerce (8.5 per cent). Admittedly, for 2010, cloud computing was on the radar for 10.3 per cent of respondents, but still way below a chief concern for the majority. Maybe this is just the perfectly natural human, and business, inclination to wait for someone else to try new directions, before plunging in to untested waters.
But, for all its purported benefits, the cloud seems to still be a bit of a fog for our IT executives. There’s some work for cloud vendors to do and maybe Microsoft’s marketing push for Azure, due for launch in November, will be one of the catalysts to change this.
Virtualisation, too, slipped one spot from 2009 to 2010 as an enterprise technology priority, despite vendors’ enthusiasm and prolific marketing. It fell in the rankings, but actually increased to 28.5 per cent as a priority for the coming year. It seems that in Asia, as in other regions, virtualisation is increasing in popularity.
For 2010, developing new business services and products rose above virtualisation, to take up number seven spot as a priority for Asian executives.
Enterprise IT security, surprisingly, given the snowballing of digital threats across the globe, slipped in popularity as a 2010 technology priority. There have certainly been some startlingly major data breaches, for example the US Heartland case, from which enterprises should be learning. Heartland Payment Systems is one of America’s largest payments processors, handling all payments—from credit, debit and prepaid cards to online transactions.
In the Heartland case, hackers gained access to the network and stole credit and debit card numbers as they were being processed. Administrators did not catch the activity in the log reports generated by their payment systems. More than 100 million transactions, containing credit card numbers and IDs were accessed by the hackers and, if you think you are safe because you are not in the US, think again. Anyone in the world who has used their credit card to make a purchase, say from a 7-Eleven outlet, could potentially have had their card details exposed.
SECURITY RANKS LOWER
For the coming year, 31.5 per cent of respondents cited enterprise IT security as important, whereas for 2009, it was highlighted by 40 per cent of respondents. If the focus on security matched the prevalence and incidence of digital threats and attacks today, this priority would be much higher. Let’s hope this contrary result means Asia’s enterprises are well-prepared for the new security environment, although some research has already indicated otherwise.
It’s worth noting what Novell’s director, identity and security solutions Asia Pacific, Anthony Turco, told a recent Fairfax Business Media (FBM) IT seminar in Kuala Lumpur. He maintained that IT administrators were responsible for more data compromises than any other insider role. He said terminated employees, sometimes with a chip on their shoulder, are mostly being allowed to walk out the door with thumb drives, CDs even laptops full of sensitive data. And they leave with their access codes working too, so they can pillage their former companies’ crown jewels at their leisure.
It doesn’t take a genius to realise that once an employee is terminated, so should any access privileges they have. In fact, perhaps the access privileges should be cut just before they are asked to leave. Turco told the seminar that at Novell, any terminated employee’s access is dead within two minutes of them departing—perhaps a good model.
BUSINESS SURVIVAL FIRST
Maybe in recognition of an impending economic upturn, business continuity planning slipped from being a number two technology priority in 2009, to number three (47.3 per cent) for 2010. In the current economic climate, you can read ‘business survival’ instead of business continuity planning. While fire and flood can be disastrous, economic survival in a financial tsunami becomes paramount.
Another technology priority that has significantly moved up the list from 2009 to 2010 is supply chain automation/visibility. This was cited by 21.8 per cent of respondents as something they planned to address in 2010, up from just 12.7 per cent in 2009. Perhaps supply chain problems caused by bankruptcies, business closures and other symptoms of economic malaise, have prompted this increased attention. There is nothing like the stress of an almost unprecedented global recession to expose the weaknesses of any supply chain system. More (17.6 per cent) respondents cited implementing new technologies as a priority for 2010 than in 2009 (13.0 per cent). The range of specific new technologies highlighted, as being used in 2009 and intended to be used in 2010, included business process management (BPM), BI, SOA, developing an Enterprise 2.0 portal, the growing technology of robotics, barcode and e-document systems, plus server consolidation/upgrades.
Here is an overview and summary of more key findings:
Q. How will your headcount change during the next 12 months (from the start of 2010)?
For readers of the economic tea leaves, there might be some good news in this survey. With US President Barack Obama talking up recovery, bank stocks jumping in price, and some Asia economies having already emerged from recession, this air of optimism appears to be wafting across IT executives too.
Nearly three quarters (74.1 per cent) indicated that their IT headcount would remain unchanged in the year to come. This pragmatic wait-and-see approach is in line with the relatively low percentage of IT labour currently being outsourced.Nearly 20 per cent (19.6) of respondents said they planned to increase their headcount by as much as 10 per cent, a real vote of confidence in an upturn. Only 6.3 per cent declared they planned to cut back staff strength, although some said they were looking at a 25 per reduction. For those planning to take on more IT people, the areas of expertise in highest demand are application development (56.4 per cent), database management (44.8 per cent), security (41.2 per cent), project management (38.2 per cent) and networking (37.6 per cent). On the bright side, at least employers will have a bigger field to choose from, given the big numbers of IT people who have lost their jobs. Interestingly, emerging technologies and open source (both 17.6 per cent) shared the bottom end of the list of needed people skills, along with website development (21.8 and Web services (22.4 per cent).
On the outsourcing front, the financial crisis does not seem to have been the boon. Nearly two-thirds (63.9 per cent) stated they did not expect to outsource any less or more for the year to come. Almost 15 per cent (14.8) said they planned to decrease their outsourcing, while 21.3 per cent planned to increase outsourcing. Nearly two thirds (62.4 per cent) said they do not outsource any of their IT labour. For those already outsourcing, about a quarter (22.6 per cent) outsource between 21 and 30 per cent of their IT labour, and 21 per cent outsource 11—20 per cent.
The top five systems that respondents, who outsourced some of their IT labour, highlighted as outsourcing targets were data centres, networks, customer relationship management, IT security and Web—e-commerce.
Q. Which business processes are you currently improving with IT?
The stand-out number one business process currently being improved is accounting and finance (69.1 per cent) which links to the new obsession with business intelligence. Knowing exactly where most of your revenue comes from has become even more important under the gloom of a recession.
Perhaps surprisingly, the number two business process that IT is being deployed for, is human resources (54.5 per cent), followed by inventory management (44.2 per cent), customer service/support (41.8 per cent) and sales (40 per cent).
It could be argued that the human resources focus also stems from the world’s financial troubles and the avalanche of redundancies, re-structuring and downsizing that has resulted from it. Perhaps human resource managers are turning to technology to help them keep track. Near the bottom is compliance (23 per cent), and R&D and product development (11.5 per cent). The US trend towards using specific software to manage, maintain and monitor compliance across diverse standards and countries doesn’t appear to have gained traction in Asia.
Q. What are the key roadblocks to IT’s involvement in innovation at your company?
The thirst for innovation does seem to have been quenched, judging by this latest research. This is despite some three quarters of survey respondents declaring that the importance of the role of IT in driving, or enabling, business innovation has become ‘somewhat, or significantly more important’ compared to last year.
More than 45 per cent of our respondents said that, in their enterprise, ‘no one has specific responsibility for R&D and vetting emerging technologies that might contribute to business innovation’. Thirty-seven per cent said this was a team responsibility and only 18 per cent said there was a specific appointed individual.
Our respondents (51.5 per cent) said the top-of-the-league ladder for innovation roadblocks was that ‘IT executives are too busy maintaining existing systems and infrastructure to innovate’.
It seems the executive team has been way too busy over the past year ensuring their survival rather than pondering any new ideas, even though it could be just such new ideas that are needed. This is something of a ‘chicken and the egg’ scenario—which comes first? The second most popular concern (38.2 per cent) was that ‘the corporate culture does not give enough responsibility to IT to innovate’. Nearly 36 per cent maintained there were ‘inadequate opportunities for IT to communicate innovative ideas’ while a similar proportion said ‘IT executives are involved too late in the decision-making process’.
Perhaps more seriously, 23 per cent of our respondents determined that there is a ‘lack of C-suite confidence in IT’s ability to generate ideas and to innovate’. To me, this sounds like a cry from help from CIOs. Maybe there is some push-back from CEOs against the need to involve their senior IT people more prominently in the decision-making process.
Whatever the reason, these results seem to indicate continuing disagreement, disenchantment and lack of team work in the executive group, at least relating to innovation. Advice from an outsider: Talk more, draw better on the strengths of your team, put aside status and territorial concerns and be more consultative.
On the bright side, our research also showed that the perception of the importance of the role of the CIO and IT in enterprises, has significantly increased, with more than three quarters of the respondents acknowledging the rise.
Q. What business benefits do you expect IT will deliver to your enterprise in 2010?
This wish list for the year to come is headed by an expectation, by 60.6 per cent of our respondents, that IT will reduce costs through efficiency/increased productivity.
More than half (50.3 per cent) want IT to ‘create or enable competitive advantage’ and 47.3 per cent believe IT will ‘enable and drive business innovation’. This seems to clash a bit with our earlier findings on innovation concerns, but underlines the key message that executive teams need to practise more collaboration and consultation.
Q. On what activities do you spend the most time?
According to our survey group (58.2 per cent), executives in Asia now spend their most time on strategising and big picture planning, followed by interacting with company CxOs and business executives (53.9 per cent) and budgeting (51.5 per cent). The next highest time-consumer (43 per cent) was designing/optimising business processes.
The practice of focusing on interaction with CxOs bodes well for an improvement in C-suite relations, so long as the interaction is consultative rather than dictatorial.
Our executives very definitely have an internal focus, whether due to the economic downturn or not. Nearly one third (32.1 per cent) highlighted ‘hiring, developing and managing staff’ as a key activity. The area of compliance management/planning was cited by 41.2 per cent of our executives as high maintenance, which seems to gel with the finding that using IT to help in this area was a low priority. Maybe if more enterprises did use IT systems for compliance duties, executives would need to spend less manual time.
Q. What best describes your philosophy on the IT department’s primary role?
More than 56 per cent (56.8 per cent) of our survey participants said that ‘IT should proactively envision business possibilities and initiate them with technology’.
There was a group, representing 43.2 per cent of our total, that said ‘IT should support and enable business initiatives’.
Again these declarations conflict somewhat with our other survey findings on the C-suite perception of innovation and who should drive it. Perhaps the key word in this is ‘should’.
IT ‘should’ proactively envision business possibilities; IT ‘should’ support and enable business initiatives. Maybe the real question is, why doesn’t it now do so, when this argument has been raging for so many years already?
So, how would you describe the State of the Asia CxO 2009 based on our survey?
Overall, the state of mind of senior executives appears to be cautious, seriously business-focused, seeking a new, detailed perspective on the internal operations of their enterprise, and conservative in their approach to any new ‘landmark technologies’ no matter how well they are promoted and marketed. They seem to have a no-nonsense, practical approach to their roles and refuse to be ‘spooked’ by economic hard times.
Said by the CxOs
Here are some comments made by respondents, relating to the overall survey thrust. As promised in our survey explanatory notes, all submissions are kept confidential.
• “Application programming languages should be improved to speed the implementation of business processes. Taking two to three years to deliver a project is too long—by then, external and internal environments have changed.”
• “The CIO in my organisation is the chief innovation officer.”
• “The outcome of this survey should not only be made known to CIOs, but should be used as a tool to educate CEOs and the C-suite in Asia on the increasingly important and complex role in balancing traditional operational matters and business requirements.” MIS Asia
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