Future of the CIO
In the second part of Network Middle East’s ‘Future of the CIO’ roundtable, IT heads discuss the economic downturn, innovation and social media
As the figurehead of an organisation’s IT department, the CIO holds an increasingly crucial role on the board. But unlike the CFO, the COO or the CEO, their role continues to grow, and as it matures, questions are being asked about the future of the CIO. With the rapid change in technology’s role within the enterprise over the last 25 years, where is the role of the CIO going?
Network Middle East chats to; Arun Tewary, vice president of IT and CIO, Emirates Flight Catering; Imad Taha, Group CIO, Belhasa International Group; Praveen Sashi, head of IT, DHL Express; Zubair Ahmed, head of IT Business Managment and PMO Dubai Bank, Ashi Sheth, director of IT, American University of Sharjah; and Jonas Zelba, research analyst, ICT Middle East & North Africa, Frost & Sullivan.
Do you have more freedom to become involved with the day to day running of IT than say the CFO does with finance, or the CMO with marketing?
AT: I definitely have more flexibility than my counterparts, although there is no industry benchmark. Despite that, I know that I definitely have more time to get involved in the day-to-day running of the IT department than the CFO or the CMO, or any other C-level executive position.
PS: I too definitely have more freedom, but I don’t really get involved with running the department on a daily basis. The only time I really get involved is if things aren’t running as they should be.However, I do get involved when it comes to evaluating new technologies, such as meeting up with vendors and hearing from them what the technologies do. It’s going through so many more changes compared to other industries, and it’s really up to us to have an open mind and think about how these new opportunities can be used. I also think that CIOs are in a better position than other C-level executives to understand the entire business and think about how company-wide processes can be changed to make the business as a whole, more efficient.
AT: Our role is 100% dependent on how the CEO looks at us and conveys his opinion about us to others. The CIO can be at a major disadvantage if the CEO is from the extreme end of the baby boom generation and hasn’t been exposed to the thought process that computers have brought to the workplace from an early part in their career. In that situation, it can be very difficult or maybe impossible to measure up to someone like the CFO who doesn’t have to constantly prove why their position is necessary.
PS: I think you have to give all credit to the CFO, because over time, they have turned what is little more than a back office function - much like IT is sometimes viewed - into one of the most important positions within an enterprise. We as CIOs need to look at ways of creating that acceptance. We need to say it’s not about running systems, we need to become active participants in the business strategy - much like CFOs did during the twentieth century.
AT: You don’t need a certification to become a CIO, but the majority of CFOs will be certified in various areas of finance. A history graduate would not be able to walk in and become the CFO of a company, but a history graduate can become a CIO.
Do you think there needs to be a system of certifications to become CIO? PS: I definitely think so.
IT: I remember reading last month the results of a survey about the world’s most hated jobs. And the job at the top of the list - number one from across thousands of responses across hundreds of countries - was CIOs. Why is this happening? We think we are smart, and we believe we are smart. But people who know about how to use an iPad, they think IT is only a skill. So whenever it comes to comparing the CIO and the CFO, don’t ever put yourself in a position where they have to choose between you and the CFO, because the role of the CIO is not mature enough for them yet.
Do you think that the recession may have been beneficial for CIOs, giving them the opportunity to prove their true value?
PS: Yes, I would agree. The recession brought with it a change in mindset, perhaps with respect to IT the most. Before the recession, the view of the IT department was very much from an angle of cost. And I think if you look across the functions, I think IT was really the only one that stepped up to deliver what businesses needed.
JZ: I would agree with that. IT is changing constantly, and CIOs are really the only ones within an organisation that can understand how IT can really save money for the organisation. And if they are able to convey this to CEOs, then they’ll get the finance. But another thing I hear from vendors a lot is that they feel there are three types of CIOs.
The ones that are in the beginning of their career; they are afraid to make the big changes, because if something goes wrong, their career could already be over before it has started. The second are those at the end of their career. They are just not interested in changing. And then there are those in the middle, who are the ones taking the chances and making real changes to the business.
PS: I think that [the downturn] was a very good point in time for the CIOs to get closer to the business and establish their partnership, and say ‘at a time when you needed it, we delivered’. And now we’ve passed that phase, I think [we have] another great opportunity to partner with the business and say ‘look; now we are looking at growing revenue, and this is where we can partner with you’.
AT: Generally, what I observed was a more effective way of doing business, rather than starting to cut down on budgets and that sort of thing. For our group, it was quite a balanced approach and the focus was on cost optimisation in all areas where it was feasible. The role we played was one of supporting these initiatives. I feel it would not be wise for any organisation during the recession, if they cut down on necessary IT expenditure and required marketing and advertising budgets.
Keep in mind, there is nothing like saving on your IT costs. You might do it one year, you might do it two years, but when you come to the third year, it will have accumulated. You cannot save money on IT by just cutting the budgets, because the costs don’t go away. They are simply deferred. In fact, even if the business feels that freeing up that capital is beneficial, it might have adverse impacts further down the line. You might end up spending more, for example. But what I did, and what I feel anyone can do, is we supported any internal plans where we could help out with optimising processes.
Can the role of the CIO ever be outsourced?
PS: I don’t think the CIO role can be outsourced, ever. It also depends on the organisation and whether the CIO has gained acceptance. I would be very surprised if you found anywhere they hadn’t been accepted though. I don’t think it can be outsourced for the simple reason that business doesn’t understand IT, and they definitely want someone on the table whom they can trust, whom they know has integrity, that they can turn around to and ask what’s best for the business. You can’t do that if you outsource. Also, the role is mainly information. The CIO is manager of information, not just the technology.
IT: I think it’s also important to remember, with someone so senior, you simply cannot outsource them. You could feasibly outsource some of the more junior roles, but it simply isn’t possible with more senior people. If you outsource the role, then you are neglecting to consider the strategy role CIOs have within their jobs.
PS: If you look at other senior functions, could you outsource the HR manager? Well, feasibly, yes, but would you? You wouldn’t for business reasons, and I think the CIO role is no different. You want senior management within each department, and you want functional experts around the table to provide the other members of the board with insight.
ZA: In certain industries, the core competence of the company lies in certain roles. For banking, technology is definitely one of them. It is part of how they differentiate themselves. In addition, they need to have someone on the table with an understanding of technology, because at the end of the day, the vendors don’t necessarily have the best interests of their clients at heart. They are a community that needs to be managed, that needs to be spoken to in a certain way. You need someone with the ability to do that on the board.
In addition, the people who come to be CIOs tend to be very strong from a process management perspective, they understand project management, and they have general management disciplines. In certain business areas, you sometime lack that. So it’s a role that’s more than technology. Yes, the understanding of technology has to be very strong, but more than that, the CIO role requires management acumen, which in my view should be a must in all industries.
JZ: I agree, because IT can be outsourced. IT is being outsourced. But CIOs, they are the ones managing the process, the outsourcing and who will be managing the vendor. Because if you outsource and get rid of the CIO, who will be managing the other outsourcers. The CEO? He won’t have time, and he’ll go to the other managers, who most likely won’t have that much of an idea about the IT side of their operation.
AS: I do think that in the wrong organisation, the CIO might be perceived as a role that can be outsourced. Because if you can outsource everyone that the CIO is responsible for, why can’t you outsource that person as an external consultant? Maybe half of companies would consider that the CIO role is not critical to the success of the business. We have to do a better job of proving ourselves, that we’re not just something that can be shifted off.
Do any of you see a point in the future where departments will order their own applications only to find they are not compatible with the business as a whole?
ZA: I think eventually it will happen; that is why governance is so important. Not only that, where do you spend the money? What part of the IT budget is spent on which business?
PS: It is all about governance, and companies that don’t have strong governance, you are likely to see this happen, you could have all sorts of problems later on. Companies that have strong governance and risk management in place, where the CIO is part of that discussion, of what sort of services they go for, there is less risk of problems later on.
AT: If a department is going with Salesforce, and they have been told everything will be running in a certain number of days, then the head of IT gives a different timescale, says it has to be integrated and so on, then IT will be seen as a hindrance.
How much of the CIO’s role is about innovation today? Is it still true that 70% of the IT budget goes on maintenance, 30% on innovation?
AT: Innovation has got the lion’s share and our existence, and the organisation’s existence, depends upon that. That is across this community.
PS: Everybody is responsible for innovation, right from the ground level to the CEO. As the CIO, you can be a great change agent, you have to choose which opportunities are worth pursuing. When you look at changes in HR, marketing, or finance, IT is always a part of it, ‘can you automate this for us?’, or ‘what can IT do here?’ The challenge is what to prioritise.
IT: Innovation is the most effective way to show what IT can do for business and remove the perception of it just being about operations. IT is not only about being able to use technology, it is about using technology in a different way; you don’t have to invent something to be innovative.
PS: I think another important thing about innovation is there is an element of risk. How tolerant is your organisation of that risk?
ZA: The best innovation comes through collective intelligence, it is about collaboration. So it is not exclusively the role of the CIO to innovate, it is also to take feedback from across the business…
PS: In some companies we are seeing roles like chief innovation officer. In companies where that role doesn’t exist, there is an opportunity for CIOs to step into that.
ZA: If the CIO is not seen as a hindrance, if he is seen as a partner that can help with solutions, then the whole organisation can start innovating.
Have you come across the need to accommodate the always-on generation in the workplace yet?
PS: You are going to see a whole generation growing up, that are more conversant with technology, that are comfortable with it, and you are going to see these demands and challenges that go with it. Again, there is always a certain amount of risk in allowing this; if someone wants to use their iPad for work, you have to give a very valid reason why not. In most organisations, you cannot use social media tools, it is a big challenge for CIOs to accept this, it could lead to a whole lot of problems.
How do you accommodate social media?
IT: I think it is a business decision based upon the job description. We are not 100% blocking social media; we have sales and marketing people, for example, who should always be educated about the new things happening in social media. I think social media is like any technology, you can use it in a good way or a bad way, you can’t have rigid rules. There are good opportunities to enhance our business, especially in the marketing side.
PS: It also includes cost and investment; if you allow social media in your company then one, there is going to be impact on your bandwidth, which means you need to invest in infrastructure. Secondly, there is a potential risk of viruses, so you have to implement systems to proactively address these concerns. How prepared are you as an organisation to invest in that compared to the benefits you get out of social media?