Are You the CIO Your Enterprise Needs?

Many CIOs tell us their role is changing. Beyond managing their enterprise’s IT organization, these days some CIOs own business processes; others have revenue targets; most manage a network of external partners, suppliers, and customers; and still others manage shared services developed by HR, financial services, and sourcing. Digitization of the business creates exponentially more connections between individuals, enterprises, devices, and governments. This enables easier transactions, collaboration, and social interactions; breaks down traditional industry boundaries; and changes how profits are made.

To understand how digitization is changing the role of the CIO, MIT CISR and Harvey Nash looked at how CIOs currently allocate their time; how allocations have changed over the last decade; what CIOs at top-performing enterprises do differently from those at bottom-performing enterprises; and how industry affects CIO time allocations.[foot]MIT CISR added several questions to the Harvey Nash/KPMG 2016 CIO Survey (N=553) and analyzed data related to those questions. Some of the results in this briefing were previously published in a special report by Stephanie L. Woerner and Peter Weill, “CIOs—A Career Choice Ahead?” Harvey Nash/KPMG CIO Survey, http://www.hnkpmgciosurvey.com/ special-report-mit-cisr/. Harvey Nash (http://www.harveynash.com/) is a global executive recruitment consultancy; KPMG (http://www.kpmg.com/) is a global professional services firm.[/foot]

CIO Time Allocation: Major Activities, and CIO Types by Focus

In previous research, MIT CISR found that CIOs allocate time to four major activities, with most CIOs devoting some time to each area:[foot]P. Weill and S.L. Woerner, “How CIOs Allocate Their Time,” MIT Sloan CISR Research Briefing, Vol. VIII, No. 1A, March 2008, https://cisr-mit-edu.ezproxy.canberra.edu.au/publication/2008_03_1a-ciotimealloa-weilwoerner.[/foot]

1. Managing IT services: Managing the IT unit and ensuring delivery of IT services across the enterprise at the desired cost, risk, and service levels. Includes working with vendors and other partners
2. Working with non-IT colleagues: Working with non-IT colleagues on business strategy, business processes, digital governance, new product development, compliance and risk, and investment prioritization 
3. Working with customers: Meeting with the enterprise’s external customers, partners, and colleagues as part of the sales or service delivery process, including establishing electronic linkages (e.g., APIs) with customers
4. Managing enterprise processes: Managing processes in areas outside of IT such as non-IT shared services, product development, operations, corporate responsibility, sustainability, HR, and a range of special projects

These different CIO activities simultaneously pull CIOs in four directions. In figure 1 we show average CIO time spent on each of the four activities both ten years ago and now—and the change is dramatic. Here are some highlights:

• There has been a 60% increase in time spent by CIOs with external customers, particularly with sales targets. CIOs of enterprises as varied as Microsoft, Raytheon, and State Street Corporation spend at least one day a week with external customers.
• CIOs spend significantly less time collaborating with senior colleagues. This might seem surprising, as many CIOs aspire to have a seat at the table and be more aligned with the business. But it turns out that the real benefit created by being embedded comes from simplifying digital governance, expediting investments in connectivity, and identifying where technology can add new value. Once such efforts have been completed, successful CIOs reduce allotted time to about 25% and shift focus to enterprise processes or customers.

We identified four types of CIO,[foot]P. Weill and S.L. Woerner, “The Future of the CIO,” MIT Sloan CISR Research Briefing, Vol. IX, No. 1, January 2009, https://cisr-mit-edu.ezproxy.canberra.edu.au/publication/2009_0101_FutureOfTheCIO_WeillWoerner.[/foot] each with a primary focus, based on above-average time spent in each of the four major activities identified above:

1. Services CIO: Emphasizes the “lights on” aspect of the CIO job
2. Embedded CIO: Concentrates on relationships with colleagues
3. External Customer CIO: Regularly meets clients of the enterprise and might have revenue targets as part of the job
4. Enterprise Processes CIO: Takes an enterprise-wide view of the organization, concentrating on building out end-to-end processes and shared services, thus leveraging the platform

The CIOs in our current and previous studies typically allocated time to at least two of the four activities and sometimes allocated time to all four activities. A CIO’s type is a matter of emphasis, determined both by what the enterprise needs and the career aspirations of the CIO.

CIO Response to Changing Enterprise Needs

The transition in time allocations over the last decade illustrates the change in what enterprises want from their CIOs and the types of CIOs needed to address those requirements. For example, in 2016 we saw CIOs spending on average 16% of their time with customers, compared to 10% in 2007, which we think indicates that enterprises are demanding more customer engagement from their CIO. Great CIOs respond to changing demands in three stages (see figure 2). Every stage has its benefits, and there is cumulative learning from stage to stage. 

Stage 1: Service Provider. At this stage, the key issue for enterprises is cost savings.[foot]Enterprise needs are identified by correlating key issues that the management board wants to see addressed (such as saving costs, enabling business change, and improving time to market) with CIO type. Correlations at the p<.06 level and lower are reported.[/foot] Every CIO tells us of the importance of making sure that IT services are stable, available, and low cost, and meet the requirements of the business. Rock-solid IT services are the base of a successful enterprise; in order to progress to the next stages and reallocate time to other activities, a CIO first has to get the services right. Some CIOs specialize in the Service Provider stage, and work at an enterprise until the services are stable and low cost, then move to another enterprise that needs this expertise.

Stage 2: Senior Team Member. Once IT services are successfully managed, a CIO is able to work more fully with non-IT colleagues, focusing on automation, better project outcomes, and implementation of systems, and embedding digitization throughout the organization. The key issue the research identified for this stage is increasing efficiency. In top-performing enterprises,[foot]Top-performing enterprises are enterprises with net margins in the top 25% relative to their industry average.[/foot] stage 2 CIOs are significantly better than competitors at successfully completing projects like offshoring, infrastructure upgrades, and digital marketing.

Stage 3: Value Driver. Once CIOs have successfully integrated themselves into the senior team, they have an important choice to make, both for their enterprise and their career: Is their next focus customers or business processes? Where can the CIO create the most value for the enterprise, and which is the best direction personally? CIOs taking the processes route focus on making the enterprise run better through the processes, people, and technology; key enterprise issues are driving M&A synergies and improving business processes. CIOs taking the customer route focus on customer engagement, sales, and peer connections; key enterprises issues are enabling mobile commerce and reputation management via social media. With either direction, service enabling core competencies via APIs, either for use with customers or internally, is an important activity for the CIO.

For instance, Bernard Gavgani at BNP Paribas Investment Bank oversees all of IT and Operations. Many CIOs, especially in industries like financial services, take a process focus, often consolidating IT and Operations. In top-performing enterprises, the highest enterprise process time allocation is significantly correlated with successfully completing projects like cloud implementations and technology innovation.

By comparison, as the CIO for HP, Ramon Boaz spent a significant portion of his time working with external customers. When in 2015 HP split into two corporations—HP and HPE—Boaz became SVP for Customer Advocacy of HPE “to lead a customer-centric, technology-driven business strategy across the organization, ensuring best-in-class experiences for customers and partners.”

We see a movement toward the customer in highly volatile environments, where customer needs and demands are constantly changing. In these environments, it is critical to amplify the customer voice inside the enterprise, and CIOs working with their peer CIOs and customers can do this very effectively.

Besides the stages, we also looked at time allocation based on industry. We found some industry differences in time currently spent with customers, with the highest CIO customer time allotment in Technology & Telecom (20%), Financial Services (19%), and Healthcare (18%). Interestingly, these are the three industries where there is a significant move toward building ecosystems and where customer knowledge and relationships are key to making that move. The lesson here is that CIOs in stage 3 who are operating in more volatile industries often do and probably should move toward the customer rather than processes.

CIOs are under pressure to help their enterprises become more digitized, agile, and global, and to help them grow profitably. Therefore, they must find ways to increase their time allocation outside of providing IT services. We already see this happening: In enterprises where the CIO is becoming a more strategic role, CIOs have reduced the amount of time spent on IT services and increased the time in other areas. CIOs and their colleagues need to design governance mechanisms that allow the CIO to spend less time managing IT services and more time delivering business value.