Are APAC CIOs Facing a Glass Ceiling?

While technology has provided CIOs with plenty of opportunities to make their mark on their respective businesses, relatively few have moved on to become a CEO. According to a report by The Economist Intelligence Unit (EIU), sponsored by Hitachi Data Systems (HDS), it may take more than technical expertise to convince senior management that today’s successful CIO will be a good choice for tomorrow’s CEO.

The report, entitled 'The Future for CIOs: Which Way Is UP?', surveyed 1,000 senior executives from 13 countries across Asia Pacific, including Australia, China, Hong Kong, India, New Zealand, South Korea, Taiwan and 6 members of the Association of Southeast Asian Nations (ASEAN).

The findings reveal that the modern CIO has a strategic role that goes beyond just managing the IT function in nearly 9 out of 10 (89 per cent) organisations. In addition, the majority of respondents (84 per cent) agree that the CIO should be involved in all business-critical decisions at an early stage.

CIOs have won the respect of the business, but reaching the next level will be difficult

“This research shows that CIOs are well-respected by the business, particularly during the past year, when they helped firms cut costs by being more efficient. Looking forward, CIOs need to take the next step and contribute to business growth by developing new products or services and generating revenue,” said Neville Vincent, senior vice president and general manager, Asia Pacific, HDS. “66 per cent of respondents believe that the CIO should be a potential candidate for succeeding the CEO – so there are already noticeable cracks in the glass ceiling.”

CIOs and other IT executives seem to be aware of the areas where they will be required to deliver. However, they may underestimate the skills and experience needed to achieve this. According to CEOs, the top 3 areas where CIOs should develop their skills are: a greater understanding of the business (41 per cent), the ability to think strategically (26 per cent), and an awareness of broader industry developments (23 per cent). However, none of these feature at the top of the CIOs’ own development goals: demonstrating business case for IT investment (28 per cent), technical skills to integrate new technologies (24 per cent) and knowledge of emerging technologies (23 per cent). Maybe less surprisingly, executives in non-IT functions are more open (17 per cent) to a CIO having a non-IT background than counterparts in the IT function (9 per cent). So this blind focus on technology skills may be misplaced.

James Chambers, senior editor of The Economist Intelligence Unit, said:

“CIOs have earned the right to be considered a candidate for CEO, alongside their C-level counterparts, but it will take more to secure the top job. Ambitious candidates will need to take the initiative to develop their own knowledge and spend time in other parts of the business as they explore ways of creating a competitive edge for their organisations.” 

As per the survey undertaken by the Indian respondents, 80 per cent believe that a CIO could become tomorrow’s CEO and 93 per cent say that the CIO should have final decision-making authority on all IT expenditure. Indian organisations invest in IT mainly to improve customer satisfaction and organisational agility.

Innovation is a key driver of revenue growth, and it is the CIO’s role to drive it

Innovation has been a major driver of revenue growth is almost 3 in 5 companies surveyed. This relationship is expected to continue on an upward trend.

Over 4 of 5 executives across all functions (85 per cent) agree that the CIO should drive innovation across the business, even though IT is considered a driver of innovation at less than a third (28 per cent) of firms. Thus, technology may have thrust the CIO into the spotlight, but his or her career is not tied to IT.

“IT is a major driver of innovation at Indian companies and 76 per cent agree that innovation leads to current revenue growth,” said Vivekanand Venugopal, Vice President and General Manager, Hitachi Data Systems. “57 per cent of the respondents said that in 2015, the investment in IT will increase and the areas with the largest investment increase will be cloud computing and IT infrastructure. As business innovation continues to increase in importance, CIO’s will continue to act as a vital catalyst for innovation.”

“A healthy number of respondents (59 per cent) agree that innovation has been a major driver of revenues. However, there are obstacles, including a lack of IT budget and/or resources (18 per cent), a low standard of existing IT infrastructure (14 per cent), followed by a lack of skills and available talent (12 per cent),” explained Vincent.

Steps to stepping up to the CEO position

Until recently, it was believed that the rapidly changing IT environment would make the CIO irrelevant, or at least reduce his or her responsibilities to technology governance and information security. This survey shows that, in Asia Pacific at least, it is not the case.

To succeed, CIOs need an accurate idea of how existing IT assets can increase their organisation’s revenue, and not just focus on making better business cases for yet more technology. As the report suggests, CIOs can further drive revenue generation and business growth by following these 5 steps:

1. Take ownership of information: CEOs are looking to better data management and analytics to drive sales growth. Providing greater insights should be an easy win for CIOs, placing them at the centre of strategic discussions.

2. Better align IT with business needs: CIOs should be looking beyond their department, focussing on discovering new ways of harnessing technology to increase their organisation’s competitive offering.

3. Deliver return on IT investment: A CIO’s future prospects are likely to be determined by money made more than money saved. The vast majority of executives now expect CIOs to generate revenue – particularly among CIOs themselves.

4. Demonstrate leadership: Ambitious CIOs need to acquire additional knowledge and experience beyond their traditional IT skillset. This requires taking the initiative, such as immersing themselves in other parts of the business.

5. Drive the innovation instead of just contributing to it: Technology can facilitate or obstruct innovation, but it is no cure for all problems. CIOs need to invest in understanding the business and working closely with C-level colleagues to drive innovation and be involved in business-critical decisions at an early stage.

“Ultimately, for a CIO to follow in a CEO’s footsteps, they will need to take ownership of information, better align with business needs and focus on driving innovation forward. This is where we can help – our solutions and services help CIOs to increase an organisation’s competitive offering and generate revenue,” concluded Vincent.