The CIO ChallengeBy Shawn Banerji | Posted 2009-10-27 Print
Finding the correct balance of innovation and cost reduction is at the center of the CIO’s dilemma.
The marketplace for IT leadership continues to be volatile. The Forbes Global 2000 saw numerous senior-level IT seats change hands or disappear over the first six months of 2009.
Information officers are grappling with issues ranging from budget constraints to increased regulatory scrutiny. These and related issues—such as the cross-industry trend of corporate restructurings—conspire to place a greater burden on the CIO as a transformational leader. The change-agent CIO role has consistently been paid lip service in the halls of technology, but real transformation has historically constituted just a fraction of the executive’s day job.
Clearly, identifying the correct balance of innovation and cost reduction is at the center of the CIO’s dilemma over the next 18 months. Information officers must consistently do more with less, while effectively partnering with line management to drive enterprise and unit-level change at almost unprecedented levels.
These expectations have correspondingly increased the visibility of the CIO role, as well as the level of direct accountability to which the function is held. At one extreme, many CIOs have resorted to a bunker mentality, while others use these difficulties as a reason to build relationships that were previously hindered by the absence of genuine incentive on the part of functional leadership and line management.
A recent Gartner poll of CIO priorities suggests that aligning technology resources with business goals is this year’s top technology priority for information officers. It may be that financial limitations encourage CIOs to increase proximity to business partners, with a focus on helping to shape cost-cutting measures by introducing new and improved business processes.
Despite additional challenges resulting from the economic downturn, a survey published by UBS in late
July indicates that IT leaders in the United States and Europe appear less pessimistic about budget cuts than they were only a few months ago. In the United States, CIOs originally expecting budgets to decline by as much as 5 percent over the next year now predict cuts closer to the 1.5 percent mark.
There is a sense that while CFO scrutiny over corporate spending will continue to be necessarily high for the remainder of this year, information officers anticipate improvements in 2010.
Over the first six months of 2009, the Information Officers Practice (IOP) at Russell Reynolds Associates conducted numerous formal interviews and anecdotal conversations with CIOs and their direct reports from a range of industries. Following are some common themes that emerged from those conversations:
1. Within our broad network of information officers, there is agreement that this is the most challenging economic cycle they’ve faced in their professional careers and the most pressure they’ve felt with respect to performance and job security.
2. Approximately half of these executives are under a mandate to reduce information technology expenditures, while simultaneously increasing productivity and operating efficiency.
3. Public company executives are directly involved in the corporate governance process in an unprecedented fashion. This transcends legacy events, such as Sarbanes-Oxley, to include enterprise risk management, compliance and regulatory oversight.
4. Vendor management and strategic sourcing have emerged as critical accountabilities within the CIO suite. Two-thirds of the information officers that we engaged report that a viable strategy for building effective third-party partnerships is high on their must-do list. They say that, for the first time, they have gained genuine board-level visibility.
5.Most telling, the vast majority of information officers we interviewed acknowledge that despite—and perhaps because of—these conditions and circumstances, they are more willing to evaluate new career opportunities than ever before.
Shawn Banerji is a member of the Information Officers and Business and Professional Services Practices within the Technology Sector at Russell Reynolds Associates, a global executive search firm headquartered in New York. He recruits chief information and technology officers in various industries.
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