This year’s State of the CIO 2003 survey reveals a very different set of challenges confronting our readers and a new set of priorities for IT leaders. Even as companies continue to struggle with a sputtering economy and weak corporate performance, and CIOs continue to wrestle with budget cuts and scarce resources, the demands the enterprise places on IT have been ratcheted up. Today, CIOs are being asked to cut costs, increase productivity, and find new ways to generate revenue and profits. In this dollar-anxious environment, alignment between business and IT, between the CEO and CIO?always important?is more critical than ever.
What’s Changed
Last year, chief information officers told us that the biggest hurdles they needed to overcome were inadequate budgets and a lack of time for strategic thinking (see last year’s State of the CIO issue at www.cio.com/ state). CIOs reported that their energy went into staffing their departments, retaining employees and implementing new technologies, such as wireless.
This year, based on the responses of 539 heads of IT from a broad range of industries including manufacturing, government, health care, technology, education and finance, we can see that both staffing and new technologies have taken a backseat to finding best practices for partnering with business units and delivering the greatest value to the organization. While CIOs will continue to deal with tight budgets in 2003, their greatest challenges for the coming year are prioritizing demands from the various business units and aligning IT with business goals.
This year’s study also finds shifts in spending priorities. Security has moved from the bottom half of last year’s spending list to become the fourth highest IT spending priority for CIOs. Systems and process integration remains CIOs’ top spending priority as companies continue to try to squeeze efficiencies out of their operations.
In terms of the skills CIOs believe they need to succeed in their jobs, effective communication and understanding business processes and operations remain important. However, strategic thinking and planning, which was listed as a critical skill by less than half (46 percent) of the CIOs surveyed last year, rocketed up this year’s list with 76 percent of IT executives saying they considered that essential. Clearly, the pressure cooker of today’s corporate world has forced CIOs to redefine their roles and their jobs. It’s either that or get cooked. (See “The Importance of Being Strategic,” Page 58.)
Another skill that more CIOs need to hone is financial-speak. The percentage of CIOs reporting to their CFOs doubled?from 11 percent last year to 22 percent.
What’s Stayed the Same
In a time of uncertainty, it’s nice to see that some things haven’t changed. The majority (73 percent) of IT heads are corporate officers with C-level titles, and roughly half of them still report directly to the CEO?a good thing. On average, CIOs manage IT budgets that represent 6 percent of total company revenue, which is also consistent with last year’s findings. That indicates that while IT budgets have been cut, at least they’ve been cut proportionately.
CIOs still spend the biggest chunks of their days meeting with senior executives and department heads (26 percent), managing their staffs (24 percent), and developing leadership within their departments (13 percent). They’ve been in their current jobs for four years on average?challenging the widely publicized notion that CIOs hop from job to job.
During good times and bad, certain IT best practices endure (see “The Six Best Practices: What Leading CIOs Do,” Page 74). Whether the CIO’s objective is to lower costs or drive business opportunities, our survey identifies certain key practices critical to every CIO’s success: Be part of the executive team; involve leaders and users at all stages of IT initiatives; and have an executive or steering committee oversee IT investment decisions to get buy-in early and avoid surprises later.
Whether you conceive of your role as being operational or strategic, it’s obvious that IT continues to grow evermore central to the business, and that the CIO’s focus on partnering with the business units and aligning IT strategy with corporate strategy will increase productivity, reduce costs, improve customer satisfaction and drive innovation.
So what are you waiting for? Take your vice president of sales to lunch!
Who You Are
CIO surveyed 539 IT executives to bring you “The State of the CIO 2003” results. Here’s what we found out about you.
CHART
Note: Percentages may not add up to 100 because of rounding and because respondents who did not answer are excluded. Slightly fewer than 539 survey respondents answered certain questions; visit our website at www.cio.com/state to see exact sampling numbers.
The Survey: How You Do Your Job
Governance
You are part of the organization’s executive management team/committee
You set the IT architecture and standards that guide the independent IT decisions of divisions, business units and departments
A high-level group in the organization governs IT investment decisions
user involvement
Your IT budget is determined in part by the business units or functions
Your IT department communicates with the user community at large
| Weekly | 23% |
| Monthly | 35% |
| Quarterly | 18% |
| Semiannually | 5% |
| Annually | 2% |
| Only for new employees/orientation | 6% |
| Never | 11% |
Your IT department regularly measures customer satisfaction with IT services
| Yes, internally?internal employees | 42% |
| Yes, externally?business partners, customers | 4% |
| Yes, both internally and externally | 17% |
| No | 36% |
You assign IT liaisons to each major business unit or function
Senior business unit leaders or managers from affected departments or functions are involved with an IT initiative in the following stages
| Initiation/authorization | 89% |
| Planning | 77% |
| Executing | 56% |
| Controlling/monitoring/measuring progress | 63% |
| Post-completion assessment | 63% |
User representatives from affected departments or functions are involved with an IT initiative in the following stages
| Initiation/authorization | 72% |
| Planning | 85% |
| Executing | 80% |
| Controlling/monitoring/measuring progress | 70% |
| Post-completion assessment | 73% |
SKILLS The personal skills most pivotal for your success as a CIO
| Ability to communicate effectively | 78% |
| Strategic thinking and planning | 76% |
| Understanding business processes and operations | 66% |
| Ability to influence/salesmanship | 35% |
| Thorough knowledge of technology options | 26% |
| Negotiation skills | 14% |
| Technical proficiency | 13% |
| Other | 1% |
TIME MANAGEMENT
How you spend your time
| Communicating with business executives and department heads | 26% |
| Managing IT staff, including hiring | 24% |
| Developing leadership within your IT department | 13% |
| Learning/understanding technologies | 13% |
| Interacting with outside business partners/suppliers (not IT vendors)/customers | 12% |
| Negotiating/meeting with IT vendors | 10% |
STRATEGIC FUNCTION
How you view the IT department’s role in the organization
| To enable business initiatives |
| To envision business possibilities and initiate with technology |
| How the IT function is budgeted |
| As a cost center that generates planned expenses |
| As an investment center that generates new business capabilities |
| Your approach to managing IT projects |
| As a portfolio or suite of investments/interrelated activities |
| Separately, according to each project’s specified budget and schedule |
I.T. IMPACT
Your ranking of IT’s impact on the enterprise
| 1 | Increased productivity |
| 2 | Reduced costs |
| 3 | Increased customer satisfaction |
| 4 | Drove business innovation |
| 5 | Created competitive advantage |
| 6 | Grew existing revenue streams |
| 7 | Generated new revenue streams |
I.T. VALUE
The IT practices you rate as highly effective in adding value to the business
| The CIO is part of the executive management team/committee | 71% |
| User representatives from the affected departments or functions are involved at all stages of an IT initiative | 64% |
| Senior business unit leaders or managers from the affected departments or functions are involved at all stages of an IT initiative | 59% |
| The company has a high-level group (executive council or IT steering committee) that governs IT investment decisions | 44% |
| The CIO assigns IT liaisons for each major business unit/function | 41% |
| The IT organization communicates with its user population at large on a regular basis | 39% |
| The IT organization measures customer satisfaction on a regular basis | 36% |
| The IT budget is determined in part by the business units/functions | 34% |
| The IT function is budgeted as an investment center that generates new business capabilities rather than a cost center that generates planned expenses | 33% |
SPENDING
Your top 14 IT spending priorities for 2003
| 1 | Integrating systems and processes |
| 2 | Lowering costs |
| 3 | Strategic planning/aligning IT and business goals |
| 4 | Implementing data security and privacy measures |
| 5 | Automating/optimizing the supply chain |
| 6 | Enabling/enhancing e-commerce |
| 7 | External business-to-business customer service/relationship management |
| 8 | Knowledge management/leveraging intellectual assets |
| 9 | Project management improvement |
| 10 | External business-to-consumer customer service/relationship management |
| 11 | User training/education/satisfaction |
| 12 | Implementing new technologies |
| 13 | Staff development/retention |
| 14 | Managing IT globally |
HURDLES
Your 15 biggest barriers to effectiveness
| 1 | Inadequate budgets and prioritizing |
| 2 | Conflicting business priorities among business units |
| 3 | Aligning IT efforts with business goals |
| 4 | Shortage of time for strategic thinking/planning |
| 5 | Risk and uncertainty due to volatile economic conditions |
| 6 | Lack of key skill sets |
| 7 | Difficulty proving the value of IT |
| 8 | Weak corporate performance/ reduced revenue |
| 9 | Ineffective communication with users/unrealistic customer expectations |
| 10 | Disconnects with executive peers |
| 11 | Leadership/business knowledge within IT department |
| 12 | Overwhelming pace of technology change |
| 13 | Poor vendor support and service levels/product quality |
| 14 | Managing staff/building |
| 15 | Inability to wield effective influence with technology vendors |
On Sale at the CIO Store
? Focus Guide on Strategic Planning: How to Develop and Align IT Strategy
? Focus Guide on The Elite CIO: Principles and Practices of Top-Tier IT Leadership
? The full results of “The State of the CIO 2003” survey identify the key practices that are critical for every CIO’s success. The complete survey, geared to both operational and strategic IT, presents the numbers you need to know, analyzed by industry. It will be available for purchase in May.
For all these items, visit www.theciostore.com.
The State of the CIO 2003 Survey Methodology
CIO’s second annual “State of the CIO” survey was administered online from Nov. 18 to Dec. 6, 2002. CIOs, CTOs and vice presidents in charge of IT were randomly selected from our circulation file and invited to take the survey. The survey findings shown are based on the responses of 539 heads of IT from a broad range of industries, with close to half (45 percent) representing companies with greater than $500 million in annual revenue. The results of the study are statistically valid. The margin of error for the survey is plus or minus 4.3 percent.
Much like last year, this study asked top IT executives about their career paths, including functional background, tenure, salary and the key skills needed for the role. We surveyed respondents about the job of CIO?reporting structure, greatest challenges, budget and staffing responsibilities and the user environments supported by their IT organizations.
This year’s survey went further in examining the CIO role and identified the best practices for effectively managing IT and partnering with the business units. -L.C.W.
