Five Characteristics of a New Breed of CIO

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The Five Characteristics of a New Breed of CIOPublished: 7 October 2013

Analyst(s): Lee Weldon, Heather Colella

A new breed of digitally minded, technology-enabled enterprises will requirea new breed of CIO. Gartner describes five crucial characteristics needed byCIOs if they are to meet the challenge.

Additional Perspectives and Updates

Midmarket Context: 'The Five Characteristics of a New Breed of CIO' (17 March2014)

Key Findings The next 10 years are set to become the first truly digital decade, when digital technology will

move to the forefront of finding new sources of value for the enterprise.

This shift in technology will require a new breed of CIO.

The personal success of CIOs in the coming decade will be heavily influenced by their abilitiesto manage the transition to a new role in response to new business expectations, while ensuringcontinuity in the management of traditional enterprise IT.

Recommendations Continue to use technology to optimize operations while developing deeper business

capabilities, enabling the enterprise to access new streams of value and revenue.

Increase your scope of accountability from the IT organization to the entire ecosystem oftechnology that is relevant to your enterprise, including consumers, suppliers and partners.

Adopt a different approach to planning, breaking away from fixed routines toward a moredynamic, hunting and learning approach.

Move away from measuring success based on efficient enterprise operations, and focus insteadon more impactful business outcomes and the value delivered through a more engagedworkforce.

Table of Contents

Analysis..................................................................................................................................................2

What Is Driving the Future of the CIO Role?......................................................................................3

What Characteristics Are Required for the New Breed of CIO?.........................................................5

How Can CIOs Determine Where to Begin?................................................................................... 10

Conclusion..................................................................................................................................... 12

Recommended Reading.......................................................................................................................12

List of Tables

Table 1. First Digital Decade Implications for CIOs..................................................................................4

Table 2. Each Dimension Is Facing a Fundamental Shift in the Required CIO Capabilities....................... 6

Table 3. CIOs Should Assess Their Level of Experience and Maturity in Each of the Five Dimensions..... 8

List of Figures

Figure 1. Five Changing Dimensions of the New Breed of CIO................................................................5

AnalysisCIOs are facing an unprecedented level of conflicting stakeholder expectations. For the past 10years, they have been required to focus on cost, control and quality in response to global economicconditions. Although these remain important, the emphasis is shifting to demand for technology thatis digital, dynamic and diverse, as business leaders look to drive growth over the next 10 years. Thepersonal success of CIOs in the coming decade will be heavily influenced by their abilities tomanage the transition to a new role in response to new business expectations, while ensuringcontinuity in the management of traditional enterprise IT.

Recent Gartner research has described the emergence of four potential futures for IT within theenterprise, each bringing with it a new set of expectations for CIOs (see "Four Potential Futures forthe IT Organization and Their Implications for the Enterprise: Get Ready for CompetitiveAdvantage"). As CIOs begin to adapt to these emerging models of IT, their profiles are shifting awayfrom the traditional role as head of IT. This transition is leading many CIOs toward a new role that isbetter described as an "explorer" or "pioneer," where they are expected to focus on creatingcompetitive advantage through technology-based business innovation (see "The Four Futures of theCIO Role").

The new set of expectations, coming from a new breed of digitally minded, technology-enabledenterprises, will require a new breed of CIO. This research will help CIOs take the first step inevolving to meet the challenge.

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What Is Driving the Future of the CIO Role?

"In many enterprises, the CIO now runs the front office, which means they're no longer thetraditional CIO, but rather a sort of 'chief innovation officer.' Everybody out there who's comingto the bank, or the airline, or the Fortune 500 investment firm, they actually are interacting withthe CIO and their staff, and the output thereof. They're not interacting, oddly enough, with anyof the stuff that you would normally associate with a CIO, in the sense that that's all hidden.True, CIOs still run the back office, but it's hidden behind a wall." Dr. Bernard Meyerson, IBMFellow, VP Innovation from IBM Research

Over the past decade, CIOs have been measured by their abilities to build a professional (oftencentralized), cost efficient and lean IT organization. The dominant themes have been ERPdeployment, application rationalization, infrastructure consolidation, service management and ITprocess maturity. Although these activities remain important, they represent only the starting pointor foundation from which CIOs are expected to create business value. They are no longer the endresult for determining the success of a CIO.

The next 10 years are set to become the first truly digital decade, when digital technology will moveto the forefront of finding new sources of value in how individuals interact with each other, howconsumers interact with providers, and how enterprises interact with partner and suppliertechnologies (see "The Gartner Travel Guide to the First Digital Decade"). As enterprises rapidlyevolve their mindsets and approach to digital, CIOs will be required to either evolve their ownprofiles and skill sets or risk becoming irrelevant.

As the characteristics of the First Digital Decade start to take shape, it becomes clear that they willplace a new set of expectations on the role of the CIO (see Table 1).

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Table 1. First Digital Decade Implications for CIOs

Characteristics of the First Digital Decade Implications for CIOs

Dynamic: Rapid disruptive technologyinnovation, coupled with customer involvementin the definition, creation and viability ofofferings, sets a dynamic undercurrent in theenterprise business environment.

In response to high expectations for digital innovation todrive business growth, CIOs must develop a deeperunderstanding of how the business will play and win inthe First Digital Decade.

Diverse: Variance is the source of continuousvalue in the First Digital Decade. It is a breedingground for new ideas and future value. This is instark contrast to the past decade, wherevariance was seen as increasing costs afactor needing management control.

CIOs must develop their abilities to find new ways ofapplying technology to create and/or provide access tonew revenue and value streams. This means a shiftaway from the traditional CIO focus of standardizationand control, with a move toward more flexibleexploration of technology innovation.

Driven by consumers: Consumers'engagement determines value. They are willingto pay a premium for products and servicesthat help them meet their needs, realize theirambitions, accomplish their tasks or satisfytheir desire for variety.

CIOs must be prepared to think and act beyond theirtraditional, internal scopes. CIOs, like any other seniorbusiness leader, must be business-minded andconsumer-driven, continuously thinking about the valuethat is provided to the consumer. It will no longer besufficient to consider internal stakeholders as"customers" of the CIO. Internal stakeholders arepartners in creating consumer value.

Collaborative: Consumers, designers,fabricators and others an entire ecosystemof resources form around value opportunitiesfor fluid and dynamic co-creation.

In the recent past, many enterprises focused onbusiness integration and expected CIOs to do likewise.Going forward, the success of the business ecosystembecomes much more crucial to CIOs. Enablingcollaboration and communication among consumers,partners and suppliers is where CIOs will be expectedto focus.

Combinatorial: Technology innovation anduptake are increasing at an exponential rate. Akey contributor to this trend is the way in whichtechnologies are combined to form platformsthat enable new waves of innovation. Forexample, a teenager can create a simple apptoday that is used by hundreds of millionswithin a few weeks, but only because it is builton a social platform such as Facebook, whichitself is built on a platform (the Web), which isalso built on a platform (the Internet) and so on.Additionally, this new wave of creative energy isbeing driven by the combination of technologywith the following: An explosion in accessible information

from the Internet of Things

Significant innovation in business models

The exponential rate of innovation means that CIOs nolonger have the luxury of committing to a static, long-term IT strategy. The recent trends of social media andsmart, mobile devices have been purely consumer-driven, and forced most CIOs to react with a desperateeffort to catch up and take advantage. CIOs can't affordto miss another wave of innovation, and must shiftfocus to more exploration and experimentation toidentify the next big opportunity for the business.Additionally, CIOs can no longer focus only on theimplementation of technology. Creating and accessingvalue in the First Digital Decade require a focus on thecombination of technology with information resources,human capabilities and innovations in the businessitself.


Characteristics of the First Digital Decade Implications for CIOs

A fundamental new mindset toward theapplication of technology to augment andenhance our own human capabilities

Source: Gartner (October 2013)

A new wave of technology and business innovation the first since the e-commerce boom of thelate 1990s drives these characteristics, and will continue to shape the next 10 years. Meetingthese new expectations will require a new breed of CIO.

What Characteristics Are Required for the New Breed of CIO?

As shown in Figure 1, there are five key characteristics that distinguish the new breed of CIO fromits traditional roots.

Figure 1. Five Changing Dimensions of the New Breed of CIO

From Breadth to Depth

From Operations to Monetization

From IT Organization to IT Ecosystem

From Routine to Dynamic

From Efficient Ways of Working

to Effective Outcomes

New Breed of CIO

Business Understanding

PrimaryFocus

Scope of Accountability

Planning Approach

Measure of Success


For CIOs to be successful in the First Digital Decade, they must begin making the transition awayfrom the traditional CIO role, and invest time and attention in developing their capabilities in each ofthe five dimensions (see Table 2).


Table 2. Each Dimension Is Facing a Fundamental Shift in the Required CIO Capabilities

Dimensions Traditional CIO New Breed of CIO

BusinessUnderstanding

Breadth of businessunderstanding based on basicknowledge of how thebusiness operates

Knowledge gained fromworking with businessstakeholders and attendingtraining courses

Depth of understanding of how thebusiness competes, makes money, anddelivers products and services

Knowledge gained either from working ina business unit or from specialassignments that have included businessaccountability

Primary Focus Applying technology to enableproductivity and driveefficiency in operations

Focus on "how we do things"

Combining technology with informationand human capabilities, and applying itto drive innovation in new customertouchpoints, new ways of competingand new revenue streams

Focus on "how we make money"

Scope ofAccountability

Managing the IT organization Building the foundational IT

platform for the enterprise(such as ERP and CRM)

Managing discrete enterprisechanges tied to specific ITdeployments

Managing with an inside-outperspective, focusing on ITtoward the business

Orchestrating a complex ecosystem ofcustomers, distributed IT development,and technology and business suppliers

Building a culture of sustainableenterprise change, with a focus onexploration and learning

Managing with an outside-inperspective, focusing on consumer valueand an integrated technology-enabledbusiness response

PlanningApproach

Creating and maintaining anannual IT strategy, withincremental updates year afteryear

A model for strategy that involvescontinuous hypothesis formation, riskassessment and experimentation,underpinned by long-term planningmethodologies, such as forecasting andscenario planning

Constant co-creative exploration fortechnology disrupters and innovationsthat will drive the next business success

Measure ofSuccess

Cost-efficient performance ofthe IT organization in responseto business demand

Consistently effective realization ofbusiness value

Successful management of businessoutcomes enabled by technology


Dimensions Traditional CIO New Breed of CIO

Successful management of thedaily operations of the ITdepartment


The following table corresponds with "Toolkit: Five Characteristics of a New Breed of CIO," andprovides CIOs with an opportunity to consider their strengths and weaknesses today across each ofthe five dimensions of a new breed of CIO. CIOs should select the answers that best represent theircurrent capabilities, and use the Toolkit to identify where to develop themselves as they face thechallenges of the First Digital Decade.


Table 3. CIOs Should Assess Their Level of Experience and Maturity in Each of the Five Dimensions

Question Answer 1 Answer 2 Answer 3 Answer 4 Answer 5

Business Under-standingWhere have yougained your under-standing of theway the businessoperates?

From working withinthe IT departmentand interacting withbusiness stakehold-ers

From formal businesstraining programs, ei-ther inside the enter-prise (such as man-agement develop-ment courses) or ex-ternally (such as anM.B.A. program)

From a temporary roleaccountable for deliver-ing a business initiative,such as an e-commerceimplementation or a dig-ital business transforma-tion

From a full-time business role(previous or current) withback-office business ac-countability, such as HR, fi-nance, operations or processownership

From a full-time business role(previous or current) with prof-it and loss accountability

Primary FocusWhich businessoutcomes are youmost directly in-volved in deliver-ing?

Focus is on opera-tional efficiency ofthe IT organization,with limited visibilityto the relevant busi-ness outcomes

Applying technologyto enable productivityand drive efficiency inback-office businessoperations

Applying technology toincrease efficiency andeffectiveness of front-of-fice business opera-tions, such as market-ing, product develop-ment and customer en-gagement

Applying technology to gen-erate business growththrough innovation in existingproduct lines and services

Applying technology to driveinnovation in new customertouchpoints, new ways ofcompeting and new revenuestreams

Scope of Ac-countabilityWhat is the scopeof your leadershipaccountability?

The IT engine room,with responsibilityfor the efficient pro-vision of IT infra-structure and opera-tions, as well asback-office plat-forms (such as ERPand data ware-houses)

A centralized IT or-ganization, positionedprimarily as a supplierto the business

A federated IT organiza-tion, with solid-line re-sponsibility over somebusiness units and dot-ted-line responsibilityover others

A shared global service pro-vider, which includes IT re-sponsibility as well as busi-ness capabilities, such as HRand finance

Orchestrating a complex eco-system of customers, distrib-uted IT development andtechnology suppliers, with re-sponsibility for IT and busi-ness process development

Planning Ap-proachWhere do you fo-cus your attentionwhen planning the

Focused on opera-tional execution,with little or no strat-egy in place

Creating and main-taining an IT strategythat focuses primarilyon how the IT organi-zation contributes tobusiness success

Creating and maintain-ing a strategy for infor-mation and technologyin the enterprise, ratherthan a strategy for the ITorganization

Strategy based on taking ad-vantage of enterprise syner-gies and coordinated effortsacross technology and busi-ness capabilities; strategygoes beyond process auto-mation, and looks at combin-

Digital business strategy un-derpinned by forecastingbased on exhaustive huntingand exploring of potential, fu-ture technology disruptersand innovations that will drivethe next business success;


Question Answer 1 Answer 2 Answer 3 Answer 4 Answer 5

use of technologyin the enterprise?

ing physical and digital re-sources in innovative ways tocreate new value

strategy iterates rapidly in re-sponse to competitive oppor-tunities and threats

Measure of Suc-cessHow is your per-sonal contributionto the businessmeasured?

Performance of theIT organization as acost

Performance of the ITorganization as anenabler

Realized business bene-fits of key IT programs

Improved performance of rel-evant operational businesskey performance indicators(KPIs), such as time to mar-ket, product quality and em-ployee productivity

Revenue increase, margin in-crease, customer satisfactionand strategic transformation,with a focus on the leadingand lagging indicators of busi-ness performance



How Can CIOs Determine Where to Begin?

CIOs are advised to use the Toolkit associated with this research (see "Toolkit: Five Characteristicsof a New Breed of CIO"), which will guide them through the questions listed above and providetailored advice based on their own personal levels of maturity in each characteristic.

As a general rule, any Level 1 or Level 2 answer to the questions listed above should take toppriority for development, while Levels 3 and 4 answers show a healthy starting point on the pathtoward becoming a new breed of CIO. Any Level 5 result highlights a strong capability for the CIO toleverage when engaging with stakeholders inside and outside the enterprise.

The guidance below provides advice on actions for CIOs to take when addressing their priorityareas for development.

Business understanding:

Seek out opportunities to take a leadership role in driving a specific business initiative.

Look for opportunities to rotate into a business leadership role ideally, with profit and lossaccountability for a fixed period before returning to the CIO role.

Balance on-the-job business leadership development with business courses, either in person oronline, and pursue an executive M.B.A. degree if the opportunity is available.

Primary focus:

Reserve personal time to proactively engage with senior business leaders on business strategyand development issues. Cut through the strategic "buzzwords" to get at the heart of thechallenges and opportunities faced by the business.

Pull together a small team of senior IT experts who are creative, business-minded, out-of-the-box thinkers. Work closely with them to generate proposals for business innovation through thecombination of technical and physical assets. Be sure to reserve a small amount of funding forexploring and testing the proposals.

Scope of accountability:

Evaluate how much of your time is spent between tasks that focus within the IT organization,and ones that focus on the business and the customer. Target a minimum ratio of 60%outward-focused tasks to 40% inward-focused.

Empower key members of your IT management team to take a stronger role in leading the ITorganization to free up your time to focus on business initiatives. Limit your involvement with IToperational issues to the deviations and escalations, rather than the routines.

Build alliances with other business leaders, such as the head of HR and the head of finance, tojointly deliver business solutions that leverage technology.


Seek opportunities for yourself and key IT leaders to take leading roles in enterprise changeinitiatives.

Planning approach:

Extend your focus beyond creating a strategy for the IT organization to creating a strategy forusing information and technology to drive business success. The question of "What do we dowith information and technology?" becomes much more important for the new breed of CIOthan the question of "How do we develop and manage IT?" This is not to say that a professionalIT organization is no longer important. However, incremental improvements to the way the ITorganization works should be treated as a tactical contribution to the more valued goal ofimproving the strategic business use of technology and information.

Focus on creating a clear and consistent long-term vision for the use of technology andinformation in the enterprise, one that provides guidelines for the desired direction, but is notrigidly prescriptive. Then develop an execution plan that relies on creative and volatile tacticsthat explore the potential paths of achieving the strategy, and take advantage of innovations intechnology and business models. Regularly review the strategy and execution plan to ensurethat the vision is still valid and that the actions are going in the right direction. This will allow thestrategy to emerge and adapt as new opportunities arise from disruptive innovations.

Measure of success:

Review the IT scorecard and routine management reports. Limit the use of inward-facing, IT-internal metrics that measure "how" the work gets done. Instead, focus the majority of metricson the realized business outcomes of the IT organization.

Allocate a dedicated resource to tracking and reporting on the business benefits realization ofall IT investments. Ensure that accountabilities are clear for who will deliver the benefits, andregularly report on achieved versus planned benefits.

Stop presenting IT cost data on its own. IT costs should always be communicated in relation tothe value delivered by the investment. Additionally, look for opportunities to communicate costas an index of business output (for example, IT cost per product sold or IT cost per servicecontract).

Work with business stakeholders to identify the key leading and lagging indicators of businessperformance that are most relevant from an IT perspective. Gartner's Business Value Model canprovide ideas for where to start these stakeholder discussions (see "The Gartner BusinessValue Model: A Framework for Measuring Business Performance"; note: this document hasbeen archived; some of its content may not reflect current conditions).

Ensure that all personal performance metrics are tied to business outcomes. CIO performanceshould be measured in a similar way to any other business leader role.


Conclusion

The First Digital Decade is emerging at a different pace across different industries, with someenterprises fully enveloped in the challenge today, while others are only beginning to feel the effect.However, all CIOs, regardless of their industry or the enterprise maturity, should avoid the mistakeof only watching and waiting. A complacent mindset can be likened to that of a child on the beachwatching the waves hit the shore. Suddenly, a wave comes in faster than expected, and the childhas to scramble to get out of the way, perhaps reacting too late, and ending up cold and startled,with wet feet. Another wave comes in faster and farther. Though the child sees the waves coming,each one takes him by surprise as he misjudges the speed.

The waves of technology and business innovation will continue to arrive in every industry furtherand faster than expected, creating a new breed of enterprise that will require a new breed of CIO.To not get caught, CIOs must begin to adjust their focuses, profiles and skills as we enter the FirstDigital Decade.

Recommended ReadingSome documents may not be available as part of your current Gartner subscription.

"Toolkit: How to Create a One-Page IT Strategy"

"The Gartner Travel Guide to the First Digital Decade"

"Hunting and Harvesting in a Digital World: The 2013 CIO Agenda"

"Digitalizing the Business"

"The Game Changes in the Front Office"

"The Nexus of Forces: Social, Mobile, Cloud and Information"

"The Internet of Things Is Moving to the Mainstream"

"Four Potential Futures for the IT Organization and Their Implications for the Enterprise: Get Readyfor Competitive Advantage"

"The Four Futures of the CIO Role"

"Field Research Summary: The Changing IT Career"

Torgovnick, K. (23 April 2013). "The Future of Work and Innovation: Robert Gordon and ErikBrynjolfsson debate at TED2013." Retrieved from blog.ted.com/2013/04/23/the-future-of-work-and-innovation-robert-gordon-and-erik-brynjolfssondebate-at-ted2013.

McGrath, R. (June 2013). "Transient Advantage." Harvard Business Review.


Schmidt, E. and Cohen, J. (2013). "The New Digital Age: Reshaping the Future of People, Nationsand Business." New York, NY: Alfred A. Knopf.

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AnalysisWhat Is Driving the Future of the CIO Role?What Characteristics Are Required for the New Breed of CIO?How Can CIOs Determine Where to Begin?Conclusion

Recommended ReadingList of TablesTable 1. First Digital Decade Implications for CIOsTable 2. Each Dimension Is Facing a Fundamental Shift in the Required CIO CapabilitiesTable 3. CIOs Should Assess Their Level of Experience and Maturity in Each of the Five Dimensions

List of FiguresFigure 1. Five Changing Dimensions of the New Breed of CIO

Five Characteristics of a New Breed of CIO

Documents

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