The New Voice of the CIO: Travel, Transportation and the CIO Role

The New Voice of the CIO

Insights from the Global Chief Information Officer Study

Travel and Transportation Executive Summary

Travel and Transportation Executive Summary 1

IntroductionIn a fast-moving business environment, how can today’s Chief Information Officer (CIO) make the biggest impact on behalf of the entire organization? To answer that question, we listened to over 2,500 CIOs worldwide, including 149 Travel and Transportation CIOs representing six industry sub-segments in 35 countries. The sub-segments include Airlines; Airports and Terminals; Freight and Logistics; Railroad (passenger and freight); Shipping; and Travel and Hospitality. These interviews, along with our statistical and financial analyses, made clearer the changing demands on CIOs. Not satisfied to be known only as consummate IT experts or perpetual seekers of savings, CIOs are redefining their role.

The voice of the CIO is being heard in new ways as CIOs are increasingly recognized as full-fledged members of the senior executive team. Successful CIOs are much more actively engaged in setting strategy, enabling flexibility and change, and solving business problems – not just IT problems.

Within the Travel and Transportation industry, significant pressures have affected both the top and bottom lines for every segment. These factors, including significant economic downturns in many markets, the rising costs of fuel, and fewer travelers for business and leisure, are just some of the changes that have dramatically impacted all segments of the industry. These issues in turn have influenced how the Travel and Transportation industry as a whole innovates and interacts with customers. Overall, 65 percent of Travel and Transportation CIOs anticipate the need for substantial change within their organization – change that will drive smarter operations and growth within their organization. However, only 55 percent of these CIOs indicate that they have been successful in these endeavors in the past. On top of the industry issues, differences in opinions between the CEO and CIO as to what are the most important actions to address further contribute to the challenges faced by today’s Travel and Transportation CIO. To address these issues and accelerate improvements to their business, CIOs are allocating their time much differently than before.

Today’s Travel and Transportation CIOs spend an impressive 56 percent of their time on activities that spur innovation. These efforts include generating buy-in for innovative plans, implementing new technologies and managing non-technology business issues. The remaining 44 percent is spent on essential, more traditional CIO tasks related to managing the ongoing technology environment: reducing IT costs, mitigating enterprise risks and leveraging automation to reduce costs elsewhere in the business.

CIOs universally acknowledge that some of their most important objectives too often seem to clash: How can we support the introduction of new services while avoiding the disruption of existing services? How can I reduce costs while improving services? How will I balance the need to influence business strategy with the need to provide top-notch IT support?

The study demonstrates that successful CIOs manage and excel at the extremes of three seemingly contradictory pairs of roles. They go beyond cost-cutting and day-to-day IT management – become strong collaborators within the business, driving innovation, creating value and executing pragmatically. Interestingly, there is a lot of variability across the T&T segments in terms of the actions taken by CIOs to drive impact.

Complementary, yet sometimes conflicting rolesOne CIO summed it up well: “In IT, we are not magicians, but we are certainly jugglers.” On any given day, CIOs are poised for the unexpected – leading an organization that solves myriad problems for both internal and external customers. Without question, IT functions represent the lifeblood of most businesses. CIOs told us that they can only turn more attention to new technology ideas after addressing current IT needs.

After thousands of interviews, we found that successful CIOs actually blend three pairs of roles. These dual roles may seem contradictory, but they are actually complementary. To characterize each role, we have coined a term that describes its dominant quality. At any given time, a CIO is:

• An Insightful Visionary and an Able Pragmatist

• A Savvy Value Creator and a Relentless Cost Cutter

• A Collaborative Business Leader and an Inspiring IT Manager.

2 The New Voice of the CIO


By integrating these three pairs of roles, the CIO:

Makes innovation realIt’s not enough to just plan for innovation; it requires a robust foundation. As an Insightful Visionary, a CIO is perceptive – promoting a broad technology agenda to help the business profit from leading-edge initiatives. The flip side of the Visionary is the Able Pragmatist role. As a Pragmatist, a CIO must deal with the realities of the business. The Pragmatist also facilitates the productivity of current IT solutions to allow more time and more budget dollars for innovation.

Raises the ROI of ITUsing IT to produce greater business value is vital, accompanied by an ongoing focus on lowering costs and heightening efficiencies. A Savvy Value Creator finds new ways to help customers and the organization profit from how data is used. The Relentless Cost Cutter, its counterpart, is focused on managing budgets and processes to eliminate or reduce costs.

Expands business impact To contribute the most to the organization, proven expertise in both business and technical matters is vital. Part of the time, CIOs will engage with the enterprise as Collaborative Business Leaders to drive new business initiatives and cultural shifts jointly with fellow chief executives (CxOs). At other times, the Inspiring IT Manager role occupies center stage to motivate the IT organization and deliver superior IT performance.

Adjusting the mix, one pair at a timeIt’s no surprise that CIOs must reconcile seemingly opposing mindsets. But our findings revealed ways in which they can be more effective in this everyday balancing act. Even some experienced CIOs acknowledged that they are sufficiently strong in just one or two of the six CIO roles. Still, every role requires at least some attention.

The realities facing each individual influence how a CIO can and should manage change at any given time. Within Travel and Transportation, we not only looked at the group as a whole, but also analyzed data at the segment levels that make up this industry: Airlines; Airports and Terminals; Freight and Logistics; Railroad (passenger and freight); Shipping; and Travel and Hospitality. To simplify the terminology in this report, we primarily refer to CIOs who work in organizations with high PBT (profit before tax) growth as “High-growth CIOs” and to those working in organizations with low PBT growth as “Low-growth CIOs.” (see page 16, “How our research was conducted.”)

Many factors impact the decisions about how much emphasis a CIO places on any single role, including macroeconomic and regional conditions, industry-specific forces and various organizational characteristics, as well as the CIO’s own skills and aspirations.

Despite the multiple forces at play, our findings show that successful CIOs discover ways to focus on high-value projects in support of their organizations.

In the following pages, we share with you the voices of many Travel and Transportation CIOs, including what they are doing to achieve three primary goals: to make innovation real, to raise the ROI of IT and to expand business impact.



The Insightful Visionary is active in setting strategy, and helps the business explore how technology can drive innovation. The Able Pragmatist sets the stage for enacting innovation. Key Visionary actions are to push business/technology integration, champion innovation and expand CIO influence. Key Pragmatist actions are to enable the corporate vision, make working together easy and concentrate on core competencies.

High-growth CIOs in the Travel and Transportation area are very involved in the senior levels of the organization, in contrast to Low-growth CIOs. More than 58 percent are part of the senior management team, and approximately 90 percent report either to the CEO or to a direct report of the CEO. In doing so, they spend a lot of time on enabling and supporting the business vision, often by linking business and technology. Although Travel and Transportation CIOs are allocating large portions of their time and effort to the integration of business and technology, they have a way to go in positioning IT as an enabler of the business vision. They report that the rest of the organization still sees IT more as a core service provider than a driver of innovation.

“I am driving for IT to be viewed as a partner to the business, and not an internal supplier. This is integral to driving additional value as the relationship develops.”

CIO, European Railroad

Making innovation realInsightful Visionary and Able Pragmatist


On the flip side of this role, High-growth CIOs who are Able Pragmatists are using collaboration and partnering technologies to spur innovation and better position IT as an innovator.

IT in T&T businesses centers mostly around core services.Despite their influence and exposure to senior management, they fail to position IT as an enabler of the business vision.

Perception gap

Figure 1

Provider of core services 28%

Provider of industry-specific solutions 26%

Facilitator of process efficiency 23%

Enabler of business and corporate vision 22%

Are you well-versed in how emerging technologies and innova-tive processes can address uncovered business needs in your industry?

In what ways will you partner with third parties to increase the time you devote to driving innovation within the business?

How can you expand the use of collaborative and communica-tion tools to widen the knowledge networks of employees and partners?

Do you measure implementation results so that business colleagues not only understand the results, but are convinced and inspired as well?

Collaboration and partnering are key.High-growth CIOs are Able Pragmatists, who use collaboration and leverage third-party services more often to enable the business vision.

High-growth T&T CIOs actively use collaboration and partnering

technology for innovation within the IT organization

+109% more

69%

High growth

33%Low growth

Figure 2

+68% more

37%

High growth

22%Low growthHigh-growth T&T CIOs actively use

collaboration and partnering technology for innovation across

the entire orgnzation


The Savvy Value Creator devises better solutions by understanding customers’ needs, while the Relentless Cost Cutter is vigilant about trimming expenses wherever possible. Key Value Creator actions are to make the data “sing,” reach customers in new ways, and enhance integration and transparency. Key Cost Cutter actions are to standardize to economize, centralize the infrastructure and keep cost reduction a top priority.

It comes as no surprise that Travel and Transportation CIOs are focusing on turning data into actionable information; in an industry where data is critical to running the business, it is not optional to ignore this need. High-growth CIOs are Savvy Value Creators. They are not only working on turning data into actionable information, they also realize that customers will expect world-class integration and transparency within a short period of time. Although there is a gap between the CIOs’ stated focus areas and the criteria by which they expect to be measured, they are pushing ahead with data analytics and optimization in order to position their organizations for the future.

Raising the ROI of ITSavvy Value Creator and Relentless Cost Cutter

“The business expects the ‘hygiene’ of running IT to be done. If you don’t do that properly, then there is no point in talking about innovation.”

CIO, Middle East Airline


With the significant economic impact to all Travel and Transportation segments in the last few years, cost cutting continues to be a high priority for all CIOs in T&T segments – even higher than in other industry segments.

Data analytics and optimization are top of mind.A potential issue for the Savvy Value Creator is the gap between stated focus areas and the criteria by which CIOs are measured.

Figure 3

Business intelligence and analytics

Mobility solutions

Virtualization

SOA/Web services

Self-service portals

80%

75%

69%

69%

Cost effectiveness

Project execution

New system implementation

Aligning business and IT

Business Intelligence initiatives

68%

52%

48%

32%

30%

1%

Top innovation plans

Performance assessment criteria

Cost management +21% more

52%

T&T

43%Overall

Cost Cutters standardize and economize.Cost cutting ranks higher as a performance criteria for T&T CIOs than for CIOs from other industries.

Figure 4

In what ways can you work with the business to extract the maximum financial return from the current IT portfolio?

Do you actively reach out to the business to jointly capture relevant information and do you suggest new ways it can provide value?

How can you leverage competitors’ experiences to further optimize business and IT processes?

If you were your own successor, what are the top three things you would do to generate a 20 percent increase in performance from your IT investments?


The Business Leader thoroughly understands the organization’s core business and builds strong partnerships, internally and externally. The Inspiring IT Manager demonstrates personal IT expertise and advocates for stronger skills across the IT organization. Key Business Leader actions are to know the business, get involved with business peers in non-IT projects, and present and measure IT in business terms. Key IT Manager actions are to cultivate truly extraordinary IT talent, lead the IT forces and enhance the data.

Travel and Transportation CIOs are well regarded by their management teams, more so than in other industries. Among High-growth CIOs, not only are they considered more collaborative, they also receive high scores and credit for technology’s contribution to the business:

“Shortage of IT personnel is chronic. . . talent that understands both IT and business is required urgently.”

CIO, Asia Pacific Freight and Logistics company

Collaborative Business Leader and Inspiring IT Manager

Expanding business impact

Ongoing technology cost reduction

Managing non-technology business issues

Travel and Transportation CIOs are equally well regarded by their own teams, particularly in the area of fostering expertise and managing technology within the organization.


Do you leverage business relationships throughout the enterprise to expand your scope of responsibilities beyond the IT organization?

How can you start an ongoing dialogue between the business and IT that also drives shared objectives and measurements?

Are you a role model with state-of-the-art expertise in at least one IT domain?

Do you have a flexible, comprehensive plan to enhance business and technology skills throughout the IT organization?

Is your IT organization passionate about protecting and improv-ing the quality of enterprise data?

Allocation of time

Low growth

High growth

15%17%17%15%18%18%

10%14%14%14%21%27%

Creating innovative plans and getting buy-in

Implementing new technology and business initiatives

Managing ongoing technology activities

Ongoing technology problem solving

Safeguarding and optimizing data is paramount.T&T CIOs are Inspiring IT Managers who foster IT expertise to extract and preserve critical business data.

Figure 6

CIOs in the T&T industry are highly regarded.T&T CIOs are well received by their management teams, more than at other industries and particularly high-growth T&T companies.

Full sample +47% more

78%

High growth

53%Low growth

Figure 5

+37% more

92%

High growth

67%Low growth

T&T

Figure 7


Managing dual roles in the future Despite the multiple forces at play, our findings show that CIOs have discovered ways to focus on what matters most to them and their organizations.

CIOs in Travel and Transportation have faced significant issues during the last several years – not only the obvious economic challenges, but also disconnects between senior executive priorities, which exacerbate the challenges CIOs face in making innovation real, raising the ROI of IT and expanding business impact.

CEOs and CIOs are aligned in terms of the need for significant business model innovation over the next few years. More than 50 percent of CEOs report they are planning significant changes to their business in order to capitalize on global integration opportunities. Both CEOs and CIOs also recognize the need to collaborate both internally and with external partners.

“We cannot continue our current (way) by extension of our past way of doing business. Alongside. we need to be able to not just respond to the users’ demands, but also be able to proactively give ideas to the business.”

CIO, Asia Pacific Travel & Hospitality Company

Differences exist between CEOs and CIOs.Differences between CEOs and CIOs on the importance of environment, budgets and technology exacerbate the challenges.

Figure 7

50%

40%

30%

20%

10%

0%0% 10% 20% 30% 40% 50%

Per

cent

of C

EO

s R

epor

ting

Fact

or a

s C

hang

e D

river

Budgets

Technological factors

Macroeconomic factors

Other

Regulatory concerns

Globalization factors

People skills

Environmental issues

Percent of CIOs Reporting Factor as Change Driver

More important to CEOsMore important to CIOs


However, disconnects remain in several key areas. While CIOs rank concerns around macroeconomic, technological and budgetary issues as very high on their priority list, CEOs are focused on people skills, globalization, regulatory concerns and environmental issues as the most important factors impacting Travel and Transportation organizations. Reconciling these differences in order to drive successful change for the business remains a key challenge for the CIO.

In analyzing the data from all of the interviews and discussions we conducted, we’ve developed profile analyses in the form of a spider diagram to provide a visual for each of the six dimensions. As shown in Figure 8, High-growth Travel and Transportation CIOs stretch to perform in five of the six dimensions. High-growth CIOs focus more on being an Insightful Visionary, Savvy Value Creator and a Collaborative Business Leader. Low-growth CIOs focus more on the Inspiring IT manager role, but both groups place equal importance on the Relentless Cost Cutter role.

Proactively push IT as an innovation element

Collect innovation ideas

• ShippingInsightful Visionary

Utilize third-party business or IT services

Use collaboration and communication tools

• Freight and Logistics; Airports and Terminals

Pragmatist

Have strong data goverrnance model

Sell into to outside parties

• ShippingValue Creator

Is infrastructure completely owned/operated?

Will processes be stand/low cost

• Shipping

Cost Cutter

Data available for relevant end-users?

Proactively craft data into actionable information?

Inspiring IT Manager

What score would the entire senior team give tech for its contribution to the business?

• Shipping

Collaborative Leader

0% 50% 100%

Percentage of T&T CIOs taking the action to a very large extent.

• Shipping

• Shipping

• Airports and Terminals

• Airlines; Airports and Terminals

• Freight and Logistics; Railroads


• All segments


• Railroads; Freight and Logistics; Airports and Terminals

• All others

• Airlines

• All segments

• Airlines

• Freight and Logistics

• Shipping

Disconnects remain in several key areas.There is a large variability across sub-industries as it relates to actions taken by CIOs to a “Very Large Extent.”

Figure 8


While High-growth Travel and Transportation CIOs do a good job in stretching across all six roles, CIOs in the segments are taking varied approaches in support of their roles and goals, and have different opinions on the best approach to achieve their objectives. Some examples of these differences include:

• Shipping is the only segment of T&T that does not see IT in the role of innovator. The rest of the T&T sub-industry CIOs report upward of 70 percent that they push IT as an Innovation Element.

• Freight & Logistics, Airport & Terminals and Railroad CIOs strongly believe in a centralized infrastructure, in contrast to Airline CIOs, who strongly favor outsourcing their IT infrastructure.

• More than 75 percent of Shipping, Airline, and Travel & Hospitality CIOs utilize third-party services, but more than 40 percent of Railroad CIOs use no such services at all.

• More than 75 percent of Travel & Hospitality, Freight & Logistics, and Airline CIOs use collaboration and communication tools, but 50 percent of Airport & Terminal and Shipping CIOs report no use of these tools.

• Shipping CIOs report that strong Data Governance Models are in place. A large number (between 21 percent and 45 percent) of CIOs from the rest of the sub-industries indicate a complete lack of such models.

All segments agree that technology makes a strong contribution to the business, and on the importance of converting data into actionable information. The challenge for Travel and Transportation CIOs is how to become a driver of change and innovation within their organization.

What Travel and Transportation CIOs are doingCIOs within each segment are focusing on the activities most important to them, and in parallel report that substantive change to the IT organization – and the enterprise – is needed. In order to successfully make these changes, Travel and Transportation CIOs will need to partner more closely with the business in order to drive transformation that can truly make a difference

Over time, we expect CIOs to regularly assess how much emphasis is appropriate on each of the three pairs of roles. Our profiles offer CIOs a more structured approach to identify where they want to increase their focus and how to do it. Whichever role you choose to emphasize, we look forward to working with you.


Obvious gaps exist between High-growth and Low-growth CIOs.High-Growth T&T CIOs stretch more to perform in five of the six dimensions, when compared to Low-Growth CIOs

Figure 9

Insightful Visionary

Savvy Value Creator

Collaborative Business Leader

Able Pragmatist

Relentless Cost Cutter

Inspiring IT Manager

High-growth

Low-growth

Low-growth

87

321

456

For further information, please send an e-mail to the IBM Institute for Business Value at [email protected]. To download the complete IBM Global Chief Information Officer Study, visit our Web site: ibm.com/voiceofthecio

ibm.com/voiceofthecio


Business intelligence and analytics

Mobility solutions

SOA/Web services

Virtualization

Self-service portals

Customer and partner collaboration

Risk management and compliance

Technology-driven innovation

Unified communications

Business process management

Application harmonization

Flexible sourcing

Collaboration and social networking

Service management frameworks

Green IT

Enterprisewide human capital development

Web 2.0 and mash ups

Cloud computing/software as service

Other

80%

75%

69%

69%

68%

66%

65%

60%

57%

57%

57%

53%

50%

49%

46%

43%

39%

36%

11%

Innovation has various aspects.T&T CIOs have developed ambitious plans to enable their companies’ innovation agendas.

Figure 10

How our research was conductedThis report is the inaugural edition of our IBM Chief Information Officer (CIO) study – the latest in the ongoing C-Suite Study Series developed by the IBM Institute for Business Value. To better understand the challenges and goals of today’s CIOs, we met face-to-face with 2,598 of them, in what is the largest known sample of these executives. Between January and April 2009, we interviewed these CIOs, who represent different sizes of organizations in 78 countries and 19 industries.1

Our analysis used 2004-2007 profit before tax (PBT) growth, relative to peers in their industries, to associate organizations with one of three growth levels: High, Medium or Low. For organizations where this information was not available, we used statistical correlation to assign levels, based on closest overall similarity of answers.

About the IBM Institute for Business ValueThe IBM Institute for Business Value, part of IBM Global Business Services, develops fact-based strategic insights for senior business executives around critical industry-specific and cross-industry issues. Browse through our research library at ibm.com/iibv.

AcknowledgementsCharles Vincent, Vice President & Partner, Distribution & Industrial Sector Leader and Travel & Transportation Industry Leader, Growth Markets

Eric Conrad, Vice President & Partner, Travel & Transportation Global Industry Leader

Salima Lin, Associate Partner, Global Strategy and Market Development

Special thanks to Yuri Karadjov for his contributions and support.


Notes and Sources1 CIOs we interviewed in the following countries were counted in the Growth Markets category:

Argentina, Australia, Bahrain, Brazil, Cameroon, Chile, China, Colombia, Croatia, Czech Republic, Ecuador, Egypt, Gabon, Georgia, Ghana, Guinea, Hong Kong, Hungary, India, Indonesia, Malaysia, Mexico, Morocco, New Zealand, Nigeria, Pakistan, Peru, Philippines, Poland, Qatar, Romania, Russia, Saudi Arabia, Singapore, Slovenia, Slovakia, South Africa, Taiwan, Thailand, Tunisia, Turkey, Uruguay, Venezuela and Vietnam. The Western Europe category includes CIOs from: Austria, Belgium, Denmark, Finland, France, Germany, Ireland, Israel, Italy, Luxembourg, Monaco, Netherlands, Norway, Portugal, Spain, Sweden, Switzerland, and United Kingdom. The North America category consists of CIOs from: Bahamas, Canada, Cayman Islands, Jamaica, Trinidad/Tobago and the United States.

Our CIO respondents represented 19 industries. The Communications sector includes: media and entertainment; telecommunications; and energy and utilities. The Distribution sector includes: agriculture; airlines; consumer products and wholesale; food, beverages and tobacco; life sciences and pharmaceuticals; mail, package and freight delivery; professional services; railroads; real estate; retail; transportation and logistics; and travel and tourism. The Industrial sector includes: aerospace and defense; automotive; chemicals and petroleum; computers and office equipment; electronics; energy (production and refining); engineering and machinery; forest and paper products; industrial products; and network and other communications equipment. The Financial Services sector includes: banking; financial markets; and insurance. The Public sector includes: education; government and public service; and healthcare payers and providers.


CIE03068-USEN-00

© Copyright IBM Corporation 2010

IBM Global Business Services Route 100 Somers, NY 10589 U.S.A.

Produced in the United States of America April 2010 All Rights Reserved

IBM, the IBM logo and ibm.com are trademarks or registered trademarks of International Business Machines Corporation in the United States, other countries, or both. If these and other IBM trademarked terms are marked on their first occurrence in this information with a trademark symbol (® or ™), these symbols indicate U.S. registered or common law trademarks owned by IBM at the time this information was published. Such trademarks may also be registered or common law trademarks in other countries. A current list of IBM trademarks is available on the Web at “Copyright and trademark information” at ibm.com/legal/copytrade.shtml

Other company, product and service names may be trademarks or service marks of others.

References in this publication to IBM products and services do not imply that IBM intends to make them available in all countries in which IBM operates.

The New Voice of the CIO: Travel, Transportation and the CIO Role

Education

Transcript of The New Voice of the CIO: Travel, Transportation and the CIO Role