Can a CIO become the next CEO?

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Updated: November 24, 2014 11:49:36 AM

Senior IT professionals have become respected members of a business, but moving up the management ladder may take more than technical expertise, according to EIU-Hitachi Data Systems survey

ceo1-thinkstock-525Reaching the CEO spot may take more than technical expertise, according to the Economist Intelligence Unit (EIU) survey.

Until recently, it was believed that the rapidly changing IT environment, turbo-charged by mega-trends such as social media, analytics, mobility and cloud computing, would make the chief information officer (CIO) irrelevant, or at least reduce his or her responsibilities to technology governance and information security. Not quite, says a recent survey—in Asia Pacific at least, it is not the case.

Senior IT professionals have won respect, but reaching the CEO spot may take more than technical expertise, according to the Economist Intelligence Unit (EIU) survey. Findings from the Indian market suggest that 80% of the Indian respondents believe that a CIO could become tomorrow’s CEO and 93% say that the CIO should have final decision-making authority on all IT expenditure. Indian firms invest in IT mainly to improve customer satisfaction and organisational agility.

There is no doubt that technology has thrust the CIO centre stage. There are now plenty of opportunities for ambitious CIOs to make their mark on the business. In recent years, a handful of CIOs have even become CEOs of major businesses. Clearly, attitudes about the role among business executives is changing. The question for CIOs in Asia Pacific is, are they ready?

To find out, the EIU conducted a survey, sponsored by Hitachi Data Systems (HDS), of 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). To get a rounded view of the topic, respondents were drawn from the IT function and from non-IT functions.

As per some of the main findings from the report, titled ‘The Future for CIOs: Which Way Is UP?’, CIOs have become respected members of business, but moving up the management ladder may take more time. “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. “Sixty percent 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.”

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%) organisations. In addition, the majority of respondents (84%) agree that the CIO should be involved in all business-critical decisions at an early stage.

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

Key findings from the Indian market reveal that 93% believe that the CIO has a strategic role and out of those, only 46% agree that IT is strategically important to the business. When it comes to the impact a CIO has made, Indian respondents agree that the largest contributions are operational efficiency and business strategy. The largest areas of investment by Indian firms are IT software followed by cloud computing. For 2015, 57% said the investment in IT will increase (38%) and the areas with the largest investment increase will be cloud computing and IT infrastructure (3% each).

“IT is a major driver of innovation at Indian companies and 76% agree that innovation leads to current revenue growth,” said Vivekanand Venugopal, vice-president and general manager, Hitachi Data Systems. As business innovation continues to increase in importance, CIOs will continue to act as a vital catalyst for innovation.

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