With digital technology increasingly vital to business, the CIO role is quickly evolving, placing IT leaders under threat from business executives who offer the blend of business and technical savvy necessary to lead transformational strategies in the future.
A recent report by market intelligence firm IDC has placed IT leaders at a crossroads, predicting that, by 2026, 60% of APAC CIOs will find their roles challenged by LOB (line-of-business) counterparts who can better demonstrate the ability to align technology with the organization’s mission and customers.
Already under pressure to accelerate digital transformation, CIOs now often find their voices drowned out by LOB executives who are heavily involved in making technology decisions, according to the report. This trend could leave CIOs vulnerable to decreased influence over the corporate technical agenda, or pushed into a secondary C-suite role.
Narottam Sharma, who recently quit his role as global CIO of Indian multinational Mastek to advise enterprises on digital transformation, cuts to the heart of the issue: “Technology is getting democratization but the pace at which business is learning technology is faster than the pace at which technology is learning business. As a result, CIOs find their roles being challenged by LOB counterparts.”
Increasingly fragmented technology budgets and transformation strategies could accelerate this crisis, he says.
“The fallout of this is challenging for CEOs as it results in distribution of money in different pockets within an organization,” Sharma says. “Also, there is a lack of cohesive and holistic transformation in the company, which eventually hinders realization of collective value for the organization”
The growing stature of LOBs
Malaysia-based Ts Saiful Bakhtiar Osman, head of IT for Asia Pacific at financial services company The Ascent Group, has experienced this situation first hand, to damaging results.
“I have been in this situation in the past when frustrated LOB managers resorted to lobbying, by using speed-to-market as an excuse, with the top management for allowing them to proceed with their own initiatives,” Osman says. “Such bulldozing without proper planning and IT best practices in place led to the initiative backfiring. IT was later dragged in to clean up the mess.”
“This not only added unnecessary workload to IT but also exposed the organization to unnecessary incompliance audit findings and threat vulnerabilities. Had IT been consulted from the beginning, it would have saved the company time and cost to combat all the bugs and security issues. The IT security governance standard is put there for a reason,” he says.
Still, Osman agrees that active participation from LOBs can have positive impact as well, provided proper controls are in place. Business would be able to grow rapidly with LOB executives leading initiatives in their area of expertise. And nurturing ownership from business executives can also mitigate pushback. “In the absence of control, the enterprise would be at risk due to shadow IT and the IT department can turn into a convenient scapegoat to be blamed for any failed initiatives,” he says.
Naren Gangavarapu, CIO and digital officer at Northern Beaches Council, a local government organisation in Sydney, is all for this trend, seeing the shift not as a “passing fad that is temporary” but as something CIOs should expect will become the new normal.
“This is the direction businesses should be heading to,” he says. “Right now, most organisations have multiple strategies such as digital strategy, IT strategy, security strategy, business strategy, and corporate strategy. To get these to work in a harmonious way is a challenge and they end up collecting dust and reviewed once a year or more thus losing relevancy in a fast-changing world. There should be only one strategy and that is ‘strategy for the digital world.’ Advances in AI and quantum computing will further put LOBs in the driver’s seat.”
In his previous role, Gangavarapu was embedded in business where he was responsible for delivering efficiencies, which involved leading digital transformation initiatives within the LOB (Department of Planning). He was able to “halve assessment timeframes for state significant projects resulting in $18 billion dollars of investment into New South Wales creating 59,000 jobs during FY 18/19.”
How CIOs can remain relevant
Even as LOB executives get more tech savvy, the past few years have proven how critical the CIO role is for businesses to stay resilient and execute on their digital transformation strategies.
To ward off LOB heads from their turf, Linus Lai, chief analyst and digital business research lead at IDC A/NZ, says CIOs must be able to demonstrate to other members of the C-suite how their actions and decisions directly boost the bottom and top lines. CIOs should also build stakeholder relationships within LOBs and leverage business relationship managers to better serve customer-facing organizations.
“CIOs will have to ensure effective joint business outcomes from IT and LOBs by delivering strategic digital business advice and enabling effective upwards communication. They must initiate a critical review of sourcing practices to manage the supplier ecosystem to maintain architectural goals and spending targets. Also, IT leaders will need to manage technical debt across the application portfolio with agile portfolio management and value stream mapping,” he says.
For CIOs to hold their own, Sharma says IT leaders can’t stop at business acumen, but instead must develop great interpersonal skills and be able to lead people in a cross-functional and cross-geographical environment. They should also be able to leverage emerging technologies to lend business a competitive edge.
To do this in his former roles as CIO, Sharma created a cross-functional decision committee comprising functional leaders, such as the CFO and CHRO, and technical leaders, such as the CIO or head of applications. “That helped in democratizing the process and enabling a smooth sale though and execution of any project,” he says.
Gangavarapu says such efforts are vital for addressing this trend, which includes “a shift in technology resources’ mindset to a new direction by preparing them to blend into the LOBs through awareness, training, and a culture shift. Besides recruiting a digital-savvy workforce for the future that is aligned to customer expectations, CIOs should themselves gear up to become an advisory function,” he says.
To do this, Gangavarapu has established a digital council at Northern Beaches Council to get the board, which consists of 15 Councillors who are elected by the community, to buy into his vision and direction. He is updating the workforce strategy and capability framework, which outlines the digital skills expected of each new hire based on their role.
“We are decentralizing budget from IT back to individual business units where they have ownership and drive the lifecycle of the contract and services. We also embed skills into LOB resources on an ongoing basis so that they are equipped to handle technology changes, compliance, and regulatory shifts around technology,” he says. “Here IT is taking an advisory role and LOBs are taking the lead. By connecting LOBs to market innovators in respective areas, with IT support, we encourage innovation.”
According to Gangavarapu, these initiatives have resulted in quite a few LOBs being self-sufficient and running their own digital initiatives with centralized coordination from IT.
Measuring progress during this journey, he shares that “employee engagement went up by 9%, wellbeing up by 13%, progress up by 18%, and customer satisfaction score shift from 71% in 2019 to 88% in 2022.”
What the future CIO role could look like
It is a given that CIOs in the future will perform beyond their IT functions. With the recent pandemic and the increasing push for digital transformation, CIOs are already wearing multiple hats to help evolve the business. “CIOs are now required to become a marketing strategist, a business analyst, a finance advisor, and an operation expert while delivering their core expertise as an IT champion. This is the way ahead and CIOs need to keep on upgrading, reskilling, and upskilling to stay relevant,” Osman says.
Going forward, there will be opportunities for CIOs to step into other CXO functions to add value and stay relevant, and this imperative will apply to all other technology resources who will realise that they cannot work siloed in a standalone IT business unit anymore but must be embedded in the LOB, understand context, and be able to add value.
As Gangavarapu says, “Digital and technology function will get embedded into LOBs driving strategies and offering products and services for the digital world. The function of information technology teams will reduce as quite a few will move to the LOBs and IT will end up running the plumbing works such as infrastructure, communications, and cybersecurity. [Cross-functional teams] will become a core ingredient of a succeeding in a digital world.”
And this shift to embedded IT will further transform the CIO role, Gangavarapu says.
“Driving digital adoption in business is easier being a part of business rather than driving from IT, as it is seen as external — someone is doing this to us — instead, ‘We are driving this’; hence, CIOs must start picking up roles in LOBs with various titles such as chief translation officer, chief digital advisory officer, or chief innovation officer,” he says.
IT leaders not willing to change may soon be out of luck, Sharma says, as he sees the CIO role getting replaced, unless they acquire the necessary skills to remain relevant, by that of a chief transformation officer, who would work closely with the CEO and act as a bridge between the CIO office and LOBs.
“The chief transformation officers will identify business transformation opportunities within the enterprise and will work closely with the business. The arrangement would be such that the ownership of the project will lie with the respective LOBs while the company-level value creation and competitive edge will be jointly shared between them,” he says, adding that the CIO could become the chief custodian or chief architect, and if unable to add any value to the board, the CIO may end up reporting to the chief transformation officer.
IDC’s Lai agrees.
“I believe the role of the CIO will evolve to being a chief business technology officer role, which many CIOs may find challenging, but is one where they are partners to the business to deliver on the promise of new digital business and operating models,” he says.
“C-level executives are increasing their focus on profitability and improved operational efficiency by concentrating on enhancing employee productivity, innovation, and time to market,” he says. “If CIOs are to play a technology/business orchestration role in the leadership team, part of that effort will involve building or strengthening relationships with business counterparts.”