dcsimg The ideal CIO has CEO potential - Ramboll Group
     
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The ideal CIO has CEO potential

Digital strategies are becoming an integral part of business strategies in best practice companies. But the integrated approach to IT and business technology is rarely reflected in the relationship between the CIO and the CEO, report reveals.

By Jesper Toft Madsen

 
 

- As CEO, you have to understand the strategic importance of IT, know how it is used and build an incredibly close relation to the CIO. Conversely, the CIO also needs to make himself relevant as he is the undisputed link between the IT organisation and management. To me, the ideal CIO has CEO potential, because he has to grasp the commercial part of the business, says Eivind Kolding, CEO of Novo A/S.

Kolding is not just any CEO. As the overall responsible for the holding company behind the Novo Group (a key player in the global life science industry valued at more than USD 40 billion), former CEO of Maersk Line (the world’s largest container shipping company) as well as CEO of Danske Bank (the biggest Danish bank), he has had his fair share of first-hand experience with the growing strategic importance and dependency on IT.

The Novo chief executive presented his views on the relationship between the CEO and the CIO at the annual conference and launch of IT in Practice 2014 – a comprehensive survey covering IT strategy, trends and experiences among CEOs and CIOs from 500 of Denmark’s largest companies.

Widening gap

The latest numbers make Eivind Kolding’s claim difficult to ignore. Take the financial sector for instance. 65% of CIOs consider IT strategically relevant, while this is only the case for 40% of CEOs. Likewise, 60% of CEOs regard IT as a tool to support processes and employees, as opposed to 35% of the CIOs. The trend indicates that the gap is widening between the IT organisation and top management.

FIGURE 1 (click to enlarge) - CEOs and CIOs clearly disagree on the strategic importance of IT

- The financial sector is all about IT, yet CEOs and CIOs have completely different perceptions of its significance. The divide has never been bigger, and this points to a lack of communication. Perhaps they should sit down and talk, because finance companies will not survive if they don’t agree on what IT can do for their business, says Nils Roien, Senior Manager in Ramboll Management Consulting.

At Danske Bank, the CIO was a natural part of strategy sessions. Eivind Kolding would not even dare to exclude IT:

- In addition to our ongoing dialogue, we had monthly meetings and the CIO participated in strategy sessions. My biggest nightmare, both in Maersk Line and in Danske Bank, was that the IT system would crash. Your whole business would stop, he explains.

Meanwhile, the opposite development is unfolding within service and commercial companies. It seems that CEOs have recognised the massive changes in consumer digital behaviour as 69% of chief executives view IT as an important strategic weapon while only 40% of CIOs share this opinion.

Edging closer to the business

While the relational gap is widening, results from IT in Practice show that the digital agenda is in fact moving closer to the boardroom. As such, 27% of companies state that the digital strategy is an integral part of their business strategy, while only 9% operate their digital strategy on the side.

 

FIGURE 2 (click to enlarge) - Companies develop digital strategies, but without systematic approach

- The results testify to a relatively high level of maturity. But only half the companies cover digital issues to some extent, without adopting a strategic, systematic approach to ensure that all digital elements are covered and that there’s a link between technology and business goals, says Nils Roien, before outlining the consequences: 

- Over time, this can become an obstacle for many companies. It is extremely important that CEOs understand the importance of a systematic integration, because if they don’t, organisations will fail to realise the full potential of their digital business opportunities.

Different expectations to transformation

Looking three years ahead, CEOs and CIOs still have different expectations to the involvement of IT in business transformation.

FIGURE 3 (click to enlarge) – CIOs not allowed to become as transformational as they imagine

Almost all CIOs expect to be comfortably placed in a key external, transformational role in 2017. Their expectations are not aligned with the CEOs who predict that CIOs will be less involved in business transformation and continue to take care of day-to-day operations.

- In 2017, 93% of CEOs see themselves as part of the core business. It’s a powerful statement of ambition to enter the boardroom, but I don’t think it is realistic. CEOs still think that there is an operational task to take care of, and this emphasises a lack of alignment. They obviously don’t share the same goals, and how likely is it then that they will be able to realise benefits together? Nils Roien asks.

According to Eivind Kolding, the alignment is a shared responsibility. Better integration and understanding on both sides of the table is essential. Silos tend to pile up in every larger corporation, and it is up to both parties to make sure they do not exist. He has a special piece of advice to CIOs:

- It is very important that you see yourself more as a businessman than an IT guy. This is the only way you can act as a relevant sparring partner to management and the board. IT management is especially about communicating your vision, thoughts and challenges clearly to support management in making the right decisions.

Recommendations from IT in Practice support his advice. It is time for renewed dialogue, because key decisions must be made now about the future of IT, in the wake of the financial crisis, the report concludes.

If you want to know more about IT in Practice and read the full report, please visit our publication page or contact:
Nils Roien
Senior Manager
M+45 5161 8040
Enilr@ramboll.com