Are Asia Pacific’s cios facing a glass ceiling?

Senior IT Professionals Have Won Respect, But Reaching the CEO Spot May Take More Than Technical Expertise, According to EIU Survey

Hong Kong – November 19, 2014 – While technology has provided CIOs with plenty of opportunities to make their mark on their respective businesses, relatively few have moved on to become a CEO. According to a report by The Economist Intelligence Unit (EIU), sponsored by Hitachi Data Systems (HDS), it may take more than technical expertise to convince senior management that today’s successful CIO will be a good choice for tomorrow’s CEO.

The report, entitled “The Future for CIOs: Which Way Is Up?”, surveyed 1,000 senior executives from 13 markets 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).

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

CIOs have won the respect of the business, but reaching the next level will be difficult

“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. “66 per cent 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.”

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

James Chambers, senior editor of The Economist Intelligence Unit, said:
“CIOs have earned the right to be considered a candidate for CEO, alongside their C-level counterparts, but it will take more to secure the top job. Ambitious candidates will need to take the initiative to develop their own knowledge and spend time in other parts of the business as they explore ways of creating a competitive edge for their organisations.”

Innovation is a key driver of revenue growth, and it is the CIO’s role to drive it
Innovation has been a major driver of revenue growth at almost 3 in 5 companies surveyed. This relationship is expected to continue on an upward trend.

Over 4 of 5 executives across all functions (85 per cent) agree that the CIO should drive innovation across the business, even though IT is considered a driver of innovation at less than a third (28 per cent) of firms. Thus, technology may have thrust the CIO into the spotlight, but his or her career is not tied to IT.

“A healthy number of respondents (59 per cent) agree that innovation has been a major driver of revenues. However, there are obstacles, including a lack of IT budget and/or resources (18 per cent), a low standard of existing IT infrastructure (14 per cent), followed by a lack of skills and available talent (12 per cent),” explained Vincent. Besides all these obstacles, Hong Kong respondents believe business reluctant to change is also one of the top challenges.

As for the situation in Hong Kong, it is found that respondents from Hong Kong feel conservative about the next step for the CIO, only half of the respondents believe that the CIO could become the next CEO.. Several respondents were unclear whether the CIO should be focused on IT or corporate strategy and saw the CIO role as quite technical and IT-focused overall. However, it is common to understand that CEO is quite a comprehensive role which requires various kinds of skillsets, this may explain why Hong Kong respondents appear cautious about the career path of the CIO.

Steps to stepping up to the CEO position
Until recently, it was believed that the rapidly changing IT environment would make the CIO irrelevant, or at least reduce his or her responsibilities to technology governance and information security. This survey shows that, in Asia Pacific at least, it is not the case.

To succeed, CIOs need an accurate idea of how existing IT assets can increase their organisation’s revenue, and not just focus on making better business cases for yet more technology. As the report suggests, CIOs can further drive revenue generation and business growth by following these 5 steps:

1. Take ownership of information: CEOs are looking to better data management and analytics to drive sales growth. Providing greater insights should be an easy win for CIOs, placing them at the centre of strategic discussions.

2. Better align IT with business needs: CIOs should be looking beyond their department, focussing on discovering new ways of harnessing technology to increase their organisation’s competitive offering.

3. Deliver return on IT investment: A CIO’s future prospects are likely to be determined by money made more than money saved. The vast majority of executives now expect CIOs to generate revenue – particularly among CIOs themselves.

4. Demonstrate leadership: Ambitious CIOs need to acquire additional knowledge and experience beyond their traditional IT skillset. This requires taking the initiative, such as immersing themselves in other parts of the business.

5. Drive the innovation instead of just contributing to it: Technology can facilitate or obstruct innovation, but it is no cure for all problems. CIOs need to invest in understanding the business and working closely with C-level colleagues to drive innovation and be involved in business-critical decisions at an early stage.

“Ultimately, for a CIO to follow in a CEO’s footsteps, they will need to take ownership of information, better align with business needs and focus on driving innovation forward. This is where we can help – our solutions and services help CIOs to increase an organisation’s competitive offering and generate revenue,” concluded Vincent.

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About Hitachi Data Systems
Hitachi Data Systems, a wholly owned subsidiary of Hitachi, Ltd., provides information technologies, services and solutions that help companies improve IT costs and agility, and innovate with information to make a difference in the world. Our products, services and solutions are trusted by the world's leading enterprises, including more than 70% of the Fortune 100 and more than 80% of the Fortune Global 100. Visit us at http://www.hds.com/hk/.

About Hitachi, Ltd.
Hitachi, Ltd. (TSE: 6501), headquartered in Tokyo, Japan, delivers innovations that answer society’s challenges with our talented team and proven experience in global markets. The company’s consolidated revenues for fiscal 2013 (ended March 31, 2014) totalled 9,616 billion yen ($93.4 billion). Hitachi is focusing more than ever on the Social Innovation Business, which includes infrastructure systems, information & telecommunication systems, power systems, construction machinery, high functional materials & components, automotive systems, health care and others. For more information on Hitachi, please visit the company's website at http://www.hitachi.com.

About The Economist Intelligence Unit
The Economist Intelligence Unit is the world leader in global business intelligence. It is the business-to-business arm of The Economist Group, which publishes The Economist newspaper. The Economist Intelligence Unit helps executives make better decisions by providing timely, reliable and impartial analysis on worldwide market trends and business strategies. More information can be found at http://www.eiu.com or http://www.twitter.com/theeiu.

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