Changing Role of the CIO in the New World of Outsourcing and Offshoring
Date: Sunday , July 13, 2008
The importance and use of information has changed radically in the past 50 years, as computers have become a core function for businesses. So has the role of the senior executive in charge of this function. The senior technology executive’s role has gone from managing hardware resources, to leading business process changes through automation, to overseeing data and information resources. As someone whose career has spanned more than 4 decades managing this function, I have had my share of changing job titles: Director of Systems and Data Processing, Director, Information Systems, Vice President, Information Management, and ultimately, Chief Information Officer (CIO) and e-Business head. I see yet another change coming – if not in the title- certainly in the job.
What are These Changes?
There are three key forces that are coming together to drive a change in the information management organization, and therefore, in the role of the senior executive:
Technology Velocity: It is amazing to realize that in an industry that is barely one human generation old, we have gone through several generations of technological evolution. The pace of change is increasing, and diversity and options for technical alternatives also are increasing. Information system environments can no longer expect life spans of 5-10 years for their technology, and business models now factor these technological revolutions into the competitive landscape. For example, mobile computing has altered how information is created, distributed, and utilized. Businesses dependent on hard-wired, mortar and brick enveloped applications are slowly dying. CIOs of these businesses not only have to manage the current technology, but they must predict, project, and plan for future evolutions.
Outsourcing has allowed some of the forward thinking businesses to let an outsourcer run ‘end of life’ technical solutions while businesses are pursuing newer options. This use of ‘transitional outsourcing’ is one of the tricks in the current CIO’s bag.
Skill shortages: Technology obsolescence, the changing landscape of technology centers, and the aging population has created an imbalance in management of the resources required for information systems. Although the use of remote computing technology has helped balance the resource issues somewhat, it has also created a new issue - managing resources remotely and in disparate environments. The workplace culture is different and offers new sets of challenges for information function leaders.
Outsourcing is now considered a ‘main stream’ strategy for addressing skills, shortages, and imbalances. It is a mature strategy for an organization to follow, and current CIOs have completely embraced it as a solution to many of their problems.
Globalization: Technically speaking, the world has shrunk dramatically in the last two decades. Remote computing and distributed systems have created both opportunities and challenges for Information Resource managers. It is completely inconceivable that the Y2K technical problems could have been addressed without mobilizing global technical resources. Offshore alternatives for managing information systems have created new models for systems development and maintenance and are fast shifting the world center of balance from the West to the East.
Considering the fact that global outsourcing is still a new strategy for many CIOs, it is surprising how quickly it is being adopted; Outsourcing providers now offer a global networked outsourcing solution for their clients. It is no wonder that IBM and Accenture have more employees outside of the U.S. working for their U.S. CIOs. In this world of revolutionary shifts, the role of the Chief Information Officer has to, and is, changing. Although, it has not yet resulted in new job titles and job descriptions, I believe that the function of Chief Information Officer is changing to that of ‘Chief Integration Officer’.
A typical CIO today is expected to manage the information environment by integrating technical solutions, aligning them to business requirements, and providing a stable environment for the technology platform. Today, this is done through an organization that is largely ‘centralized’ and even if outsourced, is managed through a strong core.
What Will the New CIO Be Like?
I believe that the role of the future CIO is going to be more complex and will require skills and experiences that are not considered prerequisites for the position yet. Today’s CIOs are expected to have a strong foundation in technology and business processes so that solutions directly address the business challenges. They are also expected to have strong management skills to manage large organizations. These management skills include planning, organizing, and communicating.
However, we are moving to an environment where the information technology organization is diverse (both logistically and in its makeup), outsourced (and hence is led by other management organizations), and rapidly changing (to address the velocity of change in technology and business). This requires some new and better-honed skills: Becoming a Chief Integrator: In the new world, where there are multiple service providers as part of development and a delivery network, integration of their efforts becomes a key to success. This requires strong inter and intra-company processes and discipline in place so that the efforts and outputs are totally coordinated. A networked organization where there are multiple providers of services who are also dependent on each other to successfully deliver on contracted scope, requires clear objectives, a common framework for governance, and an open style of performance management. Integration skillswill be essential to synchronize business and technology strategies with a diverse group of providers. Innovation in technology, and its application to business problems, will propel the business and technology functions in new directions. Thus, managing innovation will become a fundamental skill for the chief integrator.
Managing a Networked organization: This requires the CIO to have the ability to ‘influence’ rather than ‘command and control’. CIOs will be expected to clearly explain ‘what’ rather than ‘why’ and leave the operational details to the outsourced organizations. Clearly setting expectations, establishing inspection processes, and managing changes in the agreement are the core requirements for an influencing style of management. In a more open environment, working with competing service providers, CIO’s must provide leadership in a non-threatening manner.
Strong Inter-personal Skills: A networked environment introduces tremendous diversity; multiple business and personal cultures, communication styles, habits, and norms. Some of this diversity will come not only from cultures of different companies but also from different ethnic backgrounds. In this environment, the leader has to learn the differences and leverage the strengths of a diverse and disparate workforce.
The future is already here. Many of today’s global organizations have shifted the way they manage their information technology functions and are recruiting a new generation of leaders. Although the title of the CIO’s job may not have changed, the role and expectations have. Innovation and integration will be the trademarks of the new information manager.
Jagdish Dalal, a frequent contributor to “Silicon India”, is a world-renowned consultant in the field of outsourcing and brings over 3 decades of senior executive leadership experience to it. As President of JDalal Associates, he works with large and small companies in defining their global outsourcing strategies. He is a noted author and presenter and has earned many awards for thought leadership in the field of IT management and outsourcing.
Jag is a “Certified Outsourcing Professional”, having passed the requirements established by IAOP. He also serves as Managing Director, Thought Leadership for IAOP. He has been the lead judge for the Global Outsourcing 100 list jointly published by IAOP and Fortune® magazine.
The author is: Managing Director, Thought Leadership, IAOP