Supporting strategic initiatives outpaces pure efficiency and cost reduction elements in terms of the highest goals among insurance industry CIOs. That’s the takeout from Novarica’s latest research report: “Creating Enterprise Value as CIO.”
Novarica polled CIOs on what they perceive to be the area of highest impact on the company as a technology leader and nearly half—45 percent—listed “supporting new strategic initiatives” as the top response.
“It shows the CIOs have strong participation in a company’s strategy and execution,” says Matt Josefowicz, partner and managing director for Novarica.
Responses to the question on the areas of highest impact vary, depending on the philosophy of the companies the various CIOs work for.
“It’s going to depend on whether expansion and new strategic initiatives are part of the highest corporate goal or whether a company is in more of an efficiency mode to protect their position,” says Josefowicz.
Twelve percent of CIOs answered that driving innovation in operations is their area of highest impact and another eight percent responded with driving innovation in products or services, according to Josefowicz.
“Having 20 percent of respondents list innovation as their highest area of contribution is frankly more than I expected,” he says.
Josefowicz believes the report shows the evolution of the CIO as a “strategic business executive” as opposed to someone with specialized skills. Twenty-two percent of CIOs rated their relationship with business leaders as the most important factor in a CIO’s ability to deliver with another 17 percent responding “business alignment.”
Only 16 percent rated their technology knowledge and skills as their most important skill.
“It would be interesting if you did this study with CFOs and you got a comparable response on meeting with line of business leaders vs. accounting and financial management skills,” says Josefowicz. “That result wouldn’t surprise anybody. Even though CFOs have specialized knowledge, it is more natural to see them as contributing to overall strategy. CIOs definitely are on that path, though.”
The study looked at how CIOs view their business counterparts in the area of understanding what exactly the IT department does. Having CIOs gain a better understanding of what the business side does appears to be more important than having the business understand IT. Only 11 percent of respondents feel the CEO or president of their company understands the mission-critical systems operating within IT, with 41 percent responding “not well” to the question.
“This was expressed very clearly to me by a CIO: If the CIO and the CEOdon’t get along anddon’t understand each other, who gets fired?” says Josefowicz.
Good senior business executives make an effort to understand key issues in terms of the technology underpinning their business the same way they understand financial management issues, HR issues, or any other issues that are critical to the business, according to Josefowicz.
“Certainly with insurance as an information business, understanding the information technology capabilities and key issues is important,” he says. “That being said, I was heartened that only 24 percent of CIOs felt that [such a lack of understanding] was a problem. That’s still a significant percentage. Twenty-four percent of CIOs are fighting uphill against their business leaders’ lack of understanding.”
Josefowicz believes that points to the need for CIOs to communicate more effectively the importance of IT issues rather than “wishing it were otherwise,” he says.
“Unfortunately, it’s the CIO’s responsibility to make sure the CEO understands well enough not to be an inhibitor,” says Josefowicz.
The study also asked where the future leaders of IT will come from. Josefowicz points out there are differences between traditional IT leaders and someone who looks to do things differently.
“An innovator, by definition, is someone who looks to shake things up and do things in a new way,” he says. “They aren’t always the most popular leaders with their own staff or the business staff. Driving change is hard.”
Josefowicz found it interesting that those who see driving change as the biggest way to create value are more interested in “cross-pollinating the IT department with business folks rather than focusing on people with an existing, well-understood set of technology skills and perspectives,” says Josefowicz.
“Innovation often comes from mixing perspectives,” he adds. “The pure heads-down coder is rarely going to be the effective organizational leader. It’s more a matter of the perspective of the leaders to bring in different perspectives and build better leaders within who are going to have the ability to drive change within the business.”