Peter Sondergaard is a glass half-full man. The senior vice-president and global head of research at analyst firm Gartner believes it is more constructive than looking at the gloomy side. But Sondergaard’s take on the situation facing CIOs today is that there are pitfalls as well as opportunities.
His message in recent months – delivered at Gartner’s ITxpo events in Orlando, Florida and Cannes, France – has been a stark one. In short, CIOs should prepare for the possibility of recession. “We see the potential for troubled times ahead,” he said, predicting tightening economic conditions.
“Your bosses will move from growth to execution. You must be prepared for changing business objectives.” He urged CIOs to prepare two budgets. One should be based on a similar growth to that seen over the past six years, the other should “assume the need to cut costs”.
However, Sondergaard offers a broader view of the challenges facing CIOs. “There’s a large proportion of IT organisations that perhaps right now are situated at a period of opportunity – but also one that can be thrown away,” he says.
There is a lot of potential that innovative technology can bring to business processes, to engagement with customers and to optimising internal skills and resources, Sondergaard explains. “But there is a mentality of locking down that can inhibit this.”
It is “not necessarily wrong”, and there are reasons – including security concerns – why CIOs are nervous about new technologies such as Web 2.0 that are often brought into the business by staff, Sondergaard acknowledges, “but it may limit innovation”, he adds.
That lock-down mentality could cause problems for the ever-closer relationship between IT departments and the wider business, he believes. IT and the business have been moving towards each other and becoming increasingly “intertwined”, Sondergaard says.
But if IT departments don’t respond to the desire for new developments from business colleagues, the two sides “could get pulled apart”.
He cites the collaborative technology now available on the web. “There’s a potential that if you don’t assimilate that into your practices, the business gives up and goes elsewhere. There’s more opportunity to do that now.”
It is not just the consumer-led Web 2.0 technologies of blogging and wikis that are appearing in the enterprise without much help from IT departments. Gartner analysts have found that three-quarters of all Software-as-a-Service (SaaS) products have been brought in by business unit leaders rather than IT managers.
There are “more and more things the business could do without IT”, Sondergaard says.
But he is quick to point to the upside of the changing relationship between IT and the business. “To counterbalance this, the CIO is taking on non-IT responsibilities and moving towards assimilation, where the CIO has responsibility for larger scale corporate projects, business innovation, business process management or even has responsibility for parts of the organisation, such as customer services.”
The convergence of technology with business practices in this area means “either the technology goes to the customer services organisation or the customer service moves to the IT organisation”, Sondergaard says, adding that CIOs taking on more non-traditional responsibilities is “the right thing”.
This means a sharp change for many CIOs, however. The research chief concedes that “not all” CIOs will be able to negotiate this new environment. “But we’re seeing fantastic skills among some CIOs that show they can do this.”
This is an area where the UK is holding its own among enterprises internationally, Sondergaard believes. “In the UK I think we’re definitely on a par with what is expected of CIOs and I think we can see some very professional CIOs in large and mid-sized organisations.”
Who is Peter Sondergaard?
Peter Sondergaard, Gartner’s senior vice president and head of research, leads a team of 650 analysts.
He started his career with a hands-on role at Scandinavian Airlines, where he was responsible for PC and data integration.
He then moved to IDC, where he became research director for the company in Europe, focusing on PC analysis and consulting projects for large European users and vendors.
At Gartner, Sondergaard started as programme director for PC research, looking at desktop computing issues.
He then held posts as Gartner’s hardware and systems sector vice-president, general manager for Gartner Research EMEA and head of research for the technology and services sector before stepping into his current role.
He holds a masters degree in economics from the University of Copenhagen, Denmark.
He adds: “Compared with 10 years ago, there’s been a tremendous evolution of CIO skills on the public sector side – and we’ve also seen an evening out of the salary-related issues that were a problem.”
Sondergaard nominates Ken Harvey, group CIO at banking giant HSBC as an example of being able to juggle a role half in and half out of the IT world.
“He’s a person you can put in front of investors and he’ll talk about how IT affects share prices.” But Harvey can also discuss technical aspects of applications with even “the hairiest” open source software geek, Sondergaard says.
The CIOs who do well over the next couple of years will be those who can adapt to make themselves business strategists, he suggests. “I think there’s a natural selection process that happens as the skillset of CIOs evolves. “
This is where Sondergaard suggests CIOs could see the glass as “half-full or half-empty”. He opts for the half-full vision, he says. The added responsibilities offer a development opportunity that could give CIOs a more powerful role at the enterprise top table. “The necessity of more complex skillsets is driving the opportunity for IT to have tremendous influence on business strategy.”
Necessity is a key word, though. Some CIOs will not make the grade, Sondergaard acknowledges, putting the proportion at one third, “CIOs that will perhaps not survive through the next couple of years,” Sondergaard warns.
CIOs will also need to have IT staff in their departments who are able to integrate both technological and business perspectives, Sondergaard says – and this could pose problems.
“IT is suffering from the [poor] availability of high-quality human resources to support the projects they are running,” he says. “We are rapidly moving into a skills shortage situation, but I think that’s also characterised by declining quality levels.”
CIOs are moving into their newly-expanded responsibilities with a “supply and demand misalignment” of experienced staff who can offer something more than traditional technology related IT skills. There are some “fantastic programmers”, Sondergaard says, “but they don’t understand end-to-end business processes”.
There is a crying need for staff who can meld both skillsets, SAP or Oracle developers with business understanding to match. “We’re seeing that right now and it will likely become worse,” he warns.
It is a gap that the educational institutions are failing to fill – right across the globe – Sondergaard says. “There is no education in end-to-end business and technology,” he says.
“When you see some of the modern projects of enterprise resource planning and application integration it’s becoming apparent that there’s not enough skilled people to do that.”
In Europe, where governments have a major role in higher education policy, they have “a shared responsibility” for the situation, he believes.
If a shortage of IT leaders with business skills is the problem, might all those business leaders merrily buying SaaS technology turn out to be the solution? Sondergaard disagrees. He notes that business managers have “always to a certain extent” adopted technology themselves – “We wouldn’t have PCs if that hadn’t happened” – and he believes it is “not necessarily a bad thing that business leaders are taking the initiative with technology”.
But the extent to which business managers are going it alone carries a higher level of risk, he says. “The issue is that it needs to be done together with the IT organisation.” Someone has to keep the infrastructure running and support the new technology, he points out.
It is all very well talking about APIs and mash-ups, but who carries the responsibility if something goes wrong? “The IT organisation would presume to manage that service level with the business,” Sondergaard says.
Japan offers a very different model, Sondergaard points out, with only 20 per cent of companies having a dedicated CIO. Traditionally, senior executives have rotated into taking responsibility for the IT infrastructure for four or five years at a time.
“There’s a risk in that,” he says, pointing out that some Japanese enterprises are now starting to move towards creating a CIO role. “It may be good to rotate business people in, as long as they have the technical depth.”
CIOs bring their understanding of just how far technology can take the business to the boardroom table, Sondergaard says. This means that they can be the ones to drive innovation through the business.
“Savvy IT organisations and CIOs understand that the primary responsibility is to visualise to the business side how IT can change things – and to do it in a continuous manner,” Sondergaard says. Of course, CIOs will also need to be able to organise the delivery of that vision – “bring it out through the IT organisation so the structures are there to enable it”.
So it is not yet time to scrap the CIO role and hand IT over to technology-savvy business leaders? “I don’t think so,” Sondergaard smiles.