Futureshock2: Change engine with a vengeance

When Alvin Toffler described technology as "That great, growling engine of change" in his 1970 book Future Shock, the Internet was barely Arpanet and a mobile phone was a telephone on a long extension.

Fast-forward 30 years. By some stage next year pundits predict there'll be one billion people connected to copper wire phones, one billion people with mobile phones, and one billion people with connectivity to the Internet. It took more than 100 years to get those billion people on copper. It's taken something like 25 years to get a billion people using mobile phones. And it will have taken fewer than 15 years since the birth of the Internet to get a billion people connected online.

Now that's a great, growling change engine at work. And it is IT managers and CIOs who are at the business end of the wave of technological change that's been sweeping the globe over the past decades.

As the head of Korn Ferry's technology office practice Asia Pacific, Mark Lelliott, puts it: "The one constant about the IT executive role that's probably more relevant to that role than any other in the executive is that it is a role that's subject to constant change. The velocity of change is incredible, and it affects the technology sector and the technology manager more than any other function in an organisation."

Globalisation, radically transformed markets, dramatic adjustments in corporate ownership and the inexorable forces of technology have wrought breathtaking movements in business throughout the 80s and 90s. And it is IT executives the world over who have found themselves at the centre of the most radical restructuring of the business world since the Industrial Revolution.

As the IT executive's job continues to shift from the technical business of data processing to the more broadly conceived role of knowledge manager and business strategist, the job is becoming in many ways the most challenging and dynamic leadership role in the business world.

"The IT executive role has got to be seen as the only other role outside that of the CEO that's got broad impact on the business," Lelliott says. "If you stand back from a business now, other functional heads, or other business unit heads, are focused on a discipline, be it marketing, or finance, or manufacturing or supply chain. The IT executive increasingly is the individual like the CEO who has to have a broad appreciation of the whole business process and understand the whole business."

By now, Lelliott says, it's a given that an IT executive will have a strong technical background and an understanding of where technology is going and how it impacts on an organisation's competitiveness, all wrapped up with the ability to be a good general manager.

Those skills will be even more pressing into the future.

What will change over the next few years, he says, is how those IT executives will deliver the outcomes.

"If you break the function down into strategy, demand and supply, we've seen a number of iterations. If you go back a decade or 15 years it was all about supply: it was about turning on the switch and making the accounting or the legacy systems work.

"Then you had a phase of demand, which is relationship management: let's focus on what the business unit wants. Now it's moved to another level, to the strategic impact on business process.

"Now it's a role that's heavily involved in strategy development and is respected for its input on all fronts within an organisation."

With the IT executive's role increasingly buttressing against that of the CEO, Lelliott says, the IT executives of the future will increasingly need to talk the language of the board and the language of the business.

Going extinct

"Technology isn't just an IT decision," notes PeopleSoft regional vice president Asia-Pacific Andrew Barkla. "In the next five years, more businesses than ever will either win or lose depending upon whether they can commit to embracing new technologies, new processes and new improvements to their business.

"The CIO of the future will have a large role to play in this, and flawless knowledge of IT systems and infrastructure won't be enough to support their business. Nor will it be enough for the CEO to allow the IT exec to drive technology decisions - their entire business may depend on it."

With Gartner predicting IT spend will increase from four per cent of revenue today, to 10 per cent in the next five years, it would be foolish to expect anything less than even more significant changes to the role of the IT executive.

Traditionally seen as the person to maintain systems and manage the technical infrastructure, the role of the IT executive and the CIO is going to grow beyond recognition - and must, if any business that commits to this position wants to thrive, Barkla says.

The IT executive must take an active role in extending the organisation's business model to new opportunities and new partnerships, such as the development of marketplaces.

"A successful company in the future will be one whose most critical senior executives are the CEO and IT executive, working closely together.

"If we believe that technology is integral to our businesses today, we aren't going to believe its criticality in five years time - and driving that forward must be the 'new' IT executives in their expanded role," Barkla says.

After 36 years in the IT industry, Roger McDougall, former CIO of Bankers Trust, now semi-retired and working as general manager for technical services at Vodafone, has seen the senior IT role undergo numerous transformations.

Reinventing the role

During the course of his career he's watched IT executives move from reporting to the finance controller or finance director to reporting directly to the managing director, before going back to once again reporting to the finance director and returning to the top once again.

He's also watched CEOs and boards decide it was more important for the IT executives to have business nous than technological knowledge, before changing their minds and going back to an appreciation of the importance of having technically-focused IT managers.

For years it was politically correct to suggest IT managers didn't really need to understand technology, they just needed good people under them who did. There's still an element of that kind of thinking around, McDougall says, but he's one CIO prepared to reject it out of hand.

"I think a good CIO is a combination of somebody who understands the business and somebody who has come up through the technology ranks, and has learnt what technology is all about," he says.

But if a technological background is vital, so is an understanding of business fundamentals.

"What makes a good IT executive today? I suppose increasingly it is understanding the business. In the early days as an IT executive you had to be a good technologist, and that would suffice. Now you've got to understand the business and understand how the technology relates to the business."

McDougall says for today's crop of IT executives a business degree is essential, particularly if they've come from a strong technology background. There are still far too many IT executives out there who don't have any grasp of the fundamentals of business, with many not even understanding the fundamentals of basic accounting. And there are way too many who have no idea how to communicate with their business peers and partners.

But more than ever before, IT executives are being forced to become entrepreneurs, not just good old-fashioned businessmen and women.

"The IT manager of old really is a disappearing breed," says BankWest general manager emerging businesses and systems Chris Whitehead. "What organisations are looking for is the IT exec to evolve into a very commercial animal who understands how IT can be applied in the business and who can act as an advocate, an evangelist and a reliable implementer of technology."

BankWest is a perfect example of the kind of breathtaking changes being wrought on business by the forces of technology. Earlier this year the bank formed Unisys West, a joint venture with Unisys Australia to provide IT services in Western Australia to government departments and enterprises across all industries. These services include business-to-business e-commerce transaction services, data centre outsourcing, business process outsourcing, network management, help-desk operations, disaster recovery services, managed services and application service provision (ASP).

Whitehead says from BankWest's perspective the move emerged from the bank's habit of constantly reviewing costs and looking for opportunities to make the organisation more efficient. With a benchmarking exercise proving the bank's IT services were already operating at world's best practice, the only realistic opportunity to reduce the bank's overall costs of IT was to gain economies of scale.

These days, Whitehead says, IT is no longer part of the back office and it is no longer about productivity. Instead, the focus is on achieving competitive advantage through better customer service and new value propositions.

"Therefore, the IT head's role is very much an all-round business role and it's really looking at how technology can be commercially exploited," he says.

"If you try to be an IT manager of old then you'll find yourself pushed down the organisation in terms of reporting and credibility and so on, because that's simply not what businesses need."

There's been a similar quiet evolution at Esprit Australia over recent years. When IT manager Roger Spraggon came on board in early 1998 his main focus was a desperate push to change over old systems which were not Y2K compliant and on putting systems in to support the company's growth.

"We had 90-plus stores when I joined the company but the software couldn't cope with more than about 96, so my main focus was to get new enterprise resource planning systems in that could keep the core part of the business running," Spraggon says.

These days, with the technology in place, the focus is on finding ways to leverage it to gain efficiencies, and to do things smarter and cheaper.

And when it comes to new technology Spraggon says he has a constant responsibility to evaluate emerging technology and to consider when it might be appropriate for Esprit to adopt it.

"For instance a lot of the time the technology that is brand new is not quite as robust as you want for an application that you're depending on within your business. And a lot of times in the early stages of a product launch it is quite expensive.

"It's a matter of looking at the new technology, looking at potential things that the business can gain advantage from and then picking the right time that it will be useful to the business, when there's a business case for going ahead with it."

But whatever Spraggon is doing now, he knows the role will change again in future. Unskilled at the use of the crystal ball, he says the best he can do to prepare himself for those changes is to attend all the relevant conferences, constantly read and review the relevant publications and spend time with colleagues in similar situations.

At explosives manufacturer Dyno Nobel IT manager Hazel Boaler finds herself increasingly preoccupied with providing remote access as she tries to satisfy the demands of those working from home and travelling.

But she also finds her role today is much more of a strategic one centred on helping IT achieve alignment with the business than ever before.

"People are much more focused on efficiency and cost reduction today, so we really have to be much more aligned with what the business needs, otherwise we just can't operate," she says.

"And in our context because we are a global company but we have to be regionally centred we're certainly trying to operate more as a global IT department.

"We see lots of areas where we can become more efficient by sharing resources across the globe rather than duplicating them in each area. It's all fairly new for us at the moment but we're setting up various global projects to look at the different areas. We have one, for example, that's looking at remote access and security, and that's a global project rather than just focusing on one of the specific regions.

"That's the way we're dealing with it at the moment. Of course, things may change."

Like everyone else in the game Boaler has found meeting the new expectations business now imposes on IT demands very different competencies.

In fact, that's a rule Barkla says applies to every IT executive on the planet.

Not only will the extended IT executive role require a deep technical understanding of the various systems in place and a solid business background, IT execs also increasingly need an understanding of the customer and of the key stakeholders in the business and their objectives. And of course they also need a strong understanding of e-business and everything it implies.

"Now this might seem like an impossible combination to find, but certainly today's knowledge managers and current IT execs are already learning these nontechnical skills as they find the need to adapt to their changing business environment," Barkla says.

"But what's even more interesting to understand is the changing role and competencies of the CEO, because the CEO in 2005 is also going to have had to make the choice today to get to grips with technology," he says. "Otherwise, with such huge increases in IT spend predicated, how will they know how their business is benefiting? How can they help prevent mistakes being made?"

Lelliott agrees, and says today's crop of IT executives must see themselves as part of the succession planning for the CEO.

"Given that it has become such a broadly based role they've got to see themselves in the light of potentially being a COO or CEO," he says.

"And that really comes down to developing a broad understanding of the business, knowing how the different business components fit together, their relationship management skills, and also I think ensuring that senior management are using current standard corporate technology on a daily basis. It's not so much even delivering the tools, it's ensuring that your core management population are using those tools," he says.

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