Born to be Digital

Born to be digital How leading CIOs are preparing for a digital transformation

Our acknowledgments Our thanks go to the more than 180 CIOs, CTOs and further IT leaders from across the globe who participated in this study. In particular, we would like to thank those people who took part in a series of in-depth interviews in which they shared their insights and personal experiences of the role (listed alphabetically by company name): CIOs Darryl West Diego Calegari Alexander Gornyi Fred Swanepoel Lars Mathiesen Celso Guiotoko CIO, Barclays Group Spanish South American CIO, Mail.Ru CIO, Nedbank CIO, Nykredit Managing Director IT/ CIO Executive, IBM IS, Renault-Nissan Bruno Ménard Michael Golz Herman de Prins Philipp Erler Richard Alan Herz Group CIO, Sanofi CIO Americas, SAP CIO, UCB CIO, Zalando CIO, Zooplus Anonymous, CIO, leading Chinese insurance company Anonymous, CIO, leading Chinese telecommunications company Subject matter experts David Nichols Dave Ryerkerk Bob Sydow Tom Velema Rob Preston Bob Concannon Jonathan Becher Americas IT Global IT Advisory Americas IT EMEIA IT Advisory Editor in Chief, Partner, KornFerry CMO, SAP Transformation Leader, EY Advisory Leader, EY Leader, EY InformationWeek Leader, EY See demographics for a full overview of the research methodology.

In this report Foreword 2 Executive summary 4 Section 1 The rise of the digital business 6 Section 2 The DNA of the IT-intensive industry CIO 10 Section 3 A mindset for change: six traits of the digital-ready CIO 18 Section 4 Routes to the top: the career paths of digital-ready CIOs 30 Conclusion Preparing for a digital business 36 Demographics 38 Further reading 40 1

Dear fellow CIOs, d What a difference a decade makes. Back then, the world of IT was a very different place. Social media was in its infancy. For the CIOs I worked with, smartphones essentially provided email on the move and little else. Cloud computing was hardly on the radar. For any CIOs wanting to introduce an innovative new application, one of the first steps would be to build the or necessary infrastructure internally. In today’s more digital world, things look rather different. A cloud-based service can be provisioned and scaled from 1 to 100,000 users at the tap of a button. Customers expect w to engage on a more real-time basis, using social media platforms. Staff members wonder why their work tools aren’t all available as mobile apps, as they are in the rest of their lives. e All of these changes provide huge opportunities for those leading businesses able to move quickly to adopt and exploit these technologies. But they also present stark challenges to CIOs. Once the masters of their domains, this digital world is challenging them to change and to evolve their skill sets and thinking. or Those leading CIOs who are embracing digital find themselves grappling with a new set of demands: learning how to transform business processes around the potential of digital, or identifying where and how they can provide new product and service innovations. The CIOs F who can master this, however, are finding their roles more influential and more strategically engaged than ever before. Unsurprisingly, they are more fulfilled. From our experience in working with CIOs, and research on this characteristic group of executives, we know that there is a distinctive subset of CIOs who have already embraced the digital world and seem to have been born digital. With this timely report, we aim to provide help and advice for those CIOs seeking to navigate these shifts. I trust you will find it as useful as I would have if I was still a CIO at Anheuser-Busch International. I look forward to continuing the conversation with you in person. Norman Lonergan, Global Advisory Leader at EY 2 | Born to be digital

In 2012, our research into the DNA of the CIO t discovered the essential ingredients of a leading CIO (www.ey.com/dna-cio). It also detailed the career aspirations that many CIOs have, which largely center on expanding the scope of their responsibilities and influence. During this research, we found that CIOs and CTOs from certain industries tended to embrace more leading practices, while expressing greater satisfaction and holding a stronger voice within their respective organizations. (Note: for simplification reasons, from now on, we use the term CIOs to include both CIOs and CTOs.) epor We also determined that these leaders were well positioned, in terms of their skills and mindset, to tackle the digital transformation that many businesses are now undertaking. This formed the basis for our new research, which seeks to provide new insights into what it takes to succeed in a more digital world. To do so, Born to be digital explores three core areas: • How CIOs with the widest remit and greatest responsibility — those in highly IT-intensive industries — differ from their peers • What lessons CIOs can take from their peers who are leading the digital transformation efforts — in terms of their core tenets and mindset • What career choices CIOs should make to help them fulfill their aspirations for broader roles and greater influence About this r Born to be digital | 3

IT-intensive industries 51% 53% 67% 38% strongly agree that hold a seat at the show clear potential of CIOs within IT- they are taking the executive management to provide a stronger intensive industries lead in pioneering new table, compared with and more strategic are highly engaged on digital approaches just 17% of CIOs in all engagement with the core strategic issues. within their business. industries. business on digital transformation. Executive summary Digital technologies — including social media, the cloud, data Some of our key findings include: analytics and mobile — are rapidly emerging as disruptive forces for businesses across all industries, from retailers and banks through to carmakers and energy companies. They are fundamentally CIOs see digital as a major changing the ways in which consumers interact with these companies, while also opening up new business models at the heart 1opportunity to fulfill their career of these firms. aspirations. These changes are already apparent to nearly all of us as consumers. Just think: when did you last book a private flight From Nestlé’s push into direct online selling as a without going online? Or go into a bank branch to transfer funds? consumer brand, to Caterpillar’s creation of new lines of Or use a phone book to find a restaurant’s number? With every services for clients, CIOs at all kinds of firms are using month that passes, more services go digital: from checking and digital technology to transform their businesses. These adjusting your home’s energy usage via a mobile app, to borrowing exciting possibilities align closely with the career a stranger’s car for an hour to pick up something urgent, or lending aspirations of CIOs. However, even in IT-intensive money to a tiny business you’ve never heard of in a foreign country industries, only half (51%) strongly agree that they are in exchange for a better rate of return. All of these services now taking the lead in pioneering new digital approaches exist, and more are created every day. within their businesses, showing much scope for This presents a huge opportunity for CIOs, especially those with the development here. aspiration, as detailed in our previous The DNA of the CIO report, to have a bigger and more influential role within the business. But, as our new report shows, grappling with any digital transformation Proactive CIOs within IT-intensive requires a shift in the skills, approach and mindset of a traditional sectors are better suited to CIO. Of course, given the varying priorities and constraints in 2transform their businesses, and different companies, some CIOs face a tougher battle to embrace digital than others. Ultimately, though, it is up to each CIO as an their careers. individual to take the proactive action to move their organization toward the digital era, rather than waiting to passively to react. Companies investing the biggest share of their overall To help provide fresh insights and lessons on what it takes to revenue in IT — typically IT companies, telecommunications succeed as a CIO in this digital era, this research sought to identify firms, banks and life sciences firms — ought to be ideally those leading CIOs who are most likely to be pioneering on this placed to take the lead on digital. As might be expected, issue. To do so, we talked to over 180 CIOs and CTOs from a range CIOs at these firms usually have more prominent roles of highly IT-intensive industries, as a proxy for those who are likely than their peers elsewhere. For example, 53% hold a seat to be investing in digital, and compared these individuals with those at the executive management table, compared with just in other sectors. Most revealingly, a core subset of this group of 17% of CIOs in all industries. They also more often IT-intensive IT leaders — those who are most strategically engaged recognize the skills needed for success, such as in their jobs — were seen to stand out from their peers — in terms of communication and leadership, strong strategic both influence and satisfaction. Career choices these CIOs have engagement, and a clear focus on growth. More broadly, made en route to the top helped to verify the findings. a majority of IT-intensive industry CIOs (67%) show clear potential to provide a stronger and more strategic engagement with the business on digital transformation. 44 | B| Born torn to be digito be digitalal

IT-intensive industries How CIOs leading digital transformation think differently: 65% six core traits of digital-ready CIOs Our research shows that the elite CIOs leading digital transformation in their businesses differ in their are highly engaged on mindset and thinking in six key ways. In particular, they: helping develop new products and services. 1. Have a strategic vision of how technology will 4. Ensure their vision is understood transform the business — and know how to 5. Move beyond operations and infrastructure implement it 2. Are relentless innovators 6. Are courageous risk-takers 3. Focus closely on driving growth — and the relationships they need to support this See page 20 for more insights on all of these. Despite a seat at the top table, not Leading CIOs take a 3enough CIOs are grasping the 5multidisciplinary approach to their potential for digital transformation. careers. Despite the advantages offered to them, and their In forging a path toward a more strategic leadership role, greater influence, many board-level CIOs in IT-intensive leading CIOs have made a series of deliberate choices firms appear not to use them to push ahead on any throughout their career progression. This starts with strategic or transformational issues. They recognize the their education, which more commonly involves a need to focus on bolstering growth, but too often fail to background in business, science or engineering, along reach out to build relationships with the front of the with IT. But it also extends through their work experience: business. Indeed, part of the risk that CIOs face on digital they actively seek out opportunities to work in other is that other business managers, or wholly new specialist parts of the business and in other geographic regions. roles, such as the chief digital officer, take the lead. And they engage extensively outside the business by, for example, taking on external advisory roles or directorships. These CIOs express greater satisfaction The CIOs most strongly aware of with their career prospects, their status within the 4their task to develop the business business, and their ability to influence corporate strategy. show a distinct set of characteristics that help them stand out. Nearly 4 in 10 (38%) of CIOs in IT-intensive industries are highly engaged in core strategic issues — delivering transformation and driving business model innovation — and they show a set of six unique traits (see text box above). These help to frame the mindset of a CIO who is leading the way on digital transformation; an individual we term the “digital-ready CIO.” For example, these individuals have a close focus on the front office and innovation: 65% are highly engaged in helping develop new products and services, compared with just 50% of other CIOs. They show a much stronger appetite for risk and a greater ability to influence the rest of the business: 90% cite communication and influencing skills as strongly important to their role, compared with 79% of other CIOs. BBorn torn to be digito be digital |al | 55

1 n io t c Se The rise of the digital business A core set of digital technologies — mobile, social, the cloud and data, among others — are transforming companies at both an operational and a strategic level. For leading CIOs, these present a major opportunity to expand their role and remit, especially for those engaged on the most strategic elements of their role. Across a range of industries and geographies, a core set of digital example, has a dedicated button that connects users to a helpline technologies — including mobile, social, the cloud and big data — are attendant via video chat, bringing a human element back into a transforming the way companies and their customers interact. At routine support function. Pharmaceutical firm Sanofi has launched the same time, these technologies are releasing a wave of IT-led a new device that can read blood glucose levels and transfer the innovation, and creating new revenue and cost-saving data onto a smart phone to send to a health care provider. “This is opportunities. This seems like a natural process within internet an example of how technology contributes to generate new companies, which are born digital, but the digital transformation is revenues for our firm,” explains Sanofi’s CIO Bruno Ménard. now spreading rapidly to enable organizations of all shapes and Of course, digital goes much further. Nestlé, the Swiss food giant, sizes to reinvent themselves. For leading CIOs, this presents a major has used digital technology to create a whole new business model opportunity to expand their role and remit, especially for those who for its Nespresso range of coffee capsules, which are largely have grasped the more strategic elements of their role. delivered direct to consumers via the internet, rather than through The wide range of examples is striking. At Nykredit, a Scandinavian traditional retail channels. Caterpillar is pushing to digitize the bank, half of the customer interactions now come via mobile trucks, graders and other heavy equipment it sells, enabling it to devices, explains CIO Lars Mathiesen, up from almost nothing just a identify proactively when vehicles require servicing or maintenance, couple of years ago. This is transforming the way the bank thinks and opening up a whole new line of service revenues for the about its customer service processes, and how such interactions business. work — opening up the potential for one-to-one video meetings These are not isolated examples. They form part of a widespread instead. Amazon, an online retailer, is using digital to invent new shift underway across the corporate world, as companies reshape ways of interacting with its customers. Its new Kindle tablet, for themselves around digital technologies. 6 | Born to be digital

An urgent, strategic shift CIO rival or peer? The digital transformation is moving extremely rapidly. In a survey, 1 carried out by MITSloan, of executives from different business The emergence of the chief functions across a wide range of industries, nearly eight out of ten respondents said that achieving digital transformation will be digital officer critical to their businesses within the next two years.The report argues that a range of digital technologies will enable major business improvements: better customer experiences, streamlined From McDonald’s to NBC News, a new job title is taking grip in 2 operations and new business models. Gartner agrees: its 2013 CIO a rapidly expanding list of companies: the chief digital officer Agenda Report notes that, while CIOs have spent the past decade 4 (CDO). Gartner believes that at least 500 such roles already dealing with tightening budgets, limited innovation and cost exist, many of which involve acting as strategic advisors to the cutting, they have seen digital reach a tipping point across the board and CEO on their digital business strategy.Given the fact business in the past 18 months. However, according to Gartner’s that many of the most promising digital technologies are directly 2014 CIO Agenda, CIOs feel overwhelmed by the prospect of supporting customer interaction and growth, these CDOs often building digital leadership. hold close ties to marketing, sales, strategy, finance and, of “Dealing with the challenge of digital change requires an end-to- course, IT. end response, building a comprehensive digital strategy, and So is the CDO emerging as is often the case with a threat that rethinking the business and operating models,” says David Nichols, could replace CIOs, or as a new potential peer, as the CTO or Americas IT Transformation Leader at EY. chief data officer? In many respects, this depends on CIOs 3 themselves, argues Bob Sydow, Americas IT Advisory Leader There are three core changes here: at EY, who sees a potential dividing line between overseeing 1. Using digital to enhance traditional business models, such as “systems of records” (in the back office) and “systems of moving from selling products to providing services — Streetcar engagement” (revenue-generating and firmly in the front office). and Xerox are two examples “Exceptional CIOs can play both of these roles, and it’s better for 2. Transforming existing business models to offer new digital the organization to have one person doing both.” services — such as 100Flowers selling via Facebook The challenge, in his view, is that traditional IT functions are 3. Inventing wholly new types of business models — from virtual often not well set up for innovation and new ideas. They don’t currencies in online games, to others selling its digital data have the ability to sit with the sales and marketing organization “In many cases, digital has moved technology toward becoming the and have an intelligent conversation about driving revenue. “To front end of the spear rather than the tail feathers,” argues Bob counter this, CIOs need to know what drives the business, how Concannon, a partner at executive recruitment firm KornFerry. business processes work, and how these all fit together,” adds “Companies are recognizing that a judicious use of IT can lead them Tom Velema, EY’s EMEIA IT Advisory Leader. ”Otherwise you toward increases in sales and returns on investment never before can see why a CDO could step in instead.” possible.” For those CIOs willing to change and step up to the challenge, there is no reason why an existing CIO can’t play a CDO’s role, according to EY Americas IT Transformation Leader David Nichols. “CIOs can provide a high degree of innovation, especially as they already service many business units, from marketing and HR to the supply chain. But to get this right, companies need to rethink how they organize themselves to ensure the greatest impact from digital,” says Nichols. Born to be digital | 7

The CIO divide ahead In the digital era, these kinds of transformations will be essential to One key issue is the pace and sequencing of the move from today’s business longevity. But they will also create profound challenges for systems to tomorrow’s digital technologies. “It’s easy to see and the firms making them and seeking to make them. And, given the understand the opportunities for these changes, and for cutting strategic nature of the changes that a digital transformation capital spending and moving toward a more flexible business requires, they also hold major implications for CIOs. “What is model,” says Dave Ryerkerk, Global IT Advisory Leader at EY. “But keeping leading CIOs up at night? It’s the challenge of how their what’s really hard for CIOs to answer is this question of pace.” business is going to be fundamentally transformed by digital,” says Rob Preston, Editor in Chief of InformationWeek. “It’s about the role of technology leaders in a world that puts a premium on innovation and growth, and considers everything else a cost center.” udy Zalando and Zooplus: t CIOs in online retail e s Philipp Erler, CIO, Zalando Richard Alan Herz, CIO, Zooplus as Unlike most retailers, German-based marketing and logistics. This raises business. “I don’t have a bunch of C pet supply company Zooplus was born conflicts with sales and marketing who people from business areas running in digital. Launched during the dot-com continue to view IT simply as a service the door who think that they have to era, it now operates across Europe, and provider. To reset this, Herz has been tell me something to get their has annual sales of more than €400m. given a direct mandate from the board requirements prioritized. I have a lot of Digital’s rapidly evolving potential — not to be an active participant in core peace of mind because teams organize least the new retail sales channels it strategic decisions. He is now charged things themselves,” says CIO Philipp opens up and the radical new logistics with providing a clear vision of where Erler. ideas it can deliver — has made CIO digital will take the business. This structure frees the CIO up for Richard Alan Herz a vital voice in At Zalando, a pan-European online other responsibilities, from strategic shaping the firm’s future business fashion retailer generating well over engagement with the rest of the model. “We need agility, given the €1b in annual sales, despite having business, through to even acting as a technology changes emerging, such as only been set up in 2008, the CIO marketer for technology recruitment. “I new interaction technologies like shares the experience of being at the must manage to establish our firm as a Google Glass,” he says. heart of setting the firm’s digital software company and, if we can do But Herz says the firm was originally strategy. However, as IT is that, then we will be a much more set up like a standard IT organization decentralized, he has a quite different exciting proposition for talented because of its strong focus on sales, relationship with the rest of the developers,” says Erler. 8 | Born to be digital

Indeed, relatively few CIOs are equipped for the demands of a digital world — and those who are not are increasingly at risk. “As more applications and infrastructure get moved to the cloud, IT leaders whose main job is to keep the lights on will be fewer and farther between,” argues EY’s Tom Velema, EMEIA IT Advisory Leader. These traditional elements to the role remain vital, but there is also a need for CIOs to be faster and more reactive in supporting innovation and growth. Bob Sydow, his counterpart in the Americas, agrees: “This is a major shift for CIOs, away from their historical focus on running an efficient IT center and toward a focus on innovation. Some are able to make that shift, but others don’t have that ability.” Opportunities ahead for CIOs in IT-intensive industries 5 Previous research revealed that about two-thirds of all CIOs (64%) are generally happy in their roles, but almost half of them (31% in total) want to move into bigger CIO roles, with a broader remit and greater influence over the rest of the business. For these CIOs, digital can provide this opportunity — at least for those who are able to recognize and adapt to this shift. This is especially apparent in a core set of sectors — including technology companies, banks and life sciences firms — that already spend a high proportion of their revenue on IT. Accordingly, this study focuses on these IT-intensive sectors as they contain the companies that are most likely to have already begun their digital transformations. Born to be digital | 9

2 n io t c Se The DNA of the IT-intensive industry CIO CIOs in IT-intensive industries are far more likely to hold places on the executive leadership team and recognize the skills needed for success. They are more likely to be empowered to drive the significant changes associated with the digital business transformation underway and seem to be more satisfied with their posts. It’s easy to pick Facebook as a truly digital business. But there are As The DNA of the CIO showed, these firms all provide ideal launch companies of all sizes that are embracing digital, and they can be pads for aspirational CIOs. Indeed, what is common across all these found in all sectors, from power and utilities to retail. Given this companies is that IT is a core boardroom topic, which receives challenge, we focused on the most IT-intensive industries globally — strong engagement from senior executives across the business. those with the highest average spend on IT as a percentage of total As would be expected, much is being done digitally in these revenue — because these are the firms most likely to be engaging in IT-intensive industries: just over half (51%) of CIOs in these digital. industries say that they are already strongly engaged in leading the This focus captures many of the firms that are using IT at the very implementation of such technologies.* core of their business — banks, pharmaceutical companies, telecommunications firms, media houses and, of course, technology firms themselves. Among these companies, there are some unsurprising names, but also many more traditional businesses. * Whenever we refer to terms such as strong, deep or key, we refer to those respondents that chose 8, 9 or 10 on a scale from 1 to 10, where 1 is lowest and 10 is highest. 10 | Born to be digital

How IT-intensive industry CIOs stand out The most IT-intensive industries Given where IT-intensive industry CIOs sit, they are clearly An analysis of the top 100 companies, in terms of their total empowered to drive the significant changes associated with the IT spending as a proportion of revenue, shows the key sectors digital transformation. So how do they differ from their peers, that are investing most in technology to transform their the “typical CIOs”? businesses. Their spending ratio ranges from 1.02% to 3.99%, representing vast investments in IT, given that their average More often a member of the executive revenues far exceed US$1b. Chart 1 management team Industry of top 100 companies with the highest IT spend One of the most striking differences is that IT-intensive industry as a % of their revenue CIOs are far more likely to hold a place on the executive management team. A little more than half (53%) do, compared with just 17% of typical CIOs. In many respects, this makes intuitive Other sense: with IT having a much greater impact on the bottom line, 7% 22% Technology (including these firms want someone accountable close at hand. It also 16% software, hardware, highlights how much more influence these IT leaders potentially Media and IT services and hold within the business. This is important: for CIOs to truly help entertainment e-commerce) address the opportunities and threats that digital transformation provides to their firms, they need to be a part of their executive 20% management team. Telecommunications However, it’s also apparent that many IT-intensive industry CIOs are 20% not making full use of their powerful position. “For years, CIOs have Pharmaceutical and 15% been fighting for a seat at the table. They’ve understood the biotechnology Banking importance of building relationships, and how to engage the business with a business-centric vocabulary, and so on. So many Source: Vertical and company size survey, IDC, 2013. now have a seat at the boardroom table, but they don’t know what to do with it,” argues KornFerry’s Concannon. Rather than simply holding budget discussions or operational IT reviews, they should be using this as a chance to make the case for a more strategic engagement on IT across the business, ensuring that technology is deeply represented within the corporate strategy. While many CIOs have to try and make this case via a proxy, often the CFO, a seat at the table gives them the chance to sell the rest of the board on a “IT-intensive industry CIOs” refers to the CIOs surveyed broader vision. for this report, from those sectors that have higher than Why do CIOs often not get this right? In part, it has to do with the average ratios of IT spending as a proportion of transition in mindset that comes with moving from a role that is total revenue. more focused on the operational elements of the job, to one that is more strategic in nature. Encouragingly, IT-intensive industry CIOs “Typical CIOs” refers to those CIOs surveyed across all who have reached the boardroom show stronger engagement on a industry sectors for The DNA of the CIO in 2012. wide range of issues. But those who are able to do more to prioritize the strategic elements of their role will do best over time. Born to be digital | 11

Typically more engaged on strategic Chart 2 issues Areas in which CIOs actively engage with the executive management team One of the clearest differences that mark out IT-intensive industry CIOs from typical CIOs is their far stronger focus on business Discussing business performance 57% performance. One in two (55%) regularly engages with the board on and challenges 55% this topic — well ahead of just 36% of typical CIOs. 36% Participating in strategic 53% Take Fred Swanepoel, the CIO of Nedbank, one of South Africa’s decision-making 43% 45% major retail banks, who is a member of the company’s executive Discussing mergers 26% committee. He provides advice to the board on the strategic and acquisitions* 27% direction of the business and leveraging technology to achieve 55% strategic objectives on at least a quarterly basis. Discussing IT's role in research and nt development of services and products* e 50% m “In IT-intensive industries, you see a more centralized governance e Providing facts as basis for ag 59% g model, with IT issues pulled together at a board or executive strategic decisions n 55% e 52% committee level,” he explains. In a business such as Nedbank, this is easy to understand: “We are constantly investigating technologies Discussing IT's role in 76% to improve client experience and operational efficiency, and to business transformation Strategic 64% 72% make sure the bank stays competitive. When you’re talking about Discussing IT budgetary issues and 77% banking products today, there are very few products you can infrastructure management 67% 73% actually touch. The computer code facilitates the commitments we make to clients, so the technology environment is strategically IT-intensive industry CIO — board member important to building and maintaining trust in the organization,” IT-intensive industry CIO — overall Typical CIO he says. (Percentage of respondents who have chosen 8, 9 or 10 on a scale from 1 = do not engage at all to 10 = actively engage) * Answer option was not included into typical CIO survey (The DNA of the CIO) 12 | Born to be digital

Chart 3 This more strategic focus is visible elsewhere too. When asked Areas in which CIOs feel they create value for companies about the areas in which CIOs create value for the business, typical CIOs tended to focus on IT budgets and costs (78%). IT-intensive industry CIOs do this too — hardly surprising, given the sustained 78% pressures on the bottom line across businesses of all kinds — but Account for IT issues and they also tend to show a clearer focus on supporting growth. For related costs 81% example, 51% note that they add significant value through product Contribute to operational 75% innovation, compared with just 45% of typical CIOs. Similarly, 75% agility of business 68% believe that CIOs can contribute to the operational agility of the Ensure compliance with 67% business, ahead of 68% of typical CIOs. Similar gains to the role can all regulatory requirements* be seen in other areas too, such as in seeking to minimize risks. 66% Minimize possible risks 59% Deliver significant corporate 66% cost efficiencies 60% Enable fact-based decision-making in 55% terms of corporate strategy 60% Add considerable value to overall business 51% growth through product innovation 45% IT-intensive industry CIO Typical CIO (Percentage of respondents who have chosen 8, 9 or 10 on a scale from 1 = do not add value at all to 10 = proactively add considerable value) * Answer option was not included into typical CIO survey (The DNA of the CIO) Born to be digital | 13

More aware of the skills needed IBM’s global-local to succeed udy IT transformation Inevitably, when executives are pushed to focus on higher-level t strategic issues, there is a consequent shift in the skills that they need to succeed. IT-intensive industry CIOs acknowledged a greater need for softer skills such as leadership, influencing and change e s Diego Calegari, Spanish South management. For example, 90% see leadership as strongly needed American CIO Executive, IBM to perform best in their role, ahead of 81% of typical CIOs. The same pattern is seen for financial skills: 57% of IT-intensive industry as CIOs said they strongly needed these skills, whereas only 51% of C As might be expected of a leading technology brand, IBM typical CIOs said the same. This recognition of the need for a is deeply engaged with digital. The company is broader palette of skills to draw upon, beyond any core IT transforming itself across the business — including HR, competencies, is also reflected in the choices that many IT-intensive sales and all other functions — around a set of global tools industry CIOs make with regard to their education and job based on digital technologies such as the cloud. While its experience, which more often shows a broader background than global CIO leads this drive by setting the global strategy with typical CIOs (see section 4 for more). and driving the overall rollout, CIOs in every region are Chart 4 adapting and localizing the strategy. One such CIO is Diego Attributes required to perform best in CIO role Calegari of IBM South America: “We are in the middle of this shift, but the next phase of our local transformation 90% will be to focus closely on mobile for our market,” he says. Leadership skills 81% All this means that he has far more engagement with 87% business transformation, in stark contrast to many local Communication and influencing skills 79% CIOs that Calegari knows. “I see many who are focused on 83% operations and infrastructure issues, rather than working Project and change management skills with the rest of the business to truly transform it,” he says. 74% “This has been a big shift for us over the past few years. Analytical approach and 81% Three years ago, I probably spent 30% of my time on organizational skills 77% innovation and transformation, and 70% on supporting Designing and executing 67% operations and the business. It’s now the opposite.” business strategy 64% This is not the only practical change. He’s now more Technological skills and 65% closely engaged with the front office of the business, acts know-how on IT trends 64% as the link between the firm’s global IT strategy and its 57% Financial management skills local implementation, and keeps a close eye on how these 51% changes help to drive growth. Deeper insight into the industry or key 52% geographical markets for your business 48% IT-intensive industry CIO Typical CIO (Percentage of respondents who have chosen 8, 9 or 10 on a scale from 1 = not needed at all to 10 = absolutely needed) 14 | Born to be digital

However, it is also apparent that many IT-intensive industry CIOs still struggle to translate this need for stronger communication and Inclusive technology? influencing skills into practical reality. For example, few of them appear to hold stronger relationships across the business than Gender diversity in IT-intensive typical CIOs do. In fact, they often have weaker relationships. This is true internally, where they have weaker links with core figures industries such as the CEO or CFO, but also externally, where ties both with regulators and end customers aren’t as strong. For IT leaders who CIOs are not the most gender-balanced group. For the most part, hold as much sway as they do to influence other parts of the typical CIOs tend to be male: just 4% of IT leaders polled for The business, this is a missed opportunity. DNA of the CIO were female. In contrast, however, IT-intensive “Digital is creating new demands for leadership. Some CIOs are industries appear to be rather more inclusive, with three times ready for that and some aren’t,” notes KornFerry’s Concannon. as many female CIOs as other sectors. Unfortunately, they “This talk about ‘the CIO is dead’ is sort of silly, but it’s clear that remain a clear minority — at just 12% of the sample — but it the role is going to change a lot. I have to be a proactive advisor to suggests that these businesses are making a greater effort to the business, providing solutions and discussing new approaches,” attract more female executives. says Zalando CIO Philipp Erler. EY’s Tom Velema adds that the The IT industry is the sector that has been the most successful in biggest challenge for a CIO has always been about getting to be attracting women to the highest roles in IT: 1 in 5 of the top 25 seen as a business enabler rather than a business problem. Digital CIOs there are female — including Cisco’s Rebecca Jacoby and presents CIOs with a fresh opportunity to become relevant to the Lenovo’s Wang Xiaoyan. This is a far cry from the one woman business, but this digital CIO needs different DNA. among the top 25 companies in banking or life sciences, or the two within telecommunications. Much progress remains to be made, but the IT sector is clearly doing what it can to push ahead. Born to be digital | 15

t 5HoHow ITw IT-in-inttensivensive induse industry CIOs stry CIOs sttand outand out Char Discussing business performance Discussing business performance with the executive management teamwith the executive management team Educational backgroundEducational background TThe rhe racace e ITIT tto go digito go digitalal Appetite for strategic engagementAppetite for strategic engagement ITIT-in-inttensivensive e indusindustry CIOtry CIO 44 %% ITIT-in-inttensivensive e %% TTypicypical CIOal CIO 66 Typical CIOTypical CIO 2929%% TTypicypical CIOal CIO 2929%% 5050%% indusindustry CIOtry CIO 5050%% 5555 from any sector from any sector %% and with manifold and with manifold 3636 backgroundsbackgrounds BusinessBusiness They are typically more engaged in corporate They are typically more engaged in corporate strategy and developmentstrategy and development 44 %% Leading digital transformationLeading digital transformation 88 IT-intensive industry CIOIT-intensive industry CIO from sectors that have higher from sectors that have higher %% than average ratios of IT than average ratios of IT ITIT-in-inttensivensivee 5511 spending as a proportion spending as a proportion indusindustry CIOtry CIO of total revenueof total revenue Average ageAverage age IT-intensive industry CIOs are leading IT-intensive industry CIOs are leading Top three skills needed to succeedTop three skills needed to succeed implementation of digital technologies implementation of digital technologies such as cloud, mobile and analyticssuch as cloud, mobile and analytics TTypicypical CIOal CIO 42.42.88 45.45.11 ITIT-in-inttensivensivee Share of womenShare of women indusindustry CIOtry CIO TTypicypical CIOal CIO ITIT-in-inttensivensive induse industry CIOtry CIO TTypicypical CIOal CIO ITIT-in-inttensivensive e indusindustry CIOtry CIO Seat at top tableSeat at top table ITIT-in-inttensivensivee indusindustry CIOtry CIO Average time in roleAverage time in role TTypicypical CIOal CIO 5353%% 7979%% 8181%% 7474%% 8787%% 9090%% 8383%% %% TTypicypical CIOal CIO ITIT-in-inttensivensivee 1177 %% %% indusindustry CIOtry CIO 44 1212 IT-intensive industry CIOs are more likely to hold IT-intensive industry CIOs are more likely to hold a seat in the executive management team, offering a seat in the executive management team, offering Communication Communication LeadershipLeadership ChangeChange huge chances to transform the businesshuge chances to transform the business and influencingand influencing managementmanagement 6.2 y6.2 yeeararss 5.3 y5.3 yeeararss Satisfaction with the external Satisfaction with the external perception of the CIO roleperception of the CIO role Involvement in innovationInvolvement in innovation 4545%% Relationships to suceedRelationships to suceed ITIT-in-inttensivensive e Career ambitionsCareer ambitions ITIT-in-inttensivensivee indusindustry CIOtry CIO indusindustry CIOtry CIO ITIT-in-inttensivensive e %% indusindustry CIOtry CIO ITIT-in-inttensivensivee 5050 TTypicypical CIOal CIO TTypicypical CIOal CIO indusindustry CIOtry CIO TTypicypical CIOal CIO 3939%% Focus on front office Focus on front office IT-intensive industry CIOs are more IT-intensive industry CIOs are more ambitious overall, but especially ambitious overall, but especially IT-intensive industry CIOs build closer IT-intensive industry CIOs build closer when it comes to aspiring business when it comes to aspiring business relationships with the CMO and clientsrelationships with the CMO and clients executive positionsexecutive positions 16 | Born to be digital

HoHow ITw IT-in-inttensivensive induse industry CIOs stry CIOs sttand outand outDiscussing business performance Discussing business performance with the executive management teamwith the executive management team Educational backgroundEducational backgroundTThe rhe racace e ITITtto go digito go digitalalAppetite for strategic engagementAppetite for strategic engagementITIT-in-inttensivensive e indusindustry CIOtry CIO 44%%ITIT-in-inttensivensive e %% TTypicypical CIOal CIO 66Typical CIOTypical CIO2929%% TTypicypical CIOal CIO2929%%5050%%indusindustry CIOtry CIO5050%%5555 from any sector from any sector %% and with manifold and with manifold 3636 backgroundsbackgrounds BusinessBusiness They are typically more engaged in corporate They are typically more engaged in corporate strategy and developmentstrategy and development 44%% Leading digital transformationLeading digital transformation 88IT-intensive industry CIOIT-intensive industry CIO from sectors that have higher from sectors that have higher %% than average ratios of IT than average ratios of IT ITIT-in-inttensivensivee 5511 spending as a proportion spending as a proportion indusindustry CIOtry CIO of total revenueof total revenueAverage ageAverage age IT-intensive industry CIOs are leading IT-intensive industry CIOs are leading Top three skills needed to succeedTop three skills needed to succeed implementation of digital technologies implementation of digital technologies such as cloud, mobile and analyticssuch as cloud, mobile and analytics TTypicypical CIOal CIO 42.42.88 45.45.11 ITIT-in-inttensivensivee Share of womenShare of women indusindustry CIOtry CIO TTypicypical CIOal CIOITIT-in-inttensivensive induse industry CIOtry CIOTTypicypical CIOal CIOITIT-in-inttensivensive e indusindustry CIOtry CIO Seat at top tableSeat at top table ITIT-in-inttensivensivee indusindustry CIOtry CIO Average time in roleAverage time in role TTypicypical CIOal CIO 5353%% 7979%%8181%% 7474%%8787%%9090%% 8383%% %% TTypicypical CIOal CIO ITIT-in-inttensivensivee 1177 %%%% indusindustry CIOtry CIO 441212 IT-intensive industry CIOs are more likely to hold IT-intensive industry CIOs are more likely to hold a seat in the executive management team, offering a seat in the executive management team, offering Communication Communication LeadershipLeadershipChangeChange huge chances to transform the businesshuge chances to transform the business and influencingand influencingmanagementmanagement6.2 y6.2 yeeararss 5.3 y5.3 yeeararss Satisfaction with the external Satisfaction with the external perception of the CIO roleperception of the CIO role Involvement in innovationInvolvement in innovation 4545%% Relationships to succeedRelationships to succeed ITIT-in-inttensivensive e Career ambitionsCareer ambitions ITIT-in-inttensivensivee indusindustry CIOtry CIO indusindustry CIOtry CIO ITIT-in-inttensivensive e %% indusindustry CIOtry CIOITIT-in-inttensivensivee 5050 TTypicypical CIOal CIOTTypicypical CIOal CIOindusindustry CIOtry CIO TTypicypical CIOal CIO 3939%% Focus on front office Focus on front office IT-intensive industry CIOs are more IT-intensive industry CIOs are more ambitious overall, but especially ambitious overall, but especially IT-intensive industry CIOs build closer IT-intensive industry CIOs build closer when it comes to aspiring business when it comes to aspiring business relationships with the CMO and clientsrelationships with the CMO and clients executive positionsexecutive positions Born to be digital | 17

3 n io t c Se A mindset for change: six traits of the digital-ready CIO Those CIOs most engaged in corporate development show striking differences in how they approach their jobs. We find these attributes to be closest to the core set of skills and capabilities needed to drive the digital transformation, from vision and storytelling, to courage and a focus on growth. However, they’re just as applicable to any CIO wanting to stand out and perform in their role. An IT-intensive company can provide the ideal context for CIOs to Among the IT-intensive industry CIOs surveyed, nearly one in four embrace digital. But to actually do so still requires the individual in (38%) were focusing far more on these most strategic elements of question to find the motivation to lead this change. In short, it the job. These leading CIOs show an ability to reframe their thinking demands a different mindset. and present a positive story to the rest of the business about how To delve deeper into this mindset, we assessed the characteristics technology can deliver a very different future. “A lot of this is about of those CIOs most engaged in the strategic elements of their jobs, being proactive. Being able to walk in and suggest where the who are delivering both on business transformation as well as opportunities are for the organization. Too many CIOs are simply business model-related innovation. These are the two elements that reactive, which is why they lose credibility with the rest of the The DNA of the CIO identified as the most helpful for CIOs trying to business,” explains EY’s Americas IT Advisory Leader Bob Sydow. stand out in their role — and they are, as this research reveals, This proactive approach is apparent in the wide range of areas in fundamental aspects of driving digital transformation. While all which these leading CIOs seek to create value, with strong three sections of the wheel together represent the full remit of any engagement across everything from product innovation and given CIO, those IT leaders who push hardest and use innovation to operational agility, through to supporting decision-making. At the change and develop their business are the ones most likely to be same time, they also carefully manage expectations, walking the building a truly digital business. fine line between keeping the business excited about the potential of IT, while keeping a realistic sense of what’s truly possible. 18 | Born to be digital

In return, they appear to benefit materially from this: 7 in 10 (71%) By focusing on how their views differed from others, we found that of these CIOs strongly agree that their standing within the business a set of six distinctive traits stood out. Collectively, these mark out has materially improved over the past three years, well ahead of the the digital-ready CIOs as role models for any other CIOs seeking to 54% of IT-intensive industry CIOs overall — and even further ahead stand out from the crowd and fulfill their career aspirations. This is of those CIOs who had least prioritized the strategic elements of certainly true for those CIOs getting engaged in a digital their role and their influence on corporate development (just 43%). transformation, but it’s just as applicable more generally for any In fact, across a broad sweep of areas, these CIOs stood out as CIOs simply wanting to gain a stronger voice in their organization. natural leaders. Unsurprisingly, then, they have a far stronger voice After all, these digital-ready CIOs can be seen to hold better career in the business overall. But equally, despite already being highly prospects and are more highly regarded in the business. skilled and well positioned within the business, they remain eager to keep developing their capabilities. We’ve called them the “digital- ready CIOs.” n o i t a v o n n M l i a e n d a o g m i n s g s c e o T n s i t E s s N u X E gb E n i g C M n i Shaping the future Controlling the r U P B of the business impact of IT spend T O with the right on the organization I L technology O E n N V o i E at 6 1 K e D m e or p i f Preparing and Ensuring the n s g n r a developing the 5 The CIO's IT and security th 2 t g organization role needs are up i l e n i r e for change and running t h g v i l o s e D 4 3 n Sustaining and extending the Providing insight “Digital-ready CIOs” are those CIOs who rated 8, 9 or 10 on organization's strategies to support business T a and objectives decisions k i r n e a scale of 1 to 10 on the corporate development aspects of g k o o w r n nb e o their roles based on the wheel model. As EY’s The DNA of r i s t hi a p m r o o f f n the CIO revealed, these qualities are what best enable CIOs I i T n a go s ve ga r n n i t a c n A ce to deliver on core business changes, such as the digital E T transformation now underway. N N A E B M L E Born to be digital | 19

Six distinctive traits of digital-ready CIOs Digital-ready CIOs Six distinctive traits of digital-ready CIOs: 1have a strategic vision of how technology will transform the Digital-ready CIOs have a strategic business — and know 1vision of how technology will how to implement it. transform the business — and know how to implement it. Digital-ready CIOs 2innovate relentlessly. By definition, all of these CIOs have a clear vision about the future state of the business. They have a powerful sense of how and where digital can transform product development or sales and Digital-ready CIOs marketing, and how it can open up new lines of revenue. While the focus closely on CEO knows where the wider business is headed, the digital-ready 3driving growth — and CIO can show how technology can enable and support that journey. the relationships they Close to 9 out of 10 (87%) digital-ready CIOs focus tightly on making the case to the executive management team for IT’s role in need to support this. business transformation. That figure is well ahead of the 72% of IT-intensive industry CIOs. “It’s very important that a CIO has a Digital-ready CIOs vision for the company that is directly linked to its business model,” ensure their vision is says Nykredit CIO Lars Mathiesen. And as InformationWeek Editor 4 in Chief Rob Preston puts it: “You need to be something of a understood. visionary, an innovator and a big thinker, not just an order taker.” All this implies that the digital-ready CIOs have a close Digital-ready CIOs understanding of their companies’ underlying business models, and move beyond products and services. EY’s Dave Ryerkerk notes that, in the past, 5operations and businesses would draw up a major initiative — setting out the infrastructure. required processes and the associated operating model — before “throwing it over the fence to IT to set it up and automate it.” Today, digital technologies shape the design of a firm’s processes Digital-ready CIOs and operating models. Indeed, Bob Sydow, Americas IT Advisory are courageous risk- Leader at EY, notes that one of the core capabilities needed for 6takers. digital-ready CIOs is an intimate knowledge of the firm’s business architecture, along with the ability to manage and drive complex implementation programs. “Our technology team has an open process creation approach, rather than simply receiving processes and supporting them. We are able to describe the target processes, and define how to go about transforming them,” explains Zalando’s CIO Philipp Erler. 20 | Born to be digital

At the global software company SAP, for example, Americas CIO Chart 6 Michael Golz is clear on how digital has transformed the inner Attributes required to perform best in the CIO role workings of the business. “When I look at the sales and marketing organization, the amount of automation and data-driven information that they use in their daily business is magnitudes Designing and executing 83% bigger than just a couple of years ago,” he says. Via mobile apps business strategy 67% and analytics, IT provides real-time information about the health of Technological skills and 75% the business at any given moment. “If we were to take this away, I know-how on IT trends 65% would not know how we’d run this business. It takes out risk. It takes Deeper insight into the industry or key 70% out a lot of the variations. It gives us insight into new opportunities geographical markets for your business 52% to cross-sell or up-sell,” he says. 67% As this implies, the ability to deliver on this vision is just as Financial management skills important as the vision itself. “You shouldn’t talk about your vision 57% if you’re not able to execute on it,” says Nykredit’s Mathiesen. When Digital-ready CIO IT-intensive industry CIO asked what attributes are most needed to help them stand out in (Percentage of respondents who have chosen 8, 9 or 10 on a scale from 1 = not needed at all their roles, digital-ready CIOs place far more importance on the to 10 = absolutely needed) ability to design and execute business strategy. More than 8 out of 10 (83%) place a high focus on this, compared with just 67% of IT-intensive industry CIOs. Digital-ready CIOs are also far more likely to recognize the breadth of skills needed to succeed in the role: they place more importance on their close understanding of their market or industry (70% “ When I look at the sales and compared with 52% of IT-intensive industry CIOs), on their financial skills (67% versus 57%), and on their technological know-how (75% marketing organization, the versus 65%). “Just as importantly, this needs to be backed up with ruthless execution, which means CIOs need to really get their amount of automation and delivery organization in order,” says EY’s Tom Velema. data-driven information that they use in their daily business is magnitudes bigger than just a couple of years ago.” Michael Golz, CIO Americas, SAP Born to be digital | 21

“ I spend at least 30% of my time on innovation.” Anonymous, CIO, leading Chinese telecommunications company Digital-ready CIOs innovate Chart 7 Areas in which CIOs actively engage with the executive 2relentlessly. management team Digital-ready CIOs strongly see the need to bring innovation both at Discussing business performance 63% a business model level and in terms of new products and services — and challenges 55% something picked out by 81% of digital-ready CIOs, well ahead of Participating in strategic 57% the 64% of IT-intensive industry CIOs overall. They’re far more often decision-making 45% exploring how to create new mobile interfaces or e-commerce solutions, or considering how social media can be used to reinvent Discussing mergers 37% customer service, and uncovering new data-driven insights. and acquisitions 27% “My job is to find interesting new ideas and innovations, and bring Discussing IT's role in research and nt 65% development of services and products e 50% them back to the CEO to discuss which of them could fit into our m e ag business,” says Alexander Gornyi, the CIO of Mail.Ru, the Russian Providing facts as basis for g 70% n e strategic decisions internet communication and entertainment company. “We don’t c i 55% g e trade in oil; we trade in innovation, so IT needs to be far closer to t a Discussing IT's role in r 87% t the decision-making in our business.” Overall, 71% of digital-ready business transformation S CIOs strongly affirm that they are responsible for driving disruptive 72% new technologies — such as cloud, mobile and analytics — within the Discussing IT budgetary issues and 78% business, compared with just 51% of IT-intensive industry CIOs. infrastructure management 73% All CIOs focus on issues relating to business performance and IT Digital-ready CIO IT-intensive industry CIO budgets, but digital-ready CIOs are far more engaged in the question of how to open new markets. For example, about two-thirds (65%) of (Percentage of respondents who have chosen 8, 9 or 10 on a scale from 1 = do not engage digital-ready CIOs are strongly engaged in discussing IT’s role in at all to 10 = actively engage) researching and developing new services or products with the executive management team, compared with just 50% of IT- As CIOs show where and how they can use digital to innovate, intensive industry CIOs overall. “I spend at least 30% of my time on innovation then becomes part of what is expected of them. “In our innovation,” remarks the CIO of a major telecommunications business, the board’s expectation is that IT is the innovation force operator in China, who asked to remain anonymous. “I have 100% that can change the business in the future,” explains the CIO of a influence on technology innovation, which requires that I have both major Chinese insurance firm, who asked to remain anonymous. a technology background and also an understanding of corporate Her work in using mobile and analytics to drive greater sales is strategy and operations.” representative of where this role is headed (see next trait for more). 22 | Born to be digital

Accordingly, digital-ready CIOs are keenly aware that they can add Of course, all this is also a challenge, as EY’s David Nichols warns: value by analyzing and innovating existing business processes. “The questions these CIOs are asking are: how best to handle the Seventy percent of digital-ready CIOs see this as the area in which rapid pace of innovation going through the rest of the business, they create the most value for the business, ahead of 61% of what it means for them, and how to build an IT organization that IT-intensive industry CIOs. Furthermore, in considering where CIOs can react to that. These are the key themes that the digital CIO is ought to create value for their business, 68% of digital-ready CIOs going to have to be concerned with.” point to the need to support growth through product innovation, compared with just 51% of IT-intensive industry CIOs. Why CIOs and CMOs must learn to love udyudy each other — not only at SAP tt e se s Michael Golz, Americas CIO, SAP Jonathan Becher, CMO, SAP asas Michael Golz and Jonathan BMichael Golz and Jonathan Becherecher,, Of cOf courourssee, this r, this raisaisees specifics specific cloclosselyely. “T. “Therhere are are se so mano many dify difffererenentt CC rreespectivspectively the Americely the Americas CIO andas CIO and challengechallenges in the ins in the intterferfacace bee bettwweeneen ttechnologieechnologies that I think one os that I think one of IT’f IT’ss globglobal CMO at Sal CMO at SAPAP, belie, believve theire their markmarkeeting, which is sting, which is seeking this insigheeking this insightt,, biggebiggesst ct conontributions rightributions right not now is tw is too functions hafunctions havve changed se changed soo and the IT tand the IT teeam delivam delivering itering it. “IT. “IT guide on hoguide on how tw to ino inttegregratate thee thesse all, ande all, and fundamenfundamenttally with the advally with the advenent ot of digitf digitalal trtraditionally caditionally comeomes frs from theom the bring thebring thesse piece piecees ts togeogetherther,,” s” saayys Golz.s Golz. ttechnologieechnologies — such as big dats — such as big data, mobilea, mobile,, perperspectivspective oe of imprf improoving a busineving a businessss UnsurprisinglyUnsurprisingly, this r, this requirequirees a fs a far cloar closserer ssocial media and cloud — that markocial media and cloud — that markeetingting prprococeesss with an implemens with an implementtation oation ovver aer a CIO-CMO rCIO-CMO relationshipelationship, s, so that IT co that IT canan and IT haand IT havve no choice no choice but te but to fo fororge ege evverer longer clonger cyyclecle,,” r” reeflectflects Golz. “Nos Golz. “Now ww wee’’rree truly undertruly underssttand what markand what markeeting isting is cloclosser rer relationshipelationshipss. B. Becher citecher citees thes the in a win a world wherorld where things are things are inse insttanantt —— aiming taiming to delivo deliverer, and ensur, and ensure that this ise that this is adage that markadage that markeetterers knos know that halfw that half whewhether itther it’’s dats data ca consumponsumption,tion, prproperly joined up with the roperly joined up with the reesst ot of thef the their marktheir markeeting inting invveesstmentment is wt is wasastted,ed, acacquisition or analyticquisition or analyticss, people e, people expectxpect businebusinessss. T. This is ehis is especially true asspecially true as but do nobut do not hat havve ane any idey idea which halfa which half.. ansanswwerers immediats immediatelyely. T. To deo deal with thisal with this,, CMOs spend an incrCMOs spend an increeasingly larasingly largege “B“But therut theree’’s no es no exxccususe ane any mory moree. W. Wee IT and markIT and markeeting musting must get get clot closserer..”” prproporoportion otion of their budgef their budgetts ons on knoknow how how tw to meo measurasure the re the reetturn onurn on TTo achieo achievve suce succceessss, IT and mark, IT and markeetingting ttechnologyechnology. F. For moor mosstt, this is no, this is noww 66 eevverything werything we doe do. T. The single biggehe single biggesstt musmust let learn tarn to co communicommunicatate more moree 15%-20%, ac15%-20%, acccorording tding to Eo EY rY reesseeararch.ch. trtrend fend for markor markeeting is tting is to be vo be veryery eeffffectivectively and cely and collaborollaboratate more moree datdata-oriena-orientted,ed,” he s” he saayyss.. Born to be digital | 23

“ Now we’re in a world where things are instant — whether it’s data consumption, acquisition or analytics, people expect answers immediately. To deal with this, IT and marketing must get closer.” Michael Golz, CIO Americas, SAP Digital-ready CIOs focus closely on But this is not just about recognition. Digital CIOs also act on this: 59% say they have a very strong relationship with their CMO, 3driving growth — and the compared with just 37% of IT-intensive industry CIOs. Modern CIOs relationships they need to support need to be true partners with marketing and sales, forming an this. alliance whereby the CSO and CMO deliver insights on customer expectations and interests, and the CIO can deliver on these One of the standout points about the digital-ready CIO is that they through new systems and processes that make the most of these are looking toward the front of the business, seeing how technology insights. can help to drive growth by changing the way the company markets Herman de Prins, the CIO at Belgian pharmaceuticals company and sells its wares. The CIO of a major Chinese insurance company UCB, explains how he spends a lot of time helping to facilitate explains how her firm is working closely with the front office to give multichannel marketing — and making sure the front office them the mobile tools they need to boost sales. Building on this, understands what’s possible. “They also need to think differently in she’s working to improve the analysis and mining of data captured, terms of integrating digital activities into their analog activities. You to gain greater customer insights and design more effective sales need to get them to look at their business in a completely new way, campaigns. “We’ve seen a clear increase in sales efficiency already,” not just automating a particular process,” he says. she says. As a result, the executive management team has now The same need for stronger relationships applies outside the tasked her with applying data analytics to generate new customer business too. CIOs must get closer to the firm’s end customers, insights — and then to work with the business to apply those their needs and preferences. Half (52%) of digital-ready CIOs place insights to sales and marketing, and even product design. “All our a strong emphasis here, well ahead of their IT-intensive industry technology will be leaning toward increasing sales productivity, and peers (37%). “Whenever we’ve asked CIOs, we find that those who giving our agents more tools to use when they are in the field,” regularly meet with customers are still very much the exception,” she says. notes InformationWeek’s Preston. Clearly this implies a much closer emphasis on fostering relationships with the front of the business, rather than focusing predominantly on the back office. “We need to understand the company’s business operations deeply and both its front- and back-end processes,” says the CIO of a major Chinese telecommunications operator. Most obviously, while CIOs often fail to realize the value of their company’s external clients to their careers, digital-ready CIOs are far more engaged here. Nearly twice as many (59% versus 33% of IT-intensive industry CIOs) cite end clients as being strongly important to their career. Many others also realize the importance of roles such as the CMO or head of sales to their career. 24 | Born to be digital

Chart 8 Digital-ready CIOs ensure their Business relationship of CIOs with internal and external stakeholders 4vision is understood. External 94% Direct reports and subordinates The next trait that stands out is the ability to craft a compelling 90% story about how technology can transform the business. This is 75% vital: digital changes the way many businesses work, opening up Chief financial officer (CFO) 63% wholly new possibilities, but people have to buy into this vision, and 75% understand how it might benefit them — in short, CIOs need to be Department heads master storytellers. Not with the aim of selling a fairytale, but 59% 73% rather in creating an exciting narrative that the rest of the business Chief executive officer (CEO) can buy into. 58% 63% Communication is a vital part of any CIO’s role, and one where Chief operating officer (COO) many acknowledge the need for improvement. But the ability to 54% craft a tale of how the business might look and work after a digital 59% Chief marketing officer (CMO) transformation further intensifies this need. “Storytelling is a key 37% skill,” says Diego Calegari, Spanish South American CIO Executive 44% at IBM, who explains that true storytelling requires a deep grasp of Chief sales officer (CSO) 39% the core of the business and how it works, in order to explain how it can change in future. Internal SAP Americas CIO Michael Golz cites examples of CIOs he meets in 52% his peer-to-peer customer conversations, like the aerospace CIO Clients who explains convincingly the impact of harnessing in-flight sensor 37% 44% data to transform their business model, or the medical device CIO Regulators who articulates the impact of information technology on their 31% products to improve the well being of patients, while creating deep 43% customer relationships. “These CIOs clearly know their industry Analysts 33% business processes, the value of collecting data from their 33% products, the business around monetizing that data, and creating Media value-added services. They know how to explain these new 21% Digital-ready CIO IT-intensive industry CIO business models, which may be more profitable than actually building the physical products,” says Golz. “So it’s a true business (Percentage of respondents who have chosen 8, 9 or 10 on a scale from 1 = needs substantial improvement conversation. It’s not about upgrading system XYZ to improve to 10 = absolutely excellent) efficiency by 0.5%.” In particular, a CIO should be able to explain the strategy of the company, the strength of its products, and its go-to-market “ Storytelling is a key skill.” strategy, using the relevant business terms and KPIs. Digital-ready CIOs more often recognize this need: 9 out of 10 cite Diego Calegari, Spanish South American CIO communication and influencing skills as strongly important to their Executive, IBM roles. “Now that technology-driven innovation has become critical to organizational success, there is more pressure on the CIO to communicate that importance,” says Nedbank’s CIO Fred Swanepoel. “It’s about your ability to go head-to-head with business executives in discussions about IT’s role in changing the core of the business. It’s here that I often see the traditional techies struggle.” Born to be digital | 25

“ I spend little time on back office and a lot on what you could categorize as digital.” Herman de Prins, CIO, UCB Swanepoel has sometimes engaged external management Digital-ready CIOs move beyond consultants to help bring a fresh perspective on what the core of operations and infrastructure. the narrative ought to be: “If you are working in IT all day, you’ve 5 got to concentrate on lifting the conversation to a level at which the board can be comfortable. But sometimes the story is just too complicated, and you need some external help to tell it in a Something common among many of the CIOs interviewed for this compelling fashion. That was definitely an inflection point for me.” report is a desire to prevent their roles from being taken over by the An important factor that can further put weight on CIOs’ operations and infrastructure elements. As Sanofi CIO Bruno communication skills is their relative position within the business. Ménard points out, it is a question of CIOs deciding where they This is extremely vital for those CIOs who don’t hold board-level really want to invest their time. “If you want to run the operations positions. With a seat at the top table, you have greater authority to yourself, that is a huge management demand, so it will affect your push through changes directly. But others must rely more on their abilities on strategy and innovation. You cannot do both,” he powers of persuasion, which makes a closer link to the CEO or other explains. key executive stakeholders more vital. At the French-Japanese car This isn’t to suggest that leading CIOs think that operations and alliance Renault-Nissan, Managing Director IT/IS Celso Guiotoko infrastructure are not important, but rather that they see these as makes use of his strong relationship with the CEO, and of more foundational elements that should be run as efficiently as possible, informal approaches, to garner the necessary influence. “The fact to free up their time for the more strategic aspects of their role. that we have the corporate executive cafeteria is very useful for “The first thing for digital CIOs is to move spending away from ‘keep me, because I can sit with some of the corporate officers and talk the lights on’ kind of operational stuff that doesn’t make their about any issues and opportunities, or about how they can get companies any money or serve their customers any better,” argues more value from IT,” he says. “In addition, I have a very good InformationWeek’s Rob Preston. “Those who focus solely on this are communication line to the CEO: we meet on a monthly basis.” just chief infrastructure officers, and that’s not a good long term At the same time, digital-ready CIOs are using media channels to career prospect.” drive influence. You can talk up the potential of IT and to help foster A lot of CIOs agree, noting that many of the traditional IT leaders momentum internally. “That is one of the reasons why we go public they meet at conferences appear to be no more than infrastructure on certain things, so that the media can come back and ask where managers. “They typically don’t come close to having board-level we’ve gotten to on this. It puts a bit more pressure on us to get discussions, and usually lie several layers away from the CEO,” things done,” says Guiotoko. The use of social media can also help notes Zooplus CIO Richard Alan Herz. Nedbank’s Fred Swanepoel to build a greater presence both internally and externally, and to adds: “In our business, sorting out the operational and efficiency make the CIO more approachable. For example, UCB’s Herman de side is just the foundation for reliably delivering excellent client Prins, who prefers to keep work-related topics out of social media, service. We build on that foundation by focusing on innovation to uses his passion for cycling as a source for non-work-related drive sales, deliver product breakthroughs, and fine-tune pricing updates and links them to technology, which in turn has helped him models to influence changes in client behavior.” to forge a range of positive connections across the business. 26 | Born to be digital

“I spend little time on back office and a lot on what you could Chart 9 categorize as digital,” explains UCB’s Herman de Prins. “I made a Priority of tasks compared with five years ago choice not to micromanage projects and get caught up in steering committees and so forth. We do 150 projects per year but I trust my team to manage them well. That frees up my time to do different things, such as being more connected externally and focusing on a few areas that are transformational,” he says. Even Shaping the future Controlling the so, he still finds scope for innovation. For example, UCB’s IT team T of the business impact of IT spend E N with the right on the organization X deployed a new flash memory-based system that boosted the E technology E M C overall performance of the company’s statistical programming by a P 100% U O T I factor of 20. “Is that a back-office thing? I don’t think so, because L O E N efficiency is good for everybody and most importantly for patients.” V 52% E Preparing and 55% Ensuring the D 48% developing the IT and security SAP Americas CIO Michael Golz agrees. He sees that embracing organization needs are up digital has meant a much clearer focus on more radical innovation for change and running elsewhere in the business, rather than on trying to squeeze limited 100% 54% 61% 78% gains from the company’s core IT systems. “You can optimize 48% endlessly, and it’s going to create some incremental improvements, 54% but the real spending is being redirected into platforms, around 68% analytics, big data, mobility and the cloud or whichever area has 81% the highest benefit for your company,” he says. Sustaining and extending the Providing insight This is borne out in the survey results. While for IT-intensive organization's strategies to support business and objectives decisions industry CIOs, the most notable increase in their focus has been on issues relating to ensuring basic IT needs are up and running, E T N N A E B M L digital-ready CIOs have been putting more attention on other E issues, such as enhancing business processes and preparing the organization for change. Even so, they do not forget the operational Digital-ready CIO IT-intensive industry CIO elements — understanding that smooth operational running is what allows them to have other focuses. (Percentage of respondents who have chosen 8, 9 or 10 on a scale from 1= much less a priority to 10 = much more a priority) Nevertheless, digital-ready CIOs do seek out bigger opportunities in IT infrastructure. But with one such opportunity, the cloud, the attraction for many IT leaders is that it has the potential to reduce the time and money spent on systems and infrastructure. Born to be digital | 27

Digital-ready CIOs are courageous Interestingly, just because they additionally have to deliver on innovation, it doesn’t mean that digital-ready CIOs feel that they 6risk-takers. face fewer or lesser challenges on budgets, resources and the lack of an innovation culture. Nearly all CIOs have these concerns. Equally, digital-ready CIOs place no greater emphasis on IT budgets Getting ahead in life often requires a willingness to take calculated and spending than do IT-intensive industry CIOs. They recognize risks, and this is particularly true for digital-ready CIOs. They need that their value comes from focusing instead on other enabling to be brave enough to take a bet on emerging technologies. One of elements of the business — and from figuring out how to reallocate the aspects that sets any IT-intensive business apart from others is any savings from operational IT into new innovation elsewhere. “A that, because IT is a bigger part of the bottom line, it’s immediately key difference in non-IT-intensive businesses is that a lot of the IT a bigger risk for the business — and thus gets closer scrutiny. spending is on operational excellence and cost efficiency; whereas Accordingly, digital-ready CIOs need to be willing to embrace this in IT-intensive firms you’re going to see a much bigger focus on risk in developing a more digital business. revenue generation,” argues the Managing Director IT/IS for This involves a willingness to risk failure: understanding that not all Renault-Nissan, Celso Guiotoko. digital projects will deliver as hoped. As such, CIOs need to Many CIOs face similar issues, but should determine not to be held experiment widely to identify the biggest opportunities for the back from taking risks by these issues. It is in their attitude to risk future. “Digital CIOs need to be more innovative and risk-taking. But that typical CIOs often come unstuck. it’s a real change from the traditional way of doing things, where you argue for budgets, and fill in capital request forms with a business case and so on,” says EY’s Tom Velema. “Many IT leaders are risk averse — they don’t dare to take any step that isn’t proven,” argues UCB’s Herman de Prins. For example, “ Like an iPad that even two-year tight budgetary pressures faced by CIOs the world over are often cited as the reason why a new project can’t push ahead — and are a olds can use by pure intuition, common excuse used by many CIOs to avoid pushing ahead on new innovation or piloting exciting new digital projects. But digital-ready the success of digital CIOs are more often willing to find ways to turn such pressures to their advantage. For example, de Prins has a clear focus on IT transformation is defined by operational costs, which he has cut by 25% since joining the business, but he uses savings here to support his preferred focus the simplicity of it plus a layer on innovation: “If you think I have no cost pressure, then think again. I get beaten up on costs every day. But too many CIOs take of abstraction.” the view that ‘well, I have to cut costs, so I can’t do anything else,’” he says. Ashwin Goolab, IT Advisory Leader Africa, EY 28 | Born to be digital

Could emerging markets leapfrog on digital? One of the exciting prospects digital technology brings is that it could potentially allow emerging markets to leapfrog others. This is most easily seen at an infrastructure level, where adoption rates for mobile connectivity have often rapidly overtaken those for fixed-line connections. Indeed, many emerging markets have been pioneers: Kenya has been the leading country in developing a wholly mobile-based 7 money system, bypassing traditional banks. Across the IT-intensive industries polled, similar potential can be seen in emerging market CIOs. Across a range of areas, they show greater potential to stand out than their peers from developed markets, as our analysis shows: 1. They’re more focused on the strategic elements of the role. About two-thirds (64%) of emerging market CIOs are highly engaged in using technology to reshape the future of their businesses, compared with just 50% of their developed market peers. Similarly, they are also more strongly interested in gaining the chance to influence corporate strategy, whereas developed Chart 10 market CIOs are often more interested in personal The DNA of the digital-ready CIO development. 2. They place less of a priority on the operational elements of the role, and see the most value in innovation. Just 55% of emerging market CIOs think He or she (yes, 13% are women - above the they should focus on operational technology as a average for CIOs overall) is typically 45 years priority, as opposed to 73% of developed market CIOs. of age. Similarly, when asked where they create most value for the business, they are much more likely to point to On average, CIOs have spent a little over things such as product innovation (60% versus 46%). five years in their current roles, although 3. They focus on a different set of barriers. While almost half (49%) have been in their current developed market CIOs worry most about a lack of roles for less than three years. resources and head count, their emerging market peers are more concerned about dealing with a culture that More often they hold either a business-related often lacks a mindset for innovation. degree (52%) or a science and engineering 4. They realize the need for networking, both inside degree (35%). and outside the business. Across a range of roles, emerging market CIOs show a clearer recognition of the need for improved relationships, not least in driving They work hard to foster relationships across their careers, whether that relationship is with the CEO, the business, and see that as important from a the CMO, or is an external relationship with regulators career perspective. and the media. 5. They’re typically more ambitious. Many developed market CIOs appear to be happier with the status quo: They are happy in their work: 64% plan to 73% say they’re very happy with the scope of their role, remain where they are, or move into a compared with just 55% of emerging market CIOs. bigger CIO position, although 23% hope to Accordingly, emerging market CIOs are far more likely run another business unit, or even become to want to move into a bigger CIO role (38% of those CEO. sampled) than to stay in the same position (19%). This compares with 19% and 45% of developed market CIOs with the same responses. Born to be digital | 29

4 n io t c Se Routes to the top: the career paths of digital-ready CIOs The digital-ready CIOs that are most engaged in the business show high levels of satisfaction in their status, career prospects and ability to influence the corporate strategy. These CIOs also show several key differences in their approach to their personal development and career choices, most importantly around ensuring a multidisciplinary approach to their education and work experience. It is clear that digital CIOs take a different approach to tackling their • Their ability to influence corporate strategy, which is vital given roles. But this research also reveals how they actively plan and how much this is a core part of their job: 60% find this strongly shape their career paths — and how much they enjoy their jobs. satisfying, compared with 45% of IT-intensive industry CIOs. High job satisfaction • The potential for future career development: 54% are strongly The first thing to point out is that digital-ready CIOs appreciate the satisfied, compared with 43% of IT-intensive industry CIOs. opportunity they hold: 64% are either content to stay in their • Their status: 59% are strongly satisfied with how others in the current position, or are simply seeking out a bigger CIO role. This is business perceive their role, versus 45% of IT-intensive industry a similar proportion to other IT-intensive industry CIOs, but digging CIOs. This is unsurprising, given that they are more often called deeper reveals a much stronger core satisfaction with their upon for advice by executives in the rest of the business. positions and prospects. Across all elements of their jobs, they express greater satisfaction with their work than their IT-intensive industry peers do. This is especially striking in three areas: 30 | Born to be digital

Darryl West’s udy path to the top t job at Barclays e s as Darryl West, CIO, Barclays Group C Darryl West joined Barclays, one of the world’s biggest banks, as its new CIO in November 2013. His placement there was the culmination of a long series of career moves that had started back when he chose to do an IT degree, and pushed himself to study accountancy at the same time, which eventually led to his qualifying as a chartered accountant (CA). He cites this choice to study both IT and “ Our company has a personnel accountancy as one of the crucial decisions early in his career. Another was his choice to join a global consulting arrangement mechanism that firm, which gave him international exposure and significant personal and professional development allows a CIO to switch roles with opportunities. “It was one of the key points of my life,” he says — not least in doubling up a new job with sideline other executives.” classes to finish his CA studies. “I’m biased here, but I believe that accountancy training is one of the best ways Anonymous, CIO, leading Chinese telecommunications company to learn how a business operates,” he says. Other key choices came into play later on. He took an opportunity to transfer to France, which forced him to embrace a new culture and language, and gave him Chart 11 experience of a major IT project for the French financial Satisfaction with aspects of CIO role market. “It was one of those sink or swim moments, but adaptability has been a key theme throughout my career,” 73% says West. This led to an operations role back in the UK The remit and range of responsibilities with US bank JP Morgan. This gave him significantly 67% wider exposure to how a finance business actually runs, The ability to influence broader 60% and led to senior placements in Frankfurt on the bank’s company strategy 45% local management committee — and then later in New The compensation, 60% York and London. A further switch in role gave him benefits and incentives 53% control of the profit and loss business unit, and direct People's perceptions of the 59% exposure to the front end of the business, before moving role of a CIO 45% back into IT again. “It really helped me to understand the 54% dynamics of the business world, including the customers The potential for career development and marketing side,” he says. 43% 48% Later positions at National Australia Bank and Lloyds The work-life balance Group gave him the chance to develop his influencing 40% The allocation of resources such as 37% skills and his ability to manage organizational politics — head count and budget to IT 33% not least when responsible for driving Lloyds’ integration with HBOS, one of the biggest IT jobs in the UK over the Digital-ready CIO IT-intensive industry CIO past decade: “By this point, the functional skills are a (Percentage of respondents who have chosen 8, 9 or 10 on a scale from 1= not satisfied at all given. It’s more about how you survive the organizational to 10 = absolutely satisfied) politics and relationships,” he says. Born to be digital | 31

Career lessons from digital-ready CIOs Digital-ready CIOs are willing to leave For other IT leaders seeking to achieve similar outcomes in their their home turf. careers, three key points stand out in the approach and career choices of digital-ready CIOs: They show a greater enthusiasm to spend time elsewhere in the Digital-ready CIOs are far more open organization to get a deep understanding of the business. Nearly half (48%) believe that experience in another function is vital, to taking advice and trying out new compared with 33% of IT-intensive industry CIOs. Similarly, a ideas. greater proportion believes that it is necessary to have spent time in other companies, and that it’s important to have been on international assignments. The CIO of a major Chinese “CIOs have to be open to new practices. To some extent, the CIO telecommunications firm explains how, having initially graduated in has to showcase new technologies, so it’s a permanent challenge engineering, her career path involved her becoming the head of a for CIOs to keep themselves occupied on new things,” says Sanofi non-IT department, as well as the CEO of a subsidiary firm, before CIO Bruno Ménard. Mail.Ru CIO Alexander Gornyi also keeps an moving into her current role. This is explicitly supported by her open mind about new things to learn: “I love what I am doing, and I firm: “Our company has a personnel arrangement mechanism that am good at it; however, I continually strive for improvement. I allows a CIO to switch roles with other executives,” she notes. believe a willingness to learn is an absolute must,” he says. Furthermore, among digital-ready CIOs, nearly one in two (46%) Chart 13 remark that they could use some advice on their career progression, Requirements for becoming a CIO compared with 36% of IT-intensive industry CIOs. They also show a greater appetite for input from other sources, whether from their 94% peers, external consultants, the print media, online webcasts or Motivation and hard work others. 86% Involvement in supporting major 67% business projects 67% They are strongly interested 56% in building their career upon Degree and training in IT 47% management skills. Degree and training in business 49% Forty-nine percent of digital-ready CIOs hold a degree in business administration and management 37% and 24% even an MBA, compared with 14% of IT-intensive industry Experience in another 48% CIOs. Similarly, a higher proportion of them (35%) hold a degree in business function 33% science or engineering. And almost half of them (49%) believe that 38% a business degree or MBA is strongly required for the CIO role, International assignments compared with 37% of IT-intensive industry CIOs. 28% Career moves in different 37% Chart 12 companies 25% Discipline of education Digital-ready CIO IT-intensive industry CIO (Percentage of respondents who have chosen 8, 9 or 10 on a scale from 1 = not required at all 49% to 10 = absolutely required) Business 44% Not only a CIO’s responsibility 38% IT 41% All of this highlights a further important point in CIOs’ career paths, 35% but one that is less often considered. It is just as much the firm’s Science responsibility to find and develop tomorrow’s digital CIOs, as it is 31% the responsibility of those working in IT to embrace and pursue this 5% Other path. “Firms know that many CIOs are not typically the most 5% flamboyant, outgoing, risk-taking types. So companies may need to Digital-ready CIO IT-intensive industry CIO rethink their hiring processes to seek out a different caliber of (Percentage of respondents who obtained a level of education in this discipline) candidate,” argues EY’s Tom Velema. “If their business focuses on CIOs who keep the lights on, they shouldn’t be surprised that they’ve not found their change leaders.” 32 | Born to be digital

CIO careers in focus EY’s analysis of the career paths of CIOs for the top 25 IT-intensive industry companies — determined by revenue or assets — confirms these findings. Although backgrounds and specific career paths vary slightly across each sector, several overall observations can be made from this global pool of 100 leading CIOs. Multidisciplinary studies External advisory or directorship positions The majority hold at least a master’s-level degree, but In keeping with digital CIOs’ tendency to actively engage very often in a field outside IT. Whether it is an MBA externally, many of them hold an external post of some or an MSc in engineering, economics or physics, there kind, or several such posts. Dr. Alan Hippe, the Chief is typically a dimension beyond IT to their studies. For Financial and IT Officer of Roche, a Swiss Pharmaceutical example, Jeanette Horan, CIO at American IT company company, is an alumnus of the World Economic Forum’s IBM, did a bachelor’s degree in mathematics, before (WEF) Forum of Young Global Leaders and serves on the later adding an MBA to her qualifications. Similarly, the supervisory board of German engineering company Voith. CIO of a leading Chinese bank holds degrees in electrical Mark Sunday, the CIO at US computer company Oracle, is engineering and in software, along with an MBA. In the also the Vice-Chairman of the Utah Technology Council, telecommunications sector, one in five of these leading and a trustee of the state’s Economic Development CIOs hold a PhD on top of other qualifications. Corporation, as well as an advisor to Epic Ventures, a venture capital firm, and an advisory board member of the David Eccles School of Business. Cross-sector experience Shorter tenures Many leading CIOs have spent time working in different As a result of their greater willingness to pursue new industries. For example, Adriana Karaboutis switched opportunities, many of these leading CIOs have been in from a career in automotive, with roles at Ford and their posts for a relatively short amount of time. In the General Motors, to become the CIO of Dell, a US-based IT sector, for example, over half took up their current end-to-end solutions company. Anders Thulin, the CIO at roles in 2010 or later. And this is even more prevalent Swedish telecommunications firm Ericsson, had worked in telecommunications, where 60% have taken up in consulting, at McKinsey & Company. CIOs working their current roles since 2010. Across the IT-intensive in IT are more likely to have made such switches, but industries, over half the CIOs surveyed had been in their these switches are common throughout all four of these roles for less than three years. IT-intensive sectors. However, CIOs working in banking are much more likely to have had a prior role in financial services, rather than in a wholly different sector. Born to be digital | 33

t 14Career paths of leading CIOs Char Fred Swanepoel Celso Guiotoko Richard Alan Herz Michael Golz Philipp Erler Nedbank Renault-Nissan Zooplus SAP Zalando 2008 – today 2009 – today 2012 – today 2003 – today 2010 – today CIO, Nedbank Managing Director CIO, Zooplus Senior Vice President CIO, Zalando IS/IT, Renault-Nissan & Americas CIO, SAP 2008 2007 – 2012 America, Inc 2008 – 2010 Divisional Director: 2006 – 2009 Consultant Business Geschäftsführer, Group Software Services, Corporate Vice and Information 2009 – 2011 Kontoblick Nedbank President Global Strategy, Capgemini Head of Global Information Systems, Consulting Application Services, 2007 Renault-Nissan SAP AG Advanced Management 2007 – 2012 Programme, Harvard 2004 – 2006 Post graduate 2002 – 2003 Business School Vice President, Global Management, Otto- Vice President IT Information Systems, Friedrich-University Infrastructure, SAP 2005 – 2007 Nissan Motor Co. Bamberg America, Inc Divisional Director: Project & Programme 1997 – 2004 2002 – 2006 1998 – 2002 Management, Nedbank Head of Consulting Consultant, Centrum Global IT Director, SAP Services, i2 für betriebliche AG 2004 Technologies Informationssysteme Divisional Director: 1991 – 1998 Finance, Risk & 1996 – 1997 2001 – 2002 Head of Information Compliance, Nedbank Director of Information Product Portfolio Management, OTTO Systems, Toshiba Manager, Atraxis Group 2002 – 2003 America Electronic (Swissair) General Manager: Components 1987 – 1991 Programme Integration, 2000 – 2001 Bachelor in Business Nedbank 1986 – 1988 Consultant Strategic & Information Assistant Professor Product Management, Technology, European 1996 – 2002 for IT, Universidade Lufthansa Systems Business School Assistant General Estadual de Sao Paulo Oestrich-Winkel Manager, Nedbank 1993 – 2000 1985 – 1986 Master in Business 1988 – 1996 Anderson Consulting Informatics, Otto- General Manager, Small Friedrich-University Business Development 1983 – 1985 Bamberg and Friedrich- Corporation Bradesco Brazilian Alexander-University bank, Civil Engineering Erlangen 1988 – 1996 Escola Politecnica, General Manager, Business Accounting Science, Partners Universidade de Sao 1992 – 1995 Paulo MBA in International Finance & IT, University of the Witwatersrand 1983 – 1986 B Com (honours) Finance, Accounting & IT, Stellenbosch University 34 | Born to be digital

Herman de Prins Alexander Gornyi Darryl West Bruno Ménard Diego Calegari Lars Mathiesen UCB Mail.Ru Barclay’s Sanofi IBM Nykredit 2009 – today 2012 – today 2013 – today 2011 – today 2013 – today 2002 – today CIO, UCB CIO, Mail.Ru CIO, Barclay’s Group Group CIO, Sanofi Spanish South CIO and Executive America CIO Vice President, 2007 – 2009 2010 – 2012 2006 – 2013 2004 – 2011 Executive, IBM Nykredit Vice President Head of ICQ, Mail.Ru Various positions, Vice President IT International, including Group CIO, Information 2010 – 2012 1997 – 2002 Medtronic 2007 – 2010 Lloyds Banking Group Solutions, Sanofi- Latin America HR Executive Vice Deputy CEO, Accenture Aventis Transformation IT President Retail 1995 – 2007 Media World (part of Leader, IBM Business and Director International RosBusinessConsulting) JPMorgan Chase 2001 – 2004 Development, IT, Guidant & Abbott Vice President 2006 – 2010 Nykredit Vascular 2006 – 2006 National Australia Information Spanish South Director of Software Group (Europe) Systems, Sanofi- America Integrated 1991 – 1997 Development Fellow, Institute Synthelabo Supply Chain Leader, CEO Nybolig Retail Department, of Chartered IBM Estate Agency, Rambler Internet Accountants of 1998 – 2001 Nykredit Holding Australia (ICAA) Director of 2002 – 2006 Resources, Sanofi Global Logistics 1982 – 1991 2000 – 2006 Bachelor of Winthrop Americas IT Leader, Various executive Developer, Senior Commerce IBM posts at Nykredit, Developer, Head of with majors in 1995 – 1998 primarily on the Mail Development Accountancy and General Manager 1999 – 2002 business side within Department, Mail.Ru Computer Science, Philippines, Sanofi- Various leadership Nykredit retail Deakin University Winthrop positions in Global customer segment 1995 – 2000 Logistics IT, IBM Latin and Nykredit estate Computer Science, 1994 – 1995 America agency services, Lomonosov Moscow General Manager Nykredit State University (MSU) Singapore, Sanofi- 1994 – 1999 Winthrop Various positions in 2011 – today Global Logistics IT, Member, IT think tank 1983 to 1986 IBM Argentina “Denmark 3.0” Bachelor in Accounting and 1990 – 1994 2010 – today Master in Finance Bachelor in IT, Member, National IT ESC Lille School of Universidad del project counsel Management Salvador 2006 – 2010 Chairman, CIO Innovation Forum 2006 – 2009 Chairman, DANSK IT 1975 – 1982 Master of Economics, University of Aarhus 1989 MDP program, Cranfield University Born to be digital | 35

n io us l c n o C Preparing for a digital business In recent years, the rollout of digital technologies has gathered momentum across nearly every industry. The early pioneers of digital have shown the disruptive potential that these tools hold — from new ways to communicate with customers, through to wholly new business model opportunities. For CIOs, all this brings new demands and Tasks at a strategic level pressures to which they will have to react. In particular, successfully dealing with the digital revolution requires a far stronger focus on the strategic elements of the role as Pushing the digital Digital, in particular, No CIO can get away opposed to the basic execution chores. This transformation agenda provides wide-ranging new from operational and shift in emphasis can be seen in the way that forward requires a opportunities to deliver infrastructure issues digital-ready CIOs set their priorities. While compelling and credible radically more efficient altogether. But leading CIOs mastering the basic execution, they spend vision, and understanding processes, as well as wholly ensure that operational less time on it to free up capacity to do more the necessary steps to new products and services. issues are a side dish, not achieve it. But to truly deliver on this, the main meal, in what on enablement and corporate development. you’ll need a firm grasp of they serve up to the rest From our interviews with leading experts and the corporate business and of the business. Free CIOs, we gathered advice and guidance on onal agenda operating model. yourself from these issues how to prepare for a digital world — and to s so you can truly focus on transformation. stand out from your peers. None of these steps is inaccessible to any sufficiently motivated CIO, or aspiring CIO. The question, as ever, is whether you have the courage to pursue them. Are you ready our perGive a detailed vision Prioritize innovation Don’t let operational to act? Y for how technology wherever possible, at IT overwhelm you can transform the both a process and a business — and a plan business model level to implement the transformation 36 | Born to be digital

Steps to setting up a digital enterprise 1 Set up the right architectures for growth 4 Understand strategic alignment with the rest of the business CIOs taking the lead on digital need to enable the rapid assembly Digital technologies have a huge potential to change the underlying of new ideas and business initiatives. “You can’t put up the operating model and business processes of the company. Therefore, CIOs regular hurdles you normally do for any sort of new functionality, must have a close understanding of these aspects. so you need a foundational architecture — for mobile, cloud, data, applications, and so on. If you don’t, you wind up connecting one dot to the next, and you get a spaghetti mess,” argues David al agendaNichols, Americas IT Transformation Leader at EY. 2 Get control of your data 5 Take a fast, multidisciplinary approach to managing new projects For the past two decades, CIOs have been largely focused on As a wave of new digital ideas emerges, CIOs will have to ensure that a application and infrastructure delivery, ahead of data. But a shift lot of different internal functions and third parties can interconnect. “This echnicinto the cloud reduces the emphasis on the application front, and demands rapid-assembly teams that represent views from across the makes data far more important again. business, including marketing, finance and IT,” says Dave Ryerkerk, Global IT Advisory Leader at EY. our t3 Set out the relevant standards 6 Plan the sequencing and pace of change Y Digital transformation requires to radically simplify the business CIOs need to balance any new digital opportunities against their associated and to change the mindset around product development. New risks. While it may make a lot of sense to move email and CRM systems products and services should not be introduced unless the quickly to the cloud, it’s a much more involved decision to know when to underlying technology is available to efficiently support these. do the same for a company’s core financial systems, such as their general CIOs will have to provide some foundational standards to guide ledgers. Getting the timing right will be vital. technology selection. These will need to cover performance requirements, along with legal, security and other aspects. Tasks at a personal level Digital technologies hold It is human nature to be Embracing new technology Many leading CIOs rarely Consider other ways to the promise to make IT a swept up by a compelling involves a leap of faith. But, spend their entire careers develop a more wide- genuine source of growth. storyline and the too often, CIOs get caught in one place, but hop ranging background to Getting this right, however, possibilities it contains. up in the downside to new around to gain exposure to showcase your skills in will require you to build The best CIOs are able to developments, worrying different experiences and another light. Many leading tight relationships across provide a narrative about IT about the small chance approaches, developing CIOs take non-executive the front office — starting that the rest of the business of failure, rather than the expertise along the way. Be directorships at other firms, with the CMO and extending can buy into — and then use potential to transform the open to these possibilities, or have joined external to the end customers. it to extend their influence business. Have courage. including ones that take you committees or think across the organization. into wholly new sectors. tanks. Others do MBAs to widen their educational backgrounds. All these help to develop a more powerful contact book. Build close Be a compelling Be willing to take Be willing to move Widen your resume relationships with storyteller risks around, across the front of the both functions and business companies Born to be digital | 37

Demographics About the research The research draws on a telephone survey of 166 (information) technology leaders from a range of IT-intensive industries, as these are the firms where CIOs are likely to Board membership Gender have the greatest scope and widest remit in their roles. The global survey, which spanned key markets across Europe, the Americas, Asia, the Middle East and Africa, focused 47% primarily on large firms: 27% had annual revenues of between No US$500m and US$1b, and the rest were larger, including 20% with revenues of at least US$10b. 53% We also conducted detailed interviews with a range of CIOs Yes and IT experts, to add additional context to our data and findings. 88% 12% We focused on those sectors independently identified as Male Female being the most IT-intensive, in terms of annual spending on IT as a percentage of revenue. These sectors included technology (including hardware, software and other IT services), financial services, life sciences, telecommunications, online and e-commerce. Job title In addition to this survey, EY conducted an analysis of the 41% career paths, education and background of over 100 leading Chief information officer (CIO) CIOs, representing the top 25 largest companies — 37% determined by revenue or assets — in four IT-intensive IT director sectors: IT, telecommunications, life sciences and banking. Head of IT 7% IT manager 3% Chief technical officer (CTO) 2% General manager IT 2% Vice president IT 1% Other 7% Age Time in current role 45% 30% 21% 8% 17% 3% 2% 46% 18–29 years 30–39 years 40–49 years 50–59 years 60–69 years Less than 1 year 1–3 years 4–6 years 12% 17% 7–9 years 10 years and more 38

Highest qualification Sector Management 48% 23% PhD in management or 1% Software, hardware and computer services business administration Demographics MBA 15% 19% Master's degree in management or 23% Banking and financial services business administration Bachelor's degree in management or 9% business administration 14% Telecommunication operators and services IT 43% PhD in IT 1% Chemical, bio- and medical technology 8% Master's degree in IT 18% Bachelor's degree in IT 24% Semiconductors and 8% telecommunications equipment Science and engineering 30% PhD in science and engineering 3% Transport and logistics 7% Master's degree in science 12% and engineering Bachelor's degree in science 15% E-commerce, internet and social media 6% and engineering Other 7% Media and televison 4% Other university degree 4% Other non-university degree 1% 1% Cable operators and services Other 1% No answer 1% Other 10% Worldwide number of employees Global annual turnover Up to 249 7% US$500m-US$999m 27% 250–499 2% US$1,000m-US$4,999m 42% 500–999 2% US$5,000m-US$9,999m 11% 1,000–1,999 4% 1,500–1,999 4% US$10,000m-US$19,999m 10% 2,000–4,999 22% US$20,000m and more 10% 5,000–9,999 17% 10,000–49,999 22% 50,000 and more 19% Location of headquarter List of countries Argentina 1% Lithuania 1% Australia 2% Luxembourg 2% Austria 5% Mexico 2% Brazil 4% Netherlands 2% Belgium 2% Nigeria 1% Czech Republic 1% Norway 1% China 1% Poland 1% Canada 6% Portugal 1% Denmark 2% Russia 7% Finland 1% Slovakia 1% France 1% South Africa 4% Germany 4% Spain 3% Greece 2% Sweden 4% India 6% Switzerland 2% Iran 1% Turkey 1% Israel 1% United Kingdom 5% Lebanon 1% United States 19% 39

Endnotes 1. “Embracing digital technology,” MITSloan Management Review, MITSloan, 2013. 2. Hunting and harvesting in a digital world: The 2013 CIO Agenda, Gartner, 2013; Taming the Digital Dragon: The 2014 CIO Agenda, Gartner, 2014. 3. The digitisation of everything: how organisations must Further reading adapt to changing consumer behaviour, EY, 2011. 4. “5 Facts about Chief Digital Officers,” by Dave Aron, Gartner, 6 November 2013. 5. The DNA of the CIO, EY, 2012. • Ready for take off? How to make the business fly, EY, 2014. 6. “Marketing’s two-headed beast,” 5 insights for • Designing your customer experience using digital executives series, EY, 2013. analytics, EY, 2013. 7. “Why does Kenya lead the world in mobile money?,” • Digital data opportunities: using insight to drive The Economist, 27 May 2013. relevance in the digital world, EY, 2011. • “Predictive analytics: a CIO’s key to the boardroom”, 5 insights for executives series, EY, 2013. • The digitisation of everything: how organisations must adapt to changing consumer behaviour, EY, 2011. 40 | Born to be digital

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