Optimism for the coming year may stem from CIOs becoming business managers.

CIOs are surprisingly optimistic as they head into the new financial year – a sign that the changing role of CIOs is continuing to develop into business leaders and of their confidence about the increasing bond between technology and business success.  

Research from Gartner Inc conducted internationally and including Asia-Pacific CIOs, noted “there is a growing appetite for technology among boards and senior leadership teams, and they expect CIOs to be playing a strategic role in the investment decision making”. That is a development that Laurence Chapman, General Manager of Spark Group Sales (Wellington & the South Island) says is already beginning to happen in New Zealand.

CIOs began their existence as IT managers, looking after procurement and operations. In recent times, however, some have evolved into not only the force driving their organisation’s digital transformation but also into business leaders.  

CIOs, he says, understand the importance of emerging technology and digital transformation – and know that technology will fuel the future economy, with companies that lead the way becoming leaders in the digital age. CIOs, as change leaders, are heading these efforts – or should be. They have to be tech-savvy but also business-savvy to in a modern organisation. IT expertise is sufficient for IT operations managers, but not for strategic business leaders or transformational leaders.

In these digital transformation days, CIOs will no longer be the IT person in the executive offshoot who provides infrastructure and support to the business. Instead, the CIO will need to sit at the table alongside the C-suite as a member of the business leadership team.

In that context, Chapman cites Gartner global research “CIOs need an IT financial plan, not just an IT budget” that notes CIOs “must construct a strategically aligned, contextualised IT financial plan to demonstrate IT’s financial value beyond the annual budget cycle.”

 Laurence Chapman, General Manager of Spark Group Sales (Wellington & South Island). Photo / Supplied 

Chapman says this resonates with many of the organisations Spark works closely with – and may partly explain the optimism he is hearing in his conversations with CIOs as the new financial year dawns.

“As we hear more about dealing with technical debt, coupled with pressures brought about first by Covid, and now weather events and rising costs, we’re learning that an incremental approach doesn’t cut it in today’s environment,” he says. “Boards and senior executives are keen for transformational change that goes beyond annual budgets; they expect CIOs to lead the way.”

That’s borne out by four IT leaders from the utility, construction, telecommunications, and construction sectors who work with Spark.

The Gartner research found that “many CIOs remain under pressure to stabilise IT costs or even reduce them even as enterprise-wide technology investments increase and require additional funding for foundational and new IT capabilities”. It therefore recommends CIOs “demonstrate the value of IT’s current spend and future, long-term investments against business outcomes by aligning IT’s planned initiatives and spend to achieve the enterprise strategy.”

Brian Northern, CIO at Fulton Hogan, says aligning IT with business strategy means Fulton Hogan is increasingly being evaluated on the technology innovation it can bring to a project.

“We are no longer just a construction company that physically builds a bridge or a road,” he says. “While we are doing that, we are also digitising as much as possible as well as creating a digital twin as part of the job.”

Steve James, General Manager of Technology at Countdown, says it’s necessary to be crystal clear on costs. Data tools that analyse where IT costs are occurring in the business – in his case, often in the supply chain – are critical when showing the alignment between tech spend and business benefits.

Meanwhile Michael Cooper, Chief Technology and Improvement Officer at First Gas says: “Budgeting on a 12-month basis is probably no longer appropriate – you are starting to look at your budget in a longer ‘lifecycle-orientated’ way.”

 Gavin Costello, Chief Digital Officer at Network for Learning, the fourth-largest network operator in New Zealand connecting schools and kura across the country, says his team are looking as far ahead as 10 years: “You need to have a longer view, understand your tech architecture, your roadmap, and change points – and have an eye on your environment, what things are happening, how things might change.”

Chapman says: “We consume the solutions we share with our business partners, so we know first-hand that now, more than any time in the past 20 years, is the time for transformational change. In the past we mostly worked with CIOs, and maybe a few CFOs – now we work right across the organisation. This means we understand how critical it is for CIOs to ensure everyone understands their goals, objectives and strategies.

“Working across the business on opportunities to transform can bring new budget from the business areas that benefit, expanding the traditional IT budget. Delivering on ROI is critical in gaining confidence from the board and the business to continue to invest.”

Read more from Spark’s Laurence Chapman on shaping a compelling IT Financial plan and access the full Gartner report here.