The remit of CIOs (Chief Information Officers) in emerging-market firms is set to broaden over the next few years to include company-wide strategic responsibilities, according to new research by the Economist Intelligence Unit. The report, Corporate CIOs in emerging markets: an evolving role, sponsored by Oracle, examines the expanding role of corporate CIOs in the emerging markets of Central and Eastern Europe (CEE), the Middle East and Africa. It identifies the factors that are both encouraging and inhibiting this rise, and explores the ways in which the three regions differ from one another.
As emerging-market companies compete aggressively for market share, they are turning to IT departments to provide them with a competitive advantage. As IT is recognised as a driver of operational efficiency, CIOs are being called on to contribute to company profitability and growth. They are moving out of back offices and into corporate boardrooms, rising to leadership positions within their organisations.
This trend is set to continue. Of the 366 senior executives of emerging-market firms surveyed by the Economist Intelligence Unit for this study, 76% expect their CIOs' role will expand to include business-wide strategic elements over the next year.
The report was based on four case studies and in-depth interviews with nine experts and senior executives in the three regions. Following are the key findings of the research:
- CIOs are now a fixture on corporate boards. During the past three years, CIOs in emerging markets have raised their profiles and broadened their remits within their companies. A majority of emerging-market CIOs are by now members of their companies' boards and are specifically tasked with helping to formulate and meet strategic objectives.
- CIOs are contributing to operational efficiency. As part of introducing complex IT systems company-wide, many emerging-market CIOs are becoming "chief process officers"-responsible for streamlining business processes, standardising procedures and improving efficiency. "The CIO is the single person with a clear picture of all the processes," says one CIO interviewed for this report.
- IT is becoming a key part of strategy-making. The changing role of CIOs is helping companies to harness IT to broader company goals. Three years ago, only 36% of emerging-market executives thought IT was well aligned with their company strategy, compared with 62% today. A growing number of CIOs also have general management and financial backgrounds, in addition to technical skills, but the added responsibility comes at a price: CIOs tend to find that their practical technology knowledge atrophies.
- Emerging-market CIOs face different obstacles to those faced by their counterparts in Western countries. They generally have to operate in less stable environments, and experience frustration in having to educate fellow executives on basic IT issues, especially security. However, they are less encumbered by legacy views that see IT as a cost centre, and the CIO as mere implementer.
- Africa leads the pack. Of the three regions under study, organisations in Africa seem the most advanced in terms of expanding the role of the CIO, followed by those in the Middle East. In general, CEE organisations lag behind those in other regions in terms of modernising internal processes and broadening the remit of the CIO.
- Change is fastest in small companies and professional services. These changes have occurred most rapidly among smaller companies (those with an annual global revenue of below $100m), where CIOs can more easily gain a company-wide purview, and in sectors that rely heavily on sophisticated IT, such as telecommunications, banking and other financial services, and professional services, such as outsourced IT and human resources (HR) services.
- CIOs budgetary control remains weak. CIOs' budgetary control over major IT investments typically lags behind their broader responsibilities. In general, emerging-market CIOs struggle against regular financial setbacks, which cause companies to focus on immediate survival, the limitations of the CIOs themselves in terms of background, difficulties in recruiting sufficient IT talent, and a strong legacy of viewing IT as mainly an enabler of other corporate functions, rather than a profit contributor in its own right.
Corporate CIOs in emerging markets: an evolving role is available free to download
