The Chief Information Officer has had his day

Zurich, 9 November 2011 - In the opinion of Ronald Hafner, CEO and co-founder of Lodestone Management Consultants AG, the results only lead to one conclusion: “In order to be able to handle the challenges and tasks of the network age that lies before us we need a new generation of CIOs.” According to Hafner, their main task will lie in the secure integration of new, mostly Internet-based technologies, applications and devices in present client-server structures. “The CIOs of the future must align flexible architectures, different platforms, network-oriented services and collaborative process structures on a global scale,” believes Hafner.

Network age redefines role
These findings are based on the one hand on the experience Lodestone has gained from over 200 projects with which it has provided strategic assistance over the past five years. On the other hand, they also rely on the results of studies carried out from 2007 to 2011 that the consultancy firm evaluated as part of both primary and secondary research – including a study – “The future CIO’s role” – by the Ingolstadt University of Applied Science, which conducted a survey between March and June 2011 of CIOs from manufacturing, service and commercial companies with more than 1,000 employees and a turnover of more than one billion euro. The following four changes will accordingly bring forth a new generation of CIOs:

1. From ERP to GRP – replacement of local business software by group-wide Global Resource Planning
   Already today the majority of IT projects consist of the consolidation of ERP system landscapes. Because of business models that are construed on a global scale, this trend will continue to grow. Most multinational companies will in the near future be using fewer than five ERP systems. In the medium to long term the tendency will even be towards a Global Resource Planning (GRP) System. The consequences: CIOs must deal increasingly with the associated process integration across the different regions, divisions and national borders. In addition they will standardise business roles – in financial management, in purchasing and in human resource management – and will increasingly combine them in international service centres, or so-called shared services centres. These will be standard throughout the group and this generally increases efficiency and leads to lower costs.
2. From EVC (Enterprise Value Chain) to NVC (Network Value Chain) – the network becomes responsible for the value contribution of the IT
   Value will in future be created in association with customers, partners and suppliers. Companies will, therefore, have to involve them more in their core business processes. As a result the previous value chain (Enterprise Value Chain) will expand into a value creation network (Network Value Chain). In order to be able to maintain and, in a second step, increase the quality of products, services and processes, the IT must be able to meet the high demands of process and technology integration. The CIOs will have to deal more with a variety of external applications and infrastructures.
3. From project to portfolio – the evaluation and management of elaborate, group-wide IT portfolios, instead of just the prioritisation of projects
   The present network age is characterised by heterogeneous technologies such as smartphones, tablet PCs, Internet applications, blogs, social networks and virtual data management. Around 50 new technologies and trends will go hand in hand with this. The age of company-wide standardised clients is over. This increasing technologisation requires systematic portfolio management in order to assess the economic benefits and the risks of technical innovations. The CIOs need the skills to initiate and implement those projects that support company strategy and make a contribution to company success.
4. From “secondary” to “primary” – value contribution shifts IT from support function to core function
   In future all core processes in the value chain will to a great extent depend on IT. The degree of penetration will increase so that IT will no longer have merely a supporting function, but will itself become part of the core business processes of the company. The CIO will therefore no longer be just a “cost centre”, but will have to provide evidence of the value contribution, so that investments achieve a corresponding Return on Investment (ROI). So the development is mapped out: the CIOs must report directly to their CEOs. This is the only way that they can be drivers of value-creating innovations and can position themselves as such.

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