The DNA of the CIO. Opening the door to the C-suite. A consumer products sector perspective

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1 The DNA of the CIO Opening the door to the C-suite A consumer products sector perspective

2 The DNA of the CIO provides fresh insight into what it takes to be a leading CIO today. This insight is drawn from interviews with today s CIOs and analysis of how they are perceived by the rest of the C-suite. It explores the expectations and aspirations of those in the job and the skills and relationships that they need to master in order to succeed. It is one of a series of EY thought leadership programs that seeks to understand the support, skills and capabilities required of C-level executives as their roles evolve. This EY worldwide report is based on our analysis of 301 CIOs, including 59 from within the consumer products sector. All respondents were ultimately responsible for the IT function in their organizations. A further 40 respondents from across the rest of the C-suite were also polled, to provide a perspective on how the CIO is perceived by the rest of the executive management team. Finally, a program of in-depth interviews with CIOs and IT directors allowed us to explore the distinctive qualities of this community of professionals. Consumer products: the pulse of the economy While the consumer products industry is hugely diverse, it is consistent in almost always having IT at the core of its business. Without the large-scale enterprise resource planning (ERP) systems run by IT, such firms could not run the sprawling product supply chains that stretch around the world. These systems also help the company keep pace with regulatory demands, such as detailing the raw materials that make up a product, and the origins of such goods. All this is necessary to keep pace with a range of demands: pressure to help get products to market faster, increasingly rapid product life cycles and the challenge of keeping pace with growth within new emerging markets. Consolidation onto a few ERP platforms, common data standards and one system thinking have been long-term and consistent trends. But while the industry s CIOs have typically run a tight ship on issues, they now have to grapple with a new set of challenges, as technology evolves and shakes up traditional approaches. For one, gaining a better understanding of consumers demands new ways of monitoring and analyzing social media. Further, the ongoing consumerization of IT makes the rest of the board far keener to challenge the CIO on technology-related issues, a sharp reversal from the past. Also, as retailers gain more power, especially online, consumer products firms are having to rethink the ways they gather market-pricing information, which upends the traditional control that CIOs used to have here. All of this renders the historic laser-focus on the firm s ERP system somewhat obsolete: it remains necessary, but far more needs to be considered beyond the business firewall and outside of the CIO s immediate control. This is tough, but it also makes the consumer products sector a huge source of opportunity for creative, business-oriented CIOs.

3 The DNA of the CIO For many years, CIOs from across all sectors have been talking about becoming a true partner to the business and the executive management team. But, as our research in The DNA of the CIO highlights, relatively few have actually made the leap. In the consumer goods sector, however, this job description comes more naturally to the CIO. In line with the evolution of the role of IT within the sector overall, CIOs here have gained a closer appreciation for how to deliver a more strategic input to the business. But, with their clear aspirations for even bigger influence, they still have more to learn.

4 Motivated to make a difference Consumer goods CIOs see significant potential to add value to the business, and are strongly motivated to make a difference. 1 There is also clear scope for them to build on a role that is already well regarded. Nine in 10 are in clear agreement that they help the business with its challenges, among the highest of all sectors. When asked why, CIOs in this sector believe they have a closer influence on business strategy than their peers elsewhere. This fits with their typically business-oriented background. There are more CIOs with an MBA here than any other sector polled. A wide-ranging remit, with a clear focus on strategy and innovation Seven in 10 CIOs in this sector enjoy the scope and remit of their role. This highlights the strong position they hold, with a wideranging influence across the business. From business strategy and IT innovation through to data gathering and analysis, they have pushed hard to prioritize these aspects of the role not least due to the clear pressures on their role to do so, as consumers rapidly adapt to a digital world. In particular, 8 in 10 see information management and data analysis as a bigger priority, which reflects the growing realization of the shift into a digital age and the need for a real-time assessment of shifting customer sentiment via a range of channels. And CIOs in the consumer goods sector are the most likely of all sectors to be prioritizing innovation. This is all in contrast to their peers in other sectors, many of whom remain more fixated on the operational nuts and bolts of their jobs. A fulfilling career in itself CIOs clearly enjoy the depth of responsibilities of their role, making this a desirable career choice overall. Sixty-three percent of those polled are content to see this as a final career destination. They derive huge personal and professional satisfaction from the projects and initiatives in which they are involved. Nevertheless, a significant proportion hold greater ambitions. This is most often for a bigger CIO role (32%), but over one in three (36%) see life beyond the CIO role, including 15% that 92% of is the proportion of CIOs feel confident CIOs saying that IT that they help the innovation is a much business to meet its 76% larger priority than it challenges was five years ago 1 Whenever we refer to terms such as strong, strongly or major, we refer to those respondents that chose 8, 9 or 10 on a scale from 1 to 10 where 1 is low and 10 is high.

5 have an eye on the top job more so than any other sector. I think next for me would be a role in a new business area, and then maybe moving on and having aspirations to even become the CEO, says Manish Choksi, CIO and Chief of Corporate Strategy at Asian Paints, a major Indian paint manufacturer. Nevertheless, despite a clearly more business-minded approach to their careers, nearly 4 in 10 (39%) admit that they could use some advice on how to achieve their ambitions. Frustrated by constraints on their ambitions Across every other sector polled, CIOs saw a lack of C-suite support as the single biggest barrier to them being able to deliver effectively on their role. But consumer goods CIOs stand out from the crowd: they express greater frustration with both a lack of sufficient budgets and the challenge of organizational inflexibility. They see these as the biggest hurdles to overcome in realizing the ambitions they hold, although often, this varies in line with the personal relationship they hold with the firm s brand and marketing leaders. But this fits with their greater aspirations around innovation and business transformation, showing their clear desire to help use IT to create a stronger and more efficient business. Barriers to the effectiveness of the role of a CIO Lack of support or understanding from executives Budgetary restraints Personal restraints (e.g., soft skills and financial mindset) Unclarity on corporate strategy and organization Other (e.g., technological or change legal issues) HR issues No answer or do not know 3% 14% 17% 23% 9% 17% 13% 19% 23% 31% 38% 36% 32% 34% Consumer products Total (Open questions with multiple answers) 54% express is the proportion of CIOs strong who feel that a lack of satisfaction budget is their prime with their career 36% inhibitor to a more possibilities ahead effective contribution

6 A strong desire to learn For the ambitious and especially for those who see themselves as the CEO-in-waiting there is strong enthusiasm about developing the skills needed for success. Topping the list are leadership skills, communication and organizational skills, where a higher proportion than average are keen to develop these attributes. They recognize these as a core part of aspiring to the top table: Once a letter C has come in front of your designation and you re into that management meeting, you have to remove your technology hat and wear a business hat, explains Vijay Sethi, the CIO of Hero MotoCorp, a major global motorcycle manufacturer. These CIOs also show a clear aim of developing their financial skills. This is important, as far too few CIOs bring a strong financial literacy to their role: from understanding how IT spend affects the net present value of the business, through to considering costs in balance sheet terms versus profit and loss terms. Closer than most to the top table In order to deliver on the ambitions they hold, CIOs need to make the step up into the executive management team. Consumer goods CIOs are closer to this goal than any of their peers in other sectors: one in four hold a seat at the top table, compared with less than one in five overall. CIOs are strong generalists, and they ve had exposure to all the different business areas, explains Isobel Thomson, the CIO of Heinz, the global food and condiment brand. This reflects in their average level of senior strategic input: 48% say that they are engaged with at a board level on strategic decision-making, second only to the life sciences sector. And 6 in 10 help support the necessary data that supports such executive decision-making, above the overall average among CIOs. They are especially prominent in their discussions on IT s role in business transformation, on which 8 in 10 engage with the board, compared with just 64% overall. 51% of CIOs strongly agree that they need to improve their leadership skills

7 Extent to which CIOs in the consumer products sector actively engage with the executive management board on key issues Discussing business 15% performance and challenges 49% Participating in strategic decision-making Providing facts as basis for strategic decisions Discussing IT's role in business transformation Discussing IT budgetary issues and infrastructure management 10% 7% 5% 3% Strategic engagement 48% 61% 76% 81% (On a scale from 1 = does not apply to 10 = fully applies) Strong engagement (8 10) Little engagement (1 3) Extent to which CIOs actively engage with the executive management board on key issues Discussing business performance and challenges Participating in strategic decision-making Providing facts as basis for strategic decisions Discussing IT's role in business transformation Discussing IT budgetary issues and infrastructure management 26% 23% 14% 13% 11% Strategic engagement 36% 43% 52% 64% 67% Strong engagement (8 10) Little engagement (1 3) (On a scale from 1 = does not apply to 10 = fully applies) 25% of consumer goods CIOs have a position in the executive leadership team

8 Relationships are key to success In trying to understand how CIOs in the consumer goods sector have achieved such a strong position, look no further than their adeptness in networking. The key skill is good relationship building, explains Thomas Pirlein, the CIO of Esprit, the global fashion brand. Indeed, compared with their less socially inclined peers, CIOs in this sector have cultivated strong relationships with a range of other executives and especially the CEO, CFO and COO trio. Across all of these, they hold a tighter-than-average relationship. Importantly, and as befits the nature of the sector they operate within, they also hold tighter front-office relationships. Sixty-three percent have a close partnership with the chief sales officer and 59% also have good ties with key clients, both well above the overall average among CIOs. Relevance of stakeholder relationships for CIOs in the consumer products sector External Internal CEO CFO COO Department heads Chief sales officers (CSO) Chief marketing officer (CMO) Clients Regulators Analysts Media 76% 78% 71% 86% 61% 66% 46% 56% 39% 63% 31% 51% 49% 59% 37% 46% 37% 44% 24% 24% Importance for career development Quality and intensity of relationship (Percentage of respondents who have chosen 8, 9 or 10 on a scale from 1 = not at all to 10 = absolutely) 86% of CIOs feel they hold a strong relationship with the CFO in their business

9 With their business-oriented mindset, eye on innovation and a good list of contacts, the consumer goods CIO is an exemplar for many others seeking a route to the top table. Thanks in part to the opportunities afforded them by their sector, they are closer than most to delivering a more strategic input within their business. But this hardly suggests that there isn t progress to make: after all, three in four CIOs in the sector are still absent from the executive management team. To get there, The DNA of the CIO provides a robust and balanced toolkit on what to change, who to influence and how to do it. You only become a true business partner by working with the business on a daily basis Sabine Everaet, CIO of Coca-Cola Europe Sabine Everaet s profile doesn t strike one as the result of typical ICT career planning. After finishing my studies in business engineering, I worked in consultancy for a while. When SAP became popular, I ended up in IT, but with a focus on business. In 1995, Everaet joined Coca-Cola as a business analyst. She rose to become a business partner, setting up, among other things, a European governance structure together with the ICT team. She was appointed CIO of Coca-Cola Europe in early 2009 and European CIO of the Year in Switch to front office I was able to make the greatest impact as focus shifted from back-office operations, which included HRM, finance and infrastructure, to front-office activities, in particular, marketing and corporate communications. Establishing this new structure was not an ICT task as such, but a comprehensive business project. How did she go about it? I assessed the team members skills, and then recruited people who possessed the skills we required. They were mostly people working with marketing agencies in other words, not 100% IT staff. As a result, we grew our position in marketing and communications. At the same time, I worked closely with the European marketing director.

10 Board of management Unsurprisingly, Everaet believes that keeping up with new technology is crucial. Still, if you consider what is behind hot issues such as social, mobile, cloud and big data, you have to keep an eye on the potential business impact. The CIO who does that generates a great deal of credibility. Once in a while, I used to meet with the European Board of Management to explain a project. Now, I am a formal member of that same Board. In the past, I occasionally spoke to the marketing director during meetings, we now see each other almost every day. In her opinion, there is no clear-cut profile for the position of CIO. It strongly depends on the organization and its priorities. Although CIOs can be very different in terms of personality, they should always have a feel for the way in which they can be of use to the company, and act accordingly. You have to focus on the business and ensure that you make a difference. You have to be very flexible and adapt to changing priorities, while providing added value by meeting those priorities. CIOs with the highest ambitions need to broaden the scope of their thinking: You have to create a wide network that enables you to venture beyond your own industry. Don t limit yourself to your own field of expertise. You should monitor certain trends in society. I sometimes meet people I would love to have on my team. They are people with a holistic mindset who have the ability to see connections. In my opinion, that is more important than specializing in any particular technology.

11 The business CIO: a snapshot of today s typical consumer products CIO Basic characteristics The average CIO is a 42-year-old male. He has typically been in his job for six years, and believes seven years to be an appropriate tenure. Of all CIOs polled, he has the most business-oriented background. Overall, 34% held a business degree, including 14% that hold an MBA, the highest of any sector in this survey. Skills and focus Although a wide range of attributes is necessary for success, consumer goods CIOs place particular attention on the need for clear market insights and business strategy. Relationships More than most, CIOs in the consumer goods sector understand the value of relationships to get ahead. To this end, they ve cultivated closer ties with a range of internal and external contacts. Given the nature of their industry, they also hold betterthan-average links with the sales arm of the business and key clients. However, their contact with other business unit leaders is poorer than average. Career Consumer goods CIOs are slightly less concerned than many of their peers about having a major business transformation program under their belts to move ahead. They put this on a par with gaining experience in another business function. Topping the list, as with others, is the need to network. They are strongly motivated by the challenge and development opportunity of a bigger role, and also identify more closely with such a position. For further information, please visit speak to your EY contact, or send an to cio@ey.com.

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