State of the CIO, 2023: Building business strategy

When he’s not immersed in cybersecurity, hybrid cloud strategy, or app modernization, David Reis, CIO at the University of Miami Health System and the Miller School of Medicine, spends his time working with the board of directors and top leadership to reimagine healthcare and take the lead driving digital transformation.

A business objective to “arrive” more patients per hour or the CEO’s desire to leverage historical data to predict future patient volume and revenue doesn’t start with a technology discussion or spoon-feed IT a particular business strategy to execute. Today, Reis and his team are early-stage partners with the business to ideate new digital strategies aimed at keeping the healthcare provider at the forefront of patient experience and care, safety, and innovation.

“In these discussions, we didn’t talk about phones, infrastructure, servers, computers, or storage — all the things people expect with IT,” Reis says. “IT is now thought of as a partner and brought in much sooner in the overall rethinking of business processes rather than coming in at the end to digitize workflows.”

Despite another year dominated by a transformation agenda and getting digital operations in order, CIOs like Reis are finding their footing as an invaluable strategic partner and resource for the business. According to the 2023 State of the CIO research, which surveyed 837 IT leaders and 201 line of business (LOB) participants, functional and transformational work consumed the bulk of IT leaders’ time this year, much the same as 2022.

Eighty-four percent of respondents were immersed in basic functional tasks such as security management (47%), improving IT operations and systems performance (40%), and cost control and expense management (28%). IT leaders were equally committed to transformation work (83%), including modernizing infrastructure and applications (35%), aligning IT initiatives with business goals (38%), cultivating the IT/business partnership (31%), and directing change efforts (28%).

While far fewer (61%) cited business strategist responsibilities as the year’s primary charter, many, like Reis, are already well-established and sought-after strategy leaders, continuing to mature their influence going forward. At the same time, the majority of 2023 State of the CIO respondents (71%) also anticipate greater immersion in business strategy over the next three years. With technology at the epicenter of all aspects of modern business, IT leaders fully expect their remit to include actively driving business innovation, developing and refining business strategy, and identifying opportunities for competitive differentiation.

“The CIO role today is really a business leadership role that is not necessarily focused on technology — technology is just part and parcel of what we do every day,” says Kevin Gray, CIO for the City of Burbank, Calif. “We are helping form strategy for our organizations, laying out roadmaps, and developing policy in ways we didn’t in the past. A CIO or CTO who wakes up thinking about technology is thinking about the wrong things.”

CIOs’ leadership stature matures

This year’s focus on IT transformation and modernization hasn’t diluted demand for CIO leadership. More than half of respondents to the 2023 State of the CIO survey (55%) said they proactively identify business opportunities and make recommendations regarding technology and provider selections while 23% said they advise on business need, technology choices, and providers.

As in prior years, the CIO role continues to be more digital- and innovation-focused — a trend cited by 85% of IT leaders participating in this year’s survey. Not only are CIOs involved in digital transformation — the majority of 2023 survey respondents maintain CIOs are more likely to lead digital transformation efforts compared to their business leader counterparts — a scenario cited by 84% of IT leaders along with nearly three quarters (72%) of LOB participants.

CIOs’ mounting credibility as a lever for business transformation is also being recognized on a broader scale, even as IT leaders are wrapped up with modernization efforts and operationalizing the technology investments that were accelerated these past few years. Eighty-five percent of respondents said they view the CIO role as a changemaker, slightly higher than last year.

At the same time, CIOs continue to forge strong relationships with other influencers in the executive ranks: Seventy-seven percent of 2023 State of the CIO respondents have cultivated a strong educational partnership with the CEO and board of directors. Nearly half (49%) of IT leaders participating in this year’s research report directly to the CEO, and CIOs themselves have retained oversight of some of the newer C-level positions. For example, among the 2023 State of the CIO survey base, many chief data officers (53%) and chief digital officers (42%) now come under the CIO management umbrella. Chief security officers and chief analytics officers are also more likely to report into IT leadership.

In a similar vein, IT retains direct control over a good portion of the IT budget at most companies — on average, around 43.5% — with respondents expecting that ratio to tick up to about 50% over the next three years. In keeping with the reporting structures, CIOs are commanding oversight of budgets allocated to some of the newer executive titles: Fifty-eight percent of those surveyed said the CTO budget was factored into overall technology expenditures under CIO management while half said the same of the chief digital officer budget. A much higher number, 63%, confirmed chief data officer expenses came under the CIO and IT department’s remit.

While CIO’s leadership stature and immersion in the business has been steadily growing for some time, ongoing economic uncertainty, the vast potential of emerging technologies to transform business, and the lingering halo effects from CIOs’ widely heralded pandemic performance have underscored the significance of the role when it comes to business strategy. Specifically, the level of transformation during the pandemic was unrivaled compared to prior periods, and the business strategies and foundational platforms put in place call for IT leadership to promote broad adoption and oversee continuous care and feeding, says JP Saini, chief digital & technology officer at Sunbelt Rentals, a global player in the equipment rental market.

“It’s about how to maintain the edge we created with the business strategies we implemented,” Saini says. “Unlike prior years, where you launch something big and the next refresh cycle is three to four years out, there’s now a continued value creation formula for digital transformation that happens year over year.”

What’s on the 2023 docket

Sunbelt Rentals’ 2023 roadmap calls for evolving its digital platforms in areas such as omnichannel ecommerce, dynamic pricing, service, supply chain, and warehouse management. The company is also investing in new collaboration technologies and Zero Trust initiatives to fully empower its employees for hybrid work, no matter where they are and on whatever device they are working from, Saini says.

The digital transformation and technology organizations used to operate on two parallel tracks. Today, they’ve been consolidated into a single group reporting to Saini to accelerate delivery of systems that drive business strategy forward. “We’re now one group that handles initiatives from start to finish because time was of the essence,” he explains. “Whatever launches in terms of ecommerce, if you don’t have a good roadmap to keep ahead of competitors, the value is eroded.”

At insurance company The Hartford, the technology initiatives and business strategies that are on tap for 2023 are one and the same, according to Deepa Soni, the company’s CIO. Cloud deployment, AI, analytics, a modern data ecosystem, and digitization of more business processes are at the top of the agenda to simplify interactions for customers, brokers, and agents and to bring the power of digital tools to employees. For example, underwriters used to toggle between nearly a dozen tools to get their job done — today they use one streamlined tool with all relevant information at their fingertips to make better decisions while understanding risks, Soni says.

With new technologies poised to reinvent business processes and disrupt entire markets, Soni says she and her CIO counterparts must play a pivotal role guiding the business to think about things differently while recognizing opportunities to harness technology to create solutions for business partners, customers, and employees. One of the more significant changes at The Hartford has been to embrace agile practices, not just in the IT domain, but as a companywide business practice. “We’re now organized around customer-centric value streams that start with the product owners in the business and extend into technology,” she explains. “The opportunity to leverage data and technology is increasing so we have to deliver capabilities faster to be able to better capitalize on future opportunities.”

Leveraging data, advanced analytics, and AI is top priority across the board. Thirty-four percent of IT leaders responding to the 2023 State of the CIO survey called out data/business analytics as a major tech initiative driving IT investments, second only to security and risk management (38%). Machine learning and AI were also high on the list, cited by 26%.

With data and analytics a critical engine for driving business strategy, Dow Inc. combined its data and analytics teams into one group last year, elevating a new dedicated leadership role. Chris Bruman, Dow’s first chief data and analytics officer, reports directly into Melanie Kalmar, a corporate vice president and Dow’s CIO and chief digital officer.

In his dual role, Bruman leads a centralized data and analytics team, but also has accountability for building a data and analytics strategy for the entire enterprise, to both enable growth and empower productivity. On his watch, Dow has updated its data operating model to a hub and spoke approach, is setting up a data platform and data catalog that can support the entire enterprise, and expanded the data initiative to harness both structured and unstructured data. Bruman’s group has also invested time and resources in data literacy, launching a companywide program to upskill the enterprise in the language of data and how to take advantage of data and analytics.

“Because analytics are so much more important in how we do work every day, we don’t believe a fully centralized team can keep up with the demand,” he explains. With the federated or hub and spoke approach, the power of leveraging analytics rests in the business functions. “It’s about data democratization and empowering the spokes to do more on their own,” he says.

The CIO-plus role takes shape

In addition to the focus on data, Dow has also invested considerably over the past few years to put digital platforms in place, including those aimed at improving and speeding up the pace of innovation and delivering a better digital buying experience on Dow.com while expanding direct connections with customers. Dow is also working to digitize its manufacturing sites, channeling data to the field where it’s needed to drive decisions and improve operational efficiency, operating discipline, safety, and reliability, according to CIO and CDO Kalmar. “Digital at Dow represents a company strategy, not just an IT strategy,” she says.

Other CIOs, like Kalmar, are expanding their roles and oversight responsibilities beyond IT as digital strategies move front and center in the business. Many are taking on new revenue responsibilities — a move cited by 68% of IT leaders this year, up from 65% in the 2022 State of the CIO survey. As part of the move, 44% of IT leaders are managing a team tasked with new revenue-generating capabilities, while a quarter are members of such a team, the research found. As part of this expanded revenue charter, IT leaders are automating business and IT processes (47%), creating new products and services (40%), and making data more available (34%).

Andrew Ho of Global Strategy Group (GSG) now has ownership of both the IT and offices services organizations — a move precipitated by the synergies between the two areas. With hybrid work now a mainstay, Ho’s dual role ensures he has accountability for evolving employee experience and engagement from working both remotely and in-office. For example, when reconfiguring office space to accommodate hybrid work, it’s impossible to separate technology requirements from construction given the need for immersive audio-visual tools, Zoom rooms, and hoteling capabilities, says Ho, senior vice president and head of technology and office services for GSG, a research, communications, and public affairs agency.

In addition, Ho says the office services staff is also best positioned to handle the front-end technical support for the firm given they are always in office and maintain a certain relationship with employees. “The lines have blurred with what is facilities versus what is technology, and all of that falls under IT,” he says.

Sastry Durvasula, who holds both the CIO and client service officer titles, came into TIAA a year ago in part for the CIO-plus opportunity. From a technology perspective, Durvasula’s 2023 roadmap balances transformation through a digital-first agenda built around data and AI for hyper-personalized experiences while at the same time, modernizing the core platforms and processes by harnessing automation and orchestrating hybrid, multicloud migration.

On the Client Services front, Durvasula’s focus is also on AI and automation to transform the way TIAA does everything from front-office client engagement to fraud management and client support services. “Our fundamental belief is that Client Services would have a significant benefit to have proximity to technology as they would be the biggest beneficiary when it comes to AI, automation, and the digital services we are investing in,” Durvasula explains. “It makes a lot of sense to bring them together.”

Durvasula, who’s held CIO-plus roles with oversight of IT and digital products at other companies, firmly believes technology’s front-and-center role in business strategy has changed the game and set IT leaders on a new course. It’s not a matter of switching focus between technology initiatives and business strategy, he says, it’s a balancing act that requires an equal focus on both.

“Now that technology is front and center in business strategy and not a back-end enabler, that changes the CIO role quite a bit,” he says. “Technology is disrupting business in a lot of ways and this is the best time to be on the CIO career path. The branches are wide open.”