What Keeps CIOs Awake At Night? Old And New Worries, Says Survey

What's keeping CIOs up at night? Issues involving IT alignment, staff, security, and speed are among the challenges that many business technology leaders are most likely to lose sleep over, according to a new survey by the Society for Information Management.

The top three IT management concerns of CIOs in 2006 are the alignment of IT and business at their companies; attracting, developing, and retaining IT talent; and security and privacy issues, according to SIM's latest annual survey, which polled 139 CIOs.

But that's not all CIOs are anxious about. While many of the top concerns named in 2006 are the same issues that CIOs have struggled with over the last few years, new challenges are also rising to the top. Among the other top 10 concerns of business tech leaders this year are speed and agility, new to this year's list.

"Speed and agility are the new buzzwords we all struggle with," says June Drewry, global CIO of the Chubb Group of Insurance Companies. "IT has been known for taking a long time to define, build, and deliver, but that's not an acceptable approach today," says Drewry.

Other top IT management concerns include IT strategic planning, project management capability, introducing rapid business solutions, true return on individual IT investments, measuring the value of IT investments, and IT governance.

Falling off this year's top 10 list of IT management concerns is business process re-engineering, which isn't necessarily a good thing, says Jerry Luftman, SIM's VP of academic community affairs, who oversaw the survey.

"This says CIOs are focusing more on technology than business. You must focus on both to be successful," says Luftman, who is also a professor and associate dean of graduate IS programs at Stevens Institute of Technology.

As for technology priorities, half of the top six applications and technology developments on CIOs' plates in 2006 are new to this year's list. Debuting on the list are Web services, business process management, and customer portals. Business intelligence, security technologies, and systems integration remained on the list.

At Chubb, Web services, as well as service-oriented architecture and reusable software components, are being looked at or deployed as technologies that can help the company tackle speed and agility issues. These technologies help business units change rules within applications without IT's involvement, providing the units with more agility, says Drewry. "There's always a backlog [of IT work]. With the new tools, IT is no longer the backlog" to business agility, she says.

The attraction, development, and retention of IT talent are also top-of-mind for CIOs, who in 2006 had an average turnover rate of 7.2%. "Turnover under 10% is good," Luftman says.

When it comes to recruiting entry-level IT staff, the top trait CIOs are looking for are communications skills, followed by functional area knowledge, systems analysis, user relationship management, and systems design. The top requirements being sought in midlevel hires are also solid communications skills, project leadership, and functional area knowledge. Other traits on the list are experience in business process design and re-engineering, managing expectations, change management, and systems analysis.

For Chubb, project management, business skills, and subject expertise are key talents in 2006, says Drewry. But in the longer term, "we worry about when the baby boomers retire," taking with them years of industry, business, and legacy system expertise, she says. Right now, the company uses contract staff when needed, as well as some offshore development work for projects.

About 37% of the surveyed CIOs expect their IT staff to increase in 2007 from 2006. About 28% expect to have fewer IT staffers, and 35% expect head count to be the same. About 70% of CIOs project that their staff salaries will increase next year, with about 9% predicting salary budgets to be less, and 20% expecting salaries to remain flat.

The average IT budget this year was 3.6% of company revenue, according to the survey. Of that overall IT budget, the biggest chunk--35.2%--was allocated to internal staff. Only 9.5% was earmarked for domestic outsourced staff; 2.7% for offshore staff; and 8.9% for consultants.

Interestingly, the top six "vehicles" CIOs are using to retain their staff don't include money. Rather, the top factors were open and honest communications; good worker-supervisor relationships; trust among coworkers; challenging work experience; opportunities for advancement; and balance between work and outside life.

As for CIOs themselves, they've been in the job an average of 3.6 years. And compared to last year, more of them report to CFOs and CEOs, and fewer report to COOs. This year, 45.2% of CIOs said they report to their company's CEO, compared to 42.6% last year.

There was also a 4% rise in the number of CIOs reporting to CFOs, to 25.4% this year from 21.8% last year. CIOs reporting to CFOs is a trend that comes and goes. Years ago, it wasn't unusual for CIOs to report to CFOs. During the height of the dot-com boom, it became increasingly common for many CIOs to report directly to CEOs. But once the bubble popped and companies re-examined their tech spending, CFOs became many CIOs' bosses once again.

In general, the relationships between CIOs and CFOs have become tighter in recent years because of the focus on Sarbanes-Oxley and other regulatory/compliance issues, says Craig Smith, a managing partner at executive recruitment firm Christian & Timbers. "We're seeing more CIOs reporting to CFOs because of the role that technology plays in compliance," Smith says. "There are a lot of controls that are part of internal systems."