CIOs Slowly Gain Clout In China

In the United States, CIOs have clearly established themselves as corporate leaders. But in China, those in charge of IT?whether their actual title is CIO, VP, or director?still struggle to define their business roles. From January to April, we conducted the 2006 China CIO Leadership Survey, polling 113 CIOs or equivalents from Chinese companies about their corporate roles. The results show that these CIOs are aware of the importance of improving their leadership skills. Like their U.S. counterparts, they work hard to familiarize themselves with business processes, learn about their own company's demands, and align business and technology. In fact, the survey shows that on average, Chinese CIOs spend 60% of their time on business issues. Among the survey participants, 22% have the actual title of CIO; more than half hold the title of IT manager or IT director; 7% use the title of VP; and the rest fall into the category of CTO or "other." While the CIOs surveyed generally have influence over IT spending, support, and services, they're still unable to touch the core business of their organization. But while CIOs are focused on achieving business innovation through IT, many IT projects fail to meet their business objectives. Chinese CIOs acknowledge three main issues that trouble them most and that contribute to their inability to accomplish business goals. First are prevalent misperceptions about the title and responsibility of CIOs at many companies in China. Many businesspeople still see them merely as IT supporters, and there's still plenty of confusion between the roles CIOs should play and those they actually do. IT executives clearly realize that they should help their company build competitive advantage, but when asked what role they actually assume within the business, most identify themselves as facilitators or consultants. Communication with business counterparts is the second important issue CIOs have to face if they want to increase their influence over business decision-making in the company. The ideal CIO should have a position in the boardroom where he or she can discuss market conditions and corporate strategies, as well as support business expansion with new technology solutions. It's a situation that has finally developed in the United States, but it can happen in China only if, as in the U.S., CIOs make their voices heard and demonstrate their business competency. Wang Shiping, VP of Accenture Great China, says tasks for most Chinese CIOs still focus on technology support and IT-department responsibilities, with a parallel-line report to other business departments. Unlike their U.S. counterparts, who largely have earned a position in the boardroom with the CEO and CFO, Chinese CIOs are in charge of value creation by information assets. "They are not real CIOs yet," Wang says. Reporting structures identified in the survey lend credence to Wang's view. While more than half (54%) report directly to the CEO or president, the rest report to the CFO, COO, or other senior managers. In other words, the efforts of nearly half the CIOs surveyed aren't seen directly by their CEOs, which, some argue, could negatively influence their efforts to affect business decision making. Somewhat surprisingly, the numbers approximate the results of Optimize's own U.S.-based "Defining The CIO" survey, so there must be other factors inhibiting the business success of the CIO in China.

As a member of the corporate strategy team, the Chinese CIO could help the company build its competitive advantage in the role of strategist or business-process innovator, which means the CIO should understand the industry well, have insight into the capacity and resources of the company, and help make decisions about business development and structure. However, survey results conflict with that expectation. Forty-one percent of CIOs believe they play the role of facilitator in discussions with their supervisors. The reason for this nonstrategic approach may be due to the limited role others in the company assign them. Twenty-four percent say a lack of time for strategic thinking may also be a factor. Line-of-business (LOB) demands leave Chinese CIOs no time for strategic planning, says Yang Zhongsheng, information-center manager at Guangzhou BYE Electric Group Co. Ltd. His company, which specializes in the manufacture and sale of electronic components, was recently involved in several mergers and acquisitions. Except for upgrading the ERP system, the most important responsibility for the IT department during those acquisitions was to integrate the dispersed business units. In Yang's view, one way to change that is to develop better business talent among his IT staff. "What we need most now are IT professionals who know business fairly well," he says. To achieve such a goal, Chinese CIOs need to effect fundamental changes between IT and the business. In other words, the alignment of IT and business that occurred over the past few years in the United States must now happen at Chinese companies. The CIO can lead that evolution, and it means getting the IT department involved and gaining in-depth knowledge of every link of the business chain. "An excellent IT staff should communicate with business departments and understand business information and demand," says Fred Lee, CIO of the communication group at Siemens Ltd., China, Shanghai branch. "Meanwhile, [the CIO] should explain to the business departments what problems can be solved by technology and what cannot." Even during discussions with LOB managers, CIOs believe they play the role of consultant, according to 30% of respondents, and 26% think they act as facilitator. Of course, there are CIOs who believe that taking the role of consultant during the discussion can better facilitate an IT project. The third primary challenge for CIOs in China is more ingrained: cultural obstacles that impede their growth. One Chinese CIO, who declines to be identified, said that despite his title at the well-known multinational company where he works, he's still considered a low-profile supporter rather than a strategist because experience has taught him that aggressive performance during a project usually courts resistance from business departments. In an effort to solve the problem, he invites an LOB manager to lead an important IT project, which the business department will then go all out to support. Once the project succeeds, the primary credit will go to the LOB manager, and when the next one starts, the business department will be more inclined to support it. The result is a virtuous circle. The CIO's method reduces his risks, yet it also understates his achievements. However, "this is a time-tested way," he insists.

What's the most important skill for a successful CIO in China? Eighty-one percent say communication directly relates to their leadership capability. However, two-fifths of the respondents report that they only have ad hoc communication with LOB managers, and 52% don't communicate with LOB managers regularly. Some companies are changing that. At GITI Tire (China) Investment Co. Ltd., IT employees are asked to visit customers and discuss business details. It's a great help for those staffers to better understand business demand. "We see business departments as our internal customers, [because] demands of business departments are comparatively affected by demands of their customers," says Wong Kar Hong, the company's general manager of IT. "It's fairly important for the IT department to ... truly understand [our] customers' customers." Wang Quangeng, VP and CIO at Metersbonwe Group, once went to the cotton fields in the Xinjiang municipality of northwest China to learn the whole process of garment manufacturing starting with cotton picking. A successful CIO should not only understand how to make use of certain kinds of technology, he says, but also know what kinds of technology, platforms, and architectures business processes need. "Sometimes I even have the impulse to study psychology," says Wu Dawei, IT director at Junyao Group. "Therefore, I can understand others better and have better communication with them." Wu has gotten creative to improve the communication skills of his employees. The IT department now has a speech contest with the topic of "My Career"; the intent is to help IT staffers acquire the communication skills they need when dealing with employees in other departments of the business. Chinese CIOs may see their future by looking at their Western counterparts. "[Years ago], I saw this as a redundant role because you could always get a consultant to do IT strategy," said Varun Jha, CIO at Tata Steel, during a CIO roundtable discussion Optimize held in April 2005. "And as far as delivery is concerned, it, too, can be outsourced. So, what's left? Recently, I've revised my opinion. I think that since a consultant isn't consistently [on site at] the company, he doesn't understand the business priorities the way a CIO does. Seeing how business can be transformed and improved is a vital role that only a CIO can play." Olina Chen is a staff writer at InformationWeek China. What advice would you offer CIOs in China or other developing countries? Tell us. See Related Articles: Chinese CIOs Heading For Mahogany Table, December 2005 What India and China Can Teach Us About Innovation, November 2005 CIOs' Rising Influence, October 2005