Corporate CIOs in emerging markets an evolving role

Corporate CIOs in emerging markets
An evolving role
A report from the Economist Intelligence Unit

Sponsored by


Corporate CIOs in emerging markets
An evolving role

Contents



Foreword

2

About this research

3

Executive summary

4

I. The broadening remit of the CIO

6

Alkhorayef Group: Speedy repairs in the field

11



Dubai Aluminium: The 24/7 customer portal

11



MOL: Understanding targets

13



Holicon: Introducing the “chief process officer”

14



Drivers of change

14

II. The overhang of the past

16



18

Obstacles to change

III. A regional comparison

19

Conclusion

22

Appendix: Survey results

23

© The Economist Intelligence Unit Limited 2011


Corporate CIOs in emerging markets
An evolving role

Foreword

E

conomists have long identified information technology (IT) investment as a driver of productivity
and operational efficiency, and hence of economic growth. This is nowhere more apparent than
in emerging markets, where effective use of IT can help to catapult a company from small local player
to international competitor. As companies in emerging markets sharpen their focus on what IT can
contribute to their efficiency, they are giving their chief information officers (CIOs) a broader remit and
increased responsibility for ensuring profitability and growth.
Corporate CIOs in emerging markets is an Economist Intelligence Unit report that examines the
expanding role of corporate CIOs in the emerging markets of Central and Eastern Europe, the Middle
East and Africa. The research was sponsored by Oracle. The Economist Intelligence Unit bears sole
responsibility for the content of this study; the findings and views do not necessarily reflect the views
of the sponsor. Terry Ernest-Jones was the author, and Aviva Freudmann and Stephanie Studer were
the editors.
October 2011



© The Economist Intelligence Unit Limited 2011


Corporate CIOs in emerging markets
An evolving role

About this research

I

n August and September 2011, the Economist Intelligence Unit surveyed over 360 senior executives
of companies in Central and Eastern Europe (CEE), the Middle East and Africa. The sample is split
roughly evenly between the three regions, with a slight predominance in CEE. Nearly two-thirds are

C-level executives and above; the majority are CEOs, CFOs or other non-CIO board members. The job
functions are mainly general management, strategy development, business development, finance
and IT. Respondents represent a wide range of industries, with the largest group from financial
services, followed by professional services, manufacturing, construction and real estate, and energy
and natural resources. As regards company size, 43% of the sample has an annual revenue of $100m
or less; 18% $100m to $500m; 14% $500m to $1bn; 13% $1bn to $5bn; and the remainder includes
corporations with annual revenues of $5bn or more. Within each region, the sample is about evenly
divided between large companies (defined as having annual revenue above $500m in CEE and the
Middle East, and above $100m in Africa) and smaller ones.
The Economist Intelligence Unit would like to thank all survey respondents, as well as the following
executives (chosen for their hands-on experience of the evolving role of CIOs), who participated in our
programme of in-depth interviews:
l Fahad Al Muttairi, chief information officer, Al Faisaliah Group (Saudi Arabia)
l Ahmad Almulla, vice-president IT, Dubai Aluminium (UAE)
l Krzysztof Chylinski, chief information officer, Holicon (Poland)
l Bryan Cruickshank, global head of IT advisory, KPMG (UK)
l Brett Magrath, chief technology officer, Mobile Transactions (Zambia)
l Zoltán Attila Tóth, chief information officer, MOL (Hungary)
l Yugo Neumorni, IT director, Vimetco Management and president,
l Romania CIO Council
l Darryl Thwaits, chief information officer, Tiger Brands (South Africa)


© The Economist Intelligence Unit Limited 2011


Corporate CIOs in emerging markets
An evolving role

Executive summary

A

s emerging-market companies increasingly compete for international market share, they are
relying more and more on their information technology (IT) functions for a competitive edge. This
is elevating chief information officers (CIOs) into leading positions, which in turn is accelerating the
introduction of sophisticated IT systems into a broad range of corporate functions.
This study is based on a survey of 366 senior executives in Central and Eastern Europe (CEE), the
Middle East and Africa, as well as eight in-depth interviews with emerging-market CIOs and other
experts. The research explores the ways in which the CIO’s role is evolving. The study looks not only at
the rise of CIOs in their respective company hierarchies and their broadening remit—including their
efforts to introduce sophisticated IT systems—but also at the factors that inhibit such developments,
and at the ways in which the three regions differ from one another in this regard. Here are the key
findings of the research:
l During the past three years, CIOs in emerging markets have raised their profiles and broadened
their remits within their companies. A majority of emerging-market CIOs are by now members of their
companies’ boards and are specifically tasked with helping to formulate and meet strategic objectives.
l A growing number of CIOs have general management and financial backgrounds in addition to IT and
technical skills, and are increasingly called upon to explain the uses of advanced IT to colleagues in
other departments.
l As part of introducing complex IT systems company-wide, many emerging-market CIOs are becoming
“chief process officers”—responsible for streamlining business processes, standardising procedures
and improving efficiency. “The CIO is the single person with a clear picture of all the processes,” says
one CIO interviewed for this report.
l The changing role of CIOs is helping companies to harness IT to broader company goals. Three years
ago, only 36% of emerging-market executives thought IT was well aligned with their company strategy,
compared with 62% today. But the added responsibility comes at a price: CIOs tend to find that their
day-to-day IT skills decline.
l These changes have occurred most rapidly among smaller companies (those with an annual global


© The Economist Intelligence Unit Limited 2011


Corporate CIOs in emerging markets
An evolving role

revenue of below $100m), where CIOs can more easily gain a company-wide purview, and in sectors
that rely heavily on sophisticated IT, such as telecommunications, banking and other financial services,
and professional services, such as outsourced IT and human resources (HR) services.
l Of the three regions under study, Africa seems the most advanced in terms of expanding the role
of the CIO, followed by the Middle East. In general, CEE lags behind in terms of modernising internal
processes and broadening the remit of the CIO.
l CIOs in emerging markets often have to wrestle with tougher issues than those faced by
counterparts in Western countries. They generally have to operate in less stable environments, and
experience frustration in having to educate fellow executives on basic IT issues, especially security.
However, they are less encumbered by legacy systems and tight budget controls.
l CIOs’ budgetary control over major IT investments typically lags behind their broader
responsibilities. In general, emerging-market CIOs struggle against regular financial setbacks, which
cause companies to focus on immediate survival, the limitations of the CIOs themselves in terms of
background, difficulties in recruiting sufficient IT talent, and a strong legacy of viewing IT as mainly an
enabler of other corporate functions, rather than a profit contributor in its own right.
l Although CIOs’ control over IT expenditure is relatively weak, corporate budgets for IT expenditure
are growing strongly. Of the various IT investments that companies make to gain an edge in volatile
markets, respondents cite business intelligence as the most important, followed by customer
relationship management systems.



© The Economist Intelligence Unit Limited 2011

Corporate CIOs in emerging markets
An evolving role

I. The broadening remit of the CIO

I

n fast-growing emerging markets, CIOs are moving out of back offices and into corporate
boardrooms, as their companies try to gain a firmer foothold in international markets. Our survey
of 366 senior executives of emerging-market companies shows in a variety of ways that, on the whole,
CIOs are rising to leadership positions within their organisations.
The most telling finding in this regard is that in 61% of the firms surveyed, the CIO is either already
a board member or is expected to be within three years. (The ratio is significantly lower in firms with
annual revenue of more than $10bn.) Moreover, by 2014, only 17% of our respondents expect their
CIOs to be responsible for IT only, with no broader remit. The presence of CIOs on the board, and
their involvement in wider corporate strategy setting, is particularly evident in smaller companies,
and in industries such as banking and telecommunications, where IT sophistication is crucial to the
company’s success in the market.
However, as their remit widens, CIOs in emerging markets often face more severe challenges than
their counterparts in Western economies. All too often, CIOs are surrounded by executives who have an
inadequate awareness of IT capacity. Still regularly perceived by senior management as peripheral to
the business, CIOs in emerging markets also typically have to operate in a more volatile, faster-growing
environment than their Western counterparts, with less developed infrastructure, both in terms of
IT and governance. However, opportunities abound, especially in terms of “greenfield” benefits, and
many are taking advantage of cloud applications to accelerate growth. “We don’t have old systems
– there were none!” as one CIO interviewee puts it.
The emergence of CIOs in leadership roles within these tough environments is confirmed by indepth interviews with CIOs in the three regions under study. For example, in Mobile Transactions
Zambia, which provides payment services via mobile phones, Brett Magrath, chief technology officer,

advises on such fundamental business issues as “at what stage we expand into new markets, and which
products to add to the offering”. Similarly, when Holicon, a Polish IT services company, came under
new ownership in 2010, a condition of purchase was that the CIO be made a board member. “They think
the head of IT understands how the business runs, and wanted me to be more integrated [into senior
management],” says Krzysztof Chylinski, chief information officer. “Now, I focus on new systems that
will make a difference to the wider business; that wasn’t the case three to four years ago.”


© The Economist Intelligence Unit Limited 2011


Corporate CIOs in emerging markets
An evolving role

Is your company's CIO currently a member of the Board? please select one answer only.
(% respondents)
Yes
35

No, but he/she will be within the next three years
26

No, and the company has no plans to make him/her a member within the next three years
39

To what extent is the CIO/CTO currently involved in setting overall company strategy, now and in three years' time?
Select all that apply.
(% respondents)

Now

Three years ago

The CIO runs IT, but is not more widely involved
34

17

This trend towards greater involvement appears strongest in the IT-driven professional services
industry, where 51% of respondents expect their CIO to be a full board member, with all the
responsibilities that brings, in three years’ time—up from 34% today. For the sample as a whole, the
proportion giving each response is 38% and 27%, respectively. Furthermore, no respondent from the
professional services sector expected their CIO to be running IT but not to be more widely involved in
setting overall company strategy in three years’ time, down from 28% today. This compares with the
full-sample result of 17% in three years’ time, and 34% today.
To what extent is the CIO/CTO currently involved in setting overall company strategy, now and in three years' time? - The CIO
runs IT, but is not more widely involved
(% respondents)

Now

Three years time

Full sample
34

17

Professional services
28

0

Consistent with their new leadership roles, CIOs now report to managers at higher levels of their
respective organisations. In 78% of companies, the CIO reports directly to the board, to the CEO or to
the managing director. A telling legacy of the past, however, is that in a further 18% of companies,
CIOs report to other C-level executives, such as the chief operating officer or chief financial officer.
To whom does your organisation’s CIO/CTO report?
(% respondents)
Board of directors
25

CEO/President/Managing director
53

CFO/Treasurer/Comptroller
8

COO
10

Other, please specify
2

There is no central locus of responsibility for IT: it is spread throughout the company
1

Don’t know
0



© The Economist Intelligence Unit Limited 2011


Corporate CIOs in emerging markets
An evolving role

Nevertheless, with the majority of CIOs now on a par organisationally with other C-level executives, the
trend is clear. As one CIO, who is among those not yet reporting to the CEO or board, noted: “After the
next business transformation, I may be reporting to the CEO.”
As might be expected, CIOs of small companies are more likely (86%) to report directly to the board
of directors or the CEO/president than are CIOs in large companies (72%). This is likely owing to the
closer collaboration with senior management fostered by smaller company size.
To whom does your organisation’s CIO/CTO report? - Board of directors and CEO/President/Managing director by size of company
(% respondents)

Board of directors

CEO/President/Managing director

<$100m
23

63

>$100m
27

45

<$500m
25

59

>$500m
26

44

$100m or less
23

63

$100m to $500m
28

49

$500m to $1bn
33

$1bn to $5bn

30

39

45

$5bn to $10bn
9

64

$10bn or more
9

51

Beyond hierarchy, CIOs enjoy greater prominence for the simple reason that they are overseeing
larger expenditure on IT. IT budgets are rising rapidly across the three regions under study, and the
increase is expected to continue. Specifically, over the past three years, IT budgets have increased by
more than 15% at 44% of respondents’ companies. More tellingly, over the next three years, fully 60%
expect to see this rate of budgetary growth.
Major IT budgetary increases, of more than 15%, reflect the overall expected growth patterns of the
regions under examination. So, in CEE, 43% of firms will experience a rise of this magnitude, compared
with 66% in the Middle East and 75% in Africa.
The drivers of the emergence of the CIO as a prominent player in emerging-market companies
go beyond a seat on the board and growing corporate IT budgets. They constitute a fundamental
shift in the CIO’s role, from providing technical support, to using IT in creative ways throughout the
organisation in order to boost competitiveness. This makes IT an integral part of corporate strategy,
and tasks the CIO with contributing to both the formulation and the implementation of strategic goals.


© The Economist Intelligence Unit Limited 2011


Corporate CIOs in emerging markets

An evolving role

How has the IT budget of your company changed within the past three years, and how do you expect it to change over the next
three years?
(% respondents)

Past three years

Next three years

Increase of 25% or more
21

26

Increase of 15-25%
23

34

Increase of 5-15%
23

30

Stay(ed) about the same
14

22

Contract(ed)
4

5

Operationally, this means that CIOs are now more likely to be directly involved with business
decisions of operating divisions and support services, to ensure that all these are operating as
efficiently as possible. It also means they are more likely to be developing key performance indicators
(KPIs) in conjunction with operating divisions and support functions, and to be introducing systems
to track progress towards meeting KPI targets. Along the road to introducing such systems, CIOs are
being tasked with persuading operating divisions and support services to adopt these systems and to
implement the data-gathering processes necessary to make them work. All this takes time, however,
and some CIO interviewees admit that their day-to-day IT skills suffer as a result.
Are there, then, any signs yet of the impact the new role of the CIO is having on emerging-market
firms? Is it turning out to be a profitable exercise? While impossible to quantify at this stage—
especially as this is likely to have been a matter of survival for some rapidly growing firms—there is a
clear indication that the changed role of CIOs is paying off for companies by harnessing IT to broader
company goals. Three years ago, only 36% of emerging-market executives thought IT was well aligned
with their company strategy, compared with 62% today. In the words of Fahad Al Muttairi, chief
information officer of Al Faisaliah Group, a Saudi Arabian conglomerate: “By sitting with management
in executive meetings, the CIO is consulting and assisting in driving their business, not just his own.
Now IT is seen a key enabler to maintain or improve competitiveness.” Ahmad Almulla, vice-president
of IT, Dubai Aluminium, adds: “I don’t look at systems directly; I’m more involved with looking at KPIs
and developing roadmaps, as well as looking after people.”
Our survey confirms that technical innovation is becoming a shared responsibility of business units
and CIOs. The proportion of companies where technological innovation is likeliest to originate within
business units is roughly equivalent to the proportion where innovation tends to originate within the
IT function. This indicates that innovation is no longer strictly the remit of operating divisions or IT,
but rather a shared responsibility for both, and for senior management. As the interest of operational
divisions in top-line IT increases, the CIO also has to consider technological innovation in a strategic

context. This is particularly true in professional services firms, where CIOs are more likely to initiate
technological innovation (34%) than either the board of directors (30%) or individual business
units (28%).


© The Economist Intelligence Unit Limited 2011


Corporate CIOs in emerging markets
An evolving role

Which of the following is most likely to initiate technological innovation within the company?
(% respondents)
The IT function
30

Business units
29

The Board of Directors
24

Customers
7

External consultants or system integrators
6

Suppliers
2

Don’t know
1

Other, please specify
1

This collaboration does not always happen automatically. In many companies, there is a resistance
to overhauling processes and implementing new systems to replace the known and familiar. This
has nudged CIOs in many emerging-market companies into the role of “chief IT trainer”, responsible
for explaining the benefits and the workings of new systems and persuading other departments to
embrace them.
CIOs participating in our in-depth interview programme point to progress in this regard. “Executives
are starting to become more IT-literate,” says Darryl Thwaits, chief information officer at Tiger Brands,
a South African food and healthcare manufacturer. He points to innovations, such as smart phones
being connected to managed servers to allow greater functional mobility. In factories, product
scanners have been installed to speed up the supply chain and improve accuracy of information,
he says. Dashboards for sales and financial performance reports are automatically distributed to
managers from a data warehouse each day. However, often introducing such innovations requires
a great effort on the CIO’s part in terms of training and persuasion. “Some people are intimidated
by IT and the constant change,” says Mr Thwaits. “The challenge is to introduce changes or new
technologies, ensuring you bring the people along with you and not scare them off with an insensitive
approach,” Mr Thwaits adds.
One crucial factor in the success of this process is to deal with business units on their own terms,
using their language, rather than the technical language of IT. “The trick is to talk in terms of ends,
rather than means,” says Mr Almulla of Dubai Aluminium. “I had to learn business language, and now I
only talk in business language.”
What does this mean in practice? A CIO may focus, for example, on the added value a new
system might bring, rather than on the details of upgrading the server or patching an enterprise
resource planning (ERP) system. Or, the CIO might focus on the amount of time that can be saved

when responding to distant customers by using online communication systems, rather than on the
computing power embedded in those systems. (See case study: Alkhorayef Group: Speedy repairs in
the field.)
A similar story appears at Dubai Aluminium, one of the world’s largest smelting companies, where
a new IT system has enabled swift customer response. (See case study: Dubai Aluminium: The 24/7
10

© The Economist Intelligence Unit Limited 2011


Corporate CIOs in emerging markets
An evolving role

Alkhorayef Group: Speedy repairs in the field
For an example of how a sophisticated IT system can improve
customer service, in his previous post as CIO of Alkhorayef Group,
another Saudi Arabian conglomerate, Fahad Al Muttairi introduced
a communication system aimed at improving competitiveness
in the agricultural and power equipment division. The issue was
speed of service: if problems developed with any of the equipment
sold, the sheer size of the machines made them difficult and costly
to move to a central service depot. The solution, as Mr Al Muttairi
saw it, was to equip field staff to carry out on-site repairs. But how
best to do that?

“We mobilised the team,” he explains. The group provided
engineers with mobile access to customer response management
systems, giving customers access to online information about
delivery of spare parts. “They can go online, check and plan,”
Mr Al Muttairi says. Field engineers are now able to access client

information on mobile devices, and send reports back to the
service centre. In addition, small regional service centres can now
stay connected to main depots, exchanging data over the same
network to enable quick deliveries and repairs.
The result has been a measurable improvement in customer
satisfaction, Mr Al Muttairi says. “Service work used to be
back office. Now it is front office, and, in fact, it is becoming a
profit centre.”

customer portal.)
This change in orientation, from a technical to a business focus, does not necessarily come easily
to CIOs. Fully 75% of respondents say their CIOs come from IT or technical backgrounds. However, the
current trend is towards CIOs with broader backgrounds. When asked about the career background

Dubai Aluminium: The 24/7 customer portal
IT has become a valuable marketing instrument for Dubai
Aluminium, which set up a portal for customers to communicate
directly with the company. The portal allows customers to place and
track orders, giving them greater control over their purchases. “The
portal lets us stay open for business 24/7 around the world, and
delivers a high-quality, high-touch experience for customers, while
reducing the cost of customer care,” says Ahmad Almulla, vice-

president of IT. The company benefits in two ways: lower costs for
answering standard queries by making answers available online;
and increased customer satisfaction owing to improved visibility of
products, pricing, and order status.
For Mr Almulla, there was a further benefit: IT became
embedded in a key corporate function in a way that it had
not been before. Now, he says, “There’s no such thing as IT

strategy alone; it is embedded in the business strategy, and the
performance of IT is measured in terms of the value it adds to
the business.”

What is the career background of the CIO/CTO at your company? Select all that apply.
(% respondents)
IT/technical
75

General management
18

Operations
17

Financial
14

Sales/marketing
7

R&D
4

Manufacturing
2

Don't know
2

Other, please specify
1

11

© The Economist Intelligence Unit Limited 2011


Corporate CIOs in emerging markets
An evolving role

of their company’s CIO, 18% of respondents cited general management and 14% cited finance. Yugo
Neumorni, director of IT at Vimetco Management, a Romanian metals producer, and president of the
Romania CIO Council, says the ideal educational background for a CIO is a graduate degree in business,
since this background allows them to frame issues in terms of their business implications.
While they must increasingly communicate in business, rather than technical, terms, CIOs are also
typically tasked with staying on the cutting edge of technological developments. Just tracking fastevolving technology and user trends can absorb much of a CIO’s time, several interviewees said. At
the same time, internal constituencies, such as heads of business units, are gradually becoming more
sophisticated listeners on matters pertaining to IT. “Senior users are much more interested in how
technology can improve the business,” says Tiger Brands’ Mr Thwaits. “Before, you were dealing with
people who didn’t know about technology and showed little interest. Now, a lot of the time is spent
talking to people who know more than in the past, but often just not enough.” He adds that most of his
time these days is taken up with “communicating what people can do with the technology and how it
can benefit the business”.
As IT is increasingly recognised as a contributor to profitability, CIOs are taking on a strategic
role, looking at ways to boost revenue, reduce costs, upgrade quality, and otherwise improve results.
In many cases, this involves thinking up creative initiatives to use customer data, to employ social
networks for recruitment or marketing purposes, or to use cloud applications for accounting or general
administrative functions not readily available in-house.
The professional services and financial services sectors appear to be in the vanguard of this trend.

In the professional services sector, CIOs are twice as likely to be improving cost efficiency in their
organisations today as they were three years ago (40% compared with 21%), and twice as likely to be
enabling revenue generation (36% compared with 19%).
In your organisation, what are the principal roles of the IT department, now compared with three years ago? - Improving cost
efficiency
(% respondents)

Now

Three years ago

Total sample
34

26

Professional services
40

21

Similarly, in both the financial and professional services sectors, CIOs are twice as likely to be
providing customer intelligence data in their organisations today as they were three years ago (in
financial services, 20% today compared with 11% three years ago; in professional services, 15% today
In your organisation, what are the principal roles of the IT department, now compared with three years ago? - Enabling
revenue generation
(% respondents)

Now

Three years ago

Total sample
24

16

Professional services
36

19

12

© The Economist Intelligence Unit Limited 2011


Corporate CIOs in emerging markets
An evolving role

In your organisation, what are the principal roles of the IT department, now compared with three years ago? - Providing
customer intelligence data
(% respondents)

Now

Three years ago

Total sample
13

7

Financial services
38
20

11

Professional services
15

6

compared with 6% three years ago).
For CIOs in general, much of the activity in support of setting and reaching strategic goals involves
examining existing processes, and then setting benchmark goals and tracking progress towards those
goals. (See case study: MOL: Understanding targets.)
In your organisation, what are the principal roles of the IT department, now compared with three years ago?
Please select the top three as they were three years ago, and the top three now.
(% respondents)

Now

Three years ago

Enabling system and network security
49

54

Providing IT support to all departments
45

62

Improving cost efficiency
26

34

Improved data and more sophisticated analytical tools help CIOs to fulfil the role of “chief process
officer”, focusing on improving efficiency in all company operations. As a first step, this typically
requires a degree of standardisation in the information collected from different divisions, so that
company-wide benchmarks can be set. “I try not to be too flexible,” says Tiger Brands’ Mr Thwaits.

MOL: Understanding targets
An example of how a CIO can contribute to setting and tracking
performance targets is the case of Zoltán Attila Tóth, CIO of MOL, a
Central European oil and gas giant. MOL has oil exploration, refining
and production operations in ten countries—a vast operation
requiring the most efficient co-ordination possible. Yet, as recently
as 2005, IT provided largely administrative support. Now Mr Tóth
finds himself plunging into the heart of industrial processes. Above
all, he says, “We need to understand targets.”
To do so, Mr Tóth worked with MOL’s refinery chief to improve
processes and set new production goals at refineries. This involved
“collecting different data, putting it on a database, and analysing
13

the data to make decisions”. It also involved developing a dashboard
to enable senior management to monitor fuel refining in a detailed
way at each stage of the process. For instance, the system enables
monitoring of oxygen levels in the fuel, as the wrong levels can
prove costly. Different colours denote the quality of the KPIs. Red
glares on the screen if the undesired values are recorded.
Other business functions may adopt similar systems, although
dashboards can be controversial, as Mr Tóth admits. The refinery
chiefs receive an update every ten minutes, highlighting which
units are working well and which are not. Moreover, every manager
can look at all screens, making errors and shortfalls difficult to
hide. “People-resistance hasn’t been easy, but I have had the
support of the CEO,” says Mr Tóth. It has also helped to have a good
relationship with the divisional leader, he adds.
© The Economist Intelligence Unit Limited 2011


Corporate CIOs in emerging markets
An evolving role

Holicon: Introducing the “chief process officer”
When a company is growing quickly, business processes are often
developed on the fly—and not necessarily in the most efficient
way. Polish IT services provider, Holicon, which provides customerservice call centres and outsourced human resources administrative
services, is a case in point. When CIO, Krzysztof Chylinski, joined
in 2007, there were 50 employees; now, there are more than 1,000.
Revenue in 2010 was around 20 times what it was three years
earlier. However, growth processes were developed haphazardly,
leading to the duplication of some functions and inadequate
coverage of others. By 2010, “We realised we had to think

differently, stop living ‘hand-to-mouth’ and develop clearer roles,”
says Mr Chylinski.
Mr Chylinski, as “chief process officer”, was put in charge of
reviewing and revising processes across departments. This involved

changing core processes for most operations. For example, his
department looked at all the steps taken when launching new
services to see whether they could be streamlined. This involved
working closely with department heads, and ensuring that an
individual “owned” each process.
The results of this analysis have transformed certain business
functions. For example, while office equipment was previously
purchased as needed, office managers now have guidelines and
software that make purchasing procedures more transparent.
Similarly, the hand-over of clients from sales to operations once a
contract has been signed has now been standardised. Previously,
“There was a stage in which no one thought it was their project,”
Mr Chylinski says. The new procedures clarify who does what, and
when, to ensure a smooth transition. The aim of all these changes is
to ensure a uniform and streamlined approach, he says. And since
automation helps to ensure both uniformity and transparency, “The
CIO has to be the central point,” he adds.

“The more standard the system the better, since fewer changes have to be made and running costs
are lower.” A business needs to prove, for example, why it needs to manage a process differently,
rather than adopt the standard. “In our businesses, we have managed to maintain a very high level of
standardisation and common process,” he says.
Equally important, setting standards for efficiency in business processes requires a detailed
knowledge of all aspects of the business, including the balance sheet, the supply chain, sales, order
fulfilment and forecasting. “If CIOs don’t understand the range of business needs, they definitely can’t

deliver the adequate level of service,” says Mr Al Muttairi of Al Faisaliah. (See case study: Holicon:
Introducing the “chief process officer”.)

Drivers of change
What is driving the ascent of emerging-market CIOs within their organisations? To some extent, the
drivers are clear: emerging-market growth is rapid, and so is technological progress. To keep up with
modern methods and remain competitive, many companies in emerging markets are deciding they
must put advanced IT at the heart of their operations.
The IT tools themselves are helping CIOs to persuade their managements to invest in modernisation.
CIOs cite business intelligence, customer-relationship management systems, and enterprise resource
planning systems as among the important tools at their disposal. Software-as-a-service, cloud
computing and supply-chain management also figure in their arsenals. Many of these tools enable
greater transparency and tighter internal controls—two key contributions of IT departments. Mr
Almulla, for one, describes a shift in IT priorities in his company from meeting operational objectives
towards ensuring clarity and timeliness in reporting results. “Transparency and control are becoming
more important issues for IT,” he says.
Beyond transparency and controls, IT tools that allow companies to streamline processes and to
14

© The Economist Intelligence Unit Limited 2011


Corporate CIOs in emerging markets
An evolving role

Which kinds of technology are most important in enabling the CIO to play a significant strategic role in managing volatile
emerging markets? Select up to three.
(% respondents)
Business intelligence
51

Customer-relationship management
49

Enterprise resource planning (ERP)
34

Software-as-a-service
31

Cloud computing
26

Supply-chain management
26

Service Oriented Architectures (SOA) and middleware
25

Open source
12

Other, please specify
0

Don't know/Not applicable
5

scale-up and scale-down operations quickly are gaining a foothold in emerging markets. For example,
Mr Al Muttairi is in the process of introducing supply-chain and back-office applications from remote

providers using cloud applications, to speed up the task of equipping 28 new restaurants with their
own IT systems. With the cloud applications, he expects a dramatic improvement in time-to-market,
requiring less than four hours per restaurant to install these systems, compared with a period of
several weeks using a conventional system deployment process, he says. “A restaurant can’t wait a
week without receiving customers,” he adds.
In general, emerging-market companies are focusing more on installing systems that provide
centralised, standardised and up-to-the-minute data for decision-making. “We’re looking at how to
analyse and control things better now there’s access to more data in a centralised system,” says Mr
Magrath of Mobile Transactions Zambia.

15

© The Economist Intelligence Unit Limited 2011


Corporate CIOs in emerging markets
An evolving role

II. The overhang of the past

T

he broadening of the CIO’s remit is still a work in progress; while there has been considerable
movement in this direction over the past three years, the process is far from complete. The reasons
for uneven progress vary, but boil down to four principal barriers: financial setbacks, which cause
companies to focus on immediate survival, rather than IT investments; the limitations of the CIOs
themselves in terms of background; difficulties in recruiting sufficient IT talent; and a strong legacy
of viewing IT as mainly an enabler of other corporate functions and profit centres, rather than a profit
contributor in its own right.
Of these, the main barrier is the legacy perceptions of the CIO’s role. In over half of the companies

surveyed (53%), respondents said the IT function still primarily plays a supporting role. This sentiment
is particularly strong in CEE, where 60% described IT as primarily a support function. In African
companies, however, only 45% describe IT as having mainly a support function. CIOs “are invited to the
board to inform the board about business plans, but not necessarily to share ideas on strategy, such as
‘should we invest in China?’ ” says Vimetco’s Mr Neumorni. “It’s not something they know about.”
Is the IT function in your organisation primarily regarded as a strategic function that increases competitiveness, or a support
function?
(% respondents)
Total sample
53

Central and Eastern Europe
60

Middle East
57

Africa
45

Similarly, while a majority of respondents say the CIO is either currently a board member or is likely
to become one within three years, a significant proportion (39%) say the opposite; that is, that the
CIO is not now a board member and is unlikely to become one within three years. This proportion is
consistent across the three regions under review. In very large companies (those with $10bn or more
in annual global revenue), the proportion holding this pessimistic view rises to above 50%. This may
indicate the relative difficulty of IT gaining a strategic overview of a very large company.
The legacy view of the IT department’s role is visible elsewhere in our survey results. For example,
16

© The Economist Intelligence Unit Limited 2011

Corporate CIOs in emerging markets
An evolving role

51% of companies say the performance of IT is measured in terms of response time—suggesting that
the support role played by IT is still of paramount importance. (This result, however, may also partly
reflect the fact that average response time is easier to quantify than the department’s contribution to
revenue growth.) Moreover, 25% agree that “The IT department is measured purely as a cost centre.”
This, too, is starting to change—for example, 30% cite IT’s contribution to company-wide cost
controls—but the legacy of the past is still much in evidence.
How is the performance of IT measured in your organisation? Select all that apply.
(% respondents)
Response time
51

Return on investment in IT
35

Uptime
30

Contribution to the revenue growth of the business
30

Contribution to the firm’s ability to control or cut costs
30

The IT department is measured purely as a cost centre
25

Effect on corporate profit margins
15

IT’s performance is not measured
10

Don’t know
4

Other, please specify
1

A telling indicator of the legacy view of the CIO’s role is the IT department’s fairly limited control
over IT spending—despite the fact that such spending is rising. Three years ago, the CEO and board had
final say over major IT investment decisions in 48% of companies, while the CIO had final say in 31%,
and business units in 9%. Today, the proportions are largely unchanged, with 47% saying the CEO and
Who has the primary responsibility for major IT investment decisions at your company, now and three years ago?
Please indicate who this was three years ago, and who this is now.
(% respondents)

Now

Three years ago

The CEO/the Board of Directors
47

The CIO or head of IT
31

32

Business unit
9

12

The CFO
7
7

An outside contractor or integrator
1

3

Don’t know
1

2

Other, please specify
0

17

1

© The Economist Intelligence Unit Limited 2011

48


Corporate CIOs in emerging markets
An evolving role

board have primary responsibility, 32% looking to the CIO, and 12% citing business units.

Obstacles to change
What causes the legacy view of the CIO’s role to persist? One major factor is the economic climate; a
slowdown tends to foster a “back-to-basics” attitude. The downturn of 2008, for example, had the
effect of putting many IT expansions on hold, as companies focused on survival. Moreover, legacy
attitudes tend to persist simply because they have developed over time, and often require equally long
periods to modify.
Equally important, IT departments can only broaden their remits to the extent that their skills
allow. In this area, many emerging-market CIOs run into obstacles. Their own backgrounds may not
be sufficiently broad, as 75% of them come from technical backgrounds, and they may have difficulty
finding the right kind of talent, which combines technical know-how with business understanding.
“Western economies have a bigger talent pool of IT managers than emerging markets do,” notes Bryan
Cruickshank, global head of IT advisory services at KPMG, a consultancy. “It can be difficult getting
access to IT management with five years or more experience.”

18

© The Economist Intelligence Unit Limited 2011


Corporate CIOs in emerging markets
An evolving role

III. A regional comparison

N

ot only are there variations between the role of CIOs in emerging markets and Western economies,
but also in the three different regions under review in this report. Some of this is due to cultural
differences, but equally to factors such as the rate of business growth and the relative advances in
technology environments. The head of IT may be moving a system literally from typewriter to Internet
in a remote African location, or deploying a cloud application to refine some element of customer
service in a Middle Eastern country. But of the three regions, where are the winds of change the
strongest? Although all three regions offer examples of both rapid transformation and persistence of
legacy systems, the region with the strongest indicators of change appears to be Africa. This could be
explained in part by the inclusion of respondents from South Africa, a relatively advanced economy.
As noted in Part II above, only 45% of African respondents, compared to 60% of CEE respondents,
see IT as a support function within their organisation. Stated more positively, 55% of African
respondents, compared to 38% of CEE respondents, see IT as mainly a strategic function within their
organisations.
Is the IT function in your organisation primarily regarded as a strategic function?
(% respondents)
Total sample
46

Africa
55

Middle East
44

Central and Eastern Europe

38

The same regional pattern holds in responses to other survey questions dealing with the CIO’s
role. In Africa, 38% of respondents say their CIOs have primary responsibility for major IT investment
decisions, compared with 30% in CEE, 26% in the Middle East, and 32% in the sample as a whole.
Who has the primary responsibility for major IT investment decisions at your company, now and three years ago?
(% respondents)

Now

Three years ago

The CIO or head of IT
31

19

© The Economist Intelligence Unit Limited 2011

32


Corporate CIOs in emerging markets
An evolving role

African CIOs have also made the greatest strides over the last three years in terms of responsibility
for improving cost efficiency, from 24% to 38%. This 14-percentage-point increase compares to an
increase of eight percentage points for the sample as a whole.
In your organisation, what are the principal roles of the IT department, now compared with three years ago? - Improving cost
efficiency

(% respondents)

Now

Three years ago

Total sample
34

26

Africa
38

24

Middle East
25

27

Central and Eastern Europe
28

36

Similarly, when asked whether they expect the CIO’s role to expand to include business-wide
strategic elements over the next year, 49% of African respondents rate this possibility as “highly
likely”, compared to 16% in CEE and 32% for the total sample.
Do you expect the CIO’s role to expand to include business-wide strategic elements over the next year, in addition to

managing day-to-day IT operations? - Highly likely
(% respondents)
Africa
32
49

Middle East
34

Central and Eastern Europe
16

Some of this discrepancy may be due to the faster average pace of growth in African economies
compared to CEE ones. It may also be due in part to relative freedom of emerging African companies
from legacy IT systems and procedures, which would need to be dismantled to make room for new
ones. A third factor may be a still-developing framework of corporate governance and oversight, which
might allow for relatively faster decision-making on large investments and major changes in strategic
direction.
The survey data lend some credence to the “fast-growth” scenario with respect to Africa. When
asked how their companies’ IT budgets have changed over the past three years, and how those budgets
are expected to change over the next three years, African respondents were consistently more likely
to report both higher growth to date and higher growth expectations. Thirty-two percent of African
respondents reported growth of 25% or more over the past three years, compared to 13% in the Middle
East and 19% in CEE. When asked about the next three years, 40% of African respondents expected ITbudget growth of 25% or more, compared to 21% in the Middle East and 17% in CEE.

20

© The Economist Intelligence Unit Limited 2011

Corporate CIOs in emerging markets
An evolving role

Is the IT function in your organisation primarily regarded as a strategic function that increases competitiveness, or a support
function?
(% respondents)
Total sample
53

Central and Eastern Europe
60

Middle East
57

Africa
45

21

© The Economist Intelligence Unit Limited 2011


Corporate CIOs in emerging markets
An evolving role

Conclusion

A

lready under greater pressure than IT chiefs in Western economies, the trends identified in this
report suggest that CIOs will continue to strengthen their positions as information becomes an
increasingly valuable (and available) asset in emerging-market firms. The transformation of the CIO
from implementer to decision-maker has occurred rapidly so far, and is expected to continue to do so;
76% of our survey respondents expect the CIO’s role to broaden to include business-wide strategic
elements over the next year. One of the interviewees for this study suggested that an IT background is
a big career asset in a time of rapid technological change: “Someone with a technical background can
adapt better to business than the other way around,” he said. As the role shifts, versatility will become
the touchstone for the emerging-market CIO.
Indeed, some see the information function taking on new dimensions, with IT as “the reporting hub
of the company” and the CIO as “chief process officer”, responsible for ensuring clarity and efficiency
throughout the business. Clearly, that is a tall order, and CIOs cannot do all this alone. To be effective,
they require the active support of business unit heads and the backing of senior management. This
survey shows that this has begun, with the fastest change occurring in Africa, in small companies, and
in IT-dependent sectors such as financial and professional services.
Experts generally reckon it will take several years for emerging-market firms to develop the same
structure to incorporate IT in way that Western companies have done. How well and how thoroughly all
types of companies in emerging markets embrace the IT revolution will influence their competitiveness
in the digitalised economy of the future.

22

Taking the reins

service to financial reporting—including the details of their
business processes.

“CIOs today can’t wait for the business to ‘come and ask’,” says
the CIO of one emerging-market company. Here are some of the
measures that our interview participants recommend to broaden the

remit of the CIO:

l – Develop: CIOs should seek out IT architecture that is scalable
and flexible enough to accommodate further growth.
l – Integrate: CIOs should standardise and integrate data that
support executive decision-making, including creating dashboards.

l – Act: At a time of repaid IT advances and fast economic growth,
CIOs have a unique opportunity to play a pivotal role in upgrading
their companies’ capabilities.

l – Connect: CIOs should endeavour to speak the language that
business executives recognise.

l – Inquire: CIOs should actively deepen their understanding of
multiple aspects of the business, from marketing and customer

l – Inform: CIOs should keep abreast of technology developments
and keep fellow executives informed.

© The Economist Intelligence Unit Limited 2011


Appendix
Survey results

Corporate CIOs in emerging markets
An evolving role

Appendix: Survey results

Is the IT function in your organisation primarily regarded as:
(% respondents)
A strategic function, which increases the firm’s competitiveness
46

A support function
53

Other, please specify
1

What is the career background of the CIO/CTO at your company? Select all that apply.
(% respondents)
IT/technical
75

General management
18

Operations
17

Financial
14

Sales/marketing
7

R&D
4

Manufacturing
2

Don't know
2

Other, please specify
1

Which of the following is most likely to initiate technological innovation within the company?
(% respondents)
The IT function
30

Business units
29

The Board of Directors
24

Customers
7

External consultants or system integrators
6

Suppliers
2

Don’t know
1

Other, please specify
1

23

© The Economist Intelligence Unit Limited 2011


Appendix
Survey results

Corporate CIOs in emerging markets
An evolving role

Who has the primary responsibility for major IT investment decisions at your company, now and three years ago?
Please indicate who this was three years ago, and who this is now.
(% respondents)

Now

Three years ago

The CEO/the Board of Directors
47

48

The CIO or head of IT
31

32

Business unit
12

9

The CFO
7
7

An outside contractor or integrator
1

3

Don’t know
1

2

Other, please specify
0

1

In your organisation, what are the principal roles of the IT department, now compared with three years ago?

Please select the top three as they were three years ago, and the top three now.
(% respondents)

Now

Three years ago

Enabling system and network security
49

54

Training staff in the effective use of IT
17

24

Improving cost efficiency
26

34

Enabling revenue generation
24

16

Ensuring compliance with regulatory requirements
21

23

Enabling the use of social networks to support corporate functions
12

8

Optimising supply-chain operations and/or purchasing
13

10

Providing IT support to all departments
45

Facilities maintenance/planning
11

14

Document/records management
15

17

Improving interaction with customers
13

18

Providing customer intelligence data
7

13

Other, please specify

24

0
0

© The Economist Intelligence Unit Limited 2011

62