Evolution of the CTO

May 2019  |  FEATURE  |  BOARDROOM INTELLIGENCE

Financier Worldwide Magazine

May 2019 Issue


In a business world increasingly beholden to digital technologies, the role of chief technology officer (CTO) has steadily ascended the corporate hierarchy to become a critical component of day-to-day operations.

Even a cursory examination of the roles and responsibilities ascribed to a CTO reveal the extent of the function’s sway today: managing physical and personnel technology infrastructure, including deployment, network and system management, integration testing and technical operations development. CTOs also oversee client relations to ensure that expectations are effectively developed and managed.

According to the 2017 Russell Reynolds report, ‘Inside the Mind of the Chief Technology Officer’, the CTO role is evolving faster than ever before, requiring the post-holder to connect and translate the creation and management of new products and services with more traditional enterprise IT and operational enablement activity.

The report also observes that while the scope of the CTO role and pace at which it is evolving varies by industry, company size, geography and culture, almost all companies are expanding the technology leader’s responsibilities, as the realisation of delivering digital products and services, data and analytics capability and customer experience is primarily differentiated by the technology function.

The upshot, determines the report, is that CTOs not only need to have broad technical expertise but also the strategic and commercial acumen to challenge, translate and drive decisions across the enterprise and the vision and market connectivity to bring the outside in.

“The CTO is one of the most forward-looking roles in a company, delivering cutting-edge digital and cloud enablement, and usually sitting on the executive board,” says Tristan Jervis, co-leader of the technology practice at Russell Reynolds. “A CTO uses technology to enhance the company’s product offerings, and create and engineer platforms and applications to meet business and customer needs, particularly where customer experience is concerned.

“The role tends to be elevated in companies where technology is the business or product, and contributes to the strategic vision of a company,” he continues. “The visibility that the technology function has gained over the last five years has been astonishing – a continuous move into the executive suite.”

Samantha Searle, a principal analyst at Gartner, believes a CTO is critical for managing the technology lifecycle and driving technology innovation. “It is one of the most complex and diverse executive roles,” she says. “We have identified three distinct CTO personas. The first is responsible for daily IT operations, while the others involve business or IT-led technology innovation.”

And, as new technologies continue to emerge, companies and their CTOs need to swiftly adopt them in order to stay ahead of the competition.

Evolution drivers

While there are numerous factors driving the evolution of the CTO function, in the main, the role has evolved as new technologies have emerged.

“Business models are shifting to adapt to the needs of a more tech-centric, collaborative and agile organisation – and the role of technology leadership is evolving in tandem,” concurs Mr Jervis. “To make this happen, technology officer roles are moving from a supportive function to becoming key enablers of a company’s transformation agenda and strategy. In B2C and B2B companies alike, this means bringing the customer into the centre of everything they do and understanding the entire customer lifecycle from front-end to back-end, rather than sitting in technology or digital silos.”

With the emergence of new technologies virtually omnipresent, the CTO role is poised to evolve further in order to accommodate fresh technological perspectives.

Leading rather than following, the name of the game for CTOs is innovation. “The role of the CTO is evolving away from technology operations to leading technology innovation,” observes Nick Jones, vice president and distinguished analyst at Gartner. “This is being driven by three factors. Firstly, business and technology innovation are becoming increasingly intertwined. Secondly, IT investment is shifting away from infrastructure and data centres to cloud services and solutions. This means less need for CTOs to manage infrastructure. Thirdly, organisations are shifting to more agile, product-centric delivery for digital products and service – an area CTOs are equipped to lead.”

In the view of Craig W. Stephenson, managing director of the North America technology officers practice at Korn Ferry, rapidly changing business dynamics are permitting technology leaders to ‘lean in’ and operate in a very strategic manner. “The CTO is leading efforts to modernise, drive change and enable business results. To effectively compete in business, technology leaders are driving efforts related to data, analytics, digital, product, engineering, cloud, innovation, platforms, cyber and customer experience.”

Additional evolutionary drivers include the impact of application programming interface (API), robotic process automation (RPA), artificial intelligence (AI) and blockchain technology.

Key challenges

‘Responsibility walks hand in hand with capacity and power’ a scholar once wrote – a notion that can be readily applied to the CTO function and all its challenges.

“CTOs are being stretched in completely new ways,” says Mr Jervis. “They are expected to be more flexible and better informed on the latest trends and technologies, while also being a business-savvy visionary capable of bringing the company along a transformation journey. The best CTOs are achieving greater strategic and ‘front-to-back’ impact, creating or enabling new revenue streams, simplifying ways of working, and increasing resilience and reducing risk.”

Given the ascendancy of the CTO function in recent years, much of the technology-related conversation now takes place at boardroom level; and while some board members adapt well to the greater exposure such discussions bring, others struggle to cope with increasing regulation, for example, and its impact on data storage, data management, and customer permissions and communication.

“Regulation is having an impact on cost and time-to-market in some industries, though this is a manageable consideration,” suggests Mr Jervis. “Technology development is now moving so fast that even the most successful companies are struggling to keep pace. The decision surrounding the need to deliver existing and new services, experiences and secure platforms have become increasingly complex and the range of vendors is changing.

“However, companies leading the race are focused not on the ‘next big thing’ but are instead focused on the agility and flexibility of the business processes and core technology architecture,” he continues. “Alignment between digital and technology is a strategic conversation, not a trend, and should be top of mind for every chief executive and board.”

Additional challenges facing CTOs include marshalling resources, measuring success and securing chief executive buy-in, as well as ensuring IT accelerates rather than hinders the progress of digital business initiatives.

“CTOs must clarify their responsibilities and agree success metrics, identifying the right moment to transition to leading technology innovation,” suggests Ms Searle. “They should be looking to ideate, and experiment and scale new innovations, while successfully navigating any regulatory constraints and organisational legacy that stands in their way.”

Operational alignment

The evolution of the CTO, while undoubtedly a boon for organisations, can be a double-edged sword, as any misunderstandings as to the scope of the role may cause operational alignment issues.

“Many companies are lost in the semantics of chief information officer (CIO) or CTO responsibilities, and in deciding if they should be referring to technology or information in this key leadership position,” asserts Mr Jervis. We see organisational alignment issues where there is still confusion from the board and chief executive on technology as the differentiator, and where the technology function lacks resilience and maturity within the business. The evolution in digital has added to the confusion around the role of the CTO, and whether a chief digital officer (CDO) still exists – raising questions around ownership of delivering experience of products and service through technology.”

As well as alignment issues, Mr Jones advises CTOs to be aware of being measured on factors outside their control. “They need the right level of influence to ensure that other functions follow their direction,” he explains. “CTO responsibilities do vary and our research indicates that CTOs and their managers, usually chief executives or CIOs, sometimes view CTO challenges, responsibilities and reporting functions differently. This is why chief executive commitment and socialisation of the CTO role and responsibilities is critical to success.”

In Mr Stephenson’s experience, as the CTO function acquires more responsibilities, its reporting line rises accordingly. “In addition to leading the technology function, the CTO is also driving culture change to approach challenges in modern and appropriate manners to include adoption of the latest technologies and methodologies,” he says. “The role increasingly involves accessing talent to thrive in highly competitive markets and addressing B2B and B2C customer requirements with transparency and fiscal stewardship.”

Future evolution

With the emergence of new technologies virtually omnipresent, the CTO role is poised to evolve further in order to accommodate fresh technological perspectives.

In Ms Searle’s view, as data centres dwindle due to increasing adoption of cloud services, CTOs are likely to spend more time driving technology innovation to address business needs and leading product delivery for digital products and services. “CTOS will be less like ‘super-geeks’ and more like technology visionaries,” she suggests. “They will need broader skillsets – including people management, innovative thinking, communication, influence, collaboration, business model design and diplomacy in order to work with external ecosystems and partners – extending beyond technology-related issues.”

Furthermore, to be a successful CTO calls for a leader, someone with the business acumen to build the right teams and drive the innovation agenda to achieve growth and results.

“These leaders need to span from an operational orientation in which they overhaul legacy mindsets and challenge the status quo, to a transformational one, in which they are fundamentally altering the way products and services are developed,” believes Mr Jervis. “Their evolution will be in their ability to be outwardly focused and to create ecosystems of ‘best-in-breadth’ solutions. Enablement of the business strategy has taken precedence over cutting budget costs – the CTO must use technology to add to top line growth.”

As technological inventions and updates continue apace and become increasingly intertwined with business, a CTO needs to ensure overall that technology infrastructure is effectively managed, service objectives met and strategy aligned with company goals – a mission fraught with challenges and pitfalls, but full of value and opportunity.

© Financier Worldwide


BY

Fraser Tennant


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