Why CIO tenures in Australia are getting shorter
- 23 July, 2018 13:35
The typical chief information officer tenure, or so goes the noughties C-Suite folklore, works to a five year cycle.
The first year is the honeymoon period. The second year sees the strategy and planning work done. In the third year comes the implementation. By the fourth year the executive and board realises the execution is not going well and by the fifth year, the CIO starts seeking another job.
Jokes aside, the five year term remains typical globally. But in Australia it has not been the norm for some time. Analysis of available data suggests that, locally, CIOs are facing tenures of well under half a decade, and the average stint time is in rapid decline.
This might sound like bad news. But according to industry experts now is a great time to be a CIO; they can choose when they jump and where to, way before being pushed.
Every year Gartner conducts a major survey of more than 2,500 CIOs for its CIO Agenda report. As part of the survey, CIOs are asked how long they have been in their current role. In 2013, CIOs globally reported they had been working where they were currently for 4.6 years. In Australia the average was slightly lower, at 4.2 years.
In the most recent 2018 survey, the global average had gone up to 4.48 years. But in Australia it had dropped significantly to 3.42 years.
A global survey by recruitment consultancy Harvey Nash had similar findings. Asking a slightly different question – ‘How long do you expect to stay in your current role from this point forwards?’ – in 2013 CIOs around the world said 40 months. In 2018, globally the answer had risen on average to 52 months, or 4.3 years.
But extracting the Australian figures tells a different story. In 2013, Australian CIOs said they expected to be in the same role for another 3.3 years. This year, they had hopes of sticking around for, on average, for only another 1.7 years.
The declining Aussie CIO tenure cannot be explained by shortening C-suite tenures overall. At last count, the shelf life of Australian CEOs for example was 5.5 years, representing a steady rise since the 4.2 average of 2012, according to a PwC study. CEO average tenures are at their highest since 2008 and in 2016 beat the global average (5.3 years) for the first time.
One of the biggest factors in the tumbling tenure trend locally is the widespread appetite for digital transformation among Australian businesses, according to experts.
Businesses need to rapidly digitise core platforms and processes, and the customer experience, to remain relevant let alone successful. As Forrester principal analyst Tim Sheedy put it in January: “you're dead or dying if you don’t respond”.
Those that do transform are able to ensure increased profit margins, productivity improvements and cost reductions as a result.
“Over the past couple of years these transformational efforts have stepped up and swept across Australia, hence the CIO career movement we are seeing in the local market. It has been an exciting time of transformation and business model reimagination in Australia, which has brought about an abundance of opportunity to transformational leaders, but equally with any change opportunity, comes disruption,” Bridget Gray, APAC managing director of global executive recruitment agency Harvey Nash, told CIO Australia.
The available opportunities in the market means CIOs can more easily make the switch to another company.
“Many a transformation CIO can be lured from their current CIO position, to truly transform a new business from traditional silos into a future ready state. These mandates are often hard to refuse as they are career defining not just from an IT leadership perspective but also a great trajectory for those aspiring for CEO roles in the future,” Gray said.
There’s also been the rise of the transformation CIO, who works to three year cycles before they begin to “crave a new challenge,” Gray adds.
The trend has also been observed by Jason Pope, the CTO of CA Technologies in ANZ, who regularly meets with CIO customers.
“Changes in the market, increasing business demands and trends in technology have led to a faster shift in the market, across all industry sectors. IT professionals are quickly moving from a CIO role in one organisation to another,” he told CIO.
Pope adds that CIOs are moving around more frequently as a result of ‘horizontality’, with individuals taking up roles in diverse industries.
“Horizontality is becoming more widespread. Many organisations look for talent from outside their own sector who can apply learnings from a wider base,” Pope said.
“A CIO operating in a finance institution may move across banking, superannuation and insurance organisations to gain that breadth and depth of experience in the industry. But now that finance organisation is switching gears and putting all its focus on how they can improve the experience for the customer, leading them to look for experience outside finance, maybe from retail or elsewhere,” he added.
According to some analysts, Australian organisations are somewhat behind the US, China and Europe when it comes to digitally transforming their businesses.
“They see it [digitisation] as something that has to happen and they are going to start making their changes quickly. I guess many of them are in industries that are being disrupted more so than our comfortable duopolies down here in Australia,” Forrester’s Sheedy said earlier this year.
In those markets, since the big digital overhauls have already happened, CIO tenures are dilating as a result. The same is predicted to happen here too.
“More mature markets like the USA and UK are in some cases ahead of Australia with regards to digital and transformational initiatives and in the next phase of change, where the heavy lifting and major disruptive phase has already taken place, and they are experiencing more stablility, and as such CIO’s in other markets are enjoying slightly longer tenures,” Gray said.
“I am confident we will start to follow global trend over the coming years as the stabilisation of these programs in Australia occurs, as it has in other mature markets,” she added.