Do CIOs Matter?

The CIO, that loftiest of all titles given to the head honcho in the IT department, actually has two meanings. Officially, CIO stands for Chief Information Officer. But, it could also mean Career Is Over, with industry pundits pointing to statistics showing that the average CIO tenure is 18 months, demonstrating the second meaning.

Even though modern corporations invest billions of dollars in information technology, questions remain whether a CIO is even required, and can take a seat at the boardroom table along the CEO, the COO (president), the CFO and the CMO.

A comparison is made between the CIO and the Chief Electrical Officer of the early 1900s. Soon after the turn of the century, electricity became ubiquitous and nothing more than a commodity, and therefore no company seriously needed a leader in that role. The same thing, they say, is happening with IT as it fades into the background of infrastructure.

Among those who are the leading critics of the IT industry and all its grandiose claims is former Harvard Business Review editor, noted industry author and blogger Nicholas Carr. In his seminal book IT Does Matter written in 2004, Carr questions the commonly held belief that IT is a significant contributor to a company’s success.

“Simply put, it remains difficult, if not impossible, to draw any broad conclusions about IT’s effect on the competitiveness and profitability of individual businesses,” he wrote.

IT, he charges, was dramatically oversold in the ‘80s and ‘90s leading into the dot-com bust of early 2000. The promises of IT as competitive advantage were illusory, because all companies in any given industry ended up using the same technology.

Central role

In hindsight, Carr was mostly just being provocative, but a good five years later, the debate lingers on. And if IT doesn’t really matter, by extension, neither does the CIO. If this is true then companies are wasting precious resources, including a six-figure salary, by awarding the title.

Those who argue the opposite say there is ample evidence to the contrary. There is not a single Fortune 500 company that does not have a CIO, and that most CIOs now report directly to the CEO is added proof of their acceptance. The current group of CIOs, they argue, have become agents of change, drivers of business strategy, and never has there been a time when a CIO has been more needed.

“CEOs who put IT at the core of their business stand a better chance of weathering the downturn,” says The Boston Consulting Group in a recent report. “And CEOs should recognize the potential for their information-technology operations to transform the business during the downturn and give IT a more central role in the company.”

“The IT organization is a significantly underutilized asset in many companies,” says Wolfgang Thiel, global leader of BCG’s Information Technology practice and one of the report’s coauthors. “These days, companies need to be firing on all cylinders simply to survive, let alone thrive. IT can play a pivotal role in that effort.”

Over the longer term, IT can enable and drive a host of capabilities that lead to true, sustainable competitive advantage. Far from shrinking in importance, the CIO function should take a central role in navigating the business through the downturn.

Striking a balance

As a CIO who has worked 14 years in the same place, Mike Cuddy is perhaps an anomaly because his tenure is much longer than the industry average.

“I don’t really know what is key to remaining CIO at the same company,” says Cuddy, vice-president and CIO at Toromont, a supplier of heavy construction and farming equipment based in Toronto, Canada.  “I could easily characterize my tenure with Toromont as a series of different jobs or engagements with quite different business priorities and strategies. Nothing remains static. The benefit of being with Toromont is that we have great products and customers, fabulous colleagues and a respectful and hard working culture, and a constancy of business purpose.”

If anything, Cuddy disagrees with Carr. IT, he says, is far more than a utility. “This company sees IT as both strategic and operational, and I am not sure how you can isolate one from the other.  We need IT to deliver the utilities of communications and information infrastructure, along with accurate and reliable transactional processing.  And we also need IT to help propel us to new levels of performance, and equip our organization with the most competitively advantageous tools and technologies.  I simply try to balance these elements in a manner that suits and supports our business objectives,” he says.    

By striking a balance between the operational and strategic, Cuddy may be ahead of the curve. In most organizations, there is a gap between perceived need and reality, says an October 2008 report called The CIO Profession: Leaders of Change, Drivers of Innovation. The report was commissioned by IBM and undertaken by the Centre for CIO Leadership.

Agents of change

According to the report, while 87 percent of CIOs identify themselves as leaders of change and possessing the skills and experience required to drive the business agenda, only 74 percent say their business colleagues are aligned with that vision.

Furthermore, various reasons are given for the CIO’s limited acceptance:

-CIOs are leaders in their organizations, BUT they are still evolving to be viewed as “true tested advisors.”

-CIOs have a seat at the boardroom, BUT are not full contributors to business strategy; and,

-CIOs know where they need to lead their IT organizations, BUT continue to wrestle with delegation and building the next-generation team.

Given that assessment, although winning the long hard-fought battle for boardroom acceptance, the CIO still has some work to do before bridging the gap between business and IT, and winning the CEO’s favor.

Organization & Talent

Management Best Practice Actions

1. Ensure that my team communicates effectively with business peers

2. Plan for delegating authority to allow for strategic activities

3. Develop business and IT capabilities of my team

4. Know the critical competencies for my team’s success

5. Link business and technology objectives to team’s performance

6. Develop training opportunities and succession plan for my team

7. Establish plan to acquire and grow talent