Enterprise 2.0

The CIO is dead (Long live the CIO)

Patrick Gray takes on the changing role of the CIO, writing that a C-level position for IT will no longer be warranted unless it evolves beyond the operational, shared-service mentality.

With the past few years resulting in an explosion of C-level titles, ranging from Chief Risk Officer to Chief Compliance Officer, a rationalization of the C-suite is long overdue before the alphabet soup of C-level positions threatens to make the title meaningless. Despite being a feature of corporations large and small for several decades, the CIO role is not safe from extinction, and in its current state, there is a good chance its days are numbered.

The CIO role originated as a means to mitigate the ever-expanding complexity of technology. Executives in COO and CFO positions who were not born with tech struggled to manage the mélange of devices, people, networks and software, and as budgets and overhead ballooned, creating a new C-level post to manage it all seemed like the right course. While that rationale was valid in the mainframe days, a confluence of factors is rapidly diminishing the relevance of the CIO position in its current guise.

Complexity and criticality are not necessarily strategic

In any discussion of the relevance of the CIO role, invariably someone mentions the complex nature of the technology embedded in most businesses. Everything from the boxes and wires to the ERP system require extensive care and feeding, a difficult job due to the complex and integrated nature of modern technology. Should a service as benign as email fail, the entire company can be left in the lurch. Eventually this line of thinking suggests that the complex and critical nature of technology demands a place in the C-suite. After all, if one of your tech charges going "bump in the night" could hamper your ability to do business, then the role must be of vital strategic importance, right?

Not so fast. While technology is critically important, its care and feeding is not necessarily deserving of a seat at the executive table. No one is arguing that modern IT infrastructure is not complex or not deserving of excellent and capable management, but like any other critical operational function, managing technical infrastructure is no more deserving of a C-level position than someone who manages the supply chain, corporate real estate, security, or asset management. Electricity is critical to most businesses and households, and a mind-numbingly complex commodity to generate and deliver, yet who considers their electricity provider a "trusted partner?" Similarly, the CIO who sees his or her role solely as keeping the servers serving and networks networking is largely doomed to irrelevancy.

IT is now embedded

Much has been written about the new generation of workers advancing through the ranks, a generation who grew up with technology, and spent their university years playing with Facebook and Linux years before "Web 2.0" and "open source" were bandied about in the boardroom. No longer the sole province of the computer science majors, the rising stars in your marketing, sales, finance and operational roles likely know more about technology than some of your IT staff. Integrating technology into their jobs is as effortless as breathing, and a monolithic IT organization that strives to block them from deploying relevant technology into the groups they manage is an anachronism to be worked around, rather than a critical resource.

Aside from large-scale infrastructure like networks and provisioning hardware and software, nearly every new IT trend points towards those in operational roles making technical decisions, rather than leaving the task to corporate IT. Virtualization, cloud computing, Web 2.0, etc. will all push the implementation of new services to end users, and unless IT evolves, it will fade into a utility that is expected to be seen and not heard.

A shared service model of IT will lead to its downfall

For several years, a shared services type of model has been held up as the holy grail of IT management. While travelling under many different names and favors, the fundamental goal of the shared services crowd is to make IT a "company within the company," its most noble incarnation developing a menu of services with corresponding prices, and perhaps even turning a "profit" as other business units pay for these services. While this may look good on paper, any "profit" generated through this model is usually a result of accounting gymnastics rather than additional revenue from an end customer. As IT tries to pass its costs to other businesses, savvy business units are going to make the natural comparison to outside providers, or look for ways to avoid IT organizations that price unrealistically. Furthermore, the best shared services deliver commodities that are best compared on cost rather than strategic value.

A down economy and a new generation of management that has a stronger grasp on what IT actually costs will likely rebel against the hit to their own profit center. Combined with the increasingly embedded nature of IT, business units will seek to "roll their own" rather than pay for internal IT's unrealistic chargeback model.

So, what's a CIO to do?

To stay relevant, the CIO role must evolve beyond the operational, shared service mentality. Droning on about uptime and upgrades is not going to cut it, and purely operational CIOs will rapidly be ushered out of the C-suite. In the future, IT will likely diverge into two disparate functions. The first will be a purely operational group that keeps the networks up, builds and maintains the virtualized infrastructure, and maintains shared business services like email and ERP. Complex and critical, yes, deserving of a C-suite role, no.

The second component of what is today's single IT organization will look more like an internal consultancy than a shared service. This group will be equally at home in both the business and technical worlds (just as its colleagues in business units will be extremely well-versed in technology), and will work to leverage corporate infrastructure to build new functionality. This group might advise on a new digital marketing campaign, or it might help finance determine the right mix of outsourced and internal infrastructure to support a new system. Rather than being compensated for technical objectives, they are compensated for business results and succeed or fail along with their business counterparts, not based on accounting gimmicks that shuffle costs around the company.

In this world, the CIO becomes a mix of process officer, information broker and skunk works-type researcher. His or her "customers" are those that write the checks for the products and services the company buys, not internal business units, and problems are tackled jointly with line of business counterparts. In this role, the infrastructure is far less important than the strategic direction of the company and a detailed understanding of the company's markets, processes and relationships. Essentially the "Information" portion of IT becomes far more relevant than the technical aspects.

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About

Patrick Gray works for a global Fortune 500 consulting and IT services company and is the author of Breakthrough IT: Supercharging Organizational Value through Technology as well as the companion e-book The Breakthrough CIO's Companion. He has spent ...

29 comments
brucemichael
brucemichael

This is a trend today in blogging and news.  Come up with a really interesting and intriguing headline, whether it makes sense or not, so that people will open and read the article and comment as we are doing.   Nevertheless, whether Mr. Gray believe in his position and this is not solely self serving, I personally see the premise here as completely flawed.  It is the same logic I heard in 1995 when many people were talking that within 10 years, IT staff will be completely unnecessary because everything will run through a browser on the cloud, and hardware will just be an appliance.   While there are some good points, it is clear that the CIO position has and will continue to evolve.  But I can make a clear case that this role is becoming increasingly strategic, and that the role has migrated out of the day to day concerns of infrastructure, and focuses as much on using the ever changing advances in technology for growth.   With so many changes, coming to so many industries, the CIO is as important as ever when it comes to communicating to other C-Level management how and why new technology will drive production.

rjohnson
rjohnson

I see this article as a poor attempt to bolster the Consulting industry that the author is apart of. This is a waste of my time to read this article and it is slanted towards a consulting company's point of view and how they can achieve more business by-passing a CIO. CIO's are not going anywhere. Users have no idea how technology works, the security required, the equipment involved, the integration to other applications necessary, and the general cost. The CIO is the central cost containment leader for Technology. You have a business person running technology you will get more costs out of pocket due to the business person not realizing how technology can be borrowed from other inhouse applications and used in others. It then becomes an IT organization nightmare. Not having a CIO on our C-suite is a technological suicide waiting to happen. From the meetings about company strategy and direction a seasoned CIO will be able to take your company to that level technically and make it happen within budget as there is multiple ways to get to the same place, but only a CIO will know how to get there cost effectively and timely. The definition of a CIO has always been to build technology that helps increase productivity in the day to day operations as well as help the company increase revenue by making strategic technological decisions that provide the company a technological advantage in the marketplace. Just because I can budget my checkbook at home and I am getting pretty savvy at stock markets and other things does not make me a financial genius and does not mean we as a company do not need a CFO anymore. Yes, businesses are more and more savvy about financial decisions and more knowledgable about finance than IT, but you will not see the CFO go away either. The Users DON'T comprehend what is required in all aspects of doing a CFO job or a CIO job. If you are a company that wants to regress into the dark ages of technology go ahead and don't have a CIO, but if you want to be a leader in your industry using technological advantages aligning your IT with business vision, then you better keep that CIO on staff. I think maybe companies are hiring the wrong people not doing what is truly required of a CIO. The executive team or boards are not savy enough technically (even though this article says they are..pfft) to realize they don't even have the right person for the job. CIOs do need to be technically advanced and also have business intelligence to have the job. This article assumes all CIOs are not like this and is a poor attempt and rocking the ship.

Taggy39
Taggy39

I think your initial definition of the CIO is misguided. The CIO is there to ensure that the technology strategy aligns to the business strategy. Whether that technology is in-house or outsourced, infrastructure or application, storage or network, the CIO has to enlighten the board of what's happening in the industry (the capabilities available), and set expectations of what the company's technology is capable of.

jascc1
jascc1

Where do I start? As many have mentioned here, the article does talk on SOME valid points (ie.e IT as consultants....though obvious), but they are very key things you are overlooking. I highligh the main three: 1) TRUE "IT" knowledge involves having contextual understanding of the IT industry, trends and how things work together. This makes you the expert that the 'surface' level business person/user cannot touch. 2) The external provider (via outsourcing) does not have the same vested interest in an organization that someone who works there does. They are in the business of getting more business. If your company folds, they get reassigned to another acount. Jerry maguire does not work at any of these Outsourcing firms that I know. Also, these firms (if there are good) focus on isolated services or nich aspects of IT. This is their selling point. Which means to rbing in multiple 'niche' firms to run the many factes of your business, you will be paying alot of money for it. My Point : Outsourcing makes sense for some things, depending on your org's make-up, but you will ALWAYS need internal strategic direction - and at the C-Level 3) A truely successful business will understand and see that it needs to INTEGRATE with IT...not just align. For this point alone, you will need a C-Level executive who is versed and can manage the field of technology (business, conultant, vendor management, and operational sides).

smithDms2002
smithDms2002

Another force pushing implementation out of IT and towards the business side is the rise of hosted services which can be set up and managed without the IT department for services like CRM, Sales Force Management, and Web Hosting to mention a few. This eliminates the need for equipment and the IT folks that come with it, and in many cases the business users can be up and running in a few days compared with the weeks and/or months that IT might take to provide same capability. I have seen real cases where a hosted service will meet the business needs, but the 'Not built here' syndrome intervened, and a locally hosted equivalent was built with additional costs and substantial delays. The new CIO needs to be more of a business person and an agent of change - driving IT to do the job better, faster and cheaper if we are to survive.

Curtis R. Unruh
Curtis R. Unruh

Many of the people making comments don't get it, and as Mr. Gray infers, will most likely be marginalized without even understanding why. To be relevant, to earn a spot at the exective management table, takes not only a business orientation, but business knowledge (and not IT knowledge and an IT orientation). IT has become nothing more than a utility (like electricity), and the expectation is near perfect operation. Like electricity, when was the last time you called the facilities manager and thanked him because the light switch worked? IT managers are enablers, not saviors. IT has become demystified and many IT management types have become stale and defensive. I fear for the future of my chosen profession. Great writing Mr. Gray. Please keep it up.

DannyH
DannyH

Disagree: The main roll was and always will be the face of IT at the executive table. The next roll would be to make the tough choices You know as well as I you can ask 3 smart experienced IT people to solve one problem And get three different right answers. CIO's will be here to stay, whatever you call them directors of technologies (DOT), Managers of IT (MOIT), Information Systems Leader There always be a need for a leader to make choices and present them to the brass. My 2 cents

dentidoru
dentidoru

Why not, M. Gray ? Things are changing. May most of today CIOs become CTOs for managing commoditized IT and avoid such a mess told in the comment "Aon, CIO and CTO" ? Why not ? What's about CIO then ? Won't they be more and more embedded in C-Level Management as IS being by now confused with organization ? I agree on the view that service model is not effective. New trends in management which consider companies capabilities (processes, competences, systems) deployment, lead to teach IS in Business school. New managers will manage IS like regular part of their business. And CEOs will soon include Enterprise Architecture in their scopes. Regard J Capirossi http://bizstrategos.com

reisen55
reisen55

In 2004, Aon Group had a CIO named June Drewey and a CTO named Greg Casagrande. Both were experienced professionals but tired of running and challenging a global network that was consistently at odds. They found a solutions: outsourcing. In August, 2004 Patrick Ryan, CEO, inked a 7 year deal with Computer Sciences Corporation. Cost $600 million to save $300 million over seven years. I do not get that math either. One day later after the signing. June sold her stock and quit. Greg sold his stock and quit. June went to Chubb Insurance. Greg went to Coca Cola. CSC overcharged Aon by $200 million in year one and the next year had a solution: fire everybody and bring in dumb young kids. So much for the CIO role at Aon.

ogunda
ogunda

Great article Patrick. One thing not mentioned in this piece is ability of the CIO?s. Referring to the statement from your piece ?To stay relevant, the CIO role must evolve beyond the operational, shared service mentality. Droning on about uptime and upgrades is not going to cut it, and purely operational CIOs will rapidly be ushered out of the C-suite? One of the key reasons for creating level C-level position within a company was to have IT at the table as part of the strategic decision, as more and more companies are leveraging IT for competitive edge. Another factor for this C-level decision was somewhat rooted in the expectation gap between the business and IT. So to mitigate this chasm, the proposal was to have IT alongside business to enable, frame and target those initiatives towards the organization?s maxims. The goal here was to enable and move the organization in a positive direction. Therefore, to make arguments for the line of thinking that the operational complexities and critical nature of technology then demands a place at the C-level leads me to the opinion of competence. That person does not understand the role of his/her job. They need to understand that the goal is not just operational and maintenance, but actually driving the business as well. I don?t know whether the CIO will die or not. The CIO need to understand the difference between operational IT and running IT as business. It?s about time they need to see IT as extension of the business and not shared services and operational maintenance. Thanks Patrick for this thought provoking and important subject.

Barshalom
Barshalom

I disagree that the CIO is dead. Is not a CIO the most senior leader of technology in a company? Remember when the title MIS Manager was used? This is just another term for CIO. The title was different, but the function remains the same. Think back to the 1970s, 80s, and the 90s. There was always a "Head Computer Person" that people would go to whenever there is something wrong with the system. So a better rendering of this article could be "The CIO Title is Evolving". There was always a technology leader, whether you called them CIO, Director, MIS, Manager, etc. and there will continue to be Senior IT leaders, no matter what their title is named.

jocemar
jocemar

For me the real point is not the discussion of who knows more of IT. This is not going to lead us anywhere. The real point to discuss is how can we (from IT) deliver fast and innovative services while keeping up the control of standard processes and technology (or someone things chaos has room on IT?). Since the past forth generation languages, promising the never reached end-user independency from the datacenter "geniuses", in this case, ourselves, I've seen no IT organized action to deliver a consistent solution for this dilemma. Current Web 2.0 solutions are not the answer, from a structured stand point, but it may have the seed that will turn into a big and solid tree where companies' end-users will take their favorite fruit from. In resume, maybe a combination of old ideas and new technology will have the potential to interrupt this identity crisis we have today: standard services, processes, security versus end-user flexibility and information at their hands to make business faster and yet with quality.

vvusa
vvusa

This is another one of those "IT is dead" kind of hypothesis. Once again comparing IT to a utility service provider. Now and again such contentions have proved wrong.Key assumption that facebook and web 2.0 users are tech savvy, is faulty to say the least.There is a big difference between skills needed to be IT solution provider and a savvy IT solution user. New generation of tech savvy business professionals will certainly change and challenge IT organizations to provide better value. But this will be boon to IT organizations as well, since there will be better understanding of tech operations amongst business pros.

jccann
jccann

While no model for IT services works perfectly, the REASON so many of the large F500 companies moved to a shared infrastructure and operations model was because their prior model of 'embedded', 'boutique', or 'dedicated' IT staff for each segment led to out-of-control expenses. Large companies had multiple contracts with the same vendors, no one shared best practices, and everyone did everything in a vacuum. No shock that the CFOs started rattling the IT cages and demanded action. Justifying a return to the uncontrolled spending The bottom line is that IT provides services. If their partners in the business need nimble, agile, or {insert favorite 'ile' technology} then build it. My company has saved $50M over the past 4 years by consolidating storage as a shared [global] service. That savings includes a 40% growth in storage demand year over year. Good luck doing that with an 'embedded' model.

Derteufel
Derteufel

The new kids moving in might be more familiar and dangerously comfortable with tech. but they went to school to become accountants and lawyers. They dont have a solid skill set but simply have heard of cloud computing and read some cool article the other day, nor do they have time to research, plan, and implement this. 20 hours of a pratitioners time to research, plan, and implement, then figure out why it doesnt work then hire someone to spend more time breaking it down and fixing it or just doing it right the first time.

mike.kuehn
mike.kuehn

This is almost written like the high school assignment given to that poor kid in the 3rd row - "Tell us why Shakespeare isn't such a great writer". You have to bend and twist and try to highlight faults that don't really exist. Identifying that the "operational" aspect of IT isn't deserving of a "C" title or seat at the table is obvious. Identifying that the business aspect of the CIO's role is deserving of that seat is also obvious. But aren't most "CIO's" responsible for both the "technology" and the business application of that technology? Isn't that what makes a CIO? Isn't it this application of the technology - the business process and optimization aspect, tied to a solid infrastructure that garners the seat at the table? It's the "business partner" or "internal consultant" approach that the CIO must have in order to be successful - that role gets the seat at the table. My director of operations and my director of business apps aren't at the "table"...but the CIO's ability to optimize their technology acumen and business savvy is what makes it all work. Just because the user base becomes more technical (being able to operate a TV doesn't make me capable of building a television network or produce and broadcast a program) doesn't invalidate the requirements for a solid, shared service approach to the business. 50 individual "end user developed" projects - critical in nature - put into any environment are simply unsupportable and will invariably cost more to develop, support, and maintain - and will open the organization to significant and ever growing security risks.

txschumacher
txschumacher

As a consultant to large businesses I have helped tech organizations mature (up) to the Shared Services model yielding benefits over the strictly silo and processes models. I agree with your new, two disparate functions direction but this applies only to a small fraction of today's businesses. Most organizations are currently too far down the maturity scale and, quite frankly, couldn't possibly make the leap from where they are to your point.

jhorton
jhorton

While the endpoint of Mr. Gray's article here is, in essence, correct - CIOs need to become internal consultants (integrators is probably the better term here) pointed toward serving business needs - this is hardly news at all. Most of the CIOs that I come into contact with have only the minimum of a technical background to begin with and so employ an IT director to fill in their missing skill set. I agree with wbranch as well - the new generation is not really more comfortable or conversant with IT, only its' use. All this means is that the new generation of executives are going to ask technology to do more for them, effectively strengthening the CIO and his/her subordinates. More importantly, the ubiquity of the social IT that the new generation desires even in the workplace is positively riddled with security issues. I see the CIO/subordinates moving to a far more centralized security model and, once again, increasing their corporate role. I am afraid, Mr. Gray, that I must disagree.

The Admiral
The Admiral

The CIO was dead when they came up with the title. If you take a look at the CIO, they really did not do anything. Most of the people were coming up with policies were the work related grunts, and the managers were creating policies only to get the CIO approval. Is a CIO really justified? No.

wilcushing
wilcushing

Directly on point. We have been using a very similar model for a couple of years with great success.

wbranch
wbranch

I think the biggest and most incorrect assumption is that the new generation of users will know more about technology than some of IT. The correct statement would be they will THINK they know more about IT. Just because you can use Facebook and you've seen Linux, doesn't mean you're a technical savant. Often times, users who think they know more than they do are far more dangerous than those that don't know anything and realize they don't know anything. IT will have to adapt to users and their changing wants and needs, but I doubt you'll want to just turn over the technology reins to people who think they know what they're doing, then suddenly realize they're in over their heads. Just because you can change an electrical outlet in your house, doesn't mean you're qualified to be an electrician and should start re-wiring you're whole house willy-nilly.

jascc1
jascc1

Yet another IT peer who shamelessly wants to narrow the true imapct of an effective IT organization. If you think IT is soley a 'utility' or 'tool' you are not only sadly mistaken, but you are contributing to the whole mishap of what value IT can truely bring to organization. IT reaches far beyond operations (even the writer admits that). Technology is also a very dynamic profession and you have to keep up with it. This is why and where the CIO-types become an asset. There is a difference between liking and understanding technology as your hobby and understanding the business of technology.

Barshalom
Barshalom

I have heard stories about CSC. They want an encyclopedia of credentials but only want to give up entry-level pay. I knew a guy who worked with them and he told me they were a joke. He said the IT Manager where he worked plugged the telephone connector into the network port of a computer and wondered why the computer couldn't connect to the network! Ain't that a trip!

IT Security Guy
IT Security Guy

I agree with Mr Horton. The CIO should not be just a glorified IT manager. He/she should be the IT rep at the big table to make sure IT is a piece of the overall business operations of the agency/company. The CIO also is the business rep to the IT department, ensuring business processes are understood by IT and that they understand they are a part of the business and their jobs are to maintain the business functions through proper maintenance of IT. The upcoming generations will be able to use more IT than those of us who have seen its use grow, but they will need subordinates how really understand the operations and security of that technology. Separating management/operations from its use is looking for big security problems that can threaten a agency's/company's ability to do business. Now if you add into the mix the CISO, then there could be problems because the CISO, on the federal side, will have an increased resposnibility for information security on a day-to-day basis, while the CIO has overall resposnibility. This is needed because the CIO can't and shouldn't be involved with the daily grind. He/she should have direct reports (CISO, CTO, CRO, etc) who manage the daily work and provide a mid to high level report on what is going on. The CIO should have a good understanding of IT in general, btu should not be a specialist (even if he/she came from one of those specialty areas).

blondlot
blondlot

People are getting more comfortable with technology, not more knowledgeable of technical detail or better at determining correct usage. The more comfortable someone gets, the less likely their lack of knowledge will be held in check by a fear that they'll break something if they screw around with things they don't understand.

NotSoChiGuy
NotSoChiGuy

Just about everyone is comfortable with cars. Yet, a small minority would attempt to do something as mundane as change the oil or rotate the tires; let alone actually try and service the engine themselves. Computer technology seems to be the same way. I had a PC cracked open a while back to swap out some memory and the hard drive. Within minutes, I had a few users standing and watching, like some sort of medical gallery! ;)

rjohnson
rjohnson

I agree to some of what you are saying here, but if you have a c-level person at the table with the exec or board he will have IT and business acumen. If he doesn't have business acumen you hired the wrong person.

A Proj Manager
A Proj Manager

I thought this was a very good article. I agree with the commenters who think that business users sometimes think they know more than they do about technical support and maintenance. But the important part of the article that I noticed was that a CIO who is focused purely on the tech support process will be "ushered out of the exec boardroom", and I agree. Maintaining technology infrastructure is an extremely important aspect of running a business, but unless the technology department is providing strategic value to the business then they are not going to get a seat at the executive table. I have seen some companies recently move IT operations to report to the CFO or COO for that reason. Technology support and development is becoming less of a highly sought-after skill known by only a select few, and more of a commodity. Technology knowledge and expertise needs to be applied to decisions that increase market share, improve customer service, or reduce cost in order to be considered a "strategic partner". Otherwise they are just a cost center.

BradTD
BradTD

That is the analogy I was thinking of while reading this article, which in my opinion is way off base. While I understand both sides of the debate about whether CIOs should be at the "executive table", in no way am I convinced that the average "up-and-comer" in a company knows more about technology than the IT department. While IT does need to see that it should function to help the business and not as its own separate business, don't believe for a second that the average end user knows what he/she wants. Using PDAs and Facebook does NOT mean you know IT!