CEOs have realised IT is the key to making their organisations smarter and more effective – which means CIOs are now in the spotlight like never before.
So how has this shift changed the role of the CIO and what does it mean for the relationship with the CEO and the rest of the board?
In the past, IT was seen as “boring, grubby and complicated” with CEOs having very little involvement, according to Vicky Maxwell Davies, co-head of the CIO practice and partner at executive headhunters Boyden.
“Five years ago, CEOs wouldn’t have had a clue what they were looking for in a CIO. They would probably know they were spending a lot of money on IT and they would probably feel they couldn’t see where that money was going,” she told silicon.com.
“They wouldn’t appreciate that there needed to be more than just making sure the email was running and making sure payroll goes out on time,” she added.
Now the rapid pace of change in technology – plus developments such as the consumerisation of IT – has put tech strategy at the top of the executive agenda.
“People know now that technology is really important. They might not understand what on Earth they’re going to do about it, but that is why they need somebody who can explain it to them,” Maxwell Davies said.
CIOs at heart of success
With many businesses becoming increasingly dependent on technology, a good CIO has the potential to make a huge difference to an organisation.
“World-class CIOs are critical to organisations getting that competitive edge,” Maxwell Davies said. “That’s how an organisation gets ahead of its peers, by being really clever with its IT.”
And as companies that have a talented, highly involved CIO gain competitive advantage, the role of the CIO will become more valued and influential, according to Mark Raskino, research VP and analyst at Gartner.
“Companies where the CIO role itself is…
…evolving and developing to take control of and get value from the new horizons, those companies will do better,” Raskino said.
“Companies where the CIO stays within the old framework, where the chief exec tries to ignore him or her as much as possible, those companies will do less well,” Raskino said. “So it will be through competition of firms that the CIO role will be advanced – it’s a little bit Darwinian.”
CIOs at the top of business
The increased importance of the CIO role means many tech chiefs now expect to report directly to the CEO, according to Boyden’s Maxwell Davies.
The very good candidates will not be happy taking up a CIO role if it reports to the finance director, as this “demonstrates perhaps a lack of understanding in that organisation of the value of IT,” she said.
World-class candidates expect to sit on the executive committee, said Maxwell Davies, who emphasised that this is by no means a given and is highly dependent on the individual’s credentials.
“You earn that place on the exec table for who you are and the value you bring, not because you’re wearing the IT hat,” she told silicon.com.
Gartner’s Raskino concurred, adding that CEOs would often like to have a CIO who can be part of their core business leadership team, but that it depends on the individual.
“Often CEOs can’t find people that strong so the CIO ends up not at that top table but delegated down one level, not because IT is unimportant but because the individual candidate at the moment just isn’t, in the chief executive’s view, strong enough,” he said.
However, Raskino added that “there is responsibility on the chief executive to develop the CIOs they need”, and he does not believe CEOs are doing this enough.
Even so, the position of CIO has a crucial role in the organisation of the most forward-facing businesses, according to Raskino, with 40 per cent of CIOs reporting directly to the CEO.
Indeed, Boyden’s Maxwell Davies argues that the CIO and the CEO are the only two people who have a full 360-degree perspective of the business.
“The CIO is one of the very few people in the organisation – other than the CEO – who knows exactly how that organisation works right across the business. They’ve got that helicopter view of how the processes all work together,” she said.
Clever CIOs could use this shared view of the business to leverage their role, even to the point of becoming the CEO’s right-hand person, Maxwell Davies added.
However, with the potential to operate at the top of the business, CEOs are now looking for CIOs who have the same business skills as any other director on the exec committee.
“Once getting to this top level, being good at tech doesn’t make you special,” said Gartner’s Raskino.
The increased requirement for business skills from CIOs will divide the success of current tech leaders, according to Brinley Platts, chairman of CIO Development.
“I think good IT people who can make that transformation are going to do very well, but I think people who are less savvy and smart about moving their career and keeping themselves up to date with the kind of skills they need, I think they are going to find it a lot harder,” he said.
When it comes to making it at board level, Platt believes…
…the need for broader business sense is stronger than ever.
“The main argument for keeping CIOs off the board is that they’re not always talking about technology at board level, therefore if the technology director has nothing else to talk about there is not much use or point in them being there,” he said.
The perfect CIO – tech but not too tech
The demand for strong business leadership in the technology side of businesses has led to some organisations hiring non-technical CIOs, although Platts adds that such moves have never worked very well.
“Wherever you are creating technologies of any kind – and that includes doing something clever with SAP or managing change or using consultants to do that kind of thing – it is quite often proven that if you don’t have a background in that kind of technology, it will lead to mistakes,” he noted.
Boyden’s Maxwell Davies also underlined that tech know-how is important in a CIO when it can inform what IT can do for the business in a broader sense.
“It’s not about getting your hands dirty. It’s not about being able to fix the chief exec’s laptop when it doesn’t work,” she said. “But it is about that real appreciation and understanding of how an organisation can achieve its business objectives through the clever exploitation of technology.”
For prospective CIOs, demonstrating the balance between tech knowledge and good business skills can be tricky, according to Gartner’s Raskino. Because CEOs often do not understand the complexities involved in dealing with different systems and the technical side of what CIOs do, chief execs often don’t value such skills as much as the candidates think they should.
“CIOs will often present themselves by talking about the last three systems they implemented rather than the organisation structure they improved or the talent that is now in the organisation they’ve just left because they hired it and nurtured it,” Raskino said.
If a CIO can demonstrate a good understanding of team building and human relationships they will prove to the CEO that they can bring added value to the organisation, he added.
The consumerisation of technology has played an important role in getting executives outside of the tech department excited about technology in business.
“The fact that the board and the executive management of organisations are excited about tech and can see the value of it and are thinking about how they utilise and exploit and leverage technology for their businesses can only be a good thing,” Boyden’s Maxwell Davies said.
However, it has also increased expectations across the business of what the IT department should achieve.
While it’s a positive development for CIOs, it is often the case that CEOs and executive management teams do not…
…understand the complexities behind the technology they use, and so their expectations may be unreasonable – putting the CIO in a difficult position.
CIOs must therefore hone their business skills to enable them to explain to CEOs why certain projects may be unfeasible, and to persuade CEOs or CFOs that some less visible IT projects are necessary.
As CIO Development’s Platts puts it, “CIOs must learn to speak the language of business.”
Innovation leaving the CIO behind?
Despite the potential for CIOs to expand their influence in the organisation, Gartner’s Raskino believes the authority of the CIO has not yet increased as much as it should given the increased importance of technology.
“The visible parts of technology and the parts that are often contributing the new value are often not under the control of the CIO,” he said.
Raskino gives the example of social media as a big movement in technology which CIOs don’t typically take a lead on.
“The way the world is changing means the CIO role will need to adapt and there is a slight risk at the moment that it is not adapting fast enough.
“Every time a new form of value creation comes as a result of advances in a new technology, CIOs seem to lean back and stay with what they’ve known and understood in the past. They almost leave that new value for somebody else in the organisation to pick up,” he said.
Raskino added that “people see the value of IT everywhere except where the CIO lives”, citing the example of mobile applications.
If CIOs are to take their place among the top executives in business, Raskino argues they must evolve their role to ensure it stays relevant and involved in the latest technologies important to business – otherwise the CIO may be in danger of being left behind.