The CIO is dead (long live the CIO)

TechRepublic's 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. You can find more posts like this on TechRepublic's IT Leadership blog.

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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