The strange life, death and rebirth of the CIO and what it means for the future of IT

The strange life, death and rebirth of the CIO and what it means for the future of IT

Summary: The way companies buy, build and use technology is changing rapidly, which means the teams that build it and run it will need to change too.

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Successive waves of change have undermined the old certainties for the CIO over the last few years. First outsourcing and offshoring, then cloud and now the emergence of consumer smartphones, tablets, and the resulting bring-own-device (BYOD) phenomenon, are forcing organisations to reassess why — and how — they acquire and manage their IT infrastructure, and the role played in that process by the CIO.

CIOs who try to resist these changes risk ending up as ineffectual figures, overwhelmed by the inexorable tide.

For the last couple of decades, the CIO's job has been to build and manage the internal technology infrastructure that a business requires to operate. Mostly that entailed creating a well-staffed and well-funded IT department to go with it.

Today, CIOs are facing a new reality in which success is measured not by the number of staff and projects on the books, but by how few. They are also expected to find new ways to make money from technology, rather than spending money on running it. That means the skills that helped build the old IT organisation are very different to (and sometimes the opposite of) the ones that CIOs will need in the future.

"Some CIOs get it, some don't. Becoming more strategic is important, and that's what's going to make the difference. It's not about keeping their hands on the tin, it's about using it for business value. Some people will thrive and some will not," says Alastair Behenna, an analyst with Forrester Research — and himself a former CIO.

The CIO status quo starts to crumble

Here's what is really worrying CIOs, right now

Here's what is really worrying CIOs, right now

Here's what is really worrying CIOs, right now

Traditionally the CIO has been the executive in control of technology strategy and spending across an organisation, with oversight of all the business's technology projects, if limited actual day-to-day involvement.

It's a job title that tends to appear more regularly in large and multinational enterprises than smaller businesses (where the senior tech decision maker is often given the 'IT director' title).

The CIO is often promoted from within the technology department and will have a background in IT, perhaps augmented by an MBA picked up along the way. The CIO is usually part of the executive team, perhaps reporting to the CEO, or CFO or COO, depending on the priority given to technology by the organisation.

They are also usually men: only about 10 percent of CIOs are women — less than the average percentage of women working in IT.

The CIO is sometimes supported by a CTO with a remit to explore emerging technologies at deeper level. Indeed, the CIO, who usually focuses on business priorities, has traditionally functioned as the translator between what's often perceived as an introverted and insular IT organisation and the rest of the organisation.

But all of these certainties are in now being questioned. The CIO's role, and that of the IT organisation they oversee, will change significantly over the next five years — and not all CIOs are likely to welcome the change.

CIOs now face a series of contradictory demands, according to Lee Weldon, research director at analyst Gartner. After years of being asked to increase efficiency and reduce costs thanks to a tough economic climate, they're also being asked to come up with new ways of using technology to create new business opportunities: "The CIO is getting hit with these conflicting expectations. That's a real pressure that they are feeling," says Weldon.

Khalid Kark, research director at analyst Forrester, adds that whereas the CIO's role in the past was to manage technology efficiently, business expectations around what technology can deliver have changed significantly in the last five years. As a result, the CIO now needs to demonstrate how IT contributes to the bottom line.

"If you don't, you are going to be commoditised as an entity and as an organisation, and you'll see a lot of business areas trying to get IT on their own and trying to do things on their own because they don't get the value and support they expect from technology through the CIO," says Kark.

The CIO: Leading the battle or caught in the crosshairs?

Forrester divides CIOs into three categories: top of the pile are the 'Generals' who shoulder responsibility for bringing in new ideas and innovation across the business: "That's a very significant trend we are starting to see, where CIOs are getting business responsibilities," says Kark.

'Captain'-style CIOs see their role as supporting the business rather than leading it, while the 'Soldier' CIO is what the traditional CIO role has been demoted to.

"They are primarily order takers — they do what they're told. They're managing technology and they try to make sure that they do that in the most efficient manner," says Kark.

Soldier CIOs would do well to watch out, as their position is likely to come under attack: "The Soldiers are the ones that come to us and say 'year over year my budget is being slashed and I'm expected to do more with less'. The other two categories typically have higher budgets, higher visibility and higher influence within the organisation," says Kark.

Forrester estimates that about 10 percent of CIOs could be classed as Generals, about 30 percent are Captains and 60 percent are Soldiers. That balance is starting to change, however, with more Generals and Captains but fewer Soldiers as cloud, BYOD and outsourcing start to eat away at the easily commoditised elements of the CIO's portfolio.

Kark warns: "There are still a lot of opportunities for Soldiers in the next five years, but it's going to be harder and harder for them to move around because that skillset is not going to be required or expected in many cases. CIOs are changing their skillsets or being relegated to commodity status where they're not able to influence in any way."

The dissolution of the IT department began with outsourcing, but it's cloud that's likely to reduce it even further.

According to research by Harvey Nash published earlier this year, almost two-thirds of CIOs outsource their software application development, including mobile applications, while over half already outsource their data centres. Just under half of CIOs continue to outsource the maintenance and ongoing support of the applications they develop, while a third have handed over the management of their help desk to outsourcers. As one CIO put it recently: "As an IT director, I don't feel running an email service adds value."

In addition, spending on technology by departments outside of IT is also on the rise.

According to a survey by IDC, 61 percent of enterprise technology projects are now funded by the business rather than the IT department, and IT spending driven by non-IT departments will outpace IT-department spending in the future. Marketing takes the top position with a 5-year compound annual growth rate of more than nine percent.

Kevin Leypoldt, IS director at Structural Integrity Associates says that the shift for the CIO is from being directly in control to managing vendors and partners. "The CIO's role of partnering with the business to identify technology to enhance process will not change — only how that technology is implemented and where it lives." 

According to Forrester's Kark, CIOs are becoming much more aware that they need to shift their approach away from being defensive. "The traditional view has been: 'This is my organisation, I've got to protect it, I've got to grow it, I've got to manage it', but what we're seeing is a shift in their thinking," he says, with CIOs increasingly focused on talent management and building the right organisational structure. "For some CIOs it may be a no-brainer, for others a slow, gradual shift."

CIOs are certainly aware of the need to change: how to innovate and how to work better with the business are often ranked among their top concerns. But Kark warns that the pressure is on: "The CIO moves from a technology leader to a business leader: the CIO role as we know it today will cease to exist — and if it does exist it will be a commoditised role. It becomes the orchestrator of technology, not the provider."

But not all CIOs will be willing or able to make the transition. The old career path — a steady rise through the ranks of the IT department — may no longer be the standard route, according to Forrester, because nearly half of CIOs in the US don't have a strong technology background.

The analyst firm points to executives such as the head of supply chain, the head of business operations or the COO being put in the CIO role — brought in to transform the IT operation and change its perspective and mindset.

Over the next three to five years, Forrester preducts that a majority of CIOs will be coming from non-IT background to manage and run technology for their organisations.

CIO future: Smaller team, bigger influence?

Not all of this change is necessarily bad for all CIOs. Because while the CIO may exchange an in-house army of coders for a handful of contracts with outsourcers and cloud providers, the most savvy tech chiefs won't just retain their influence, they'll extend it. Says Forrester's Kark: "Their influence increases as the size of their organisation decreases. The influence is going to increase over time to make them key stakeholders in business decisions as they are being made, not after they're made and being told to deliver technology around it."

Michael Spears, CIO at NCCI Holdings, says that although in five years time the CIO position will be at least as influential as it is today, CIOs need to do more than ever to earn that influence. "There have been endless debates about whether the CIO should be more of a business person or more of a technician. You must have skills in both areas, but I believe it's more important to engage as a business person. Shadow IT in other departments is a good indicator that the balance has shifted in the wrong direction. Cloud, outsourcing etcetera are just excuses for lack of influence. If you are more of a roadblock than an enabler, it's time for a change."

But while CIOs may been keen on giving tech a makeover, many still face an uphill struggle persuading their fellow execs of their strategy. According to the Harvey Nash survey, over half of CIOs believe they lack support from the board, and just under half struggle to build support from their C-level peers in achieving their technology vision.

More than four in ten CIOs say their business has not 'bought into' technology to some extent, and 15 per cent say it's a major issue in their organisation. "As we enter a more collaborative age, the importance placed on the relationship-building and influencing skills of the CIO will only grow, as internal and external partners are required to work together collaboratively to achieve success," the report notes.

One in five CIOs in the Harvey Nash survey feel they have lost an element of direct control over their IT assets in the last five years. But the report notes that 'control' does not equate to 'influence', and CIOs are increasingly seeing their role as collaborators rather than controllers: almost half say their influence has increased over the last five years.

Who the CIO needs to influence is also changing, as their fellow executives become more tech savvy.

Says Rohit Killam, CTO at Masan Group: "With democratization of technology, business applications will be more easily understood by functional heads like CMO, CFO etcetera. Hence they will have better handle over technology decisions."

CIOs have historically good ties with the CFO and operations, but relationships with marketing are weak. That's a problem because Chief Marketing Officers (CMO) are playing an bigger role in the evolution of many companies' digital strategy — an overarching plan including web and mobile that extends beyond the internal IT infrastructure. Mobile strategy is a particular area of conflict between the two, making the CMO the "aggressor in the C-suite battle with the CIO" according to one recent survey.

And it's apparently the CIO who needs to persuade the CMO. According to research by Accenture, CIOs are more committed to greater collaboration than CMOs: more than three out of four CIOs surveyed (77 percent) agree that CMO-CIO alignment is important, compared to 57 percent of CMOs participating in the survey. 

Of course outside of these macro trends the impact of the individual CIO is down to their own drive and personality, and their willingness to navigate the political currents. As John Gracyalny, VP of IT at SafeAmerica Credit Union, says, that much depends on the size of the organization. "At my shop, when I was hired 5 years ago it was the first time that there was an executive role for technology. So to us, CIO, CTO, CDO, etcetera are all one person, and will continue to be that way for the indefinite future."

"My role has expanded in the five years I've been here to not only being a direct report to the CEO, but I work directly with our chairman of the board on major technology initiatives. In a larger organisation which might have one of each, my guess is the relative importance will be more a matter of the individuals' political astuteness rather than pure business drivers, due to the considerable potential overlap of responsibilities."

New job titles, new rivalries?

But as well as working with existing execs, CIOs will need to deal with newcomers who may eat into their authority. Two emerging job titles, in particular, may limit the CIO's room to manoeuvre: Chief Digital Officer and Chief Data Officer.

The CDO's job will be to focus on the digital potential of an organisation, which means they may have a marketing or sales background. In organisations that create a CDO, the CIO may be relegated to the role of cost control and process management (the Soldier CIO mentioned earlier). The Chief Data Officer will take on issues of risk and compliance.

According to Gartner's Weldon, there is room for both a CIO and CDO and an opportunity for synergy – but also an element of risk: "Certainly there will be growing pains. If they treat [the CDO] as a threat there's a risk; if there's pushing back from the CIO that can lead to some challenges. This is an area where there is some maturing to do; we need to figure out how these roles fit together."

Indeed, at a recent event I caught a glimpse of one possible version of how this plays out: when Tesco launched its new Hudl tablet, the three speakers were the CIO, the CDO and the CEO (who had previously been the head of technology).  

To complicate matters even further, it's possible that other job titles will also emerge as the IT department changes: according to Gartner, the role of the CDO needs to be broken down even further into three distinct roles rather than one: Digital Strategy Advisers (DSAs), Digital Market Leaders (DMLs) or Digital Business Unit Leaders (DBULs).

CIO: Career Is Over?

All of this change only adds to what's already a highly pressured role in which reputations are made and broken by every successful or failed project. The average tenure of a CIO hovers around three or four years before they quit or are fired, so they have little time to assess the organisation and make an impact before moving on. Not for nothing do CIOs joke that the acronym really stands for 'Career Is Over'.

There's also certain irony in that for years CIOs have been arguing that smart use of technology is essential for the success of any business. Now the business finally agrees, but isn't convinced that the CIOs can be trusted to get it right.

Hence the emergence of new tech leaders in waiting, and turf wars with internal rivals like the marketing chief who wants control of the company's digital strategy. The stakes have never been higher for the CIO and the IT department: those that succeed will become a central part of their businesses' success stories, while those that don't make the grade will be reduced to a footnote in organisational history.

Topics: The Battle for the Soul of IT, CXO

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3 comments
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  • CITO?

    I believe a CIO should be T agnostic, a CTO should be I agnostic and a CITO should serve them both. As our employment of technology grows, so these roles gets sucked into the increasingly hungry vortex that is technology dev and prod support leaving the 'information' side kinda neglected. Finance try to take the reigns but they just can't. CIOs need to hold their ground, insist that technology support for CTO grows as required and stick with the job of leveraging information to enable business objectives, esepcially given that there is now so much more of it available to leverage.
    RichSmart
  • CTO at our organisation

    It really depends on the type of business.

    Our organisation is all about information and a large part of the personnel is involved with the collection, analysis, delivery and presentation of information. I think you'll find there are a lot of organisations like this.

    The IT team is less than 3% of the total employees and a lot of this article is very relevant.
    james.faction
  • "Come Blow Your Horn"...If You Don't Tell 'Em, They Won't Know

    One of the most common complaints/mystified comments I hear is "no one understands what I do for this organization." All too often, the contributions of many at the "lower," less visible levels...as well as those even at more senior levels...are overlooked/misunderstood/ignored. Even as a budding public relations professional, I learned the hard way that if I didn't remind my higher-ups of what I was doing for the organization, I could very easily become a "non-person." It took me a while to come to grips with this as I had been raised in the belief that self-promotion was "ungentlemanly." Fortunately, I have been able to overcome this misperception...and I now encourage my students and anyone else who will listen to let others know what they are doing and how what they are doing benefits the organization.
    Kirk Hazlett, APR, Fellow PRSA