Video: The rise and rise of the CIO
What is a CIO?
A Chief Information Officer (CIO) is the most senior technology executive inside an organisation. The job title is used widely around the world in business and in government and in charitable and non-profit organisations.
What is the role of the Chief Information Officer?
The role of the CIO is to help to set and lead the technology strategy for an organisation, in concert with the other C-level executives. As such one of the many roles of the CIO it to provide an executive-level interface between the technology department and the rest of the business.
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What is the difference between a CIO and an IT director?
IT directors tend to be focused on day-to-day operations, while CIOs are outward-facing and more concerned with strategy and leadership. Some IT directors, in fact, report to CIOs, especially those working for large, multi-national organisations at a country or regional level who sit beneath a global peer. Not all organisations will have a CIO: smaller businesses use the job title IT director for their head of technology. Indeed, when it comes to technology executives, the picture concerning job titles is often far from clear.
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What is the difference between a CIO and a Chief Technology Officer?
Generally the CTO will report to the CIO, although not always. The roles of the CIO and CTO, and the relationship between the two, will vary by organisation.
In some, the CIO is responsible for setting the broad strategy and managing the relationship with the wider business, explaining how technology can help to streamline the supply chain or optimise business processes, while the CTO looks for innovative or emerging technologies that could potentially assist the organisation to reach its objectives. In some tech businesses the CIOs lead internal business implementations of technology, while CTOs lead the development of technologies that are being developed to be sold externally.
Behind those neat divides, however, lies a huge amount of blurring. CIOs might, for example, identify how an in-house developed application could be sold on to external customers as well as looking at strategic planning. The business might draw on the CIO's knowledge in the wider sales process. Equally, some CTOs also help run internal IT operations.
There are other job titles that are worth being aware of too, like senior vice president for IT and head of technology which is also often used. Other examples of technology chief titles include chief operating officer (COO), head of ICT, IS director or more specific job titles like VP of digital and IT or director of data and technology. The only way to know for sure about someone's influence and responsibilities is to find out what they do on a daily basis.
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What does a CIO do?
The CIO runs IT and the CIO changes IT. As much as they would like to spend less time in the IT department on day-to-day processes, many CIOs still need to keep an eye on the data centre to ensure systems and services are up and running as well as understanding technology trends.
When something technical goes wrong at the weekend, it is likely to be the CIO who gets the call, even if someone else ultimately has the duty of fixing the problem. While the rest of the business talks about the importance of game-changing digital transformation, most CIOs recognise they will be judged first and foremost on their ability to do the basics right. A grand e-business strategy will fail if the CIO neglects to ensure that cybersecurity or business continuity is taken seriously, for example.
As a C-level executive, the CIO is responsible for setting the IT strategy and ensuring that this works with the broader business strategy. In many digital businesses the IT strategy will be the main element driving the business strategy. This means the CIO needs be able to understand the broader business requirements and which to prioritise through the use of technology. Another big role for the CIO is building and maintaining an effective and motivated team.
When it comes to transformation, too many vendors think CIOs are focused on leading-edge technology. Yet the reality is that while IT leaders keep a watchful eye over hyped technologies, such as AI, VR and IoT, most are still trying to exploit technologies that are only now reaching the tipping point, such as cloud computing and big data analytics. So, while marketing folk talk about the need to disrupt or be disrupted, most CIOs are still concentrating on building the platform to enable digital change.
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Who does the CIO report to?
Consultant Deloitte found 33 percent of CIOs report to the CEO, 22 percent to the CFO, 11 percent to the COO and nine percent to a global CIO, with the rest in a myriad of complex reporting structures. Dotted lines are not uncommon: CIOs will often report into a couple of executives, depending on internal lines of communication and ongoing initiatives.
There is a common, perhaps misguided, belief that IT leaders should always report to the CEO. While reporting to the CEO helps keep the role of technology front and centre, reporting to the CFO can also help ensure IT budgets are clearly defined and understood — and in some organisations, cost control remains the absolute top priority.
It should also be noted that working for a big firm is no guarantee of a direct line to the CEO or other board members. Recruitment firm Harvey Nash and KPMG report that 17 percent of CIOs report directly to the CEO in larger firms, compared with nearly half (45 per cent) of IT leaders at smaller organisations. IT leaders at smaller firms also have more direct access to board members compared with peers at larger organisations.
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What is the history of the CIO role?
In comparison to other c-suite positions, the CIO role is a relatively new one. IT professionals were first employed by many firms through the 1970s and 1980s to help their businesses use mainframe computers. As the use of computing evolved, so did technology leadership, with the first CIOs beginning to take up position during the 1980s. During the next decade, the roles of IT director and CIO became more commonplace.
Since the turn of the millennium, the CIO position has been through a tumultuous period of change. Rather than simply buying IT and managing operational concerns, CIOs now have a much more outward-facing role, largely thanks to the rise of the internet. With the use of cloud computing and outsourcing, many technical solutions are no longer sourced directly by the in-house IT team. Instead, CIOs take a strategic view, helping the rest of the business make the most of technology.
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Who forms part of the CIO organisation?
As modern CIOs spend a lot of time outside the IT department, they are increasingly reliant on a team of trusted lieutenants to help manage key areas of provision. CIOs will have a team reporting to them across a range of areas that could potentially include items such as IT security, procurement, maintenance, development, integration, maintenance, support, business analysis, and account management.
Some CIOs also take responsibility for closely related areas, particularly facilities management and personnel security. In fact, Gartner predicts CIOs will be as responsible for culture change as chief HR officers by 2021. The size of the internal team and the number of direct reports varies considerably depending on the size of the business and its use of external service provision, either through outsourcing or the cloud.
It is also important to note the traditional hierarchies of the CIO organisation remain in a state of flux. Automation is likely to lead to the replacement of some tasks. The ability of line-of-business employees to source their own services directly from the cloud will also impact the size of the IT department. Rather than commanding vast armies of in-house developers, a CIO may be managing a set of contracts with external service providers instead.
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What is the difference between a Chief Information Officer and a Chief Digital Officer?
The appointment of a chief digital officer (CDO) became popular five-or-so years ago when the consumerisation of IT and the clamour for all-things-digital led experts to question the longevity of the CIO role. As recently as 2014, researcher IDC predicted 60 percent of blue-chip CIOs would be supplanted by CDOs by the end of decade. Right now, that prediction looks unlikely to come true, with PWC suggesting just 6 percent of organisations have appointed a digital chief.
CIOs remain the go-to executives for enterprise IT concerns. In fact, CDO has more recently been linked to a new role: chief data officer. As big data has moved from a theoretical concept to a practical reality, firms have invested time and money in building their analytical capability. Gartner estimates 90 percent of large organisations will have a data chief through 2019. Yet rather than replacing traditional IT leaders, the analyst suggests this new group of CDOs will work alongside CIOs to lead change.
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What's a Chief Data Officer and how do these executives work with CIOs?
To make C-suite responsibilities just a little bit more confusing, more and more CIOs now have to work with another CDO — the chief data officer. The data chief is a senior executive who is responsible for organisation-wide governance, management and exploitation of information.
Although a new role, research suggests the number of companies hiring a CDO has more than quadrupled since 2012. Gartner estimates 90 percent of large organisations will have a CDO by 2019. Recruiter Harvey Nash and consultant KPMG report that organisations with a CDO, either in a dedicated or acting role, are more than twice as likely to have a clear and pervasive digital strategy than those without one (44 percent versus 21 percent).
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What proportion of their resources do CIOs dedicate to innovation?
The oft-quoted split for IT budgets is 80 percent on operations and 20 percent on innovations. Experts suggest IT leaders should spend as little money as possible keeping the lights on and as much money as possible running pioneering digital projects that help transform the business.
In practice, however, even the 80/20 split can be tough to reach, especially in large, traditional enterprises — such as retailers and finance firms — that maintain a huge legacy IT estate: for some big businesses as little as five percent of the IT budget could go on innovation.
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How are CIOs embracing innovation?
As money for innovation is often at a premium, CIOs must find smart ways to develop new ideas. While some IT leaders have the luxury of an in-house lab, most CIOs develop other ways to inspire innovative thinking. IT leaders often draw on an ecosystem of creative thinkers. Popular mechanisms include internal hackathons, where IT specialists and line-of-business workers work in tandem for short bursts to create potential solutions to business challenges.
The innovation ecosystem also extends beyond the enterprise firewall. CIOs recognise that many vendor partners spend huge amounts developing customisable solutions to business challenges, many of which can be purchased on-demand through the cloud. These trusted partnerships are not just focused on big vendors, either. Increasing numbers of CIOs reach out to the start-up community to find novel technical ideas. They also have to be willing to work with and understand the agenda of their business peers, like the chief marketing officer and the chief financial officer.
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How much is a CIO paid?
Compensation rates, unsurprisingly, vary by location, sector and organisation. Salary specialist PayScale reports US-based CIOs earn about $155K per year on average, while recruiter Harvey Nash reports mean global rates are £131,480 in the UK and $185,647 worldwide. A third of CIOs enjoyed an increase in base salary last year, according to Harvey Nash and KPMG.
While average rates tell one story, salaries for the most in-demand CIOs are sky-high. Average compensation for a Fortune 500 CIO is about $2.6 million, up from $1.9 million in 2015, according to Korn/Ferry research for the Wall Street Journal. The 37 percent jump in CIO pay is due to the exceptional demand for executives who can help change business models through digitisation.
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What is the CIO career path?
Like human resources, IT has traditionally been viewed as a service rather than a core business function, such as finance or sales and marketing. While it is common for directors in these departments to assume the top job, CIOs have often been overlooked for the role of CEO.
This situation means the CIO role has been seen by some as the pinnacle of a business-focused IT professional's career. With nowhere else to go, the CIO role is viewed as the executive equivalent of a cul-de-sac, with the long-standing jibe that CIO is an acronym for 'career is over'. More recent evidence suggests that view is dated. Former CIOs have assumed the top jobs in blue-chip firms, such as the National Health Service, Tesco, Economist Group, GE Transportation and BT Global Services.
CIOs also regularly take on broader roles, with responsibility for other functions, such as operations, digital and governance. This broad experience base means CIOs are highly-prized when it comes to consultancy and advisory roles. The CIO position, therefore, is far from a dead end. CIOs usually find new opportunities as IT leaders at other firms. Reaching the glass ceiling at one business also helps explain why CIOs often move jobs.
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What is an interim CIO?
Interim CIOs are non-permanent IT leaders. These freelance CIOs take on fixed-term contracts that are sometimes extended and can often be made permanent. Key roles for interim IT leaders include providing stability in the absence of a permanent CIO, leading change during a transformation project and mentoring an up-and-coming IT leader.
As mentioned above, CIOs are highly-prized when it comes to consultancy and advisory roles. Some experts believe there has been a 25 per cent rise in demand for interim CIOs during the past five years. Such is the demand that increasing numbers of IT leaders are choosing — either temporarily or permanently — to create portfolio careers. These executives take on a range of roles, including interim positions, advisory work for start-ups and scale-ups, strategic consultancy engagements, and non-executive board positions with private and public-sector organisations.
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How long is the average CIO tenure?
Advisory firm Korn Ferry estimates the average tenure for a CIO is 4.3 years, with CIOs in the consumer, energy, and professional services sectors tying for the longest-average tenure at 4.5 years. The shortest-tenured CIO is in the industrial sector at an average of 4.0 years. Korn Ferry reports the average tenure for a C-suite executive is 5.3 years, making CIOs the shortest-tenured execs.
However, while around four years is the average tenure, it is not uncommon to see CVs filled with a collection of two-year stints. These job-hopping IT leaders cast themselves as transformation specialists, who enter a business, see what's wrong and put in place a strategy for IT-led change.
Their CIO peers, who stay in-situ at a single business for many years, question whether true business transformation can be completed in two-year cycles. The happy medium sits somewhere between leaving too quickly and staying too long. Whereabouts, exactly, depends on your point of view.
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What are CIOs like as people?
Like all c-suite executives, CIOs are serious strategists with great leadership skills. However, my experience suggests CIOs are almost always approachable. CEOs and CFOs command huge power and can sometimes be remote. CIOs have spent their working lives trying to get the rest of the business to take their role seriously.
When they get the opportunity to demonstrate this capability, they grasp it. Now, in an age where technology underlies all business operations, savvy CIOs must be listened to. Outside of work, CIOs like to push the limits — interviewees from all backgrounds have a disproportionate interest in extreme sports and fast cars.
Those interests might be familiar to all c-suite executives but CIOs certainly seem to revel in the extremities. As an aside, Korn Ferry suggests the CIO is on average the youngest in the C-suite at age 51 (the average age for a C-suite member is 54).
What is the future of the CIO?
In a word, bright. Experts who predicted the demise of the CIO role have been left red-faced by the re-emergence of the IT leader. Businesses embraced consumerisation and then discovered they still needed an executive to oversee the decentralised technology procurement decisions made by line-of-business managers. That supervisory role is best-fulfilled by the CIO in most organisations, given their many years of experience of vendor management, IT integration and technology governance.
The CIO role is also unlikely to vanish soon. Increasing numbers of CIOs are also taking responsibility for other areas, such as procurement, innovation, operations and even human resources. Enterprises continue to be bombarded by more technology than ever before. In an age of technological uncertainty, CIOs provide a degree of IT leadership certainty. For CIOs who embrace this requirement, the opportunities are bountiful.
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Previous and related coverage
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The Chief Information Officer at SAP offers leadership advice for moving beyond infrastructure to enabling innovation and delivering value through partnership and collaboration with business stakeholders. It's real advice from a genuine CIO practitioner.