According to the CIO of a global consumer products company, “If you’re not extremely careful with these programs, business stamina and patience run out. ‘Just get the #@*%$!! system in once and for all so that we can pick ourselves up again and move on’ becomes the dominant refrain. That’s of course assuming that you can get to a working system at all.” The result, frequently, is an expensive IT solution that doesn’t quite do what was promised and ultimately doesn’t have much tangible impact on business performance.
Think Big to Succeed
Given the number of institutional challenges CIOs face, CEOs have to play a direct role in creating a more favorable work environment.
The first step is knowing where to look for the next CIO. We offer a simple rule of thumb: If a CEO believes that IT and digitization are currently on the right path in the company, and there is broad confidence in the strategy and road map laid out by the CIO and the IT team, looking internally for a successor should be the default plan. If, however, these conditions do not exist, the CEO should consider external successors. He or she should also look within their organization to identify what allowed such a situation to develop in the first place, whether on the business side or within IT itself.
Our survey also revealed the importance of the CIO’s reporting relationship. This relationship has a direct impact on how the CIO focuses the IT organization’s energies and resources. The reporting relationship won’t be the same at every company, but it needs to be clearly defined and aligned to the company’s overall strategic goals.
Although a small number of CIOs reported to a COO or other operational executive, the majority had a direct line to the CFO or CEO, in roughly equal proportion. Those reporting to the CEO said they were typically encouraged to prioritize enterprise-wide business value—how much the IT department delivers to the business—whereas those reporting to the CFO may have been asked to emphasize the cost agenda and automation of operations. Both roles are important, although the latter is often connected to an older way of thinking about IT, as a cost center to be managed efficiently. Cost management is a critical concern in an age when IT absorbs a large portion of companies’ budgets, but it’s not necessarily the way to get the most business value out of new technologies.
Still, no matter what the reporting line, CIOs who have a strong sense of how their job duties and their IT strategy fit into the overall corporate strategy will be best positioned to create a high-functioning team that coordinates well with key stakeholders throughout the company. And this will help avoid the large project failure trap. CIOs need to instill a strong sense of joint ownership and work in genuine partnership with these stakeholders to ensure the successful delivery of complex IT-enabled business change. As the CIO of a global energy company told us, “If the CIO is credible and accepted by the top team, and has the IT management basics like service and cost under tight control, the fact that they report to the CFO...doesn’t have to make a lot of difference.”
It’s also important to clearly define the CIO’s job, and to make sure he or she has opportunities for advancement. Many of the CIOs we spoke with pointed to shared-services operations and other support functions as being areas that could be put under their responsibility. Those departments would benefit from the IT function’s service management capabilities, and would give the CIO’s role wider scope.