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 / Third Quarter 2002 / Issue 28(originally published by Booz & Company)


CEO vs. CIO: Can This Marriage Be Saved?

This type of hands-on process management by a CIO of a business unit and this degree of cooperation between a CIO and a business unit head, although tremendously valuable, is extremely rare, primarily because most CEOs don’t endorse that level of CIO involvement. Without it, though, we’ve found that a disturbing cycle has set in at many companies, in which business unit heads are avoiding the CIO and hiring outside help to design non-mission-critical applications. Kept out of the stream of ideas at the process level of the company, the CIO is unable to efficiently leverage the new technology across the company or, importantly, pollinate technological concepts throughout the corporation. This, in turn, makes the CIO seem even less knowledgeable and capable of strategic management.

Of course, the CIO may exacerbate the situation. Frequently, when the IT group is asked to do something quickly, such as turn around a marketing campaign in days to respond to a competitor’s actions, it reacts by saying the project could take months. Frustrated by this response and knowing they don’t have that long to wait, the business units go elsewhere to get the campaign off the ground. Eventually, this disconnection between business units and the CIO comes back to haunt the company in the extra costs to pay outsiders to do what IT staffers should be doing, the maintenance and support headaches, and the difficulty in keeping track of equipment purchases and technology inventory.

To stop this spiral, CEOs must be vigilant, making sure, for instance, when a business unit head proposes an initiative involving technology, even in an offhand conversation, that the CIO is included in the discussion. One way to accomplish this is to discourage making key process-oriented decisions outside the scope of executive committee meetings.

As with everything else related to healing the fractured relationship between CEOs and CIOs, however, both sides must participate. Once he or she has the CEO’s imprimatur, the CIO has to foster the process relationship with business units by providing demand-management strategies that help scope, model, and prioritize technology expenditures. This way the business unit head has a good idea at the beginning of the budget year what the expected technology costs will be and can decide, with the CIO, how to spread the limited money available. If something unexpected occurs, such as a sales effort that wasn’t anticipated, the CIO, closely involved as he or she would be with the day-to-day activities of the business unit, can move funds from another department to this project — and, importantly, gear up IT staff to tackle it in crisis mode — or pitch the executive committee for a larger budget.

Perhaps the CIO who has most successfully made process management the centerpiece of his job description is John McKinley, chief technology officer of Merrill Lynch & Company. He showed his stripes soon after he joined Merrill in 1999 by guaranteeing that, in six months, the company would have an online presence that would rival those of Schwab and E-Trade, two of the many Web brokerages that were making Merrill look like a dinosaur with its old-fashioned telephone and in-person approach to trading stocks. Mr. McKinley assembled a team of 30 people, many of them borrowed from the business units that would be involved with the Web site, and had constant discussions with business unit heads about how the site should look and operate. The team met the deadline, in large part, says Mr. McKinley, because the consensus management approach ensured that many parts of Merrill’s organization felt they had a hand in building the site and, thus, wanted it to succeed. But only a few people — Mr. McKinley and some of the key business unit heads who would be involved with the online initiative — made the final decisions about how to proceed.

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  1. David M. Katz, “It’s Good to Be King,”, June 5, 2002; Click here.
  2. Terry A. Kirkpatrick, “Research: The CIO’s Role,” CIO Insight, April 1, 2002; Click here.
  3. Esther Schein, “Judging Tech? It Ain’t Easy,”, March 5, 2002; Click here.
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