Why do a large percentage of IT organizations report directly to the CFO or CEO and not to the CIO? This is as high as 60 percent in smaller businesses with revenues up to USD 250 million. Why CEOs often wonder if the bang will be worth their IT investment bucks at all?
This perhaps makes sense in the current tough economic situation where we need to cast a hawk's eye on spending. But this financial aspect is taking decision-making away from IT. This may have other collateral damages as well. A CIO may no longer be a trusted partner, business peer, or viewed as a valued service provider. With new technologies like cloud computing and SaaS propelling IT toward a utility model, the paradigm is changing. IT may not be deemed to be providing competitive differentiation.
There is a fundamental disconnect between IT and the Business that keeps most companies from capitalizing on all that technology can do. This disconnect is a set of opposing forces that define the role of technology leadership, a paradox in which CIOs are caught - the conflict between what's expected of CIOs and what they can and are allowed to do.
Another challenge is with the infrastructure, which sucks up to 80 percent of IT budget. It's no wonder CIOs have difficulty getting to the value-added projects. The CIO has to figure out ways to manage through these challenges and contradictions. After all, CIOs are hired to be strategic and not spend all of their time in the weeds. In this age of social networking, a CIO shouldn't be a geek from the never-never land.
CIOs must be fairly financially literate in order to have a say and communicate the initiatives clearly to CEO/CFO. CEOs may not always understand where IT is spending from already narrowed margins of the company. It's the CIO who has to breakdown each product/service and ROIs expected or realized in simple terms (in terms of the dollar - the language the CEOs understand), and bring in transparency.
CIOs are often accused of hiding everything behind a blizzard of complexity and buzzwords. The top dog of the company doesn't have to understand the intricacies and nitty-gritty of Enterprise IT. A CEO may not understand big-data, but will certainly understand Business Intelligence and Analytics resulting from it. The company may think in terms of quarters, but the CIO needs to create the long-term roadmap and convince his peers.
Today, the CIO's job is to communicate those concepts and risks clearly. The hesitancy to invest in IT often comes from the 'unknown' and 'IT is a blackbox' syndromes. Transparency and simple (non-IT) language helps in the free flow of communication and evokes confidence. Having a few cash cows helps the IT department boost its foothold in the game as well.
CIOs have the additional onus of identifying the next opportunity while determining the appropriate level of investment based on the organization's current condition. Google urges its IT managers to work on projects which will bring value to the company in 10 years (not tomorrow), and thereby stay ahead of the game. ('In The Plex: How Google Thinks, Works, and Shapes Our Lives' by Steven Levy).
While historically, IT has been more accustomed to static, two-dimensional facts and figures gathered months, or even years ago, we have now moved into gathering up-to-the-minute data that easily translates into future trends and predictions. It is the CIO's job to help the company tap into the digital footprints of two billion Internet users, mine real-time data to fundamentally change how the CEO makes some of the most important decisions, and takes the company to the next level of the Social Data Revolution.
Once the organization sees how IT can improve the trend in forecasting, productivity, and bottom line, the rest of the discussion will automatically fall in place in favor of the CIO. IT starts tracking the trends, threats, opportunities, and provides meaningful and measurable results, and the CIO becomes the cynosure of decision-making (Pulse: The New Science of Harnessing Internet Buzz to Track Threats and Opportunities, by Doug Hubbard). After all, at the end of day, there are no "IT" projects, but only business projects.
This is how IT can enhance the use of new technologies on the horizon, offering higher ROI while driving down costs, without the fear of failure. There's a plethora of opportunities on the IT horizon, and missing them will be equivalent to giving way to the nimbler competition.
The budget is getting leaner. The CIO has to put himself into the shoes of the CEO to understand his vision and core issues facing the company. Then justify investments with ROI, value additions, and long-term profitability.
It is also important to accept failures as lessons learned and make the tough decision in the larger interest of the company - similar to Google withdrawing from the Chinese market, although the most promising. Such a result-oriented and open communication will help both the CIO and the CEO to be on the same wavelength, develop a productive relationship, and reclaim the IT turf.
