CIOs: You`ve Got Clout!

By Allan Alter  |  Posted 04-08-2008

CIOs: You`ve Got Clout!

Perhaps not since 1990, when BusinessWeek proclaimed "CIO Is Starting to Stand for 'Career Is Over,'" has the CIO role and its importance been as hotly debated as it is today. While some say the CIO role is doomed to all but disappear, others argue that the role remains crucial for competitive differentiation.

With this survey, we examine the CIO role by framing the question as one of influence: What kind do CIOs have, and how much? To find out, we asked CIOs not only about specific roles and responsibilities, but about whether their influence is rising or waning, and the degree of influence they have over particular business, technology and spending decisions.

As a reality check, we posed similar questions to other IT executives and managers, with survey respondents totaling nearly 500. (We also conducted our usual benchmarks, such as career backgrounds, compensation, longevity, age and gender.)

CIOs don't see their peers as leaders on par with other top executives. Still, nearly all CIOs have enormous influence over IT spending, vendor selection and decisions regarding business process improvement.

In fact, today's CIOs also act much like chief process-improvement officers. Ninety-seven percent agree with Mark McDonald, Gartner Executive Programs group vice president, who says, "CIOs are now expected to deliver the solutions that make the enterprise different in a way that matters to company performance and customer satisfaction."

However, only about half of CIOs--usually those with responsibilities for creating strategy--have any influence over important business decisions, such as which markets to enter or which companies to acquire. And one-third of CIOs think that as IT matures, the CIO role will decline.

Still, with the influence of CIOs apparently growing rather than shrinking, the CIO role will remain important for a long time--even if 80 percent of CIOs agree with Bobby Cameron of Forrester Research, who says, "The 21st century CIO will have little resemblance to the CIOs of years past, in background, time distribution and influence."

Mixed Messages About CIO's Influence

FINDING 1
Mixed Messages About CIOs' Influence

Most CIOs think they are becoming more influential, but others aren't so sure. CIOs reject the notion that most companies will eliminate the CIO position, and most say their influence is rising, especially among other executives.

But these statements of confidence should not be taken at face value. Remarkably few CIOs think they or their peers are the top leaders in their companies, despite their growing influence.

One in three agrees with author Nicholas Carr that the CIO role is in an inevitable decline. Non-CIOs are even less starry-eyed about CIOs' influence and future role. While CIOs' influence may be rising, it has its limits, as shown in Finding 2.

Finding 1.2

 

CIOs Control Process Change and IT Spending

FINDING 2
CIOs Control Process Change and IT Spending

Half of CIOs are involved in strategic business decisions. Top IT executives and others agree that CIOs have enormous influence over three areas in particular.

For the company at large, their greatest impact is on business process improvement. Business operations have become so dependent on IT that it's impossible to improve them without including the CIO in decisions.

CIOs have also retained their power over IT spending and the selection of major vendors. Many have the authority to sign off on large expenditures without requesting additional approval.

But when it comes to other strategic decisions, CIOs are split almost evenly between high-ranking strategic executives and those who implement their decisions or are left out of decision-making altogether. This is why most CIOs don't view their peers as top corporate leaders: Many aren't in the inner circle of corporate decision-makers.

Finding 2.2 and 2.3

Finding 2.4

Any CIO Can Aspire to Be Strategic

FINDING 3
Any CIO Can Aspire to Be Strategic

It helps to report to the CEO, but that's not a prerequisite for clout. The split between "strategic CIOs" and "operational" or "tactical CIOs"--the 44 percent of CIOs involved in creating business strategy and the 56 percent for whom that is not a primary role--extends beyond their involvement in business decisions, but the differences aren't absolute.

Tactical CIOs are twice as likely to report to CFOs, while most strategic CIOs report to CEOs. Still, many of the CIOs who report to CFOs play a strategic role in the business. Strategic CIOs spend only a little less time with the IT staff than tactical CIOs do. Few strategic CIOs sit on the board of directors, although they attend more board meetings than tactical CIOs. Top IT executives are not limited to operational roles, even if they don't report to the CEO or sit on the board.

In fact, plenty of clout-carrying CIOs don't do either.

Finding 3.3 and 3.4

Finding 3.5

CIO Skills, Responsibility Land Bigger Paychecks

FINDING 4
CIO Skills, Responsibility Land Bigger Paychecks

The average salary for CIOs in 2008 is 5.5 percent higher than in 2007.

CIOs at larger companies make the most money, but there are other ways to increase earning potential. CIOs who focus on discovering new business opportunities for their companies take home, on average, $30,000 more annually than those who don't. CIOs who manage other departments along with IT also earn higher salaries.

Large companies are more likely to hire MBAs as CIOs, so earning that degree opens the door to higher-paying jobs. Does it help to land a CIO title? Yes, but mostly because large companies are more likely to call the top IT executive the CIO. Overall, responsibility and business skills matter most.

Finding 4.2

Creating New Revenue:The Overlooked CIO Role

FINDING 5
Creating New Revenue: The Overlooked CIO Role

CIOs confuse operating a business with running a business. CIOs take any role they play in business strategy seriously. But more than anything else, CIOs believe their job is to advise executives on how to improve their company's processes, serve as the point person to understand technology trends and opportunities and what they mean for the organization, and make sure the business isn't tripped up by IT problems.

However, few CIOs count innovation or uncovering new business opportunities among their roles--and therein lies the lost opportunity for CIOs to be movers and shakers, and to earn higher incomes (see Finding 4).

That's also why business-IT alignment is still a problem: These CIOs haven't made the company's raison d'être one of their top responsibilities. Many CIOs think being business-minded means running business operations and processes, when it really means devising new ways to put more money in shareholders' pockets.

Finding 5.2

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