The CIO's Role: FindingsBy Allan Alter | Posted 04-17-2007
It Pays to Be a CIO
Compensation is increasing at large and midsize companies. The Society for Information Management's warnings about an impending shortage of CIOs seems to be coming true. It's the most likely explanation for the 12.4 percent increase in base salaries and bonuses for top IT executives since last year's survey. And with opportunities to boost their pay, many CIOs are looking for, and taking, new positions. That's causing tenure rates to dipthough most CIOs do remain on the job for more than five years. The CIO post, like any executive position, may be packed with pressure, but nearly all agree they enjoy their work. The excitement, challenges and financial rewards of the CIO position more than compensate for the pressures of the job.
CIOs Foresee Big Changes in Their Role
CIOs will be focusing more on strategy and innovation. Our previous surveys found that IT organizations are undergoing radical changes, and CIOs believe their role is changing, too. Setting strategy will become more important, and innovationin the form of new technologies and new ways to exploit information will also get more attention. It appears that more CIOs will step back from overseeing day-to-day operations, process improvement, data quality, projects, standards and architecture issues. Since these issues aren't going away, CIOs will need to delegate more responsibility for them to other IT executives. But will these technical and execution issues be adequately addressed if CIOs give them less attention?
CIOs Need A Balanced Definition of Success
While CIOs want to focus on strategy, their bosses need them to pay attention to IT operations. We went back five years to our 2003 CIO Role survey to see whether CIOs believe the personal attributes they need for success have changedand indeed they have. Leadership and business understanding remain essential. However, CIOs today see strategic thinking as far more important than in 2003, while technical know-how and execution are much less critical. In contrast, consider how CIOs are evaluated: While their contribution to strategy is growing in importance, so too is the IT organization's overall performance, successful project completion, and interaction with business peers. CIOs may be emphasizing strategy at the expense of dayto- day performance; their CEOs, CFOs and COOs want them to focus on both.
Most CIOs Play a Limited Strategic Role
Less than half of CIOs now report to the CEO. Since today's CIOs believe they will focus more on business strategy, they recommend that aspiring CIOs gain experience in creating strategy and financial management and take P&L responsibility. However, opportunities to develop strategy may be hard to come by: Most CIOs continue to execute strategy rather than create it. Also, for the first time since 2003, fewer than half of CIOs report to the CEOand CIOs who report to other executives are less likely to be involved in strategy creation. This is due to many factors, from a rising generation of tech-savvy executives to the weight being given to compliance and process improvement. CIOs may think they will play a more important role in strategy creation, but for most, the job is still focused on operations and strategy execution.
The CIO Background Remains Primarily Technical
But it's now leavened with business experience. Sixty-nine percent of CIOs come primarily from within IT, and have advanced by excelling as project managers or by serving as liaisons, consultants or business analysts. Half spent time as programmers or systems developers. The move to "hybrid" CIO with equal business/ IT experience has leveled off at about a quarter of top IT executives, while the idea of parachuting CIOs with little prior IT experience has been abandoned. CIOs want to move beyond their IT roots to a broader strategic positionbut they need to ask whether they are really prepared to play the role to which they aspire.