Broken System

By Edward Cone  |  Posted 01-16-2008 Print

Still, CIOs and CIO wannabes who dream of being the CEO's strategic information visionary may not be disappointed as some innovative organizations create positions for high-ranking specialized information--not IT--executives.

But Player's words reflect the widespread sense that conventional IT management just hasn't worked very well. After years of calls for closer alignment with business units and a sharper focus on strategy, companies are deciding that the CIO function as configured is inadequate to the tasks at hand, and that the system itself is broken.

Reports to that effect are thick on the ground. Bobby Cameron, a vice president and principal in Forrester Research's IT leadership team, estimates twothirds of CIOs are not moving in a strategic direction, and many are marginalizing themselves by focusing more on IT operations than business results. Micro Focus' Moultrup says CFOs have a much better understanding of return on investment than the average CIO, who is focused on maintaining budget and staffing levels. "The CIO often does what's cool for him, and what's good for his career, not what's best for the company," he says.

Says Ian Campbell, president of the IT consultancy Nucleus Research, "Technology has grown past the CIO."

Nonetheless, at least one influential thinker says it's plain wrong to have the CIO report to the CFO. "It's clearly not the right way to go for several reasons," says Jerry Luftman, an associate dean and distinguished professor at the Stephens Institute of Technology and author of the SIM survey. "If you want IT to be strategic and an integral part of the organization, having the CIO report to the CFO is not effective."

Luftman's research indicates that companies in which the CIO reports to the CFO have the worst business/IT alignment. "You want the IS executive to be treated like one of the other top executives, and if they report into the CFO, it's hard for them to do that," he says.

Changing Times

Despite Luftman's admonition, the timing of the transition to a new kind of IT management seems natural, coinciding with a new level of control and confidence about technology across the enterprise. "All the standards and common IT frameworks like ITIL just mean that more of the capabilities are moving out to the business," Cameron says. "Most of the senior business executives saw IT as a utility, but now they fully expect technology to be driving the future."

CFOs and business users are more comfortable with technology than ever before. "Technology has fallen from a pinnacle where only a few people understood it to something everyone appreciates," Campbell says. A generation after the advent of the personal computer and well into the age of Web 2.0 applications, information technology has become part of the culture, woven into the fabric of everyday life and routine business practices. "The CFO is very savvy, many of them have an MBA and an understanding of IT, and the CEO does, too," says Moultrup.

Meanwhile, the tools available to CFOs have evolved. "There's a revolution in measurement going on that is leading to a revolution in management," says Brynjolfsson of MIT. "We are moving beyond financial accounting to managerial accounting, with multiple metrics that are not all dollars and cents. More and more measures are not just financial measures, but measures of information flows, the way you can track information flows to understand what your workers are doing. That's a whole set of micro-data that wasn't available to companies in the past. If you have a CFO who is open to and interested in looking at that kind of data, it's a good idea for that person to get involved."

Page 3: The Business End of IT

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