CAO: The Next Logical Step for CIOs?

I had a number of interesting meetings recently with some accomplished CIOs. They have found themselves spending more than 50 percent of their time in nontraditional CIO functions, including real estate, operations management and procurement. So what does this mean?

Many of us have forecasted that some CIOs would make logical choices to graduate to the COO role. After careful review, I am beginning to doubt it will be that role.

What’s the reason? I just think that most organizations want more financial experience in their COOs, and these positions tend to go to those executives with P&L experience, particularly the CFO.

Do not lose hope, however. The role that has been mentioned these days is the chief administrative officer (CAO). This role typically does not require that heavy P&L responsibility; rather, it is an executive who can integrate the many administrative jobs that need to be efficiently run. And what better person than someone who has automation expertise?

Here are some attributes of an effective CAO:

1. An understanding of operational efficiencies and excellence. The job typically requires streamlining costs while maintaining outstanding customer service. That’s not an easy combination, but the CIO has been challenged with this dilemma for years.

2. Experience in contract negotiations and competitive bidding. CIOs have experience dealing in complex international contracts. Almost every CIO has gone through competitive bidding and is a veteran in dealing with vendors to get the best deal for the business.

3. Outsourcing decisions. It’s the CIO’s favorite challenge. And outsourcing is no longer limited to IT. The decision and cost/benefit decisions apply to every operational area in the business.

4. Capital equipment management. IT has traditionally had the largest capital budget. CIOs have experience dealing with the complexities of obsolete equipment, the accounting issues surrounding writing them off, and the implications on the firm’s financial reporting.

5. Virtual team management. IT has been a pioneer with virtual teams–mostly due to the expansion of overseas outsourcing relationships. In a global economy, virtual teams are becoming more relevant and considered a core component of knowledge management.

6. Nontraditional roles and responsibilities. IT executives historically have had unusual employment relationships and unique career paths. The advent of varying relationships with employees and consultants is becoming more relevant, especially with baby boomers retiring at an accelerated pace.

7. General automation. What CEO isn’t looking to automate operations? And who better to take this on than a CIO? It just seems like a natural fit for experienced IT leaders.

8. Competitive advantage. While the CAO function seems to include mostly support-related responsibilities, operations can create many new competitive services that actually help provide advantages over your competitors.

This may not be an exhaustive list, but it represents compelling evidence that the right person for the job is the CIO.

The question then is, who is that CIO? That person starts with many of the attributes I discussed in my November article (“Prepare for Your Next Position … Now”): Be part of the business; make sure you have a CIO ready to succeed you; understand how to complement your weaknesses; know where your organization is vulnerable and correct it quickly; be part of executive social causes; and most of all, be visible with the firm’s new clients.

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