The Changing Role of the CIOBy Allan Alter
55% say contributing to corporate strategy is one of their three top responsibilities
34% of CIOs manage another corporate function while running IT
16% spend most of their time dealing with emergencies
55% report to the chairman, CEO or president of their company
This year marks the 25th anniversary of the first time the phrase "chief information officer" was used in IT.
Right from the start, people understood just how difficult the position was: It requires executives to be both outstanding technology managers and fully functional business leaders.
The occasion was the 1980 Information Management Exposition and Conference, and the speaker was William Synott, then senior vice president of the First National Bank of Boston.
Synott said: "The manager of information systems in the 1980s has to be Supermanretaining his technology cape, but doffing the technical suit for a business suit and becoming one of the chief executives of the firm. The job of chief information officer (CIO)equal in rank to chief executive and chief financial officersdoes not exist today, but the CIO will identify, collect, and manage information as a resource, set corporate information policy and affect all office and distributed systems."
Ever since Synott's speech, the debate has raged over how, and even whether, CIOs can wear both a business suit and a technology cape. There's no better source of insight into what being a CIO demands than the CIOs themselves.
That is what this annual survey (which previously ran in the March 2004, February 2003 and April 2002 issues) provides, and why it's so important to keep doing it every year.
As always, our survey takes a snapshot of today's CIOs: their age, background, experience and compensation. Every year, we ask CIOs which business experiences are most helpful to have before taking the job, and we track business and technology priorities to uncover any changes in what CIOs are focusing on.
But we also ask new questions every year. This year, we looked into how many of the 405 CIOs come from IT or business backgrounds, or an equal mix of the two, and what their actual responsibilities were, including their role in mergers and acquisitions and managing other functions besides IT.
This year's study uncovers an important shift
in CIO priorities. In recent years, cutting costs has been among the top priorities for CIOs. But today, other concernsnotably improving business processes, the IT infrastructure and architecture, and securityrank higher. This is consistent with data from our February IT spending survey, which found 2005 IT budgets have increased by 5 percent over 2004, with much of the extra money going to infrastructure, integration and security.
Business process improvement and integration, along with security, are also listed as top priorities in two other recent studies: Gartner's 2005 CIO Agenda survey, and Deloitte Consulting's report "CIO 2.0: The Changing Role of the Chief Information Officer." The primary way IT can provide value to companies today, CIOs are saying, is to create an infrastructure that reliably and securely provides companies with greater business flexibility.
|The Average CIO|
Gender: Male (9% are women)
Years as CIO of current company: 5.4
Years as a CIO in any company: 9.7
Reports to: Chairman, CEO or president
Background: 65% IT, 9% business, 26% hybrid
Previous position: IT executive/manager
Annual salary in 2004: $140,200 (up from $137,793 in 2003)
Bonus in 2004: $31,178 (up from $28,283 in 2003)
Hours of work each week: 53
Why are these issues so critical now? Because architecture, integrated infrastructure and business processes support the kind of growth companies seek today. Globalization requires standardized IT platforms and business processes, and acquisition strategies depend on standardization to eliminate redundancies and achieve economies of scale. And unlike the Roaring Nineties, executives want quick returns on their IT investments, so they must improve efficiency even as they grow. "The philosophy now is if you are to grow, you need to grow profitably," says Jeanne Ross, principal research scientist at MIT's Center for Information Systems Research. "Companies say they've got to build a stable platform to build stable growth." Security concerns only amplify these needs. "With lousy architecture, security is very expensive," notes June Drewry, a SIM executive board member and the former CIO of AON Corp. "With good architecture, you can beef up your security at a much more reasonable price."
This year's survey also found important new information about who CIOs are and what they do. One in three CIOs manages another corporate function besides IT: most frequently strategic planning, but also building and grounds, day-to-day operations, and customer service. This creates a rich and complex picture of what CIOs do. More than half of CIOs are also involved in decisions about mergers and acquisitions. Given the importance of IT in getting value out of a merger today, it's hard to envision how they could be left out of the discussion.
Over the years, much of the debate about CIOs has focused on whether CIOs should come from the "business side" or the "IT side." It turns out just 9 percent of companies hire CIOs who come mostly from business backgrounds. But for many more, the answer is both: 26 percent of CIOs have backgrounds that are evenly divided between IT and business. The obvious advantage is a CIO who can comfortably wear both a business suit and a technology cape. And indeed, hybrid CIOs are more confident they have the business experience they need than CIOs from primarily IT backgrounds. Expect to see more hybrid CIOs in the future who have run business units or manage enterprise-wide business processes. And up-and-coming general managers are increasingly rotating through IT, according to Mark McDonald, a group vice president of Gartner Executive Programs. "That doesn't mean growing up in IT will be an albatross around your neck. Delivering high-quality, secure IT services will never go out of style," he notes. But it's obvious that all CIOs should urge their top IT managers to do some job rotation, too.