How digital demands are changing the CEO/CIO relationship

For years — decades even — the relationship between most CEOs and their Chief Information Officers (CIO) was little more than surface-level. Enterprise IT and/or digital concerns for the vast majority of corporate history were merely cost centers, the high price of doing business. You needed phones, computers, e-mail, the Internet and the halo of devices and services that came with them in order to do your job. But these weren’t areas in which your company gleaned a competitive market advantage, they were merely tools you had to use in order to do your job. In that scenario, CIOs had two main functions for their respective CEOs — 1) deliver necessary IT functionality and keep it in working order, and 2) keep costs down as much as possible.

All that’s changed in the last 5-10 years.

From ‘how’ to ‘what’

Up until relatively recently, CIOs were concerned first and foremost with figuring out ‘how’ to deliver something. The C-suite or board or consultants decide a new system or tool ought to be implemented, and it’s the job of the CIO to figure out how to build/integrate that into the enterprise for as little cost as possible. Hence the ‘how’. But according to Gartner’s annual survey of CIOs, that notion has been totally flipped on its head.

“The quickening pace of digitalization and technological innovation are changing the CIO role from delivery executive to business executive,” Gartner says [emphasis mine]. “To successfully lead digital transformation, CIOs must help their organizations move beyond digital experimentation and pilots and start bringing digital best practices to scale.”

According to Venture Beat’s Derek Hutson, “Smart CEOs now see IT not as a cost center but as a differentiator, a source of innovation, and an enabler of revenue growth and market differentiation.”

No longer are CIOs resigned to mere execution of another person’s vision — they’re tasked with helping to set that vision more and more. That’s a ‘what’ question.

Why the shift

Digital tools from the IT Department are no longer merely the ‘cost of doing business’ for CEOs, for many, it’s the whole business. For others, it can be the very differentiator that sets them apart from their competitors. Few businesses have no digital component to them any more, and predictably so, CIOs have taken on greater influence since that shift.

CEOs, by and large, are probably less likely to frown at IT leaders in budget meetings more so now than ever before; those IT professionals are far more likely to be considered strategic business partners every bit as important to sustained enterprise success as the sales or marketing departments.

“CEOs are quickly realizing that the CIO needs to be front and center in the company business strategy and align IT with it”, Hutson continues. “CIOs need to understand the business and be empowered to take calculated risks to advance the company’s digital strategy. Things move and change so fast that strategy without speed and execution will fail.”

Where that leaves CIOs

As more and more enterprises run headlong into digital’s embrace, CIOs’ influence has grown considerably over the past 10-15 years. According to the most recent Harvey Nash/KPMG CIO Survey, only 38% of CIOs were members of their organizations’ executive committee in 2005; today, that number stands at 62%. What’s more, the likelihood that those same CIOs are reporting directly to the CEO instead of the CFO or another corporate officer has been rising by about 10% a year.

The Gartner Report concludes that IT leaders are “increasingly working at board level” while “[m]ore than three-quarters attended a board meeting within the last 12 months.”

Popular topics within those board meetings?  “IT strategy, technology investments, digital transformation and, of course, the ever-present challenge of cyber security. This increased exposure may have led many CIOs to take leading roles in innovating in their organizations”, the Gartner Report concludes.

Takeaway

The best, most innovative companies no longer see digital as merely a cost center and CIOs as just ‘how’ employees. This changing nature of CIOs’ relative importance demands a change from CIOs, too. They have to consider themselves not IT leaders, but rather business leaders looking at strategic problems through an IT lens. The more CIOs can do that, the more prevalent their executive presence will become, and the more the forward-looking companies can leverage technology to their benefit.