Dollars and sense –Why CIOs need to move beyond execution

FRAMINGHAM – No one likes to be stereotyped. Yet here we are, in our sixth annual “State of the CIO” report, trying to box you into narrowly defined CIO archetypes. And we know what you’re thinking: “I don’t fit into any of these categories. I have to do a little of this, a little of that, and a lot of everything else to do my job right.”

We agree. What we’re trying to do by extracting these four varieties of the CIO species — Business Leader, Innovation Agent, Operational Expert and Turnaround Artist — from the data our survey collected from you is to identify and define all those demands on your time and to illuminate all the myriad roles you may be called on to play over the course of your career, in order to help you see where you fit in (and where you could fit in) along a broad swath of possibilities. This is an attempt to reconcile the personal skills you bring to the job — your leadership and project management skills, for example — with the different ways your company may see IT fitting into its long- and short-term goals. For instance, you may be called on to play all these roles at once in a company that views IT as providing a strategic and competitive advantage. Or you may be a younger CIO, working to acquire the skills you’ll need to grow along with an equally young company that’s just beginning to discover the advantages that IT can bring. Or, unhappily, you may be a frustrated visionary working for a company that doesn’t see IT as anything more than a fungible tool that needs, above all, to be cheap.

You may disagree with the categories our research has helped us devise, or you may believe there are others that we’ve left out. We’d love to hear about them all.

Despite all our efforts to slice and dice you, we found that one aspect of the job cuts across all boundaries and is a prerequisite for success for every CIO: a reliable IT utility. You can have the emotional intelligence of a Business Leader CIO or the project management skills of an Operational CIO, but if the basic IT utility that lets business people do their jobs isn’t running up to expectations — and if its unit cost doesn’t go down continually — you will soon find yourself unemployed. Guaranteed.

And we’re not talking about network uptime. “The business doesn’t care about 99.9 percent uptime unless you’re talking about the uptime of a business process or an end-to-end capability,” says Peter Weill, director of the Center for Information Systems Research and senior research scientist at the MIT Sloan School of Management.

Let’s then call it business uptime.

The expectations for that are increasing all the time. The percentage of organizations that can afford to have their core IT systems down for any significant period is down to about the 10 percent range, from roughly 35 percent 10 years ago, according to Warren McFarlan, a professor of business administration at Harvard Business School. “It’s the reality of how IT has insinuated itself into the minute-by-minute, heart-to-heart operations of organizations,” he says.

In short, IT, and therefore the CIO, matters as never before.

Dollars and sense

Ironically, keeping the IT utility running is no longer considered a valuable job skill; it’s an expectation. “Delivery gets you in the game,” says Michael Gerrard, vice president and distinguished analyst for research company Gartner. “Then it becomes what you can add on top of that.”

This may help explain why the average CIO salary has risen just 1 percent since 2002. In organizations where IT generally is considered tactical (about 40 percent of organizations overall, according to Weill’s research), utility-style IT management is on its way to becoming a commodity that is subject to local and global arbitrage. “I would expect to see these CIOs’ salaries remain flat or go down and to see them be phased out and replaced by [outsourcers],” says Weill, dolefully. Only when CIOs are brought in to revive shattered IT organizations are they rewarded for running utility-style IT departments.

The four archetypes

Of course, CIOs brought in to fix IT problems bring more to the table than basic IT management skills. They’re turning things around, which requires more than a dollop of extra leadership and change management skills. So it should be no surprise that of our four archetypes, Turnaround CIOs are the most highly paid.

Our archetypes essentially describe four distinct skill sets that bring value to an organization above and beyond the basic ability to run IT as an efficient utility.

Organizations that want more than that typically begin with an Operational CIO, who adds value with his project management expertise and his technology smarts, enabling him to deliver IT solutions faster than before (a.k.a. enterprise agility). These CIOs need to highlight their delivery skills — and keep delivering — to avoid being dismissed as utility CIOs. Indeed, this archetype faces the most challenges in terms of business alignment, access to resources and personal rewards.

Business Leader CIOs are those who have good interpersonal skills and solid knowledge of business processes and may emphasize IT governance in the way they do their jobs and administer their departments. (They may hire Operational CIOs to do the heavy lifting.)

Finally, Innovative CIOs have the ability to help envision and create new business products and services as though they were one of the business gang. Indeed, these CIOs may be experienced businesspeople (our survey shows many come from a sales and marketing background) who are lucky (or shrewd) enough to find themselves in companies where IT is as highly valued as any other competency, and thus the best and brightest are rotated through IT just as they might move through manufacturing and finance. In these rare companies, the CIO is welcomed as an innovative force because IT competence is expected of all senior managers, says Gartner’s Gerrard.

Where you fit in

CIOs with some or all of the skills associated with these four archetypes have the opportunity to make a real impact (and earn real money) because they aren’t just running IT, they’re working on — and, in some cases, owning — business processes. “By optimizing the core business processes, rather than the systems, the CIO becomes more important,” says Gerrard. “More and more, [CIOs] are being pushed into the role of change agent because they have the perspective of end-to-end core process.”

In the right circumstances — an organization that views IT as strategic — you can transform those processes so that they improve the overall performance of the company. At least that’s what Weill and his MIT colleague George Westerman discovered when they studied companies where IT was given command of business process reengineering. In those companies where core processes were not already rigidly defined (think oil and gas and chemical companies, for example), IT’s reengineering capabilities had a direct correlation to profitability. “Those CIOs are in high demand, and their salaries are growing,” says Weill.

So is their stress level. As you will see, this year’s survey demonstrates conclusively that mere blocking and tackling is no longer enough to get ahead. CIOs have to find a way to manage the IT utility while also demonstrating real ability in at least one — if not all — of four very difficult archetypal skill sets.

They may even be managing more than IT. A growing trend, especially as business process leadership falls more and more to CIOs, is that they get to run the processes (as would a COO) after they change them.

There may not be enough time in the day for all this. McFarlan says CIOs are beginning to remind him of his investment banker friends. “Increasingly, it’s a role for young people,” he says. “CIOs make great grandparents because they can afford to retire. But they make lousy parents because they work 18 hours a day.”

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