CIO being cut out of C-suite

Whenever CIOs and C-level executives tackle business strategy collaboratively, the IT function will deliver more value to advance the strategy. While that conclusion may be obvious to many IT professionals, many organizations still haven’t recognized the value of the CIO to C-level relationship.

Recently McKinsey surveyed CIO’s and C-level executives about IT performance. The survey results clearly showed that collaboration among CIOs and C-level executives needs work.

Are CIOs operating in stealth mode?

In the McKinsey survey, only half the CIOs were at the strategy table with C-level executives in the organizations surveyed.

I wonder how many CIOs operate in stealth mode because they’re:

  1. On the defensive about performance issues surrounding major IT projects?
  2. Not sure what to focus on in their informal discussions with C-level executives?
  3. Prone to techno-speak?
  4. Apprehensive about being asked to deliver even more with an even lower budget?
  5. Spending more time meeting with direct reports in the IS department than meeting with C-level executives and mid-level managers?

The clearest conclusion of the survey was that IT performance was seen as more effective in organizations when CIOs are more involved in setting business strategy with C-level executives.

CIOs can easily leave stealth mode by allocating more time to collaboration with C-level executives and less time to supervising direct reports.

Is the IS organization ineffective?

CIOs didn’t rate the effectiveness of their own IS organization highly in the McKinsey survey. In no IS process did even 50 per cent of CIOs rate their own IS organization as either completely effective or very effective.

Perhaps the CIOs were being modest although I doubt it. I believe this poor rating is due to either overly convoluted IS processes that are too complex to be effective or to the absence of IS processes that result in IS as a continuous crisis operation.

CIOs can lead their direct reports to sensibly optimize IS processes and quit operating at the dysfunctional extremes. That action will lead to improved IS organization effectiveness and more appreciation for the IS contribution to business strategy.

Is focusing on IS costs important?

In the McKinsey survey, CIOs said reducing IS costs is twice as important as other C-level executives. Cost was where opinions were the most divergent in the survey.

CIOs are being torn apart between widely divergent expectations on IS costs. The CFO, who is the boss of many CIOs, is largely measured by operating cost reductions and expects the CIO to trim costs. However, most of the consumers of IS services don’t report to the CFO and are clamoring for better IS service. These pushy consumers are largely measured by revenue growth, see IS as an important enabler and are willing to spend more on IS.

Many organization exacerbate this cost problem by budgeting and paying for software licensing and maintenance costs within the IS budget. That accounting practice makes the IS budget a very large and juicy target at budget time.

IS departments are seen as more successful if these software costs are budgeted and spent in the department that uses the software. Then the responsible vice president can defend the cost and the optics of the IS department budget are significantly changed.

CIOs are less susceptible to being harangued about allegedly excessive IS costs if they only have to defend the computing infrastructure costs that they can actually influence.

If you can share observations about the McKinsey survey or about how CIOs can better position themselves to add value to the business strategy, please post a comment.

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