Former Assistant Secretary of Education Diane Ravitch once said, “The person who knows how will always have a job. The person who knows why will always be his boss.” She might know more about why IT reports where it does than many CIOs do.
A lot of angst surrounds the question of who the CIO reports to. Many CIOs insist that, to be successful, they need to report to the CEO; they covet the access that seems to guarantee a better chance of influencing the enterprise, getting more funding and even earning a higher salary.
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But if you apply some rational thought to this issue, you might conclude that, for some CIOs, success will come from not reporting to the CEO. It all depends on the CEO, the CIO and IT’s role in the business.
First, not every CEO is someone that the CIO should want to report to. CEOs vary as much as other people. Some are good salespeople and communicators. Others are good at manufacturing, product development or managing people. The one characteristic they all seem to have in common is that they know their strengths and play to them. CEOs who spend most of their time selling and giving speeches to civic groups are often called outside CEOs. These CEOs usually rely on the COO or some other senior executive to make the everyday business decisions and direct the business unit heads and other C-level executives. No CIO should want to report to an absentee CEO.
Conversely, not every CIO is a good candidate to report to the CEO. Being a member of the CEO’s inner circle brings many perks, but it also carries responsibilities. The CEO’s team can often expect to spend more nights and weekends away from home, and a CIO on that team needs to be up to speed on issues far removed from IT’s day-to-day technology concerns. If a CIO is uncomfortable discussing marketing plans, customer segmentation or currency fluctuations in the Far East, then reporting to the CEO might not be a good idea.
The most critical point, though, is that IT might not be a good candidate for direct CEO attention. Most CEOs care about products, sales and customers. They want to make sure that they are manufacturing and marketing the right products and services, in the right places, at the right time, at the right price, to the right people.
Manufacturing is critical to managing the quantity, quality and cost of the company’s products. The sales organization generates revenue from customers buying the products. Others design the products, service them when they break or support customers when something isn’t right. Those groups are players — they have integral roles in activities that have a direct impact on the CEO’s three areas of concern.
On the other hand, some organizations within the enterprise are observers, not players; they only report on the CEO’s three concerns, so the CEO doesn’t need to spend his valuable time dealing directly with them.
So the key question becomes, Is IT a player or an observer? Does IT directly contribute to the development or production of the company’s products, generate sales or satisfy customers? If yes, then the CEO would be wise to have IT report directly to him. But if IT only reports on the successes or failures of others, then why should the CEO deal directly with it?
For some CIOs, reporting to the CEO is the right structure. Their IT organizations are either revenue producers or in some way directly responsible for revenue creation. But for those CIOs whose organizations are important to the enterprise but not at the center of what the company is all about, it is probably appropriate that the CIO report elsewhere.
To paraphrase Ravitch, being a successful CIO involves not just knowing how, but also knowing why.
George Tillmann is a former CIO, a management consultant and the author of The Business-Oriented CIO (John Wiley). You can contact him at [email protected].