The state of the CIO in 2003 is strategic.

Our second-annual survey of more than 500 CIOs reveals that (no surprise) your budgets are still tight and that (not coincidentally) you have to prove the value of each and every IT system and project deployed or planned. Yet despite the pressure to cut and the charge to do more with less, you are looking ahead rather than hunkering down.

More than three-fourths of you say that strategic thinking and planning is pivotal to your success in this business climate. That’s a remarkable increase from last year’s inaugural "State of the CIO" survey, when only 46 percent of you listed strategic thinking and planning among your three most important skill sets.

What does it mean to be strategic today? It means taking an enterprisewide view rather than simply focusing on your department. It means welcoming the business heads into your planning process rather than assuming that they will turn up providentially when it’s time to make critical IT decisions. It means devising budgets based on what can benefit the company as a whole rather than responding serially to the requests of individual business chiefs. Above all, strategy for CIOs means being aware of the powerful effect IT has on organizational competitiveness.

Adrian Danescu, senior vice president and CIO of Manufacturers Bank in Los Angeles, looks at each new IT system and asks himself, "How does it fit in with strategy? How does it fit with the competition? How will it make us look better moving forward?"

Asking (and answering) those strategic, forward-looking questions is important because IT is increasingly the difference-maker in how well an organization competes in the marketplace. It is the difference between a successful company and one that’s treading water. "IT is the key organization within the financial industry," says Danescu. "It’s charged not only with maintaining the infrastructure but also to look for new lines of revenue."

As the linchpin to organizational success, IT must work more closely than ever with the business side to align strategy. It must also work harder than ever because alignment is not a destination you reach, it’s a road you travel. Liza Lowery became CIO of the city of Los Angeles one year ago and was pleased to find open lines of communication between the IT group and other departments in the city government. Each department, such as police and fire, had someone assigned as a contact for the IT group. But that wasn’t good enough.