12 business concepts IT leaders should master

Today’s CIOs see themselves as business leaders as much — if not more so — than as technologists.

That’s not surprising, considering how essential technology has become for running organizations and serving stakeholders — whether customers, employees, or investors.

CIOs spoke to the criticality of their role in CIO.com’s 2023 State of the CIO survey, with 71% saying that they expect to devote a higher percentage of their time to business strategist work three years out. “They plan to focus on driving business innovation, developing and refining business strategy, identifying opportunities for competitive differentiation, and developing new go-to-market strategies and technologies,” the report states.

Given such responsibilities, CIOs say they must not only speak the language of the business but also understand business fundamentals — those key ideas and theories that have become the bedrock lessons of MBA programs and corporate planning.

There are, of course, the management essentials and the longstanding executive skills that remain constant must-haves. But there are, too, a list of topics that bubble up and dominate based on current trends and present-day realities.

Speaking to that latter point, CIO.com polled analysts, consultants, and CIOs about the must-have business concepts of today. Here’s what made their list.

1. What drives each functional area

In addition to having a broad business acumen, CIOs see value in understanding the general workings of each functional area as well as each area’s drivers and objectives.

“It’s a necessary foundation for a CIO,” says Erica Hausheer, senior vice president and CIO of software company Teradata. “CIOs have to work with the entire C-suite so the challenges of the C-suite are the challenges of the CIO.”

Hausheer, who says she honed her business acumen by earning an MBA after serving as an officer in the US Navy as well as through on-the-job experience, believes it’s essential for tech leaders to hold their own in conversations dealing with a full scope of business topics, whether they’re talking about, for example, the difference between direct and indirect procurement, organizational design or tax strategy.

Of course, CIOs don’t need to be experts in such areas, she says, but they should know enough to follow the flow of thought and contribute to the discussion.

She adds: “If you understand the ‘why’ behind the company strategy, you can be in the boat with them and offer options and different ways to think about the implementation plan.”

2. Key business drivers

Similarly, as CIOs have moved from technologists to executives over the past decade or so, they have had to better understand how their organizations operate and make money. Meanwhile, the upheaval of the past few years and today’s economic uncertainties have brought the need for CIOs to fully grasp what drives the business to the forefront.

“By deeply understanding this, the technology team can partner with the business to design and implement technology solutions that not only continuously improve on the products and services customers rely on, but also create greater value for the customers,” says Mark Mintz, corporate senior vice president and CIO of Charles River Laboratories. “This is more important than ever now because technology’s role in creating value is bigger than it ever has been.”

3. Accounting principles

CIOs have long said they need to show the benefits of the technology investments they’ve made and calculate expected and realized returns. To do that, though, they need to have some solid accounting skills.

That’s one reason why Joel Schwalbe, CIO of biotech company Transnetyx, lists accounting as one of the must-have business concepts for tech leaders.

“And it’s not just for investments, but it’s important for [calculating expense reduction, too, and understanding how we can improve margins,” he says, noting that corporate leaders center their financial health discussions around EBITDA — for earnings before interest, taxes, depreciation and amortization, making that concept an essential must-know for CIOs.

4. Finance, financial markets

Protiviti, a global business consulting firm, surveyed 1,304 C-level executives and directors to understand the top risks they face in 2023. Those leaders list economic conditions in their markets and their potential to significantly restrict growth opportunities as a top risk, coming in at No. 2 behind staffing challenges at No. 1.

Given the economic uncertainties of today, CIOs should be well-versed in not only how their companies make money but in broader macro and microeconomic ideas — from the workings of corporate finance and financial markets to global economic trends, says Leona Thomas, senior delivery director with the global BAS transformation team at the consulting firm Slalom.

“These should be concepts you know off the top of your head, and not something you have to take a step back for,” she adds.

5. The geopolitical environment’s impact on business

The geopolitical environment is another area that was once foreign to CIOs but is now impacting enterprise operations and, thus, IT.

Consequently, CIOs should have a stronger grasp on the geopolitical landscape and how world events, political decisions, and related actions could impact not only their organizations as a whole but how they deliver technical and digital services, says Jeff Wong, global chief innovation officer with professional services firm EY.

Events over the past few years have illustrated this point.

The Russian invasion of Ukraine disrupted the global economy, impacted supply chains, and affected international work teams — including those working in IT.

COVID and COVID-related safety measures interrupted the global supply of computer chips as well as other technologies, which in turn impacted some enterprise IT initiatives.

And US government concerns over Hauwei and ZTE led to federal bans on the use of their equipment, a move that has both design and cost implications for companies across the United States.

That’s just the start, Wong says, noting that other national policies and geopolitical actions affect how and where organizations can store data, what and where they can use certain algorithms, and even what cloud providers may be used — all of which is information that many CIOs need to track and understand.

6. Business resiliency

CIOs are typically seen as experts in disaster recovery and are key participants in business continuity planning. But some IT leaders say they’re now expected to understand business resiliency at a whole new level.

More organizations have a global reach through customers, employees, and service providers. And as those organizations have stretched around the world, they’ve had to contend with issues such as domestic unrest, international conflicts, and the pandemic.

“Business resiliency has taken on a different connotation today,” says Kristen Lamoreaux, president and CEO of Lamoreaux Search.

Lamoreaux says these events have executives asking: What would we do if supply chains face further disruption, whether a major industrial accident occurred, when the next country implements a lockdown?

“And many have been turning to CIOs to help get them through these questions, to figure out how to do things faster, cheaper, find new routes, and make it more secure,” Lamoreaux says.

7. Strategy as a discipline

CIOs are among the enterprise leaders developing strategy, so experienced executives say they should understand the art and science of it.

“It’s much more of a discipline than many CIOs realize,” says Michael Seals, who became chief digital officer and SVP of business strategy of Hussmann, a subsidiary of Panasonic, in 2022 after seven years as its CIO.

Seals says learning the academics around strategic thinking and formulating strategy allows CIOs to be more effective and influential in shaping their organization’s vision.

“Most CIOs get that technology is a game-changer but many don’t understand how to take that and turn it into a strategy, to make sure what is envisioned is something that’s feasible; that can drive competitive advantage, sustain it or extend it,” Seals explains, adding that without that approach to strategy development “the likelihood of success is pretty low.”

8. The science behind the customer journey

Info-Tech Research Group calls out the importance of customer experience in its list of five CIO Priorities for 2023, saying CIOs should “shape the IT organization to improve customer experience.”

To do that, CIOs need to understand not just CX from a digital perspective but to understand the customer journey from a sales and marketing perspective, too.

“It transcends technology,” says Jamie Smith, CIO of the University of Phoenix, adding thathe has leaned on his undergraduate marketing degree to understand the end-to-end customer journey and key ideas such as journey mapping, charting to moments that matter, and the peak-end rule.

“Customer experience is a discipline and there is a science to it, and understanding that has been really valuable,” Smith adds.

9. Data privacy laws

In April 2022 only four US states had data privacy laws on the books, according to the International Association of Privacy Professionals (IAPP) Westin Research Center. A year later, nine states had such laws with Texas poised to become the 10th. An additional 10 states had proposed laws under active consideration.

That, of course, is on top of all existing international data-privacy laws as well as emerging changes to those laws and proposed new ones.

Although they don’t have to become lawyers, CIOs do need to understand the legal and business ramifications of these laws and how their technology strategies intersect with those, Lamoreaux says.

“It’s often thought of as a purely legal problem, but you [as a CIO] need to be an expert in this space in the countries in which you do business. The complexities of today, pulling data from social media as well as internal streams, where and how data is stored, how you’re using it, cross-border data transfers, means that in a click of a mouse your entire reputation can be put at risk,” she says.

10. Agility — for business

CIOs have been implementing agile software development practices in their IT organizations for much of the past two decades. Now they need to embrace business agility concepts, says Jean-René Rousseau, a vice president with the strategic business consulting team at CGI.

“CIOs need to understand what agile means from a business perspective and engage with their executive colleagues to help increase the urgency of becoming more agile as an organization,” Rousseau says, noting that “possessing many agile software teams does not create an agile organization.”

Rather, he explains, it’s about understanding what “agility means from a strategic planning, business operation, accounting, and cultural perspective.”

Smith concurs, saying the discipline of business agility is about how the entire enterprise structures its ways of working, empowering teams to solve business problems, and “pushing authority to where the information is.”

11. Lean management

CIOs are increasingly focused on efficiency.

Research from Evanta, a Gartner Company, determined that increasing operational efficiencies and productivity is the top mission-critical priority for CIOs in 2023. And while it has been the top priority for three years in a row, the percentage of CIOs listing it as such increased by 2 points in 2023 from 2022.

Given the focus on efficiency, Rousseau says lean management — a staple of 20th century business operations — has become an essential tool in the 21st century IT function.

“CIOs need to understand the Lean principles not only to streamline their own processes, but to take a systemic view of their organization and understand the complete value creation system that involves not only their teams but many business teams as well,” he explains. “Using the ‘lean’ language can help [CIOs] discuss systemic performance issues with their executive colleagues without using technology-associated concepts.”

12. Human-centric workplace

With hybrid office environments here to stay, Tyler says organizations will have to transform their workplaces from an office-centric design to a human-centric one.

The concept of a human-centric workplace goes beyond enabling virtual work and online collaboration, he explains. Instead, it’s a deep dive into building an environment that supports the people.

“Now as we’re all going back into the office, we have to think about what that looks like. We have to rethink work. We have to realize [workers] are human beings and think about what’s the right balance of working from home versus the office, how do we deal with scheduling, how do we make workers feel connected, what works, what doesn’t,” Tyler says. “The CIO has to be part of those choices.”