The future of the CIO

Every so often, I get requests from outside organizations wanting to learn from the CIOs in the #CIOChat. Recently, an organization wanted to get a sense of how the CIO role will change in the next five years. Here is a summary of what we both learned from this conversation.

How does where a CIO reports impact the ability to transform?

I expected a more unified position for this question, but instead I heard two differing perspectives. One group of CIOs insisted that CIOs do not necessarily need to report to the CEO. These IT leaders, however, suggested that if a CIO is lucky they will have a functional boss that truly knows the CEO’s mind and operates for the good of the entire organization. They said it can work to the upside if the reporting leader knows as well where the money is and how to get it. On the downside, these CIOs said that bad CFOs are like bad CIOs and treat everything as a cost and just want to ‘keep the lights on’. This, these CIOs said, is a sign that IT is viewed only as a cost center which is never a good thing. One CIO volunteered here that they once reported to a CMO. They said this was much worse than the CFO. They said that every customer call resulted in a new IT priority and for this reason, nothing ever got done.

For the above CIOs, personality is as important as formal reporting and different functions attract different personalities. They say that the reporting structure will naturally depend upon the industry. These CIOs believe that the CIO does not have to report to a CEO to be successful. Other reporting structures may apply depending on the team and company focus. They stressed in some verticals the CIO is not the most senior technical executive. Higher Education, for example, does not have any kind of standard.

With this said, these CIOs suggest that it takes much more than a reporting structure to succeed as a CIO these days. They say that worrying to much about reporting is like moving the deck chairs and expecting a different outcome. One consultant asserted here that rather than focus on reporting structure, their firm is advising CEOs to establish a vision for technology within the organization and to hire the vision not a position description. The value of this is that the hire regardless of reporting will have a champion in the CEO/President.

The second group of CIOs says that if IT is strategic, the CIO needs to report to the CEO and be a member of the senior collaborative team. This group believes the best scenario is when the CIO reports to the CEO. However, it needs to be the right CIO and C-Suite with the right perspective. It can be damaging when you put a CIO reporting to the CEO that is not ready for that relationship. This group believe that if the CIO doesn’t report to the top executive their priorities will align instead with the functional head (CFO, CAO, etc.) to whom they report. This is seen as sub-optimal in the age of digital transformation.

The second group of CIOs believe that without reporting to the CEO, it can be almost impossible to make the necessary changes to transform the business. Reporting, they claim, signals focus. The best CIOs, for this reason, will want to report to the CEO. These CIOs believe, as well, it’s getting harder to imagine an organization that wouldn’t benefit from having IT represented strongly.  IT, they say, is the nervous system of the organization, so it needs to be wired in at the top. At the same time, it allows them to be at the table as an equal with rest of the business’ leaders to work with them to transform the business.

Clearly, if IT is irrelevant to the organizational success, it doesn’t matter where the CIO reports. But CIOs challenged me to name an industry where that’s true in 2018. I did meet one such organization several years ago. It was a franchise business that had franchises modem up their results quarterly. The bottom line was driven at the franchises and not the company. Here, IT did little to drive business outcomes. In this kind of organizations, IT is squarely set viewed as a cost center, not a source of innovation, then reporting to CFO is okay. For most CIOs, this will be too limiting. However, if the organization is serious about digital transformation then the CIO should be directly report to CEO; otherwise they’re not transforming they are optimizing.

What is the best path to the CIO position? Will it change in the next 5 years?

CIOs answered this question initial by looking at the skill sets that are essential for CIOs to have. CIOs need to be able to build c-suite relationships, serve as a true business leader, understand customers, and leveraging (not just running) IT. This requires broad technical knowledge, but also extremely broad and deep business knowledge. The era is over where IT is a utility and where CIOs can flip industry at will is over. Deep business knowledge is incredibly important. Same goes for understanding the customer.

CIOs say that chemistry matters. One CIO said they have had CEO bosses who didn’t understand a thing about IT, but where mutual trust made things work. It seems clear that future CIOs likely will need strong multi-sourcing skills rather than ERP implementation skills. Contracts, vendor management, and a blended data center will matter too.

CIOs as a part of this will need to become a universal translator. They must be able to move and communicate smoothly between the business and technology. So, the path to CIO should combine deep technical expertise and broad business experience. As organizations contemplate cloud migration over next 5 years, technical skills will matter too. CIOs are not so sure ‘pure technology’ will matter as internally run infrastructure starts to disappear.

For these reasons, CIOs have a bias for someone who has both a consulting and corporate IT background. Corporate to know business areas and IT functions and consulting for collaboration, big picture, experiences background. Part of this is having skill, change management. CIOs can never succeed without it.

One CIO asked is there a best path to CIO? They suggested that experience and behavior matter, achieving this requires traveling many roads. Being an exceptional leader is a start. CIOs believe there are not many ways to become one without being an exceptional person. Leadership needs to be tied to deep knowledge of a specific industry/company. Or deep understanding of the processes underlying business.

Additionally, a mix of line positions and consulting roles was seen as a good thing. Consulting matters because it provides the ability to influence stakeholders. The CIO role today and in the future is often shepherding cats and/or tigers. Additionally, good CIOs know at their core that expertise does not come from just one person. Having a team with varied expertise is essential. One CIO concluded the conversation by saying are you trying to survive, run, grow, or transform the business? For the first two, you can report anywhere. For the last 2, ideally you will report to the CEO. If your aspirations don’t match the category of company, it is likely time to leave.

What is the CIO role today and how will it change?

CIOs say that today is crazy and challenging and in 5 years, it will be much the same. One CIO responded by saying as many years as I’ve been doing this, the details of what kind of crazy is what changes. Historically, IT was a supporting function to business strategy, but more and more with digital, IT is redefining business strategy.

In 5 years, AI will manage all infrastructure (networks and systems) and machine learning may replace the need for strategic planning and robots will replace the CIO? The CIO role today has different impact across organizations and industries. In the future, CIOs will emerge into the front-line of driving customer engagement and business innovation. 

IT is clearly moving from the back office to center stage, so any disruption instantly impacts every customer and employee. CIOs, for these reasons, must be more adept at communicating, leading, persuading, apologizing, and selling. One CIO suggest here that they call the path forward a three-legged race. Three things must change: 1) the CIO, 2) the IT organization, and 3) the rest of the company. Without this, success will be hard to achieve.

Clearly, CIOs have the opportunity today and, in the future, to be a driver of business change. The CIO, for this reason, needs to lead the discussion, vision, and direction for business processes and data effectiveness and efficiency. As well and with the CEO, the CIO needs to challenge the status quo; connect everyone; think differently; help others succeed; grow the organization; and improve relevance and adoption of tools available.

What capabilities/skills will become essential for CIOs to masters in the next 5 years?

One CIO started this discussion off by asking when will digital transformation become how we do business. Clearly, as the pace of change increases and the life of public company decreases, change will become a continuous process that will at some point be supplanted by the next way of doing things.  

The right CIO today and in the future will lead the digital transformation conversation, but in the context of business transformation rather than technology or IT transformation. Without the business context, digital transformation is hard to value. CIOs need to be just be careful that it is being done for the right reasons and it’s not about technology looking for problems. For this reason, the business leader relationships are critical.

Additionally, speed and agility are critical. You want the CIO to have the ability to build an organization matched to technology strategy and to corporate strategy. A top down architecture of execution is needed for this. CIOs need to have business and soft skills to achieve these ends. They need to build relationships, engage with customers, and understand how to drive business. Technology is just the enabler for these.

Good CIOs already have the skills. They just need to garner more experience to be ready for the future. It is essential, however, that CIOs have a skills foundation. CIO say there’s no way they have time/experience to understand the deep ramifications of finance; I just trust my CFO peer. However, every executive needs to gain digital literacy. However, mutual trust in competence and mission are vital.

CIOs need to acquire the following skills:

• Communication, leadership, motivation and inspiration
• Comfort with ambiguity
• Self-awareness and mindfulness
• A thick skin
• Empowerment for innovation
• Political acumen
• Respectfulness and trust
• Ability to balance between hype and promise of transformative technology
• Diplomacy and negotiating
• Solid financial and technical skills
• Deep understanding of the business, competitors, and the entire industry
• Understanding and negotiating contracts

How do you see the pace of change impacting how CIOs operate?

CIOs say that the CIO of future needs to orchestrate, engage, and relate versus having all the details. One CIO said here, “as Hunter Thompson once stated faster, faster until the thrill of speed overcomes the fear of death”. It seems clear that the world of the CIO is only getting faster and more complicated. Because of this, CIOs need to change the way they operate and what they focus upon.

Jack Welch said, “if the rate of change outside the organization is faster than inside, the end is near”. Innovative CIOs who are great leaders and visionaries for this reason will really need a strong number two. Their focus needs to be across the business and towards customers, not running existing technologies. Change of technology only matters when they are adopting or implementing them.

CIOs say the paced of change is only increasing. This is why current organizations, processes, and Tech Debt are such a challenge. Responding requires a CIO that is flexible and able to find ways to increase the speed and agility of their organizations. Technology change will continue to accelerate.  CIOs need to keep their eyes on the big prize (enterprise architecture as strategy) and trust their team to choose good tactical fits for the organization as a whole.

Adaptability will be critical as business and technology are not slowing down. Organizations need to value experimentation over project documentation. A foundation in data and analytics will be critical. It is clear like today that the CIO must first have the trust of their peers and then create a technology strategy and roadmap that is constantly evolving to match business strategy and congruent with the needs of the executive team. This is what most businesses need—i.e. business driven changes versus improvements to existing analog processes. No longer will it be acceptable to get half-baked implementations. CIOs believe that the pace of change has always been fast. Just what we put in the slow, medium, fast lanes is changing.

Parting remarks

The CIO trajectory forward is not requiring a complete course correction. The CIO of the future will need to be more integrated into the business and more skilled at dealing with an increasing pace of change. They will need to be experienced managers and leaders. Given this, this author expects you will see more CIOs becoming operational business leaders especially as in a digital age where what is business and what is IT becomes harder to judge.