by Kumar R Parakala

Stop undervaluing the CIO’s role in shaping business growth

Aug 26, 2016
C-SuiteCIOIT Leadership

CEOs must urgently capitalize on the opportunity to drive growth by taking advantage of new technology advancements, before market forces and competition forces them to do so.

executives sitting in board room at conference table
Credit: thinkstock

Several recent surveys of chief information officers (CIOs) showed less than 33 percent play an active role in directly shaping business strategies in their organizations. A survey of CIOs by Forbes, Harvey Nash/KPMG, Deloitte, McKinsey and others indicate business leaders understand and appreciate the benefits of IT and collaboration with the CIO. But, only a third of CIOs surveyed played a role in shaping their organization’s business strategy. The Deloitte study suggests that two-thirds of CIOs work as “trusted operators” and “change agents” to reduce costs and drive change through IT. This is compared to one-third of CIOs called “business co-creators” who spend time driving business strategy.

Business executives generally appreciate the significant benefits of technology and how it is important for the success of any business strategy. Yet, with IT budgets shrinking and the technology landscape shifting to digital, the CIOs are finding a full alignment with business expectations difficult. This challenge is creating a perception of decline in CIO effectiveness. CEOs are also introducing new roles, such as a chief digital officer to drive the digital strategy, to quickly introduce and keep up with technology advancements, often claiming these roles are external “client-facing” role. Under these circumstances, it is not surprising CIOs are not able to play an active role in defining their firm’s business strategy. In summary, the top five reasons are:

  • Technology is still outside CEO’s comfort zone: CEOs and business executives continue to remain reluctant to acknowledge and support the role technology can play in business transformation and growth. This is an alien concept for them.
  • CIO is not a member of the executive team: Most CIOs surveyed did not report to the CEO. They report to a CFO or COO or a business unit head. The Deloitte surveyed 1,200 CIOs. The results indicate 66 percent of CIOs do not report to the CEO and 55 percent said it would be better if they report to someone else.
  • CIOs are lost in technical tasks: CIOs are too busy running operations and IT infrastructure activities. They are often so stretched coping with transitioning their companies to new technologies, that they miss out on business strategy discussions. Further, for many CIOs, spending time on complex business matters is outside their comfort zone, just like how the technology is for the CEOs and others.
  • Business executives are unfairly judgmental: The surveys found business executives feel their IT organizations are lagging behind, particularly in leveraging digital technologies for business benefits. Catching up is often considered a priority over the CIO contributing to the business strategy. One in five respondents expressed a need for change in their IT leadership, with many expressing a declining confidence. It is evident business leaders do not understand complex challenges of their technology environment and, sometimes, unrealistically expect CIOs to perform miracles.
  • CIOs may not have the necessary skills: Often CIOs with technology backgrounds and training, find it difficult to transition to a more creative business CIO role. They are not able to invest enough time cultivating these skills and, therefore, cannot always meet business expectations.

As CIOs come to terms with these challenges and redefine their roles, it is important to find new ways of leveraging technology for business transformation and growth. Business leaders not embracing their CIO and the role of technology wholeheartedly, can be the difference between success and failure. The responsibility rests with the board and CEO, not just the CIO. The CEO needs to empower the CIO and help them build wider support across the organization.

There are five things that CEOs and CIOs can do to improve the likelihood of using technology for business growth:

  • CEOs must spend time understanding the strategic benefits of technology to their business, particularly the disruptive potential of digital and emerging technologies.
  • Redefine the role of CIOs so they can contribute to business strategy and growth discussions. CIOs must report to the CEO in a growth-oriented organization because technology has become ubiquitous across all business functions and is critical for success.
  • Encourage business executives to work in IT roles and vice versa. CIOs must understand how the business operates to contribute to discussions about how technology can enable business growth. It is equally important for business leaders to understand the complexity of managing technology so they are not unfairly critical of CIOs or their IT performance.
  • CIOs must redesign their IT organization to become more customer-focused, responsive and nimble. They must take advantage of some of the new technologies such as cloud and analytics. They should also get their vendors to deliver better more innovative solutions.
  • CIOs, CEOs and senior executives need to spend reasonable time on a regular basis understanding disruptive trends in the industry; fostering innovation in products and services; identifying new opportunities to enhance customer experience; and new ways of driving growth using technology. These should become agenda items for discussion at monthly executive team meetings.

As more and more companies compete in technology-enabled business environments, CEOs must take responsibility for driving growth by leveraging technology advancements. This can only happen if they empower their CIO. This enables them to play an effective role in shaping the business strategy and driving the growth agenda.