Outsoucing IT and the CIO Role

A CIO who Has served for years on CIO’s editorial advisory board broke the bad news to us this summer in a terse e-mail: “My company has decided to take a different approach toward IT. The new approach unfortunately does not include the CIO position. They are planning on outsourcing IT operations.”

In these days, with so many companies caught in the corporate convulsion of reducing spending at all costs, wholesale outsourcing is becoming too tempting for companies to resist. Consequently, CEOs and CFOs are questioning why they need a pricey CIO position heading a business function that’s been effectively outplaced. Get rid of the function, and ditch the function head. Give the vendor contracts to the CFO to manage, or install a relatively cheap IT project manager to manage vendors. End of problem. End of expense. End of story.

What we’re seeing, I think, is another iteration of a cyclical phenomenon where enterprises lose faith in IT as a strategic entity, and therefore assume they can do without a strategic IT leader. The CIO role is in real danger of being dumbed down, diminished or ditched. You can read about why and how this is happening in Stephanie Overby’s feature “The Incredible Shrinking CIO,” on Page 66.

The fact is no sane enterprise should turn over responsibility for the strategic exploitation of information technologies to a vendor. And that’s what an outsourcer is, after all—a company that wants to make money from your organization and as many other customers as possible.

But there’s no denying that the massive migration of IT jobs offshore has and will continue to dramatically downsize the CIO’s domestically based staff. What CEOs and their boards need to understand is that the location and size of an IT workforce doesn’t determine the need for a highly skilled CIO. Globalization is here to stay; its expansion is inevitable. In that context, it makes perfect sense that CIOs should command a global IT workforce, even if some or most of that workforce is employed by an outsourcer. As Paul Saffo, director at the Institute for the Future, said at the CIO 100 Symposium in August, IT staff will come from everywhere, and so will the CIO.

Enterprises that think they can do without a strategic CIO are kidding themselves. At a time like this, when we seem finally ready to move slowly but steadily toward economic recovery, the worst thing in the world an organization can do would be to eviscerate the position and cede any chance of using IT for a competitive jump start and sustainable advantage.