Why the Recession Is Marginalizing CIOs

That sucking sound you’ve been noticing during this recessionary mess we’re all in: That’s the sound of CIOs’ clout being sucked away.

It’s not that loud. Or obvious. But it’s there.

With each passing day, CIOs are being marginalized in one way or another: by a CFO making deep budget cuts into a bloated IT department’s operations; by business execs getting angrier about the typical 12- to 18-month ERP or CRM software implementation that is unlikely to come in on time, costs more than anticipated and typically delivers unsatisfying results; by the SaaS vendor who does the end run around the CIO and now sells directly to line-of-business execs; by the supply chain chief and his frustration over why he still has to use the fax machine to communicate with sourcing partners in China; and by the CEO and his belief that while enterprise systems are important to his company, his CIO’s team is not giving him what he needs right now.

Perception is, of course, everything. Even more so today. And the popular perception of IT is about as good as that of Illinois politicians right now, according to 2009 State of the CIO data, which we combined with a Forrester Research survey of some 600 business executives. The research paints a grim picture for IT executives.

For instance, business executives said the top IT priority and most important business driver (cited by 53 percent of those surveyed) was acquiring and retaining customers. Yet how well did IT actually support that mission during the past year? Nearly 50 percent of the business execs judged IT’s performance as “fair” or “poor.” Another 5 percent said IT did not support acquiring or retaining customers at all. Business execs’ ratings of IT’s impact on managing customer relationships were equally bad.

The disconnect reminds me of “The Bobs” famous interview of Tom Smykowski in the movie Office Space: “What would you say ya do here?”

Also, slightly less than half of CIOs said that IT is still considered a cost center. And cost centers always get cut first. (As do expensive executive salaries.) Slash, slash and slash some more.

CIOs and their IT departments may have escaped or been just out of sight of the bean counters’ eyes during the last couple of years—our data shows that nearly half of CIOs report into their CEO now, while only 16 percent report directly to the CFO—but that will probably soon change. In today’s economic climate, CFOs will once again be wielding control over the “cost center” that is IT.

And they’ll most likely be incredulous when they start digging deeper into IT’s ledgers (if they haven’t already).

I can just hear the conversations among the executive team now: We are paying how much to (take your pick) Oracle or SAP or Microsoft or IBM or HP for (take your pick): sky-high software upgrade costs that offer little to no value, maintenance fees that are actually going up this year, and escalating infrastructure and data center expenses.

“Hey, Mr. CIO: Are we doing anything with Google Docs? Open source ERP? Are you even trying to save us money?”

“And all of this IT gets us what, exactly? Isn’t it still true that the company’s decision makers still fly blind and continue to make half of their ‘business intelligence’ decisions from their gut, rather than from accurate and true business data?”

Danger, CIOs. Danger.

Alignment may seem like a trite business concept. But now is the time to be joined—no, locked—to the business’s hip.