A global recession and the inability of chief information officers to deliver on business value have tarnished their status, says Harvard blogger R "Ray" Wang. What now?
Posted on Harvard Business Review: March 3, 2011 12:33 PM
Five years ago, Chief Information Officers (CIOs) were on top of the world. These executives played mission-critical roles in driving multi-million dollar projects that delivered massive change. However, a global recession and the inability of CIOs to deliver on business value have tarnished their status. Today's CIOs are under pressure to deliver on requests for innovation, cost reduction, connectivity, and a growing demand for business intelligence.
Just as previous technology and business shifts have changed the role of the CIO, the new, more consumer-oriented business models of the social revolution will favor a new breed of business and technology leader. These leaders will have to navigate myriad converging and disruptive technologies, align new initiatives to both business value and technology feasibility, and identify strategies to leverage existing investments to fund innovation.
Consequently, the role of the CIO will evolve. Many next-generation technology leaders will still come from traditional tech backgrounds, but business leaders with a technology bent will also have a shot. As overall business strategy planning ties closer to IT strategy, four personas of the next-generation CIO will emerge:
1. Chief "Infrastructure" Officers focus on cost reduction, and account for 65% to 70% of the overall IT budget. Most of this CIO persona's projects prioritize keeping the lights on and managing legacy environments. Disruptive technologies such as virtualization and cloud will play a key role in cost reduction. These infrastructure officers tend to focus on the technology side and internal-facing activities.
2. Chief "Integration" Officers connect internal and external ecosystems. With 5% to 10% of the overall budget, this CEO persona must bring together a hodge-podge of business processes, data, systems, and connection points with legacy systems and newer cloud-based approaches. Projects touch external systems and often address post-merger integration environments. These integrators tend to focus on the technology side and both internal and external activities.
3. Chief "Intelligence" Officers empower the business with actionable insights. Representing between 10% and 15% of the overall budget, this CIO persona must improve business-user access to information. A key theme includes placing the right data to the right person at the right time on the right interface. These intelligence officers tend to focus on the business side and internal facing activities.
4. Chief "Innovation" Officers identify disruptive technologies for pilot projects. Investing 5% to 10% of the overall budget, this CIO persona must drive innovation on a shoestring. Typically from business backgrounds, these leaders move fast, fail fast, and move on. They tend to focus on the business side and external activities.
Most of today's CIOs fit squarely in the Chief Infrastructure Officer persona, dedicating their time and resources struggling to keep the lights on. Shifting into the Chief Integration Officer role will be a smooth transition for most of them, but only a few with a business bent will grow into the Chief Innovation Officer role. On the flip side, many business leaders with a technology bent will evolve into the Chief Innovation Officer and Chief Intelligence Officer roles.
Among the companies we study, we're seeing three different approaches to accommodating the different CIO personas:
1. One CIO can deliver on all four roles this by upgrading his or her skill sets.
2. A shadow CIO-like organization could emerge on the business side to fill the roles of Chief Intelligence and Chief Innovation Officer.
3. A CIO could have lieutenants charged with one or more of these functions.
R "Ray" Wang is CEO of the technology research firm Constellation Research and author of the enterprise software blog A Software Insider's Point of View. He is working on a book for Harvard Business Review Press on the new laws of business.