Not long ago pundits were writing the obituary for CIO’s. They were becoming as archaic as the VP’s of Electricity from the early 20th century. CDO’s, CTO’s even CMO’s were the future. Well, check again folks – the CIO is back!
Twelve years ago Nicholas Carr wrote the best-selling “Does IT Matter?” where he argued that we had wrung all the leverage out of information technology that we could and CIO’s were really just caretakers of the back office plant. Five years later in “The Big Switch” he describes the transformation of data processing from the old individual “walled garden” at every company to the current advent of cloud computing as a utility. He makes the analogy that this is just like the shift of electric power provision by firms in the early twentieth century – where every factory had its own power plant – to today’s method where electric power is tapped as a utility with flip of the switch access. Carr infers that today’s CIO might just go the way of the VP’s of Electricity that used to be needed to run those individual power plants.
It looked like he was on to something. Netflix – the ultimate cloud success story, which runs its whole operations on Amazon Web Services cloud – got rid of its CIO just a couple of years ago. Pretty soon the role of Chief Digital Officer (CDO) began to emerge in response to the belief that the CIO could not hack the companies’ need to embrace the tidal wave of digitization that was sweeping all industries.
Surveys showed that CIO’s were deluding themselves, they thought they had a seat at the high table when in reality their executive peers and their CEO’s really did not think so. Even Chief Marketing Officers (CMO’s) were being touted as the biggest budgets for IT and thought to be more likely successors to the CEO in the age of “software eating the world”.
If you were a CIO things looked depressing and grim. The world you knew was being upended by cloud. You were running as hard as you could to just stand in place with over 80% of your budgets devoted to LODO (keeping the “Lights On and the Doors Open”) but everyone else wanted the new-new. Your ability as an IT organization to support the business seemed to slip farther and farther behind. Cloud-based SaaS (Software as a Service) applications enabled your peers to go around you. Shadow IT sprang up everywhere with little concern for the security and compliance issues.
Well, how have things worked out? Target just dumped its CDO after four months and indicated it was relying on its CIO, Mike McNamara, to honcho its badly needed digital restoration. The Wall Street Journal recently reported that pay for CIO’s is climbing rapidly “…reflecting both the growing importance of IT in the emerging digital marketplace and the broader role CIOs now play in front-office decision-making…” (BTW, Target’s CIO made a cool $10 Million!).
What? You thought I just told you CIO’s were anachronisms and on their way out like VP’s of Electricity. What’s going on? Well, all firms are now undergoing a digital transformation. But a recent survey from SAP indicates only 21%, or so, have their act together. It turns out that many of the best performing firms have turned to their CIO’s to lead this charge.
These CIO’s are masters of the new technology, especially cloud, and are at the same time consummate performers in working well with their peers to get the firm to the digital nirvana it seeks. They come from many different disciplines. While some have come up the IT path, a number have risen through operations, marketing or even R&D. The key is they get it. They grasp they new, rich digital tools and possibilities before them.
The role of CIO looks promising if the right individual can assume the mantle. But while things are looking up, a few sobering caveats are in order. The same SAP survey reports the CIO is the most likely member of the C-suite to take ownership of digital transformation efforts (37%), followed by the CEO (25%). But, IT departments as a whole are falling short when it comes to digital transformation: Sadly only 7% of executives said that they believe IT leads their organization’s attempts to identify ways to innovate, while 35% said they believe it should.
By John Pientka