CIO Wisdom

CIO-C?O = Expect Change

Since the early 80's, CIO's have been pushed all over the reporting landscape within enterprises, non-profits, government agencies, and start-ups. There is a false belief among CIO's that there is 1 "correct" model - and that firms of all types must adopt a common reporting structure. The hard truth is that the CIO reporting structure should be driven by the companies needs from technology. And more importantly, our current economic situation is likely to cause shifts.

When a company is technology dependent (at the core of its product or service) and view IT as a weapon, studies have shown that a CIO reporting directly to a CEO will result in more meaningful impact to sales (top line). These CIO's also typically have a stronger budget (over 9% of gross revenues), spend more time working on strategy(49% vs 39% reporting to CFO's) and less on compliance (13% vs 21% reporting to CFO's) and operations (39% vs. 49% reporting to CFO's).

When a company is more focused on IT as an operational function (IT is a tool, not a weapon), the CIO is more likely to report to the CFO. As a result, the CIO's role will have a more direct impact on reducing operating expenses (bottom line). These CIO's typically have to do more with less (less than 4.7% of gross revenues), spend more time working on portfolio management, less time on strategy, more time on compliance, and cite significant difficulty in showing value to the CFO (hard to show top-line value when you're focused on bottom-line savings).

So what does this have to do with the current economic situation? Just a few short years ago (2002), CIO were split equally between CFO's and CEO's (41%). At the mid-point of 2008, only 23% of CIO's indicated they reported to CFO, while over 41% noted they reported to the CEO. Roughly 16% indicated they report to COO's. IT leaders reporting into operations are more likely to face a shift to CFO (or focus that is more similar to the CIO-CFO model) as cost-savings become the focus.

For those of you who have lived through downturns in the past, you know that the longer an economic downturn lasts, the more likely the probability of an organizational change to push a CIO under a CFO... and all the rules, budgets, value propositions, and responsibilities will change along with it.

If you can are facing a reporting shift, take a deep breath and recognize your new responsibilities. As Phil pointed out in his prior post, keep innovation alive. Ensure you continue to remind the CEO that the day will come when IT needs to shift back to an innovation or product leadership role.

Most importantly, accept that the true role of a CIO is not to demand 1 model, but become the expert in transition between the roles necessary in changing times.

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