CIO 2.0
Pim van der Horst, Managing Partner (COO/CIO) Addition Knowledge House (a KAS BANK company)
Introduction
Times are changing… As a matter of fact, continuously change has become a reality. How is today’s CIO dealing with change? Is the CIO changing or is his role changing?
In my view, CIOs need to change dramatically. Here is my view on the journey and what is next for the CIO role: the CIO 2.0.
CIO 1.0
The “first generation” CIOs had been IT Managers. Then when it became “en vogue” to become a Chief (Chief Executive Officer, Chief Financial Officer, Chief Risk Officer, Chief Procurement Officer , Chief Marketing Officer, Chief Operations Officer, Chief Technology Officer, etc.) there had to be a Chief Information Officer, CIO! So, the IT Manager/Director changed his business card. His job and responsibilities stayed the same; he or she just had a new title. These early CIOs were what I would call the CIO 1.0. The CIO 1.0 concentrated on keeping IT running, focusing on internal operations. In this environment, it was challenging for IT leaders to reach beyond the scope of day-to-day IT operations to get involved in other aspects of leading the business. When the CIO 1.0 tried to get connected with the other “chiefs”, he often found it difficult to communicate with anyone besides the CFO and the COO. And in the case of the CFO and the COO, in many cases one of them was his direct boss. For those CIOs who aspired to connect as peers with the CFO, the COO, and the rest of the “chiefs” to get involved in running the business, many of them struggled. Only a few CIO’s made it into the boardroom…
Getting to the boardroom
How could the CIO 1.0 get into the boardroom in this environment? Not by doing the same old job: keep IT running and saying “no” to commercial projects…
One of the challenges for the CIO 1.0 is that when he was successful (i.e. keeping IT running at a high percentage of availability) it was difficult to showcase the potential to help the business, since a well-running IT function is largely invisible. Then as technology continued to rapidly evolve and data management began to explode, the domain of the CIO 1.0 expanded. The CIO 1.0 had more visibility as these changes profoundly impacted the way the business was run. He (or she) was educated in a “hardware” and “infrastructure” world with more influence on the enterprise: his (or her) systems were running on his servers, in his datacenter. Working in this environment gave the CIO more confidence and in this environment he was able to show his (added) value.
Change is there, again!
Then things started to change again for the CIO. Decentralized IT. Knowledgeable end-users. Many external IT-services suppliers. And worst of all: the Internet. These organizational and technology advancements disrupted the carefully managed world of the IT organization. The CIO 1.0 tried to regain control by demanding strict rules regarding the use of IT across the enterprise. This worked… for a short while. At the same time, he had to build a “bridge” between his IT department and the end user (internal customer): business-IT alignment became a top priority. CIOs started to try to speak the language of business and connect to the end users, but were at the same time confounded by the challenge that IT’s “internal customers” were now buying IT services through the Internet and exploiting the opportunities now available on the Internet without informing the CIO.
It is not completely fair to say that the CIO 1.0 didn’t (try to) innovate or didn’t lead challenging IT transformation projects. Some examples that resonated with the C-suite were:
- Virtualization (of servers and desktops) or “doing the same with less, by centralizing and consolidating IT processing”;
- Outsourcing;
- Back-sourcing or cancelling the previous outsourcing.
The CIO 1.0 kept IT running, but still his (internal) customers were not satisfied. Instead of promoting and supporting technology innovation, the CIO 1.0 has become one of the major hurdles in IT transformation.
CIO 2.0: rise!
As these changes to technology and the marketplace continue and accelerate, I believe a new CIO is needed- one focused on business priorities and enterprise value and transformation. But what are the core competencies to enable this CIO 2.0?
Some trends are emerging to answer this question. A renowned head hunter has put the following text on its website:
Given the Chief Information Officer’s (CIO) responsibility for the “central nervous system” of the corporation, filling a CIO vacancy is one of the most critical leadership decisions an enterprise can face. While an acceptable CIO might be able to reliably “keep the lights on”, a world-class CIO will be able to leverage information technology to drive process improvements, cost reductions, actionable competitive intelligence and revenue expansion opportunities. Because of the increased demands for talent, skilled CIOs are continually presented with opportunities, and so even companies currently thoroughly satisfied with their current IT leadership need to have a well thought out approach to CIO succession whether through promotion from within the IT function, rotation of a non-IT executive from the business to bring a user’s perspective to the role or through external recruitment.
It is clear that CIOs need to play a key role in the strategic direction of a company, and in order to do this effectively they need to understand the business and the elements that drive the business. Communication skills are of the utmost importance. For different organizations in different industries, different communication skills apply. In particular, the CIO 2.0 needs to be able to communicate effectively across the enterprise, and with all of the other “Chiefs” in the C-suite, in business language and from a business perspective. In fact, some companies have now appointed business people (without much technical back ground) as the CIO… These have discovered that technology skills are less important than the skills to understand how the business works and communicate with the rest of the enterprise.
Another indicator of the new business-oriented CIO 2.0 is the set of priorities he or she has. One CIO of a Fortune 50 company that I admired, at one point published his 5 top priorities as:
- aligning business and IT
- integrating the enterprise
- driving long-term revenue growth
- fueling innovation
- developing employee skills
One thing that is most notable is that there is not much technology in this CIO’s priorities… They focus on connecting with the business, increasing competitive advantage, looking for opportunities. In short, the listed priorities show a common factor: transformation! As I see it, the CIO 2.0 is a transformer- a transformer of the enterprise to a new level of competitive advantage and business success. And on a final note, I would also say that when this new CIO has finished the transformation he should move on to the next role: the CIO 2.0 is not the right person to keep IT running. The CIO 2.0 drives transformation, which drives the business.
CIO 2.0: forget IT, think business!
My closing question to Center members: what are your observations on CIO 2.0? Is your role evolving to business transformation leader?
