Are CIOs in Line of Command or Line of Fire?

Ann All

One of the nuggets of information found in CIO.com's annual State of the CIO Survey, which I blogged about last month, is that 41 percent of CIOs report to the CEO, which has long been seen as a sign of the relative importance of the role technology plays at a given company.


A Society for Information Management survey puts the number of CIOs reporting to CEOs far lower -- at 31 percent, down from 45 percent in 2006. At the same time, according to a CIO Insight article, the number of CIOs reporting to CFOs grew from 25 percent in 2006 to nearly 30 percent in 2007.


Though the actual numbers are a bit fluid, both the CIO.com survey and the CIO Insight piece point to an executive role very much in transition. How this will ultimately affect CIOs remains to be seen.


The job of maintaining existing tech systems, largely an exercise in cost control, increasingly falls under the purview of finance officers, say several experts interviewed by CIO Insight. Because technology is no longer the "big mystery" that it once was, finance executives are fairly comfortable with this kind of oversight.


Says Steve Player, president of the consultancy Player Group and North American director of the Beyond Budgeting Round Table:

... a vast amount of the typical IT budget is not subject to discretion. If 60 percent or more of the budget is locked in to keeping the phone system and the backbone up, then it should be under the CFO.

Another factor that appears to be bringing IT and finance closer together, notes the article, is the growing role of technology in helping companies satisfy their requirements for Sarbanes-Oxley, HIPAA and other regulatory mandates.


So with some of the "boring stuff" being removed from their plates, CIOs are free to concentrate on more visionary initiatives, right? Not exactly. Instead, says CIO Insight, business units themselves increasingly call the tech shots. I blogged aboutthis trend in November, citing Forrester Research showing that 25 percent of non-IT executives select their own tech tools and negotiate directly with tech vendors.


Ian Campbell, president of Nucleus Research, tells CIO Insight that under this new scenario, a sales executive might create a short list of desired features for a CRM system and take it to the CFO for approval, before the project moves to IT for implementation.


Campbell's take is echoed by Rajiv Banker, a professor of accounting and IT at Temple University's Fox School of Business, who spoke to CIO Insight ina separate Q&A. Banker says:

Very often, (the CIO's) strategic role is supportive. For example, for companies with market-based strategies, aiming to deliver to customers, the strategy will perhaps be driven more by the marketing organization. IT will then follow up to make sure that strategy is delivered.

The concern here, of course, is that the CIO starts to seem superfluous -- at least to some companies. Back in August, I blogged about two British retail chains where CFOs assumed what had been CIO duties.


Taken together, the gist of the CIO Insight articles appears to be that IT's role will become responsible for implementing business strategies rather than creating or maintaining them. If that's true, maybe an entirely new reporting hierarchy is in order, one in which the CIO reports to the business executive who manages the division(s) most closely aligned with a company's strategy.


I found a May 2006 eWEEK article that offers an idea of how this might work. According to the article, the CIO of retail chain Ann Taylor reports to the supply chain officer. While unconventional, it hopefully encourages a tight connection between IT and the supply chain, a goal that makes sense at a company where much of its success is determined by how well it can move product.

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