Perhaps it’s time for CIOs to speak up as organisations map out their strategy.
And perhaps it’s time for the rest of the C-suite to listen to what their CIOs say about strategic matters.
A new survey highlights why. Organisations reporting strong collaboration between the CIO and the C-suite were four times as likely as those with less collaborative teams to be top performers, according to a PwC survey of more than 1,100 senior executives from 12 countries.
Despite those findings, it is common for CIOs to be marginalised in an organisation’s strategic planning. An Ernst & Young global survey last year found that while 60% of CIOs strongly believe they help enable fact-based corporate strategic decisions, just 35% of their C-suite peers agree.
And 17% of senior finance professionals participating in a UK survey in 2012 said the CIO’s role will disappear altogether in five years, while 43% said the CIO role will merge with the CFO role.
But Lilibeth Hanlon, CPA/CITP, CGMA, founder and managing director of New Jersey-based management consulting firm Bridge Strategies LLC, believes the CIO role is not in danger of extinction. She said strategic partnerships between CFOs and CIOs are growing in frequency and importance, and agrees with the results of the PwC survey.
“A strategic effort with the CIO does indeed increase performance for business,” Hanlon said.
Hanlon, who has been working on initiatives involving CFOs and CIOs since 1998, cited two prominent examples of projects CFOs and CIOs frequently work on together:
First, the implementation of shared service centres requires the expertise of both the CFO and CIO. They work together to conquer the challenges of globalisation and integration of multiple business units with disaggregated systems into one shared service facility, she said.
Second, cloud-computing implementation requires the attention of the CFO and CIO, Hanlon said.
“CFOs and CIOs are definitely collaborating on a strategic perspective for business cost containment as well as for a competitive advantage,” Hanlon said.
PwC’s Digital IQ report said companies whose C-suites are strong collaborators with IT tend to:
- Possess an understanding in the C-suite of the corporate strategy and how much it will cost to implement.
- Possess explicit processes to link the IT road map to the corporate strategy.
- Report higher performance and be more confident than other respondents in their revenue growth, profitability and market share.
“Social media, mobile channels and data analytics, along with the cloud, are making new business and operating models possible,” Chris Curran, a PwC principal and chief technologist for the US firm’s advisory practice, said in a news release. “Because enterprise responsibility lives across the C-suite for these issues, collaborative digital conversations are critical to bring it all together and evaluate and adopt these technologies.”
Debate over role
The role of the CIO – and its reporting relationship – has been a matter of considerable debate amongst those who follow the politics of corporate management.
A 2010 survey of senior finance managers found that 42% said their IT organisation reports to the CFO, while 33% said IT reports to the CEO. CFOs played a key role in determining IT investment in three-fourths of the organisations participating in the survey, conducted jointly by Gartner and the Financial Executives Research Foundation.
Some believe the CIO should report to the CFO because IT is such a significant part of the budget. Others believe the CIO should report directly to the CEO, in part because CIOs possess more of the technical knowledge necessary to advocate for IT investment.
Regardless of the reporting relationship, PwC’s research shows the value that can exist when CIOs play a prominent role in strategy. But Ernst & Young global CIO Maureen Osborne said in her firm’s recent report on The DNA of the CIO that it is startling how few CIOs have taken steps to reinvent themselves within their business. She said CIOs must refresh outdated perspectives that other executives hold about their roles.
A 2013 Gartner report based on a global survey of more than 2,000 CIOs says IT leaders need to establish a new financial, organisational and enterprise rationale for IT with the following actions:
- Exploiting new technology. This can create a digital edge in the capabilities needed to meet growth and efficiency demands.
- Removing historical and legacy commitments. These can be replaced with new connections in processes, structures and roles.
- Refreshing IT. Revising and extending business practices and strategies can reinvigorate IT’s value potential.
- Liberating resources and time. Devoting attention to new challenges rather than blindly applying “best practices” or attending to dead-end trends can improve IT’s contributions.
Hanlon advises CIOs who want to make a significant strategic impact to consider IT’s potential impact on the key performance indicators (KPIs) that are most critical to success. CIOs have the ability to innovate processes ranging from the supply chain and logistics to shared services. They possess the expertise to innovate a multitude of monitoring controls critical to governance and risk assessment.
When CIOs demonstrate the ability to do these things, their voice will be heard in the strategic discussions, Hanlon said. And that will be good for the entire organisation, according to PwC’s research.
“If [CIOs] realise that they can improve these indices more rapidly, better than their competitors in the industry, I think the CFO definitely will be listening to the CIO,” Hanlon said. “… It’s all strategy. It’s how to win, not only to make your company sustainable, but also for them to gain more market share and to improve the presence in the market.”
Related CGMA Magazine content:
“Companies Not Tapping Into Big Data, US CIO Survey Says”: A majority of US chief information officers say their companies aren’t harvesting information on customers, and even those that are doing so have not necessarily turned big data into business insight. A Robert Half survey of 1,400 CIOs says that talent constraints limited companies’ ability to access and analyse business data.
“Finance Pros in UK Report Increasing Responsibility for IT Decisions”: Seventy-seven per cent of senior finance professionals participating in a recent survey said they had gained greater responsibility for IT purchasing decisions in the previous two years.
—Ken Tysiac (firstname.lastname@example.org) is a CGMA Magazine senior editor.