The End of the CIO as we Know IT

Keith Mattioli, Principal, CIO Advisory

The CIO has the most dynamic role in an organization. What started off as keeping the mainframe running has turned into an integrated, business strategy role directly impacting revenue and the overall success of the business.

 Keeping the lights on is certainly still important, but that role offers no value to the business when the CIO can get five nines  (99.999%) from any number of cloud providers. Faced with managing a diverse set of sourcing options for a diverse set of emerging technologies within a very dynamic business and technology environment, the traditional CIO is changing into a new kind of CIO―the chief integration officer.

Evidence of this transition―difficult at times―is supported by a recent study conducted for KPMG LLP by CIO magazine and IDG Research Services.

On the one hand, survey respondents indicate that their organizations are most often overhauling IT organizational operations and updating IT strategies to address challenges and opportunities. On the other hand, less than one-third report that the structure of the IT organization, strategy, IT/business alignment, or IT governance are areas of strength. In other words, CIOs recognize the need for change, but are struggling with how to define what their new operating model should look like and how to transition to it.

The answer lies in the changing role of CIOs, and that is driven by a fundamental shift in the way they look at business, IT, and technology execution. This involves two main areas: organization and governance.

The organizational aspect involves not only the IT organization but also how the CIO fits into the overall strategic structure of a company. Traditionally, the CIO supplied IT services to different lines of business individually. However, IT is ubiquitous and needs to be a part of each function as an integral part of its business. HR IT capabilities, for example, should arguably be embedded in the HR function and represented by dedicated systems analysts and other specialists supported by a set of common services that are required for all lines of business. In effect, each function has integrated IT as part of its business.

Under this new kind of organization, the traditional role of the CIO has been divided into operations and strategy. IT operations supplies common business services to each function, including email and collaboration tools, as well as technical services such as computing, storage, and networking. IT strategy drives overall corporate strategy for both planning and execution at the c-level. By integrating traditional IT services for each function with a strategy that integrates IT across these functions, the CIO can use technology to effectively execute on the vision of the company.

In this dispersed operating model, governance becomes much more important. Managers in each function should have an understanding of how their technology affects other functions. There should be clearly defined roles, decision rights, and structure to empower small, effective, and agile teams. In finance, for example, a purchasing application will be of importance, primarily within the function, but will require integration into HR to manage dependencies such as employee data and approval hierarchies. The groups will need to work together in a coordinated fashion across their traditional business and IT silos.

Whether you call it decentralized, federated, hybrid, or some other term, the days of IT empire-building are over. More and more CIOs will be born out of the MBA mold than the traditional technology mold. Understanding business strategy and the technology required to enable it will be the key role of successful CIOs today and in the future. Many forward-looking companies have already started down this road, creating technology roles in each function and moving the technology function to the business. In these companies, the CIO is acting as a kind of strategy officer to ensure that IT delivers full business value to the company.

Perhaps we are seeing the end of the CIO as we have known that role. But ahead lies the possibility that CIOs will transition from service provider to strategic decision maker by using the business value of integrated IT to support the growth and profitability of the organization.

Visit IT Advisory Services to learn more about the IT industry and KPMG’s microsite to learn more about guiding the CIO agenda.

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