A new generation of CEOs—not in age but in perspective—has embraced the notion of CIOs as strategic business peers. These CEOs compete in a world of massive complexity and global interdependency. Their companies engage with customers using technology, and social media is becoming pervasive. In this world, back-office-focused, tactical IT order-takers won’t cut it. “It has become critically important that the CIO be at the executive table, acting as a business person who can advise me and be trusted to help us come to the right conclusions about achieving our business strategy,” says Gregory Babe, President and CEO of Bayer and the senior Bayer representative in North America.
CEOs don’t need more golfing buddies; their embrace of a strategic role for CIOs is motivated by value. While systems effectiveness and efficiency are always required of a CIO, CEOs want IT leaders who are not only accountable for technology operations, but who also drive innovation, fuel growth, enable change and create competitive advantage. They expect IT leaders to focus outside the walls of the company—on markets, customers and sales opportunities—and then to suggest, develop and execute product strategies to take advantage of those opportunities.
Suzanne Woolsey is a member of the board of directors of Fluor (FLR), a $22 billion engineering, construction and project-management company. “It is absolutely essential for business competition to have somebody in the C-suite who is able to understand and articulate new ways of looking at the world that come from understanding how technology is changing,” she says.
“The user community is part of our CTO’s focus and always was, but it’s become more important to find how to make the experience much better for the end customer,” says Sam Ghosh, group CEO of Reliance Capital, a $1.6 billion financial services conglomerate with $4.5 billion in assets. Calling on distributors and retail customers is part of Reliance CTO Sandeep Phanasgaonkar’s job. Meanwhile, Ghosh employs key performance indicators based on surveys of Reliance’s retail customers to make sure his CTO knows whether those constituents are happy with his efforts.
Of course, CIOs have long argued that they could make more strategic contributions if company expectations and culture allowed. Gartner says that by 2012, the top 25 percent of companies in terms of earnings growth will be those with “entrepreneurial CIOs” who provide new or breakaway competitive advantages that translate directly into revenue, financial results and market share.
But conventional perceptions of IT leadership as reactive and business-challenged prove stubborn. Gartner’s CEO research has established every year for the past six years that more than 60 percent of CEOs see their IT organizations as a key constraint on the changes they need to make. Unless CIOs and their IT organizations break out of their internally focused, IT-centric mold, the future of the profession is at risk, according to members of the CIO Executive Council, a global peer advisory community of 500 top IT leaders founded by CIO’s publisher.
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