Why CMOs and CFOs Will Rule Above CIOs
As disruptive forces reshape IT's role, some CEOs are already asking why the CIO position needs to be part of the executive team.
in my last column, the same disruptive, IT-enabled forces that are transforming entire industries will diminish the role and weaken the influence of the CIO and corporate IT organization. These changes will accelerate over the next five years when major business events cause management realignments. Those events will include substantial financial shortfalls at companies, strategic reviews of company direction, and even CEO and CIO retirements.
To be clear, it's the executive role of the CIO that will be diminished and likely eliminated at many companies. While the title of CIO will survive at some companies, fewer CIOs will serve on the highest-level executive team, initiate technology changes to improve the customer experience and profitability, and drive innovation. Those CIOs will report to the CFO, COO, or CMO.
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No internal organization will be more affected than corporate marketing. A marketing consultant recently told me that no matter how long you've been in the marketing business, right now you have three years of experience. And he's understating how fast things are changing.
Marketing has always had some capability to develop its own systems through its shadow IT and own vendors. In the 1990s the planning, coding, and launching of a major promotion could take months and would target a very large customer population. Today, however, the time frame is much shorter and the granularity of the targeted customer base is much smaller.
[ Despite the challenges, people still want to be CIOs. Read I'm A 'Tech Savvy' Pro, But Am I CIO Timber?. ]
It's the marketing organization that's going to have to learn how to use social networks of all types, buy and use historical data, make sense of big data coming from customer interactions, and ultimately own the customer experience and new products. Gartner predicts that some CMOs will spend more on IT than their companies' CIOs by 2017.
Marketing projects have always been time-sensitive, ill-defined at first, and subject to a lot of discovery. It's the same today, but the means of delivering promotions and interacting with customers are more complex, dynamic, and poorly understood. Marketers, who are still experimenting on social networks, mobile devices, and websites, will turn to outside experts who know the technology and best practices for fast delivery of targeted marketing messages. CMOs view CIOs and their teams as slow and unresponsive, and they'll take this opportunity to elevate themselves and their organizations' status by working with external partners.
IT-savvy CFOs will also chip away at the CIO's domain. They'll ask more and more about the cost savings available through cloud-based software and infrastructure services. As the CMO spends more money on customer- and product-focused IT projects, the CFO will want to cut the CIO's budget. These will be difficult discussions for CIOs.
Those who argue that there will always be a need for a CIO don't understand how many CEOs are asking why this position needs to be part of the executive team. A recent worldwide survey of 536 C-level executives by the Economist finds that 57% of them expect their companies' IT function to change significantly over the next three years, and 12% predict a "complete overhaul." In the survey, titled "The C-Suite Challenges IT: New Expectations for Business Value," 43% of respondents said their company will increasingly use IT as a commodity service, bought only when needed. Perhaps most telling, one in six CIOs are only "consulted" or have no role at all in setting IT strategy, according to the report.
Some people argue that there will always be a CIO if for no other reason than for the CEO to have a "throat to choke." That argument has no merit. No CEO I have ever worked for would go to that overhead trouble just to have someone close by to hold accountable. And no CEO I know has any problem jumping far down into the organization to find some throats.
Vendors of cloud-based as-a-service products will take advantage of the weakening position of the CIO, as vendors did in the early 1990s, by telling CFOs and CMOs: "Your CIO is going to tell you this won't work (or will cost more), but he/she is just protecting his/her job."
CIOs who don't already have a lot of credibility with their executive peers, who haven't built up political capital over the years, and who haven't initiated and communicated to the executive team a thorough IT restructurings are at the greatest risk and will be the first ones to go.
However, well-structured IT organizations will remain critical to corporate success, no matter how disruptive are the forces of business change. As the old saying goes: "Every problem presents an opportunity." The big opportunity is to build smaller, higher-skilled, more externally focused IT organizations, led by more technical, business-supportive, and externally savvy CTOs.
Next column: more on how the CTO role might evolve.
Dr. Larry Tieman has been a senior VP at FedEx, a CIO, or a CTO for the last 20 years. He has worked with some of the great CIOs, including Max Hopper, Charlie Feld, and Rob Carter. He can be reached at Larry@LarryTieman.com.
Expertise, automation, and silo busting are all required, say early adopters of private clouds. Also in the new, all-digital Private Clouds: Vision Vs. Reality issue of InformationWeek: How to choose between OpenStack and CloudStack for your private cloud. (Free with registration.)