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7/9/2012
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Larry Tieman
Larry Tieman
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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.

10 CIOs: Career Decisions I'd Do Over
10 CIOs: Career Decisions I'd Do Over
(click image for larger view and for slideshow)
Expanding on an assertion I made 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.

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.

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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.)

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ANON1238215912130
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ANON1238215912130,
User Rank: Apprentice
2/16/2013 | 10:55:20 PM
re: Why CMOs and CFOs Will Rule Above CIOs
What is this guy "Dr" Larry talking about....Is he too old to understand. I'm a successful CEO who has worked with many CIOs and there is no way you can run a business without them being on the team. CFOs undersand finance, CMOs marketing...do you think people would have the CMO report to the CIO, or the CFO report to the CIO --NO...Wake up Larry
JimC
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JimC,
User Rank: Apprentice
7/13/2012 | 4:48:58 PM
re: Why CMOs and CFOs Will Rule Above CIOs
As I recall, the CIO position didn't exist before the 1980s. Back then, the top IT person was the Director of Management Information Systems and (s)he reported to the CFO. The Director of MIS was typically a former technician who gained management skills and the CFO wasn't technical at all. It was rare for a line-of-business executive like a Marketing VP to fight or bypass the Data Processing department to license and/or implement a computer-based business system. In the '80s, "rogue" LOB executives, like those in sales and marketing, sometimes bought non-mainframe, turnkey application systems (hardware, software) and had them installed/implemented by consultants. In only a few years, packaged software for both business apps and IT infrastructure (mainframe and distributed) rapidly supplanted in-house development. This plus the CIO position being created and wedged between the CFO and the VP of IT (formerly the Director of MIS) reduced the value/clout of IT staffers. The Marketing LOB executive of the '80s and '90s has become the Chief Marketing Officer of the post-Y2K world. That new-breed, C-suite executive doesn't hesitate to encourage the outsourcing of IT work or people below the CIO level. Soon enough, the CIO who manages hardware, software and outsourcer vendor relationships may indeed have his/her job responsibilities absorbed by technically savvy CFOs and CMOs. Cloud Computing will further accelerate this trend.
srovniak
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srovniak,
User Rank: Apprentice
7/12/2012 | 1:39:53 PM
re: Why CMOs and CFOs Will Rule Above CIOs
The 5 out of 6 CIOs that are are only "consulted" or have no role at all in setting IT strategy (in the Economist's study) must have inflated titles.
Mentor
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Mentor,
User Rank: Apprentice
7/11/2012 | 10:05:30 PM
re: Why CMOs and CFOs Will Rule Above CIOs
The next few years may turn out to be the "glory years" for IT hatchet men, forensic IT auditors, IT turnaround specialists and IT experts for vendor and consultant non-performance lawsuits and other types of legal cases.

There are good executives and there many bad ones, including CEOs, CFOs, COOs, CIOs and CTOs. Sometimes the difference between a good one and a bad one is just your perspective, sometimes it's just that the objectives and mission have changed and a once valuable and productive member of the executive team has become a hindrance. Sometimes a bad executive is just the one trying to save the firm or just holds a more longer term investment perspective than many of today's CEO "fast times" wannabes. I have seen the sound warnings of due diligence by executives be heard as "resistance" or "building up a cost wall" or "not listening to the clients" just before disaster strikes and the painful arm of Sarbanes-Oxley or the Board of Directors destroys an executive like a CEO that should have never been put in power in the first place.

As with all misdirection, the latest MBA drivel, corporatist sycophany and vendor propaganda (remember who funds the author of this article - always follow the money), there is a grain of truth wrapped around an agenda here.

It it true that at some point all executives become resistant to change in their careers. Many also become so good at a limited view, that they forget the big picture. Although change is constant, it is also uncomfortable and sometimes painful, so many executives will resist it. Sometimes sound judgement is viewed as resistance to change when an executive preaches caution but doesn't communicate clearly the cost of unbridled change, especially when it comes to technology and business controls from an older CIO to a younger COO, CFO and CEO. Sometimes a narrowed expertise is denigrated because managers listen to some college professor or vendor "expert" with an agenda and the narrow experts points cannot be understood by others in the executive suite and thus a valuable insight is ignored to the detriment of a firm or worse yet an investor disaster.

Sometimes the agenda of a new CEO is to prepare the company for sale or disposal, and the resistance of those who have invested their lives in a firm who cannot shrug off the fact that their firm is now a disposable target on the chopping block, irregardless of their past performance, cannot be tolerated. Business is warfare, and many times what has to be done it is uncivilized, tasteless and immoral but yet legal and must be done.

Technology is clearly commoditizing rapidly and all executives must realize this. Executives should also be cognizant that it is THEIR responsibility to do the due diligence and understand all views, positive and otherwise to a decision. It is they who fail when accept the latest press and vendor fads, if they fail and affect the firm. I wonder how many CIOs have been ignored when it comes to Cloud Insurance, SaaS contract language for outages and non-delivery and cyber-attack damage control. A refusal by a vendor to add a clause in a contract is a red flag, not a black mark on a CIO that's trying to protect you the CEO and the firm!

As this article aptly states, CIOs must be more business savvy, better communicators, and more aware of their surroundings (including the Board of Directors). However, that goes for all executives and those who aspire to become executives.

The title of CIO may go away, but someone will always be in charge of the technology of an enterprise, be it the creative side (application development), the political side (user relations and education) and the "run" side of things - operations. They'll also need to be someone who can control vendors, consultants and answer to the latest fads like "The Cloud" with logical, cool and measured answers and true due diligence that explores the business balance of opportunity versus risk. People that perform the functions and lead them are and will always be at a premium, even more so in the future.

Disclosure: I've been a member of turnaround teams in various IT executive positions and audited dozens of fortune 500 IT shops. I also worked as a "Rent a CIO" and forensic IT management consultant for a services firm for 15 years. Rob Carter, when he heard of me through the demise of a career of a fellow CIO called me "the most dangerous man to let into any data center" and vendors used to call me "The Mongoose" because of my propensity to be totally unpredictable but assuredly dependable and deadly as I bit off vendor and consultant heads' off in court. The wonderful Grace Hopper, not Max Hopper, was one of my early mentors and Lou Gerstner glared but respected me when I screamed at him "You can fire me any time you want, corporate pirate!".

DarthVaderMentor
BenTheCIO
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BenTheCIO,
User Rank: Apprentice
7/11/2012 | 5:52:18 PM
re: Why CMOs and CFOs Will Rule Above CIOs
This sort of article does a disservice to good CIOs who understand both business and technology and who work in companies that value what technology can do. I am disappointed that someone who clearly had a decent career as a CIO and who probably made a good living at it is now resorting to making provocative statements about all those who are now filling those sorts of roles just for the sake of being published.

Regardless of what Nicholas Carr and others trying to make a buck off of sensationalism say, IT matters - and if companies don't realize that and don't place value in CIOs who understand systems and business (not just tech guys and not just MBAs with no tech chops), they will be the losers.

CFOs can focus on finance. CMOs can focus on marketing. Without the help of someone who understands how to fit things together, good luck. Vendors will always play that "your CIO is just trying to save his butt by saying we're more expensive" card, but, clever CEOs will know better if they have talented CIOs helping them.
wdgroover
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wdgroover,
User Rank: Apprentice
7/11/2012 | 5:30:17 PM
re: Why CMOs and CFOs Will Rule Above CIOs
Companies choosing to exclude their technology department from high-level management discussion will eventual find themselves unprepared to compete in the marketplace.
Sam Iam
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Sam Iam,
User Rank: Apprentice
7/11/2012 | 4:07:08 AM
re: Why CMOs and CFOs Will Rule Above CIOs
Agree, there is truth to this article, but I think there will still be a role for a centralized IT organization if for no other reason than integration. Marketing, finance, supply chain, sales, etc are all off doing their own things with IT within their functional divisions (e.g. marketing doing segment analytics or SCM doing route optimization). All of these groups are building their own DBs, DWs, middleware, using a variety of IT infrastructure models, etc. At some point it will become unruly and people will, once again, go through a consolidation and standardization process. Look at the number of customer tables and meta definitions of "customer" in the standard large organization today.

I do agree that the need for a CIO position as a definer of services, particularly application services, and engineer of business processes is no longer required if it ever was required. The CIO position should evolve into more of a CTO position where the business units define their process requirements, select their applications, and IT determines how to deploy it and integrate it. The idea that the CIO should be a business process expert never made sense. The lines of business are the business process experts and, should at least, understand their processes better than the CIO.
hdweiner
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hdweiner,
User Rank: Apprentice
7/10/2012 | 9:07:31 PM
re: Why CMOs and CFOs Will Rule Above CIOs
This says more about CIOs than it does CEOs. Shame on CIOs.

CIOs are more than technology jocks. They're supposed to be heavily vested in business process and exhibit a mastery of the business.

In my last position, I knew more about the CFO's shop than the CFO--who was no slouch! Show me a CFO who knows more about technology than a CIO should, and I'll show you a very poor CIO.

Our CEO came to me for business intelligence based on the organization's financial data. One of my CIO colleagues couldn't understand why I was so heavily involved in corporate risk management, financial analysis, and a part of all key strategy meetings convened by the CEO. He always wanted to know when I would get back into IT! More than once I tried to gently suggest he was more of an IT Director than a CIO.

This reminds me of an interesting past experience. I had a Fortune 500 client--a CIO--who was...disappointing. To the corporate management team he MUST have been a cracker jack technologist, because he didn't understand anyone's business, let alone theirs. To his IT staff he was viewed as a cracker jack "management guy," because he didn't know technology.

There are a lot of these folks around.
robin oliver
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robin oliver,
User Rank: Apprentice
7/10/2012 | 7:45:19 PM
re: Why CMOs and CFOs Will Rule Above CIOs
The domain of the CIO really services the needs of the CMO, the CFO, and the COO. And ideally, the CIO provides the entire organization with the capabilities to deliver relevant information for guidance and decision-making to the global domain of the CEO...

If the attentions that are given to marketing, finance, and operations are varied and whimsical over relatively short periods of time, I can see how it would become very easy to hammer the CIO and the relatively limited resources of the CIO's domain. The reasons for why the CIO's decisions are considered sound (or not) will depend entirely upon the perspective of his clients across the enterprise...

While the chiefs of marketing, finance, and operations may find it individually convenient to directly manage their own information systems and technologies investment, development, and maintenance, there are a couple of things to consider when the CMO, CFO, and COO incorporate the CIO's domain into their own...

First is that they will not likely be any happier with the new resource allocations they get in terms of funds and competent staff. Second is that enterprise level information systems planning and implementation will become less unified as enterprise level adherence to "standards" become less important and erodes. Third is that many CMOs, CFOs, and COOs will find that the host of issues that the CIO is managing (or ought to be managing: what information is critical or useful to decision-making in each client domain of the enterprise and how does it get gathered and delivered in a timely and relatively convenient way to those who need that information to act on... including the CEO and owners of the enterprise) will become their own and a new distraction to their operational mission...

Ultimately, the arrangement that works (partnership in the C-team OR incorporation into the domains of marketing, finance, and operations OR someplace in between) will hang, as it usually does, on the right balance of authority and the related responsibility for producing favorable results...

The irony here is that the CEO who questions the need for a CIO will find herself or himself the new CIO if any of the chiefs are not happy with the results of diminution of the CIO. And few CEOs are really up to that as the issues tend to be complex and technical...
MyW0r1d
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MyW0r1d,
User Rank: Strategist
7/10/2012 | 1:59:49 PM
re: Why CMOs and CFOs Will Rule Above CIOs
Those same fluid job characteristics used to describe marketing have been used to describe IT for years (don't understand it, no problem in six months it will be different and the technology will be outdated). But the difference between the CMO and CIO should not be in selecting the technologies to use but in understanding how they are implemented for optimum benefit. This is the failure point in populating the CIO with MBAs as opposed to engineers (MSc or BSc) who should understand how to implement the underlying technology layer (typically filling your CTO positions). When I used the term "failure point" I'm referring to that diminished opinion of the CIO role and function as described in the article because I believe it is accurately representative on a large scale.
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