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John Soat
John Soat

The Evolution Of The CIO

The role of the CIO is at a critical point of change. It's time for CIOs to step up -- or step back.

At the annual meeting last month of the Society for Information Management, rumor had it that a bombshell was buried in the results of the organization's annual IT management survey. And so there was: The percentage of CIOs and other top IT executives reporting directly to CEOs had fallen dramatically from the year-earlier survey, SIM revealed.

Last year, 45% of the business technology executives surveyed said they report to the CEO; this year, it's just 31%. At the same time, the percentage of CIOs reporting to the company CFO has risen, to 29% from 25%.

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The implication? The CIO's influence is waning. "If the CEO number is going down, clearly [CIOs are] losing traction," says survey principal Jerry Luftman, associate dean of the Graduate Information Systems Programs at the Stevens Institute of Technology. "I'm hoping it's a blip."

Another interesting result nestled in the SIM study suggests that IT execs aren't feeling altogether secure. For the first time in the 27-year history of the survey, execs were asked about "the evolving CIO leadership role," and they cited it among their top concerns--No. 10, precisely--indicating some uncertainty about how and where they fit within their organizations.

Whether the SIM data is an early indicator or a blip, there are signs that the CIO role is at a crossroads. "The non-business-oriented CIO is about to take a shift down a tick in the reporting structure," predicts Bobby Cameron, a principal with Forrester Research. M.S. Krishnan, chair of business information technology at the University of Michigan's Ross School of Business, presents it as a challenge. CIOs are "going to step up or they're going to step down," he says. "They cannot be where they are."

chart: Positive Momentum -- Looking ahead, how would you describe the influence of the CIO in your company?
Because customers will increasingly have more choices, and because of globalization, companies will be forced to change their business models, says Krishnan, who with partner C.K. Prahalad is writing a book on the subject. As part of that transformation, CIOs have an unprecedented opportunity to seize control of their careers and help chart the future of their companies, he says. In order to innovate rapidly, a company's business processes must be docu- mented, understood, and governed, and where does responsibility for most of those processes lie in the modern-day, automated business organization? The CIO.

"It's IT that runs every business process today," Krishnan says. "And while the IT department takes the responsibility for running those processes--the applications are doing fine, transactions are going great--they don't take ownership."

But somebody will take ownership, he predicts, and soon. "As companies become global, this will become a critical position," Krishnan says. The overseer might be called one of several things: chief operating officer, chief process officer--or chief information officer. But if the CIO doesn't step up, he predicts, "the CIO will be subsumed."

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