While IT budgets may have seen their biggest increases in 15 years, the number of Chief Information Officers (CIOs) sitting on the board has dropped from 71% to only 58% in as little as 24 months, according to a new report.
This situation has come about despite the fact that two thirds of technology leaders believe they are continuing to gain in influence, a study undertaken by recruitment consultancy Harvey Nash and management consultancy KPMG has revealed.
But in the opinion of Natalie Whittlesey, director of Harvey Nash’s CIO Practice, things are not quite as straightforward as they seem. Indeed, she believes that the role and responsibilities of CIOs are changing in four key ways based on the organisation’s approach to technology:
- More tech-savvy CxOs are emerging: Non-IT-specialist board members are becoming more tech-savvy as technology becomes more fundamental to business success. This situation is resulting in some CIOs reporting into other board members as their titles morph from CIO to IT/technology director. The boss then determines whether their focus should be on promoting innovation and growth or purely on cost-cutting.
- The ‘end’ of major tech transformation is perceived to be nigh: Board members in many large, traditional organisations feel the time for huge technology overhauls, such as migrating from a call centre to a multi-channel environment, is now over. As a result, they no longer consider it necessary to keep the CIO at the top table.
- CIOs are broadening out their roles: Some technology leaders are expanding their remits, or actually changing roles, to gain experience of business areas, such as operations, facilities management and procurement. In this situation, tech-savvy CxOs do not necessarily feel they require a technology leader per se.
- A shift is happening towards business-managed IT: In tech companies in particular, technology is so fundamental to the business that a ‘business-managed IT’ approach is becoming the norm. However, if there is no longer a tech function in the traditional sense, they find there is also no need for a CIO either.
But Gavin Scruby, CIO of direct debit bureau SmartDebit, has a somewhat different take. He points out that in large organisations at least, tech people have rarely been members of the senior executive team anyway:
In Fortune 500 companies, there’s never been more than about 5% of tech leaders on the board, although it does vary from industry to industry - Amazon, doesn’t have anyone at board-level, for example. The point is that, as organisations get bigger, the role of technology tends to become more commodity in nature. But the real change lately has been the fact that technology has become more prevalent and, as a result, all the different aspects of it are getting too complex for one person to handle any more.
Diffusion of responsibility
On the one hand, the roles of CIO and CTO have been around for years, with the former being predominantly inward-facing with a focus on “keeping the lights on” and the latter more outward-facing with an emphasis on employing technology in new product development.
On the other hand, newer roles, such as those of CDO (Chief Digital Officer) and CISO (Chief Information Security Officer) have also emerged. But with the growing importance of issues, such as risk, data protection and Artificial Intelligence, Scruby does not believe this will be the end of it. He explains:
In small companies and start-ups, the CIO role will stay the same as they depend on technology, and many will end up on the board. But in larger ones, as technology drives things more and more, you’ll see an increasing diffusion of responsibility. Things that used to be classed as technology, such as data analytics, are now often integrated into marketing or sales tools, which leads to the development of new specialisms, such as Chief Analytics Officer. So as specialisms diffuse out, you inevitably end up with a broader set of people all working at a similar level.
When such a situation takes place, boards tend to assign responsibility for the technology portfolio to someone from the business in order to pull everything together. But Scruby still believes there is a place for people with a technical background on the senior executive team:
I think it’s important to have a mix of technical and business skills, although it can be difficult as people in tech roles often aren’t exposed to running other parts of the business, and the board inevitably favours like-minded individuals who are more outward-facing. The problem is that people from the business don’t necessarily have a deep knowledge of technology, and you can’t pick it up by osmosis. But if the implications aren’t explained directly to decision-makers, messages can change as they go through the different layers. They then discover something’s not technically feasible and changes have to be made, which hits profitability.
Meanwhile, Sudhir Reddy, CIO of $3 billion global design and engineering company Altran, believes the reason why CIO representation on the board is falling is that the role is starting to split into two distinct categories. The first consist of “factory CIOs” whose job it is to keep the lights on and ensure that services are offered as cost-effectively as possible. They tend not to have a seat at the top table.
Making stark choices
The second is “business CIOs”, who have a good understanding of the organisation and are effective influencers, but do not always have an IT background. They tend to be board members but are less common than their factory CIO counterparts.
As a result, Harry Chima, Head of Infosys Consulting’s CIO Advisory Europe practice, says:
CIOs now have a stark choice and, like politics these days, there’s no middle ground. They can either act as low-cost optimisers, like kind of ‘tech janitors’, or as strategic enablers. So if they want to be low-level problem-solvers, where it’s about design, run, build and a large part of the job involves managing suppliers, that’s fine. But if they want to be more proactive, they need to make certain choices and accept that the world has changed.
In other words, in a rehash of a mantra widely heard about a decade ago, it is about assuming a more strategic role. This means becoming less of a fire-fighter and more of an influencer and innovator. It also means concentrating on issues, such as data governance and risk management, and working with the business to understand how technology can proactively be used to support strategic aims. As Chima points out:
The rate of change is colossal, but a lot of CIOs have taken their eye off the ball. Tech budgets may be up but the money is being spread all over the business, which means most IT leaders are getting the same amount but are under pressure to deliver more. So they can’t be responsible for all the buying, building and running of technology any more – those decisions have to be made elsewhere. Technology, for me, is now table stakes, which means CIOs have to be across the business and look at how they can take innovation forward. It’s about influencing the organisation but also moving away from traditional IT organisations towards distributed hubs of people. While these hubs will report to the CIO, there’ll also be a dotted line to the business and everything will be more loosely-coupled.
Chima acknowledges that implementing such a change in focus is difficult when tech leaders feel under pressure, not least as it requires them to step off the treadmill for a while to re-evaluate. But he also believes it is crucial if they are to come into their own again:
It’s about elevating the role back up to what it was a decade or so ago. Either that or you just go back to being an order-taker.
While views may be mixed as to how the role of the CIO is shifting, the consensus is that change is in the air – whether IT leaders like it or not and whether they choose to bury their head in the sand or acknowledge it.
While those who are already on the board appear to be staying put for the time being, a key reason for the fall in representation, in Chima’s opinion, is that new slots are simply not opening up when they leave. And nor will they, it seems, unless tech leaders work to re-don the innovation mantle that many fought so hard for just a handful of years ago.