The value of a CIO

I had an interesting discussion with an executive search professional who called to ascertain interest in a position with her client. Her company is known as one of the premier head hunters that work only on C-level placements and does a good job of that. Her client, a large diversified group, wanted a business IT professional for the position of a CIO, reporting to the Group Chairman. She believed that the position was exclusive and merited attention.

As the discussion progressed, she sought my view on current CIO compensation levels. I pointed her to research done not too long ago by an IT publishing house that provided the range in which CIOs were placed with slices for industry, experience and location. She expressed dismay on the median and the fact that most of the IT leaders titled CIO were underpaid in her opinion in comparison to other CXOs. Her data points were the placements her company had executed.

Ruminating over the discussion I saw a thread on one of the professional social sites on a similar subject. Is CIO compensation in line with other CXOs in the company ? Does a company perceive similar value contribution by the CIO ? Are there CIOs out there who earn more than their other CXOs ? The answers validated the revelation the head hunter had a few days back. Most CIOs are ill positioned and not on par with their peers (my definition: 5% variance is on par); the exception group is miniscule.

What contributes to this situation ? Is the gap due to the position being still seen as a service provider and not an equal to say the CMO or the CFO ? Does the person in position influence the decision on the monetary value ? The industry variance exists though the gap varies. I started scanning data from other countries and found that the story was similar. Exploring age or experience gap, the data revealed that this factor was not relevant.

What is the CIO worth to a company ? S/he keeps the business humming 24X7 across locations with connectivity, business applications, mobile connectivity, information on demand anytime anywhere, business intelligence and analytics, sales force enablement, supply chain visibility, production planning, customer relationship and engagement management, ecommerce and m-commerce, scheduling and operations of flights, hotels, information security, business continuity, phew ! Is all this of any value ?

Ask anyone in a company the challenges and chaos or the disruptions when any of the above stops working. The impact varies by company and industry as the elasticity is defined by multiple factors. Antagonists will say all this can be outsourced; yes it can be, however someone has to first set it up before the operations can be given away. Even total outsourcing retains part of the IT team along with the leadership to strategically keep the technology in line with the changing market and needs.

I believe that the value of the CIO is defined by the CIO. The discussion, debate, and engagement of the IT team with stakeholders; articulation of change, success and the value creation with IT systems contributes to the perception of value. Contributions to business decisions add up; taking a position on issues not just limited to IT make a well-rounded business leader and earns respect at the table. How the IT team interacts and presents itself is a reflection of the CIOs leadership.

Will all this bring value commensurate to the effort and monetary reward comparable to others in the enterprise ? The suggestions above are a small representation of CIO behaviours that contribute to his/her locus standing. Each person has to find their balance and align it to their reality; don’t try to change the world, change yourself for your own sake. I am saying this from personal experience.

The Role of the CEO

The relationship between the CIO and the CFO has been discussed with adversarial undercurrents as the general perception about the CFO portrays a beanie counter. This is analogous to the CIO remaining the EDP Manager, but the prototype has stayed stuck; in a similar vein where the belief continues that the CIO has not evolved and is still the Chief Technician who fixes Boardroom projectors and the Boss’s email.

Recent time, with the resurgence of social media, has seen the emergence of another debate about the CMO cornering a large proportion of the IT budget. This news which could be based on some data points in a survey in a small geography for a sub-segment of a domain, the conclusions depict the CMO usurping the CIO chair; a real stretch of imagination, but which has a group of CIOs vehemently opposing this purported trend. Some discussion groups even want the CIOs to confront their respective CMOs and assert their power over the IT budget.

So when I had an opportunity to partake in a CEO get together, I was looking forward to clarifying a few assumptions and doubts. If you are wondering what this has got to do with the CFO and the CMO, well along with the CIO, they all typically report to the CEO who is expected to mediate in case there is a conflict within his team. The above presumed conflicts will sooner or later end up for arbitration or follow the general trend where the CIO backs off.

I love interacting with CEOs (including my own CEO); they are the better barometer of IT progress and use within their company than the CIO is. As the primary leader of the enterprise, s/he sets the behavioural norms and culture of the company. Their belief system percolates down the spine of the company influencing processes, process discipline, technology deployment and use, risk behaviour and finally the cohesiveness of the Executive Committee that runs the company.

Since I knew most of their CIOs it was easy to create correlations: big manufacturing CEO used social media extensively, his CIO is well known for success; mid pharma CEO who thought of IT as a cost centre had high attrition in IT; diversified group young digital native CEO had the CIO soaring high from success to success. You get the trend; the CEO is the lead indicator of how the job of the CIO is likely to be in a company and where s/he will stand in case of a conflict with other CXOs.

If you benchmark companies with CIO reporting to CEO versus other CXOs, the comparison set clearly demonstrates the ones with the CEO fare better even when the CEO is not necessarily IT friendly. In the control group which ranges from 30-80% (CIOs reporting to CEO) depending on the geography and industry, the next differentiating factor is the CEOs appreciation, tolerance, averseness or indifference to IT. It is evident that the CIO directly or indirectly influences the success of the CIO.

Should the CIO be insecure about the span of control, budget, or technology disruptions ? Most CIOs aren’t but the hype created by various factions would make you believe that the CIO is shivering with fear uncertainty and doubt (FUD factor) on his/her future. Reality being diametrically opposite, I believe that CIOs should stop reacting to rumours and instead start proactive communication on the contributions to different parts of the enterprise in making the CMO or the CFO successful. Let them be at the receiving end for a change !

Meeting Customers

A recent edit in an IT publication discussed the pitfalls of the CIO going out on the field meeting the end customers of the company’s products or services. It highlighted the fact that most CXOs wanted the CIO to stay away from the customers and not encroach on their territory. The CIO meeting customers was seen as disruptive and a threat to their relationship and the final moment of truth with the consumer. This observation was believed to be consistent across industries as well as size of the company.

A call to the Editor resulted in her portraying the reality she had witnessed on the discussion table that included some heavy weight CIOs. They were tentative in their approach to reaching out to customers; this was not viewed kindly with heavy brick-walling. A casual interaction was fine, but not continued engagement that may result in a different reality for the sales/marketing teams. Off course there were a few outlier CIOs who did systemically meet the customers and shared insights with their teams.

My reality being different from the majority, I decided to chat up with some CXOs to determine if reality was indeed that grim. I picked a few high-touch industries like retail, banking and airlines, and added some low touch ones like pharmaceuticals and FMCG where the end consumer is largely faceless. Then I started searching through the good old visiting card rolodex, my connections on social media and professional networking sites; finally adding some with help from industry bodies.

I had some apprehension if I will get candid responses, so I decided to use the research envelope which does normally get open answers; you know researchers are perceived as non-threatening since in a statistical model, there is no identity. The modus operandi worked well and my research was successful in capturing reality with high fidelity. The correlation to industry or size of company was not decisive, the general trend was however quite evident.

Marketing and Sales have over the last few years faced uncertainty due to the global economic uncertainty and the impact it has had on consumer sentiment. Corporate as well as individual spending has seen a general holding back. Do we really need to spend ? Do I really need the latest gadget ? Such decision points have resulted in pressure that has everyone looking inward more than outward. Natural reaction has been to hold on to the fragile relationships. What if the discussion turned away the customer ? What do you know about customers anyway ?

One of them quite paranoid went on to state that IT has no business prying into relationships; he had advised his team to keep everyone at bay like the pirates; auditors, information security, anyone who asked for data was turned away. Even the BI reporting was curtailed lest it be used by someone to create different conclusions. The company in question was struggling for growth though doing better than some of their competitors. In the high growth era, they were the leaders, now that appeared to be chapters in a history textbook.

Can the CIO change this behaviour ? Being an optimist I would say probably yes ! Is it worth the effort, many would say certainly not ! And I tend to agree with the collective wisdom though with a caveat. I believe that CIOs are always at the short end of disruption; so they should not back off in the face of this push back but continue the dialogue while getting others behind the cause. Different perspectives have always created new opportunities. After all, you cannot expect different results if you continued doing the same thing over and over again. I have lived by this maxim and I am still alive.

One Stop Shop

The IT industry has many types of vendors; some focusing on niche solutions, some specializing in specific technologies or domains, some who offer a menu of products/services ranging from infrastructure to applications, and then there are large diversified companies who do everything from consulting to implementation of technology solutions or packages backed by support services in a local, offshore or multi-location model. The big guys manage all kinds of requirements and bring to the discussion table a comprehensive long-term engagement model.

Different vendors set different expectations on what they can deliver; the niche providers do not promise a breadth of services, they stay focused on their expertise. The big ones claim to have expertise across the legacy to contemporary and cutting edge; they have industry practices and business consultants who profess incremental to transformational change capabilities. You name it we can do it; even if you cannot put a name to it, we will find a way to do it !

The large one-stop-shop engagements typically begin with setting of scope and expectations on delivery, timelines, and quality of service, rewards, penalties, force majeure, arbitration, cost, escalations and a lot more. The larger the scope, or the longer the time period of the contract, the governance becomes complex. We know that Total or Strategic outsourcing can cover everything; in recent times though the number of such deals has been dwindling.

So it was an interesting debate when a few CEOs on a panel berated the one-stop-shop companies giving it a new twist. Consider you wanting to reach a far-far away destination and the only option is to go by bus. Every bus gets you there, some are slower than others, some offer many comforts through the journey; the cheaper ones just get you there. Depending on what you can afford, there are many options to choose from. Caveat is once you have bought a ticket, a change is difficult and painful.

When someone advertises one-stop-shop the conventional understanding is that I get from where I am to the final destination with no stops with the advertised and agreed comfort. Reality as we know is not always as advertised. A CEO remarked on his journey with one of the global biggies; he signed up for a long journey wanting to focus on his business. Very quickly he was on the discussion table with the bus driver, conductor and the entire fleet management company.

Why is my journey so excruciatingly slow ? Why is the transformation promised not happening ? When will I see any impact to my employees, stakeholders, customers, or for that matter any efficiency to business operations ? Whatever happened to the pre-sales promises made by the various function heads of your company on various domains and technologies ? Pat came the answer, “we are a one-stop-shop company; we go one stop at a time. This is what we promised; we did have a driver change and a breakdown; that is part of the contract. We meet defined service levels.”

Both are right in their frame of reference; so where is the problem ? I believe that any such engagement should have common definition of reference points with clear understanding of step-by-step process, impact and governance. Otherwise the semantics of the one-stop-shop can be painful for everyone involved, the deliverer and the recipient. The bus is still moving but not in the way that makes the journey a pleasure. CIOs will be at the receiving end if there are such gaps.