CIO Performance Metrics

In the last few weeks there has been a lot of publicity and visibility on the fact that CIOs are being or going to be measured on business metrics, many of which they do not control or influence directly or indirectly. This sparked many a debates on various forums that attract CIOs, social media sites and groups that are dedicated to IT leaders. Not that anyone tried to contain it, the fever spread globally very quickly with reactions that spanned the spectrum of emotions.

Traditionally IT was measured on three aspects; operational efficiency, budgets, and delivery of projects. The connected world also added information security. Disaster recovery and business continuity surfaced and made it to the dashboard. Somewhere business benefit crept in and then projects were also reviewed from a business angle. Regulatory compliance required significant IT support and thus edged in. But revenue, profitability, customer acquisition or retention, product availability ?

How does the CIO influence any of these ? Can better IT deliver additional growth ? Will technology drive profitability ? What can the CIO do to acquire new customers or retain existing ones ? And what about product quality or availability ? If cash flow is an issue, how will systems ease it ? Competition has a better and cheaper product or a great marketing strategy, can IT or the CIO counter it in any way ? If the answer to one or more is no, then why link performance or compensation to these measurements ?

I know some of the CIOs who have been there done that, evolved beyond technology and/or taken additional business roles will say that the CIO can indeed contribute and influence most of the measures above. This is achieved with systems that create operational efficiency, business process management, information visibility, business intelligence and analytical models, and even enabling new models of engagement with the new trends and hyped technology troika, Big Data, Mobility, and Social Media. Cloud and Outsourcing are passé; everyone has done it or is doing it

It is evident that this piece of news has many people worried, and not all of them are CIOs; they are propagating the message that if I cannot control something, I should have the choice to determine if my performance is likely to be impacted. Fair point if the organization worked in perfect silos. In business and life uncertainty is certain and thus even the metrics that seem to be under control have dependencies – internal and external – which are beyond one’s power of influence.

Does the CEO control how the industry will behave ? Can the CFO control interest rates or liquidity crunch ? If the customer does not buy, what can the CMO do ? Rhetorical questions ? They are not helpless, but there is a limit to their ability to influence the outcome. They do play a role and they depend on the rest of the CXOs to work lock-step in achieving success. CPO (Chief People Officer) has to help hire and retain the best talent, CIO has to ensure information availability to key stakeholders for decision making and analysis. That’s what the C-suite is all about.

So if the CIO stakes claim to the table, it comes with a set of obligations and responsibilities; it comes with the territory; all CXOs are jointly and individually responsible for the success of the enterprise. It is not about “I have done my part and now you go figure”; I believe that CIOs should and does actively seek this responsibility and then works with others in shaping the future. The C-suite has to take this variability risk. Only then can the CIO aspire to take a position on the Board or become a CEO.

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.