The Question Behind the Question
To insure getting the desired detail, I framed the query further. In the months prior to posting, I had participated in a roundtable discussion with a number of CIOs of $500M+ companies. This topic came up and a few felt adamant that the CIO should report to the CEO. However, as the discussion evolved, most softened their stance. In the end, there were two general groups of thought, both relatively close in concept:
- The CIO needs to be a respected peer of others reporting to the CEO, regardless of the actual reporting structure for the CIO.
- The reporting structure needs to be set up based on the technical prowess of the CEO. However, there was a wide diversity of reasons—technophobic CEOs, older risk-averse companies, and corporate cultures opposed to having a non-core competency reporting to the CEO.
The responses to the CIO group posting were about the same—primarily that CIOs should report to the CEO, the next most popular choice was the CFO, and a smattering of COOs and CTOs. Finally, a few folks who refered to who the person was and how well they understood the business. Feel free to join the group review the responses.
It Depends on the CIO
The latter group interested me—it depends on the CIO. The majority that said CIOs should report to the CEO seemed to feel this would give the CIO the credibility to do the job. This is problematic. If you lack the leadership skills, IT competency, or business knowledge to earn respect of the C-level peers, how will reporting structure change that? Rightfully so, if the CIO does not deliver value to the business, he or she will be fired. The only way to deliver value is to understand the business. Not IT, the business.
On the other hand, if you have that knowledge and the CEO's direct reports still fail to recognize you, there is a problem. Reporting to the CEO will not fix that; the cultural problem needs fixing first.
Now the other angle, the view inside IT. In generalities, IT budgets allocate two-thirds to keep the lights on and one-third to deliver business initiatives. Understanding the value of Forrester's MOOSE (Maintain and Operate the Organization, Systems, and Equipment) is simple—keep everything running all the time. There is only a minimal requirement to understand the inner workings of the business. Analogous to the power company, you need to know the amount of power to supply and little about how it is used.
The other third, initiatives, is quite different. Building or implementing new systems requires business process knowledge, comprehension of business goals, and the variables that affect them. It requires embedding knowledge of multiple processes into a system that can be easily modified in concert with ever changing business environment. This requires IT to understand how the business runs, rather than how many neat features are in a new application.
Lose site of the business and IT managers start making stupid decisions. People second guess management, architects begin thinking the goal is delivering technology, and project managers cannot differentiate between critical scope and nice-to-haves. The Garage SyndromeTM reigns, projects start to fail, moral diminishes and the organization spirals downward. The business loses trust in IT's ability to help streamline its operations.
The CIO's Role
The solution is the CIO. If the CIO understands the business' issues and demands his or her direct reports do the same, the organization's attitude, culture, and drive will change to deliver solutions with a business focus. Everything, including projects, runs better since the focus is away from implementing an application and centered on solutions for the business. This top-down attitude engages everyone in the project's chain of command to understand what is critical to quality.
The reporting structure of the CIO is irrelevant. It is the CIO's complete and thorough understanding of the business that makes the CIO and the IT organization relevant.