Is Your CIO Adding Value

Abstract

Whether a company sees its IS department as an asset or a liability is largely down to the CIO's ability to add value Many organizations are experiencing a crisis of confidence in their information systems and in the chief information officers who lead them. General managers are tired of being told that information technology can create competitive advantage and enable business transformation. What they observe and experience are IS project failures, unrelenting hype about IT, and rising information processing costs. Chief executive officers often do not know how to evaluate the performance of the IS function or the contribution of the CIO. Consequently, radical IS management prescriptions, such as outsourcing and downsizing, are being applied, and CIOs are even being fired.(1) Some of them are the very heroes of the IT profession whose photographs graced the covers of business magazines not long ago. For several years, we have been researching IS leaders, conducting extensive interviews with CEOs and CIOs.(2) One study examined the factors that determined the relationships between CEOs and CIOs in fourteen organizations.(3) A second focused on the survival of CIOs, and studied ten matched pairs of surviving and nonsurviving CIOs in different industries.(4) In a third, ten CIOs who had been interviewed in a 1986 study were revisited in order to understand their experience and learning over a five-year period.(5) All of these studies involved CIOs in leading corporations across the spectrum of industries. Face-to-face interviews with CIOs and CEOs explored not only their actions and experiences, but also their personal backgrounds, attitudes, and values, and the organizational contexts in which they operated. We supplemented the CIO interviews by administering psychometric tests. These and other studies gave us data on IS leadership in more than sixty organizations. A problem or a strength? From this data, two patterns stand out. First, CEOs appear to be polarized between those who see IT as a strategic resource, and those who see it merely as a cost. Second, the CIO's role and actions are crucial in ensuring that IT is deployed for strategic advantage, and that the IS function delivers value. The CIO can and must add value, or IS will be seen as a problem, instead of recognized as a strength. In the following three companies, drawn from our research, IS was seen as a problem: In a telecommunications company, the CEO revealed that only one thing kept him awake at night: he was never sure whether his CIO was doing a good job. He knew that IT mattered in his industry, and he found the IT strategy seductive, but delivery and benefits were elusive. The strategy centered on building a new state-of-the-art IT infrastructure that would, it was claimed, provide an efficient and flexible platform to meet both current and future business needs. The CIO had spent his career in the IT industry and was an avid scanner of emerging technologies. Although the CEO was attracted by the promise of longer-term IS capability, he wanted adequate applications quickly to support a rapidly growing business. After wrestling with this dilemma for some time, he fired the CIO. Soon afterward, a successor CEO strongly reinforced the emphasis on rapid support for immediate needs and ensured that most of the IS policies of the past were now formally abandoned. In a chemical company, the CIO believed fervently that IT could yield competitive advantage across the business, and he regularly created occasions to promulgate his message to the company's management teams. Given his previous background as a general manager, the CIO's beliefs were based more on a sense of business opportunities than on long familiarity with IT. He was initially appointed and backed by a CEO who was himself a well-known visionary on the transformational capabilities of IT. The CIO led investment in a corporate-wide infrastructure well before many of the business units had adopted and owned such a vision. …

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