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The CIO’s changing role

Hadley Baldwin

The Evolving CIO 

If you are a CIO and spend most of your time thinking about ERP programmes, data centres, networks and driving down operating costs your world may be about to change…

After many years working alongside Fortune 100 CIOs, it is clear: The CIO’s role is rapidly refocusing on leading digital innovation rather than managing traditional back-office IT systems.”

Hadley Baldwin, Partner

Software as a service is not a new idea but now it is reaching maturity. So rather than just providing best of breed applications, it will soon be the default for provision of core ERP systems even in the world’s largest companies. 

This will have two impacts for CIOs: 

  1. It will materially reduce cost and move costs from being fixed CAPEX to variable OPEX 
  2. It will significantly reduce the effort and complexity of both traditional IT projects (no customisation – it’s not an option, just more powerful configuration) and systems support (no infrastructure to support, no applications upgrades to manage).

As time and money is freed up, where will it go? Customer facing digital innovation.

In the future we can expect digital innovation to become the biggest concern for IT leaders across industries. But what does this mean for the CIO role and which attributes will be necessary? 

CIO time used to be predominantly focused on back-office concerns, developing processes, infrastructure and software to keep systems efficient and relevant. More recently, as an increasing amount of back-office functions get outsourced, we have seen the focus shift towards more customer facing concerns. Suddenly collaboration, networking and emotional intelligence are key skills a CIO must cultivate to succeed.

Traditionally CIOs have been focused on major technology initiatives and have not made the time to truly understand the business imperatives. In today’s increasingly fast-paced, changing and digital world, IT need to effectively work with their business partners, and in particular Marketing, to drive strategic business change.

If business partners don’t want to work with IT on a new digital product (perhaps a new app) they’ll just go to an external web or marketing agency. The problem here is that new digital products almost always need a version two and integration – so from a business point of view it’s better they collaborate with IT. This is more likely to happen if the CIO is engaging with business partners effectively and providing value in terms of strategic guidance.

IT is joining Finance and Marketing as the third function driving profitability

In the past, Marketing and Finance would have been the functions most companies would recognise as driving profitability, now we are moving to a place where the IT has a key role to play in growing the business. 

Business strategy and IT strategy used to be separate entities, now they are fusing. With IT as a more central part of generating revenue and managing costs, a company’s approach to IT is inextricably linked to the wider objectives of business development. 

This has led to a shift in the significance of the CIO. Where before a CIO's power might have come from knowing the workings of computer systems that others didn’t, now it is becoming much more of a leadership role requiring the coordination and management of a variety of outside companies and suppliers.

Control versus collaboration: managing external and internal teams

  • External team management: The set of competencies that are becoming essential are partnering skills and the ability to manage external teams. If your IT systems are no longer centralised in your own office but depend on a host of outside suppliers, then the ability to coordinate and optimise these relationships becomes a crucial part of delivering value as a CIO. 
  • Internal team management: It used to be all about MUST. You must have approval, must follow the rules, must have the budget. The new world of internal team management moves away from rigid control to flexible collaboration. Delegating responsibilities to the different roles within the department is key to freeing up the CIO’s time for innovation. 

We might traditionally consider the head of an IT department to not need the same front-facing skills as other members of the team, yet as the role evolves into one of leadership and people management, social and emotional intelligence become necessary requisites for the job. 

The journey to being a CIO is in large part about driving change, dealing with multifunctional teams, dealing with the different silos of your business and pulling them together. These challenges filter out people on a career path to CIO. In my opinion a CIO without these skills won’t add long-term value.

Not just for CIOs - alongside finance, CEOs must understand IT and digital

IT literacy goes both ways. Finance has traditionally been seen as the essential skill for developing business strategy and we are used to the idea that an effective CEO needs to have a strong understanding of finance. 

Now we are witnessing the rise of IT becoming a necessary skill set for leaders. CEOs will need a solid grasp of digital to keep their companies relevant. This change doesn’t only affect senior management – it indicates that businesspeople in general need to be better educated about IT. If primary school children are being taught programming, we need to make sure our business schools are equally on the ball in disseminating these newly essential digital skills. 

The CIO of the future faces a very different task to what has been come before, requiring a variety of new skills. As more routine processes get outsourced and innovation becomes a stronger element of the job description, CIOs will command smaller teams… but of much greater value. How we think of IT will change and it will become part of the must have skill set for every role from the CEO downwards.

CEOs also need to understand the evolving role of CIOs will play. We predict that in less than ten years’ time, it will become clear that the digital agenda is IT enabled. The digital agenda is driving real business transformation, real growth, and real value to customers. It’s got to become less acceptable for people to rise up through the ranks saying, “I don’t know anything about IT”.