CIO as middle manager or key strategic player?
By Christian Rolin, Partner at Peoplement / AltoPartners Denmark.
This article was first posted in Danish on the Peoplement website. To read the original post, click here.
All organisations know, or should know, that IT plays an ever-increasingly important role. But, it may be surprising when we as executive consultants increasingly see that the CIO function has started to change to “simply” being an operations manager.
The Coronavirus pandemic really demonstrated how essential a role IT actually is in companies. IT managers have become key people in key development decisions, and their knowledge and networks are crucial for companies’ growth and security. IT, systems and technology are developed and changed constantly and at an ever-increasing pace. It constantly gives companies completely new conditions and challenges the business foundation and raison d’être. Companies increase their budgets for security, IT operating systems and cloud solutions every year. In addition, there are new investments for e-commerce, tools for data analysis and marketing.
We see this in the companies’ need for digital skills caused by the digital disruption.
The CIO role is therefore absolutely central and indispensable for innovation, investment initiatives and when it comes to developing the company’s growth strategy.
A CIO’s knowledge, experience and network are therefore a significant asset and a valuable investment for the company. Of course, it goes both ways. The companies continue to make greater demands on the CIO’s area of competence, with an expectation of, for example, a return in terms of resources, increased growth, etc.
While the CIO’s previous role was to build and operate cost-effective IT infrastructure together with automation of business processes, they are now expected to predict the company’s needs - and thus have a significant influence on investment, in addition to increased focus on revenue growth, customer experience and, not least, data-based insight.
Despite that, as executive search consultants we often see that the CIO is placed in the organisation as a form of operations manager, typically below the CFO.
A seat at the table
CFOs develop the company based on management tools based on ROI and cost-benefit analyses. It is undeniably important when the business is to be maintained and grown. But in order to ensure innovation across the company’s organisation, a CFO as gatekeeper between CIO and CEO may risk inhibiting the company’s overall level of innovation.
When the CIO only reports to the CFO, an unnecessary hierarchy is created, whereby important knowledge with significance for the company’s security, growth strategy and growth potential risks being lost. A CIO should therefore always have a permanent seat around the table in the director’s office.
Of course, we know that not one solution can be generalized to all companies. But in the vast majority of cases, it makes the best sense for a CIO to report to the person whose main focus is the company’s overall strategy – namely the CEO.