As corporations undergo digital transformation to survive in today’s rapidly-evolving marketplace, demands placed on CIOs extend far past traditional IT roles. Over the past decade, business-aligned CIOs became the standard, meaning that other leaders evaluated technology executives based on how they enabled business outcomes, rather than traditional metrics such as uptime, systems availability and on-time project delivery. In the new digital world, CIOs will be evaluated on not only business enablement, but also on strategic alignment, revenue generation, expense management, vendor/partner relationships and operational effectiveness.
Why the change?
Today’s transformation of digital ecosystems via the consumerization of processes and democratization of data are engendering massive change into the operating structures of most public and private corporations. There are a few key examples of where the change is occurring. Companies are becoming digital platforms that ensure they are relevant to their client needs by providing the right products and information. Digital interactions with other players in the ecosystem are becoming API driven, thereby affecting client experience and potentially opening new avenues for monetization.
At the same time, data and analytics are shifting from predictive insight generation to enrichment of product and services delivery. However, the availability of personalized data is forcing the rethinking of traditional security and privacy policies, such as authentication, access or personalization. Lastly, internal processes are becoming digitized to improve client experience and drive down expenses. All of these changes have significant ramifications for operations.
In this new climate, board members concerned about their firm’s future viability must ask who in the organization is responsible for setting the direction, ensuring the right investments and, most importantly, executing on the above changes. The CIO inevitably rises as a natural player where these capabilities coalesce. Two questions then arise: are boards prepared to ask the right questions of management, and in particular the CIO? And are CIOs prepared to take on this broader responsibility?
What questions should the board ask the CIO?
Boards need to interrogate the CIO position and the rest of the management team in five key areas. Whether these discussions happen within a technology committee or as part of other committees is not as relevant as whether they happen at all.
1. Strategic Business Alignment. How well does the CIO’s strategy align with business strategy? There are several ways in which the board can test this alignment. Does the CIO demonstrate a deep understanding of client experience? How aligned is the CIO’s scorecard to the business scorecard? Are Business and IT teams integrated from strategy through operation? Is the CIO an active participant in setting Business strategy? Are technology assets viewed as monetization opportunities? Does the strategy effectively address the changing digital ecosystem?
2. Investments and Effectiveness. Does investment in IT deliver the desired value and true business outcomes? This is usually harder to measure, but there are some key questions that can indicate success or failure. How well do the technology platforms and architecture facilitate end-to-end processes? What percentage of IT investments are focused on new initiatives, as opposed to maintaining current processes? Are systems built to enable future business direction? Is the organization effective in attaining the benefits of its investments? Does the business understand their IT cost allocations?
3. Agility & Efficiency. How agile is IT in deploying new capabilities and managing operational efficiency? How rapidly are new capabilities deployed? Do the right teams, processes, and platforms exist to enable agility? Does the CIO understand the technology component of process expenses? What is the balance between structural, or fixed, costs and variable costs? Cost is an important part of every IT team, and being able to explain and justify expenses helps show which leaders stand apart in their field.
4. Partnerships. Are partnerships leveraged appropriately? Does the CIO engage only with traditional technology players? What role do partnerships play in developing new business? How does the CIO keep current in this changing world of new entrants and changing partner capabilities? As technology leaders, CIOs need to be able to explain the business value and importance of new developments in their field.
5. Security & Risk. Are we keeping our most important knowledge and processes protected? Do we know what our weaknesses are? Are critical processes available when needed? What is the strategy with regards to aging platforms? By asking questions like these, boards can ensure that their information security processes and systems are prepared for attacks.
Where does this leave us?
In the last decade, many leaders have discussed how the role of the CIO will grow into more of a business partner and enabler of financial success. The changing digital landscape has raised expectations and responsibilities even further. The current environment presents an opportunity for CIOs to contribute to meaningful business change.
If the CIO does not step up, others may supplant his or her role. It is my belief that companies will not benefit by fragmenting the CIO role into multiple positions. Doing so will only lead to role clarity issues and make governance more complex. By asking these questions of the CIO, the board not only plays a part in overseeing critical strategic and operational concerns, but also plays a part in raising the expectations of, and thereby, the performance of the CIO.
