Are CIOs "dead weight"?
March 23, 2007
In my commentary on the latest Financial Times Digital Business podcast, I look at Chris Anderson's charge that chief information officers are turning into "dead weight." In case you missed it, Anderson had a provocative post on his blog late last month titled "Who Needs a CIO?" He'd given a speech at a CIO Magazine conference and came away from the event disillusioned:
You might have expected, as I had, that most Chief Information Officers wanted to know about the latest trends in technology so they could keep ahead of the curve. Nothing of the sort. CIOs, it turns out, are mostly business people who have been given the thankless job of keeping the lights on, IT wise. And the best way to ensure that they stay on is to change as little as possible. That puts many CIOs in the position of not being the technology innovator in their company, but rather the dead weight keeping the real technology innovators - employees who want to use the tools increasingly available on the wide-open Web to help them do their jobs better - from taking matters into their own hands.
... many CIOs are now just one step above Building Maintenance. They have the unpleasant job of mopping up data spills when they happen, along with enforcing draconian data retention policies sent down from the legal department. They respond to trouble tickets and disable user permissions. They practice saying "No", not "What if..."
Christopher Koch, the executive editor of CIO Magazine, took umbrage at Anderson's missile-like missive. On his own blog, he wrote:
Wow, did Chris Anderson, editor of Wired magazine, get some bad shrimp at the buffet when he spoke at our CIO conference a few months ago? [Anderson's] premise for this post - that CIOs are business people exiled to the wasteland of IT - is completely without basis. Of the more than 500 CIOs we survey every year for our State of the CIO Survey, 80 percent have a technology background, not a business background - and that number has remained consistent since we started doing the survey in 2002. If there is a problem for CIOs these days, it is that their technology background gives business people the perception that CIOs are incapable of coming up with ways that IT can benefit the business ... I would also argue that part of IT's resistance to Web 2.0 can be traced to the fact that it isn't really Web 2.0 at all. It's Web 1.1. There are no FUNDAMENTALLY new ways of connecting people or exchanging value here, which makes a lot of it seem redundant to a CIO charged with maintaining application integrity, security and network performance.
There are a couple of different skirmishes going on here - over the identity of CIOs as well as over the value of new Web technologies - but, as I note in the FT commentary (pardon the self-quote), "what’s most interesting is that, once you peel back their rhetorical differences, you find that [Anderson and Koch] are largely in agreement. They both believe that most CIOs serve mainly a control function rather than one of innovation." That's a big change from the prevailing view about the direction of the CIO job at the dawn of this decade, when it was commonly assumed that the IT department would become the locus of not just IT innovation but business innovation in general.
But is "keeping the lights on" really so bad? One actual CIO, in a comment on Koch's post, rose to the defense of the control role:
Keeping the lights on is important. Every morning, 1,500 people log in to our network and they expect their apps to work. Making sure their data is protected and that they have access to it 99.999% of the time is mission-critical to us ... Our job is to find ways to use technology to advance the goals of the enterprise, not to find excuses to implement things because they're new, cool, or will look good on our resumes.
It's a fair point - running a tight IT ship is no easy accomplishment, particularly in a large organization - but I have no doubt that it's not the last word in the seemingly endless debate about the role of the CIO. Of all "C-level" positions, the CIO post remains the least well defined and the most prone to identity crises. That's probably a reflection of a deeper tension - the tension between the myth of business IT and the somewhat more pedestrian reality.
posted soemthing similar on Chris' post too last week
It is open season on the CIO. But check out any large corporation's IT budget and 80% is spent on external vendors - sw, hw, services and telecomms - and only 20% on CIO and IT staff. And that 80% is stubbbornly difficult to bring down. And the savings that do come out of this has been increasingly forced into compliance/risk mgt spend especially in companies where the CIO reports to the CFO.
And for the few pennies left for innovation spend they have web 2.0, telemetry, mobility, virtualizaion, and a bunch of other new stuff competing for the CIOs attention.
Unfortunately, a number of web 2.0 entrepreneurs do not want to face up to the reality above and just want to blame CIOs and dream of just going straight to the business users for money. Good luck finding business users who fight the CFO and tell him/her compliance is for the birds
Most CIOs are not fat or lazy - they have little room to maneuver. You want CIOs to implement all the cool new stuff coming out of the Valley - pick on the real culprit. Go after the lack of innovation in the 80% that is spent on major incumbent vendors. Free up dollars from there.
And then have web 2.0 stuff show better payback than a mobile app or telemetry app or a data center consolidation project.
The game has not changed. There are hurdles for funding - have been, continue to be. Show a high payback and even the laziest CIO will want it...
Posted by: vinnie mirchandani at March 22, 2007 11:44 PM
Vinnie makes good points. We have to find a way to engage CIO's in web 2.0 & enterprise 2.0 implementations even when the applications originate outside the IT department. We have to fight the common view that "the IT department is a barrier." The downside of a lack of IT involvement, as sure as God made little green apples, is trouble down the road in terms of incompatibility, security, and reliability issues caused by multiple versions of something being implemented.
The flip side is that the IT department has to be open to and welcome participation in the planning and adoption process. We know that implementing systems like blogs, wikis, and bookmark sharing involve just as much social as technical processes. Both IT and executive management need to understand that. For example, if management views corporate blogging as primarily a technical application and its implementation gets stacked into all the other "technical problems" IT has to handle -- like making sure the "lights are on" -- the adoption process suffers.
Posted by: Dennis D. McDonald at March 23, 2007 07:41 AM
"not being the technology innovator in their company, but rather the dead weight keeping the real technology innovators - employees who want to use the tools increasingly available on the wide-open Web to help them do their jobs better - from taking matters into their own hands"
BTDT. Years ago, I had the job title of Information Centre Consultant (or somesuch); my job was to support PC users, identify software requirements and develop small bespoke systems (you could do that sort of thing in those days). Once we came across an accountant who was supporting his local PC users, identifying their software requirements and developing small bespoke systems for them; we only found him when he started ordering new PCs out of his department's budget. At this point my job was to stop him. I also had to take over support for the stuff he'd written, and then take over the development projects he'd started, but the first priority was to stop him.
I've never regretted it for a second. Whether it's an accounts system running on Paradox or a bunch of downloads from the "wide-open Web", technology needs support; there are people whose job it is to do that, and they're not Anderson's "real technology innovators". The real technology innovators are a menace.
Posted by: Phil at March 23, 2007 11:12 AM
The web 2.0 jihadists operate on the false premise that the objective good of these technologies is self-evident. In fact, it's far from clear whether they add any value to a corporate computing environment or are just newfangled time wasters.
Like global warming alarmists, they don't want to have a real debate on the subject; rather, anyone who disagrees with them is simply dismissed as insane, "dead weight" or (the ultimate net put-down) "not getting it".
The point that Nick makes about both Anderson and Koch believe that the CIO function is about control rather than innovation is the key one. We separated R&D from production decades ago. New product development separated from mainstream Marketing. But we believe the CIO should manage service delivery, compliance and a complete set of operational tasks - but also get creative and innovative. When did you last see a Creative Director on sales calls?
At the end of the day, neither role is a c-level role. I believe that the c-level discussion is likely to last until managers in other functions get around to learning more about technology - the way they do finance or marketing.
Reinvigoration, not Requiems for the CIO
The CIO isn’t dead weight, although the appeal of the position is certainly circling the drain when you consider the burdens placed on the position by the failures of client-server.
Gartner reports that an astonishing 80% of the CIO’s budget is “dead money” committed to thankless maintenance tasks. That’s not just a cost center—it’s a budget black hole that from which the light of imagination cannot escape.
And yet, the CIOs I’ve been talking to are anything but organizational dead weight. They’ve got great ideas and smart people working for them. The problem is that all they spend too much time carrying a bucket and a mop for Microsoft, Oracle, and SAP. And, significantly, not enough time working on that long list of applications that they would like to deploy.
So what’s the answer? How can you break the innovation bottleneck that is crippling the enterprise?
What if you could deploy new apps without having to buy more hardware and software? What if you could develop and deploy custom apps that differentiated your enterprise from its competitors?
Apex, our platform, and AppExchange, our directory of on-demand applications were designed to make the CIO a hero again. Now the CIO can say “yes” to new applications— more than 500 on the AppExchange-- without having to face burdens of additional hardware and software. And because we’ve redefined the potential of on-demand with Apex, our programming language, innovative CIOs can quickly develop their own applications that run on our infrastructure, without the constraints of typical software development.
And fortunately, it’s not just our technology that is making this shift happen. Our friends at Google have delivered terrific on-demand versions of desktop apps like word processing and spreadsheets. There are more all the time from entrepreneurs. Best of all, open Web-based APIs mean that these apps can be integrated and mashed up. No application will be untouched by this trend.
There was a time when software-as-a-service was considered an end-run around the CIO. It subverted her control, critics said; it made him irrelevant, they charged. Now IT organizations are realizing that software-as-a-service platforms give them all the control, power and integration flexibility of traditional on-premise platforms but without any of the infrastructure, performance tuning, backup or upgrade nightmares. It’s not just “freedom from…” but “freedom to…”
The on-demand revolution has created an opportunity for the CIO to reassert his or her role as a creator of value, an agent of positive change.
Death to the CIO? That’s been the slow trend of the past twenty-five years, thanks to the slow capital punishment of client server software Here’s to the new CIO, the Chief Innovation Officer.
You have the uncanny skill of taking something many of us have read before, adding a couple of pithy comments and the rest of us scurry round linking away.
Replace the term CIO with HR Director and you have the same debate that was kicked of 10 years ago by Tom Stewart. (what is it with you HBR editors?)
My ramblings here.
Posted by: Thomas Otter at March 28, 2007 09:56 AM
Nick, you have misrepresented my comments about the CIO and innovation. You write, "What’s most interesting is that, once you peel back their rhetorical differences, you find that [Anderson and Koch] are largely in agreement. They both believe that most CIOs serve mainly a control function rather than one of innovation."
That is completely untrue.
Control is only part of CIOs' role. There are many, many examples of innovative CIOs and innovative IT departments. But I guess I have a higher bar for innovation than you and Chris. Innovation in IT is something that creates a new business capability that didn't exist before, or so extends a current capability that it may as well be new. Beginning with Sabre in the 1970s, and P&G's automated replenishment system, and Wal-Mart's IT-based supply chain control system in the 80s and 90s, to Fedex's web-based package tracking system, corporate IT has played a leading role in creating innovative business capabilities.
And with the emergence of technology standards for integration and communication over the web, we are entering an era when IT innovation no longer requires huge investment--and risk--to make an impact on the business. CIOs are now able to create unique applications that make a difference much more quickly and cheaply than in the past. These small innovations add up, but more importantly, they can change more quickly, giving CIOs something they've never known with traditional applications and infrastructures: a measure of agility. You can see this progression especially in financial services and telecom, where web services and Service Oriented Architectures have begun to take hold.
But this is almost beside the point. CIOs aren't directly responsible for innovation any more than CEOs are. I can think of many creative business entrepreneurs who built great companies with a great idea, but CEOs who are hired in to manage those companies are supposed to be stewards of innovation--not to supply every good idea the company has. Their job--though it certainly isn't their entire job--is to allow the innovative ideas inside the company to get management attention and development money. CEOs have immense freedom to allow that to happen. They have R&D groups (and the more CEOs spend on them, the happier Wall Street is), product marketing groups and expensive outside consultants who are supposed to supply those ideas. Talented CEOs know how to spot the good ideas and create cover for them while they are developed.
CIOs are like CEOs who are brought in to manage what is, in essence, someone else's company. But that's where the similarities end.
First, let's look at freedom and flexibility. CIOs don't have either today. Our State of the CIO data shows that 24 percent of CIOs report to CFOs. What this means is that in 24 percent of companies today, IT is viewed as a cost to be contained. It is difficult, if not impossible, for CIOs to offer management cover and financial support for risky ideas when they report to a function whose purpose is to reduce cost and risk.
But even in the companies where CIOs report to the CEO--41 percent--the CIOs' hands are tied. In most companies today, existing systems and their maintenance swallow up anywhere from 80-95 percent of the typical IT budget and a good deal of the management attention of CIOs and their staffs. That doesn't leave a lot of room for innovation. If CIOs have the capability to create forward-looking R&D groups within IT or consulting groups to help businesses innovate with IT, the resources are going to be a sliver of what they should be to create real progress inside a large company. And those costs inevitably will be subsumed within an IT budget that is viewed by Wall Street as a liability rather than an asset.
Even if IT has good ideas, it's difficult to carry them out on top of a jumble of 30-year-old mainframe systems whose designers never imagined the PC or the internet, let alone ways to connect to them. The technologies for connecting systems together into something that can be changed in anything approaching a timely and agile way have only been available since the 90s and are still crude. It's hard to design a new car when your engineers spend 80-95 percent of their time battling to keep the current model starting reliably.
When communication and integration improve more broadly, the cost of IT innovation will go way down and the speed will increase. Indeed, half of innovation is speed and agility. The proof of this is in young companies that have had the luxury of designing their systems infrastructures with the web in mind. Companies like Google and Yahoo have tried to design their infrastructures to be cheap, flexible palettes for creating innovative new IT-based capabilities. They can quickly create new IT-based products and let them fly or fail without presenting a huge risk or cost to the company. Try saddling these companies with dozens of 30-year-old mainframes glommed together from six different company mergers and I'd bet that the rate of innovation would decrease significantly and the cost and risks would go way up, dulling their appetite for experimenting with new and risky IT capabilities.
As long as we persist in the naïve assumption that CIOs should be able to use 10-20 percent of their budgets to create a constant stream of breakthrough innovation on top of a creaky infrastructure that consumes nearly all of their management time and staff's attention, we will not have significant progress. It's like saying the company's investment in existing factories should be subsumed within the R&D budget.
Now let's look at the ownership of innovation. Few business people today have grown up thinking that IT has anything substantive to add to business innovation. The predominant view, even in companies that claim IT to be "strategic," is that the business owns innovation, not IT: "You guys run the systems; we'll come up with the ideas and we'll let you know when we need something to support it." I know plenty of brilliant IT people who have gone back to get their MBAs and would love to work on business innovation--if only they were allowed into the conversation. All the good CIOs I've met would be willing to be part of that conversation, but I know plenty who have been actively prevented from taking part in it. It's a primitive reaction--the cognitive bias that affects us all. IT fails a lot; therefore IT will simply ruin our ideas if we let them into the process. CIOs are put in the role of order takers whether they like it or not.
Don't misinterpret all this as an apology for CIOs. This is about negligent business management that stubbornly clings to a structure and philosophy about IT's role in business that was created in the '60s--when a single mainframe did payroll and IT's job really was one of maintenance and support. It's time for CEOs and business management to acknowledge that just as their businesses are now completely reliant upon IT, they are more reliant on the geeks to help them innovate. And the geeks need to worry less about development languages and start worrying more about the business. But until we untie the CIOs' hands, we won't be able to objectively judge their ability to steward real innovation.
Thanks for your comment, and I apologize if I misstated your position. I was going by the following passage in your post:
If there is a problem for CIOs these days, it is that their technology background gives business people the perception that CIOs are incapable of coming up with ways that IT can benefit the business. I could give you some examples of CIOs who have grown out of that perception, but the general perception is real.
Ironically, in the organizations where the CIO has risen to strategic prominence, it has less to do with the CIO than with business's perception of IT. Business people and CEOs who bother to learn about technology and its potential tend to elevate their CIOs to a strategic role. They understand that CIOs aren't there to keep the network running, in my research.
I read that as saying that the companies in which the CIO's main role is business innovation rather than "keeping the network running" remain a minority (if, in your view, an enlightened minority) - hence "most CIOs serve mainly a control function rather than one of innovation."
Isn't that also the thrust of your comment:
But even in the companies where CIOs report to the CEO--41 percent--the CIOs' hands are tied. In most companies today, existing systems and their maintenance swallow up anywhere from 80-95 percent of the typical IT budget and a good deal of the management attention of CIOs and their staffs. That doesn't leave a lot of room for innovation.
That still sounds to me like you're saying that today ""most CIOs serve mainly a control function rather than one of innovation." (Whether that's the right function for CIOs or not is, of course, a different matter - as you eloquently lay out.)
It's worth saying, as well, that serving mainly a control function doesn't mean that there's no innovativeness at work. A CFO, for instance, can be creative even in carrying out what is largely a control function. And so can a CIO.
I am following this thread with interest. But it seems to me that the discussion gets confused between the role of the CIO and the position of the CIO.
The role of the CIO has continued to change over the last 40 years and will continue to change. Certainly the primary activities 20 or 30 years ago are vastly different than today. And they continue to morph today.
The position of the CIO is highly variable based upon the person selected to fill this job, the person who hired them (and their expectations) and the stage of maturity the enterprise in regard to the use of technology, the interaction with stakeholders and many other things.
Many of the issue above are about the position of the CIO. Many of the weaknesses of the position discussed seem to deal with the participants and/or the organizations. Business participation, innovation and creative deployment of technology say as much about the organization and the people running it as it does about the CIO position. If the primary goal is to "keep the lights on," don't expect much in terms of new innovative business perspective. On the other hand, if business metrics and creative application of technology metrics are the measure for the CIO, expect a great deal.
In this latter case, the limitations in skills of the CIO are the delimiter and this could be the basis for another discussion.
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