Volume 4, Number 25 -- June 27, 2007

The CIO Is the Hammer, and Everything IT Vendors See Are Nails

Published: June 27, 2007

by Timothy Prickett Morgan

When you are the formerly largest supplier of IT products in the world--and definitely the dominant data center player if you don't count Hewlett-Packard's printer business as IT--as IBM is, you have to use your access to the boardroom as well as to the data center to your advantage. And that means doing lots of surveys and studies to try to prove that IBM knows a thing or two about business and how chief executive officers, chief financial officers, and chief information officers should work together to make their businesses run better and deliver more revenues and profits.

Apropos of nothing last week--excepting that we are heading into the final weeks of the second quarter and looking at the summer doldrums where IT news is a little sparse--IBM announced the results of a number of studies that its internal consultants put together last fall to help CEOs and CIOs get along.

The CIO Leadership Forum Study polled 170 CIOs from "leading companies around the world"--which means a lot of IBM's largest customers, no doubt--and a companion survey called the Global CEO Study polled 750 CEOs.

As has been the case since the term "CIO" became vogue in the late 1980s, many CIOs feel that the title has changed, but there is very little that could be called "chief" about their role. About 34 percent of the CIOs polled in the first study cited above said they did not have a formal role in their executive management committee, and 31 percent said that the biggest barrier to their ability to contribute to their company's top and bottom line is a misunderstanding of exactly what the CIO's role is. Ironically, CIOs want to be ranked according to business transformation metrics, innovation, and revenue growth, and less by how well or poorly their IT operations run. CIOs want to participate in their company's overall strategy, but too many still feel that their role is merely to implement that strategy after it has been decided upon in the board room.

It comes as no surprise at all that 84 percent of CIOs said that they believe that technology is transforming their industries and that the correct deployment of technologies could give their companies a competitive edge; it is also perfectly predictable that only 16 percent of those CIOs surveyed by IBM thought that they were using IT to its full potential.

According to the latter study of CEOs, 80 percent of the CEOs surveyed said that they thought integrating business and technology were "of great importance" but that only 45 percent felt that business operations and technology operations "were integrated to a large extent in the enterprise." By IBM's own analysis of the companies polled, those companies that did "extensive" integration of business and technology operations were three times as often to have revenue increases than their peers who presumably saw flat or declining revenues.

These two IBM studies--and similar ones that come out all of the time from Gartner, IDC, Forrester, and what sometimes seems like a zillion other consultancies--seem to be predicated on the idea that CEOs do not understand information technology and that CIOs, with their binocular vision of both business operations and technology operations, should be in a more exalted position in the corporate hierarchy than they currently have, even after two decades of pushing to get a seat at the big oak table and a key to the executive washroom.

For one thing, not every issue at a business is about technology. New business ideas start first in a mind, move on to many meetings, and then progress to systems, then onto the field. Automating a stupid business idea well is still a stupid idea, probably bound to fail at best and making huge losses at worst. While people are always talking about how most IT projects fail, we very rarely get a sense if IT projects sometimes fail because what a company was trying to do was idiotic in the first place--and thank heavens the IT project failed when it did before even more money was sunk into these bad ideas. (That is not to say that the failure of IT projects did not make companies miss opportunities--that certainly happens, and probably happens a lot, too.)

The real problem seems to be that all IT vendors want us to nod our heads to the idea that the CIO is really the CEO in a modern, technology-supported economy. Notice how I did not say technology driven? Technology does not drive a business--a good idea that results in a salable product that is brought to market at a competitive price is what drives a business. Competitors with better ideas, better products, or cheaper prices are what drive you out of business. IT can be part of the success or the failure, and in some cases, central to the product. No question about it. But IT is not the be-all, end-all. People count, too.

Technology is an enabler, and just like CEOs tinker with business plans, potential markets, mergers and acquisitions and all sorts of things that sometimes work to grow the business and sometimes fail miserably, CIOs tinker with different technologies to deliver information to executives, employees, partners, and customers in support of business operations, and sometimes those technologies are bad ideas to begin with, or are good ideas that get poorly implemented, and sometimes the information or the business units that information was intended to support fail, are sold off, or are unaffected in either a positive of negative way by the changes. Sometimes, you can't get a new business line off the ground, and sometimes that has nothing to do with the ineptness of the IT department or the fact that the CIO sits closer to the data center than to the boardroom.

It is, of course, utterly ridiculous given the heavily computerized nature of modern businesses that the CIO is not a direct report to the CEO at companies, much as other chiefs who count money, watch over legal issues, handle marketing or sales, and other functions usually are. If CIOs have a right to feel snubbed, this is why. But to say that the CIO should sit above these other chiefs, or even side by side with the CEO, is silly. There can only be one executive in charge, and that is the CEO. (Until the CEO screws up and is ousted by the chairman of the board, of course.) If a CEO doesn't have enough sense to use the CIO to leverage IT correctly, then he or she should be fired just as certainly and as surely as would be the case if he or she broke accounting rules or other laws. Negligence is negligence.

But to suggest that CIOs have a greater role than building and maintaining the information infrastructure, cutting costs as much as possible to boost profits, and making it as flexible as possible to chase new business is nonsense. And it is exactly the position that you would expect the major IT vendors and consultancies, who charge lots for the products and services, to take. They want to increase the IT spend at companies, and no one wants to spend more on IT than a CIO who has been empowered to do so. The CIO is the engineer, not the captain, of the good ship Enterprise. And being the engineer is a difficult enough job without making it even more tough.

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Editor: Alex Woodie
Contributing Editors: Dan Burger, Joe Hertvik,
Shannon O'Donnell, Timothy Prickett Morgan
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