What does a Chief Information Officer do, anyway? Most of the descriptions I’ve heard make them sound like a glorified purchaser. “They make sure our systems are up to date.” Mega-yawn. CIOs fill a very important role, it’s just no one knows what. Well, today’s podcast will outline the four things you want from your CIO (and probably don’t get).
CIOs have popped up everywhere in the last 15 years. But what does a CIO do? Here’s my take. First, CIOs say “No” to advances in technology. Techies love toys. They do. It’s how they’re wired. They’ll want the latest and greatest, believing New means Better. The Chief Information Officer’s job is to push back. New technology doesn’t necessarily make things easier or cheaper; sometimes new technology doesn’t even work. The CIO must insure new technology will really make things things more efficient.
Bay Banks in Boston used Windows 3.1 all the way into the late 90s—years after Windows 95 and 98 arrived. Why? Because there was no business reason to upgrade. Everything worked on Windows 3.1. By the late 90s, their IT expense was a third the industry average! They just didn’t spend on new technology without a business case. When it made business sense, however, they would upgrade in an instant.
The CIO also insures financial responsibility. Just because something saves money doesn’t mean you buy a new one each year. Imagine a car with greater gas than your current car. If you bought that new car for an extra $5,000.00, you must drive it enough so you actually get the $5,000.00 savings. If you replace it yearly, you never get enough savings to justify the purchase.
The CIO must keep tech purchases making business sense:
- There must be a business case for purchases.
- The technology must be around long enough to realize the savings.
The second CIO responsibility is linking technology to internal strategy. Some businesses compete because they’re good at executing. Fedex and Wal-Mart are great at logistics. They move stuff around quickly, efficiently and accurately. Technology helps track the logistics. That’s an internal capability that technology improves. A CIO scans the tech trends to find ways technology can improve internal operations. They are looking mainly for strategic efficiencies; they aren’t looking for tech solutions to everything. They are helping develop new capabilities that translate into business success.
The CIO’s third responsibility is linking technology to external offerings and strategy. Some technology lets you offer a new product or service. When the web arrived, companies could easily let customers order over the web. The CIO should be looking out for ways technology can create new offerings for or new ways of reaching customers. For instance, The Limited lets customers try out clothes in different combinations and colors before they order. Their information folks saw what the technology could do and said, “we can use that to give our customers a better experience.”
The fourth CIO responsibility is forecasting how technology will competition. This is hard, and it’s the most valuable thing a CIO can do. For example, the web made people think, “Traditional bookstores are a dying breed.” If you were a bookstore whose CIO saw it coming, you could adapt to compete on something other than price. My local bookstore doesn’t sell books. Well, they do sell books, but they really sell community. With book readings, discussion groups, recommendations, and a little cafe, it’s more like a neighborhood salon than a bookstore. They realized technology changes the book business, but they can attract customers with community. Books are just their excuse for bringing in cash.
Or consider music companies, fighting desperately for Digital Rights laws that help them avoid facing reality: they think their value is making and distributing music. But technology has made that a commodity. Like the buggy whip makers, it’s time for music companies to adapt or die. Producing and printing CD doesn’t add value any more. A strategic music company CIO would have spotted the trend and had music companies shifting their strategy long ago. They still add significant value.(1), just not in their traditional areas. A CIO should have kick-started the search years ago.
So to recap, a CIO has four duties:
- Saying No to technology that doesn’t have a business rationale.
- Linking technology to internal strategic capabilities.
- Linking technology to external strategic products and services.
- Forecasting how technology will change competition, and adapting the business so it continues to thrive.
I hope you found this useful and I would welcome the feedback and opinions on what you think a Chief Information Officer should do.
(1) Did I mention I’m available as a consultant? 🙂