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The CIO role, from IT operator to business strategist

The CIO position has changed dramatically since its inception 40 years ago. This in-depth review traces the job's evolution and explains what is required of the CIO role today.

The modern role of the CIO has evolved greatly as technology and digital data have become ubiquitous and vital to business success. Ever since its beginnings nearly 40 years ago, the CIO's job has required strategic management of an enterprise's IT systems. But, today, the role also requires CIOs to understand how IT drives business outcomes and creates business value.

No longer just the overseers of IT, CIOs now must be key business strategists, working with their C-level peers to create the digital business models necessary for survival in the 21st century digital economy. Successful CIOs possess the personal skills essential for driving large-scale change like digital transformation. And they have the technical expertise to decide which of the avalanche of emerging technologies will give their enterprises a competitive edge. "CIOs nowadays need to be business leaders," is how Suzanne Adnams, a Gartner analyst, summed up the CIO role today.

The evolution of the CIO job from technology expert to business strategist has arguably been more dramatic than any other C-level role transition. Traditionally, CIOs came to their positions by being very good at technology. By the 1990s, IT's top leaders had transitioned from being data-processing experts in the 1960s to executive-level arbiters of a company's hardware, software and data management. Despite burgeoning IT budgets, a C-level title and oversight of companywide systems, late 20th century CIOs were still largely IT operators, rather than business executives. Their IT organizations of highly trained experts were perceived as order takers of the business, not as the innovators.

Who coined the term 'CIO'?

The term chief information officer (CIO) was coined by organizational theorists William Synnott and William Gruber in their 1981 book, Information Resource Management: Opportunities and Strategies for the 1980s.

The role was conceived as a top management position. Just as the CFO's purview was finance, the CIO was envisioned as the corporate-wide information technology strategist. Gruber and Synnott, then a senior vice president at the Bank of Boston, believed the strategic management of information processing would give the bank a significant competitive advantage.

The success of the CIO role depended on the "fusion" of business users who appreciated the capabilities of technology and technologists who understood business, they stressed. The holy grail of IT and business alignment, however, has proved difficult to achieve at many companies, where differences between business leaders and IT experts -- in language, culture, objectives and professional skills -- hinders efforts to form strategic partnerships.

It was not until the first decade of the new millennium -- with the rise of social media, smartphones, the world's largest search engine and the world's largest e-commerce company -- that companies fully grasped how integral IT was to business innovation and strategy. In the new millennium, technology was no longer the exclusive province of IT experts or an add-on for business functions -- it was everywhere, it was a normal part of everyday experience and it was changing how business got done. This consumerization of IT marked the turning point for CIOs from overseers of centralized computing to overseers of an enterprise's digital business strategy.

Changing role of the CIO: A review of the decades

CIO Isaac Sacolick, author of Driving Digital: The Leader's Guide to Business Transformation Through Technology, was a firsthand witness to the shift in the CIO role to business strategist. When he started out as a young CTO in the 1990s, the CIOs he knew were operators -- by necessity. "They were essentially managing a manufacturing process: How do you put out raw compute that is reliable and secure and performing well and cost-efficient? Those were hard problems to solve," said Sacolick, president and CIO of StarCIO. When the web came out, there was a new set of problems to solve. Today, he noted, IT operational excellence is necessary but not sufficient for CIOs. "If you look at the CIO role today, it is all around relationships, culture, application development and innovation."

To understand the extent of the transformation of the CIO role, it helps to review IT's top job at some of its major inflection points.

Major inflection points in IT's top role from the mainframe era to the present.

1950s through 1970s: The mainframe era
In the mainframe era, IT's top professionals were the specialized programmers, systems operators and analysts hired to operate the massive machines that gave the era its name. Also known as big iron, mainframes are the expensive, complex computers that debuted in the late 1950s and were used primarily by large companies for high-speed calculations and data crunching. Working in customized, cooled rooms, garbed in white lab coats, IT experts were as remote from the day-to-day business as the powerful machines they operated. Data processing was centralized and done on IT's timetable. The business reports these technology systems of record generated included the monthly payroll, inventory, sales and other back-office transactional data.

1970s through mid-1990s: Distributed computing era
The heyday of the mainframe was followed by what's known as the distributed computing era. While mainframe use continued, the period from the 1970s to the 1990s marked the use of minicomputers and the advent of personal computers (PCs). Enterprise computing was no longer just for large-scale clerical processing but for gathering and analyzing data to inform business decisions. Data was not just the province of the few but currency for the many, as the adoption of PCs put powerful technology in the hands of employees.

This decentralization of information systems gave rise to IT managers throughout the enterprise -- including businesspeople with IT expertise. At the same time, decentralization highlighted the need for an executive-level technology leader to oversee a function that now touched every part of the enterprise, directly affected how businesses made money and increasingly dictated how employees worked. The term CIO came into use in 1981. (See "Who coined the term CIO?")

1990s through 2000s: Web and e-business arrive
CIOs in this period remained responsible for delivering new IT systems on time and on budget and for running existing and new systems with a high degree of reliability. The technical challenges CIOs faced did not abate. The 1990s marked the adoption of the modern enterprise resource management (ERP) software suites that collected and managed data produced at different levels of the business. These were costly, complex systems that often required significant business process reengineering. At large companies, there were data centers to build, networks to protect and critical business applications to maintain.

Even as CIO responsibilities expanded, IT continued to be viewed as an expense center rather than an investment in business success. (The idea of IT as an innovation hub was far off.) As a result, CIOs were continually pressured to cut costs, to strive to do more with less.

One trend that helped turn around the perception of IT as purely a cost center was the adoption of IT chargeback, an accounting strategy that applies the costs of IT services, hardware and software to the business unit in which they are used. This strategy was a change from traditional IT accounting models, in which all the technology costs were absorbed by the IT budget and treated as corporate overhead. With the chargeback approach, business units could see the implications of the IT decisions they were making.

Another development that changed the role of the CIO and IT was the advent of e-business, the conducting of business processes online, and e-commerce, the buying and selling of goods and services on the web. This opened the door for some CIOs and their IT departments to become more deeply involved in business strategy.

2005 through present: Cloud rises, digital transformation era begins
The immensely successful 2007 debut of the iPhone (followed by other consumer-oriented mobile devices) presaged another watershed moment for enterprise IT and the CIO role. These smart devices ushered in the expectation of anytime, anyplace computing and the irreversible breakdown between work and personal computing.

But the trend that radically redefined the CIO role was the rise of cloud computing providers between 2005 and 2015. Cloud computing companies provided software, infrastructure and platforms as a service to other companies. The use of cloud shifted IT investment from a capital to an operating expense, it dramatically cut the time to provision services to business users, and it forced CIOs to deal with a new class of vendors. It also allowed them more time to focus on strategy.

CIOs are emerging as the leaders of digital transformation.

The rise of cloud providers effected another big change for enterprise IT: Cloud providers allowed business leaders, and even employees, to easily procure powerful technology without consulting IT and the CIO. The potential security risks and integration problems posed by unauthorized, ad hoc technology decisions highlighted another skill required of effective CIOs: Building trusted relationships with the C-suite, line-of-business leaders and even boards of directors became a vital part of the CIO job. (See image, "Qualities of a high-performing CIO.") As Gartner's Adnams described it, CIOs needed to act as "an adviser and consultant to the business, as opposed to the IT technology expert."

Between 2010 and 2015, digital transformation -- a term that has been widely dismissed as a buzzword and remains difficult to define -- started rising up the CIO agenda, marking yet another inflection point in the role.

CIO role in driving digital transformation today

Broadly speaking, digital transformation involves the integration of current technologies into an organization's products, processes, partnerships and strategies. It is what companies must do to compete in an environment where the way people work, play and live is increasingly mediated through digital technologies. These technologies include the now widely adopted stalwarts of digital transformation -- cloud, mobile, social media and analytics -- but also a torrent of emerging technologies, including artificial intelligence, IoT, robotics process automation and the so-called immersive technologies: augmented and virtual reality.

Digital transformation projects at companies with traditional business models and large investments in legacy technology are typically complex, large-scale, multiyear, arduous and therefore prone to failure. At many companies, the project requires converting wholesale from an analog to a digital business model, and businesses have little choice but to adapt. As digital technologies continue to blur the distinction between the physical and virtual world, finding a way to generate digital revenue is critical to survival.

According to researchers from the MIT Sloan School of Management, companies that have successfully navigated the paradigm change from traditional to digitally effective businesses tend to do so along two dimensions: operational efficiency and customer experience. Digitally transformed companies are thus low-cost and innovative.

The CIO role in digital transformation depends on the following factors:

  • the types of companies they work for;
  • where their companies are in terms of operational efficiency and digital customer experience;
  • the extent to which their companies are under threat by digital competitors; and
  • how receptive the leadership is to undertaking the digital transformation journey.

A 2018 Deloitte global study on CIOs found that less than 10% of CIOs report getting the company support they feel they need to lead digital transformation. However, research from Gartner found that CEOs and boards of directors increasingly favor CIOs to lead digital transformation over other technology or business executives. (See "How does the CIO role differ from other technology roles in the C-suite?")

Qualities of high-performing CIOs

As the CIO role has evolved, the leadership qualities it takes to do the job well have changed too. Practically since the CIO role's inception, all high-performing CIOs needed to be able to inspire and lead their IT organizations. Adept CIOs also understood how their IT mission and strategic plans supported the business's mission and strategic goals -- and they made those connections for both their staff and for their C-suite peers. The truly outstanding CIOs have used IT to fundamentally change the businesses they worked for, as explained in a study of "renaissance CIOs" by Berkeley researchers James Spitze and Judith Lee.

The CIO role today requires a combination of superb verbal and people skills plus business savvy. A high-performing CIO is a technology evangelist, who focuses on the why of technology, not the nuts and bolts of IT implementation.

The chart below outlines the key skills and capabilities CIOs must possess in order to set a vision, build relationships and implement their goals.

Qualities that all great CIOs possess

How does the CIO role differ from other technology roles in the C-suite?

As IT has become increasingly important to business success, the number of tech-related titles in the C-suite keeps expanding. They include but are not limited to the following: chief digital officer, chief data officer, chief privacy officer, chief marketing technology officer, chief AI officer and chief experience officer (aka chief user experience officer).

There are key differences -- but confusing similarities as well -- between the role of the modern CIO and these new IT-related executive titles. Making matters more complicated, traditional IT roles like CTO and CISO are also evolving, as companies strive to understand how to best manage their potentially most strategic asset -- information.

Below is a general breakdown of the various IT-related C-suite roles.

The chief technology officer (CTO) position, under various names, dates to the post-WWII era and even earlier when companies like AT&T and Xerox supported research labs and put technology directors at the helm. The focus on technology research and development has remained the purview of the CTOs, who often report to the CIOs. But there are signs the role and its status in the enterprise are changing, as the need to get an early jump on emerging technology becomes more critical to business success.

Executives at the board and CEO level are expecting the CIO to … drive and lead digital evolution and their digital business.
Suzanne AdnamsAnalyst, Gartner

Today, the CTO and CIO roles are coming into focus as a partnership of equals, said Gartner analyst Samantha Searle. Under the new model, each exec reports to the CEO and each is responsible for different aspects of digital transformation. To wit: The CIO is heavily involved in developing the enterprise's new business models, while the CTO is focused on technology strategy, in particular the value of disruptive emerging technologies such as high-performance computing, AI and edge computing.

The chief information security officer (CISO), whose role dates to the mid-1990s, has gained traction in the organizational hierarchy as cybersecurity has become a top concern for corporate boards. In many organizations, the CISO reports to the CIO, but some industry pundits argue that CISOs need independence to do their jobs properly; having the enterprise's top watchdog of information security report to the CIO is a conflict of interest.

Chief data officer positions started showing up on organizational charts after the Great Recession in the late 2000s. Created to help companies deal with the increasing regulatory and compliance issues following the financial meltdown, the chief data officer role has shifted its focus at many companies to big data analytics, specifically how to use data to drive better business decisions and create new sources of revenue.

The chief digital officer position, which debuted in 2010, was touted as the C-level executive who would be in charge of digital transformation. The emergence of the role was in part a response to perceptions that CIOs were not up to the task of leading this major paradigm change -- but that sentiment seems to be changing. "Even if the company [installed] a chief digital officer or a chief data officer for the time being," Gartner's Adnams said, "executives at the board and CEO level are expecting the CIO to be this chief digital officer, to drive and lead digital evolution and their digital business." The chief digital officer role, in fact, tends to mean different things at different companies. One scholarly treatment  identifies four types of chief digital officer: evangelist, coordinator, innovator and advocate.

What's next for the CIO?

For as long as there have been CIOs, there's been handwringing over what the role entails and how to fill it successfully. "The CIO is dead; long live the CIO!" is a recurring theme, as the pundit class debates whether the CIO should be replaced by another IT expert like the chief data officer or chief digital officer, or if, in fact, a business executive should become the enterprise's next czar of technology.

The relentless pace of technology innovation and change in recent years has quieted some of that chatter. Everyone from the C-suite to frontline workers now understands on a visceral level that IT is a powerful business tool. They understand that aligning technology to business goals requires a depth of expertise -- not just anyone can be in charge. And it's clear that failing to capitalize on IT puts businesses at risk for being disrupted by the likes of Amazon, Google, Apple, Facebook, Airbnb and any number of new tech wunderkinds not yet in the limelight. These days, we're even starting to hear talk of CIOs as the talent pool for the next generation of CEOs.

What's certain is that to keep their jobs, all CIOs today must help their companies use technology as a business differentiator. Top-performing CIOs provide business value. They do that by delivering bulletproof and agile systems and services that are inextricably linked to business goals in real time -- and by leading their enterprises through the cultural shift to becoming digital businesses.

Perspectives on the evolving role of the CIO from Isaac Sacolick, Suzanne Adnams, Patricia Coffey and Samantha Searle.

Curating and achieving the specific IT projects that fit a business and its culture are big challenges and some of the trickiest aspects of the CIO role. It's the CIO's job to use emerging technologies to win early advantage for their companies but do so in a fashion that won't lock their companies in if things change. For example, how much should companies invest in their own AI capabilities -- or should they simply rely on the vendors who are investing fortunes on adding AI into their products? What about distributed ledger technology, or blockchain? A Google search yields thousands of hits on the term, but how it works and how best to use it is still murky. On the horizon are the esoteric but tantalizing possibilities of quantum computing. Companies will be looking to their CIOs for guidance.

The corporate IT function may be at another big inflection point. As the physical world is overlaid with artificial intelligence, sensors, computer-generated simulations and other digital technologies, IT becomes integral to every company's products. In the "augmented-product era," as one CIO put it, it's no longer enough for companies to sell a great widget. The success of the widget depends on customers finding it, getting support for it, reviewing it and getting instructions on how to assemble it. That's all IT, which means products and customer strategy -- the heart of a business -- are part of the CIO role today. IT has indeed moved from the backroom to center stage.

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