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A chief information officer (CIO) is the corporate executive in charge of information technology (IT) strategy and implementation. In addition to overseeing the hardware, software and data that helps other members of the C-suite do their jobs effectively, the CIO must research new technologies, strategize how technology can provide business value and address the risks associated with digital information. In many companies, CIOs report directly to the chief executive officer (CEO), and at some companies, the CIO sits on the executive board.
The Role of a CIO
The CIO role traces its lineage to the late 1950s and 1960s when businesses began to incorporate computing into business operations. By the mid-1980s, the CIO role was primarily a technical job. First-generation CIOs were typically senior or middle managers in data processing or information systems (IS). This was the mainframe era, an interval spanning roughly from the 1960s to the early 1980s and so named for the mainframe computers procured by enterprises to automate back office processes.
During this time, CIOs were rarely involved in determining the enterprise's IT strategy (let alone business strategy), preferring to let the dominant vendor (usually IBM) set the course. Until the internet came along, the main responsibility of the CIO was to deliver new IT systems on time and on budget and run existing systems with a high level of reliability.
Public access to the World Wide Web in the early 1990s quickly extended the role of IT in business operations, which opened the door for the CIO to become involved in business strategy and help the company understand how to take advantage of the Internet, which was radically changing how business was being done.
As a result of their increased strategic responsibilities, a CIO in a large organization typically delegates the oversight of day-to-day IT operations to a deputy and relies on a team of specialists to manage specific areas of IT, such as storage or security. The CIO’s deputy may be called a chief operating officer of IT (COO of IT). Gartner sometimes refers to this structure as bi-modal IT. When a CIO oversees IT strategy and implementation at more than one company, the position is called a fractional CIO.
Qualifications and Skills
By the turn of the century, it became clear that a CIO needs business skills as well as technical skills. Arguably, the most effective CIOs not only have the ability to dramatically re-engineer business processes, they also have the leadership skills required to convince others that change is necessary.
To figure out how IT can generate business value, CIOs must grasp and quickly respond to a number of market forces, including innovations in technology, vendor product offerings, disruptive technology and, increasingly, a customer base that expects to do business across physical and virtual channels. Many experts believe the pressure on CIOs to adapt to these market forces is more acute today than it's been in the 30-year history of the role.
The increasingly rapid pace of technology change, coupled with widespread consumer adoption of digital technologies such as social media, mobile devices and cloud computing, have forced CIOs and their enterprises to rethink the role IT plays in nearly every aspect of the business, from operational efficiency to employee productivity to customer service to business goals and even business survival.
Salary and Responsibilities
CIO compensation varies widely, depending on years of experience and, in particular, company revenue and size. A TechTarget IT Salary and Careers Survey of 464 IT executives found that the highest earners' average total compensation of $225,301 was more than double the $101,562 average total compensation for low earners. Among those in the low-earner category, only 5% worked for companies with 10,000 or more employees, compared with 21% of high earners.
Nearly half (48%) of high earners worked for companies with revenue between $500 million to more than $10 billion, compared with only 4% of low earners. Among senior IT executives, more than half of all high earners (52%) worked for companies with 1,000 or more employees, compared to just 29% of low earners. Three-quarters of the companies where senior IT high earners worked had annual revenue of more than $100 million. Three-quarters of the companies where senior IT high earners worked had annual revenue of more than $100 million. Most of the companies (64%) where senior IT low earners were employed had revenue of $50 million or less.
At many companies, the CIO is responsible for managing a budget that is calculated as a percent of revenue. The ratio of spending to revenue varies depending upon the industry and its reliance on technology, but can range from 1% in the construction sector to 6.7% in the internet services sector. In recent years, as technology has become central to business operations and competiveness, the metric has come under fire. Some see it as counterproductive, effectively rewarding IT organizations that spend below their industry average -- a result that could actually have a negative effect on revenue.
Managing a distributed workforce
With the adoption of personal computers (PCs) in the enterprise by the early 1980s, IT systems were no longer concentrated in data processing departments staffed by IT professionals but were distributed throughout the enterprise. Business units outside the central IT organization began procuring their own IT systems from a new crop of IT vendors, including Microsoft and Intel. Employees became accustomed to having powerful desktop technology at their fingertips.
It quickly became apparent to businesses that supporting autonomous pockets of IT, also called shadow IT, was inefficient and expensive, and many enterprises adopted a federated model in which some IT systems and services remained under IT's control and other technologies were under local control.
Figuring out how and from whom these systems should be procured, architected and networked end-to-end became an important part of the CIO role. This period also marked the emergence of the large enterprise resource planning (ERP) software suites to collect and manage the data produced at different levels of the business. Implementation of these complex systems was costly and difficult, required significant business process re-engineering (BPR) and sometimes resulted in spectacular failures for CIOs, prompting the now-old joke that CIO stood for Career Is Over.
The future of the CIO
As businesses of all types become more and more digitized, the challenge remains the same for CIOs. Native-digital companies such as Google, Amazon and Facebook have ushered in a new set of competencies for the CIO. These include the need for cloud-based IT, mobile-first computing, big data analytics and social collaboration platforms.
Advances in computing power are paving the way for commercial application of artificial intelligence (AI) and the Internet of Things (IoT). Digital disruptors such as the ride-sharing service Uber and streaming media company Netflix are redefining business models and whole sectors of the economy. Meanwhile, the responsibility of safeguarding enterprise IT systems and data becomes a nearly impossible task in the face of relentless cyberattacks.
Some have observed that the ubiquity of computing has brought the role of the CIO to a point where it must change, with some CIOs eager to exploit technology to create business value. Other CIOs, according to executive search professionals, are concerned they have not been trained to carry out the initiatives they're expected to lead. As the flow of information becomes ever more central to business success or failure, the role of the CIO is filled with risk and primed for great reward.
As business processes have become more digitalized and customers become digital data points, the CIO's reach and portfolio have expanded, some would argue to a breaking point. Some experts believe that as companies strive to compete in the digital marketplace, CIOs are the best-positioned to become chief executive officers. Others argue that IT strategy-setting and the procurement of IT systems will be subsumed by business functions, and the CIO role, as traditionally defined, will be carried out by a team of specialists throughout the company.
Already, many former CIO responsibilities are being transferred to other executive roles. In addition to a chief technology officer and chief information security officer, a host of new "information chiefs" are cropping up with titles that include chief data officer, chief digital officer and chief analytics officer.