Does the CEO Care About IT?

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In his latest post, IT project failure expert and writer Michael Krigsman beautifully summarizes the risks associated with the lack of CEO and senior business leaders engagement in information technology investments.  Developing support and engaging all of the business leaders in strategic use of IT is a problem Diamond has been studying and helping clients address since our inception in 1994.

A few years ago, we launched a broad annual study we call Diamond Digital IQ which set out to get some insights into the problem that Michael discusses and the challenges associated with connecting the enterprise’s strategic objectives with the actual business value, which often comes several years after the big ideas are hatched.  To get a “fair and balanced” view, half of the 592 surveyed are business leaders and half are IT leaders.

Here are five questions from our 2010 survey questions related to the senior business executive support for IT.

1.  Our CEO or senior-most business leader is an active champion in the use of information technology to improve our business

The promise of a fully integrated organization in which there is no “business” and “IT” must begin at the top.  Information technology (the capability) must be seen by all business leadership as both a driver of growth and a tool to improve efficiency.  While 64% of respondents agreed with this statement, it’s incredible to me that it’s not in the 80-90% range.  While I didn’t explain this in detail, the industries included in the survey are large or very large companies in banking, financial service, insurance, consumer products, etc.

2.  Our CIO is very involved in the business strategy development process

This question indicates the senior management team’s buy-in of the importance of IT at the next level of detail.  If only 54% agree with this statement, what are the other 46% doing?  An insurance executive told me a story of a claims initiative that some colleagues in “the business” brought to him which they later approved.  It involved taking images, video and audio to better understand the claims and so that more of the reviews and QA could be done remotely by experts.  Late in the project, one of the managers came back to him and admitted a big mistake that would cost them several million dollars.  Apparently, they forgot to estimate any storage for all of the digital media.

3.  Business Executives are very confident in the company’s IT capabilities

Half think that the business leaders are neutral or negative in terms of IT’s capabilities.  My colleagues Peter Weill and Jeanne Ross at MIT believe that service delivery is the basis for everything else.  I wonder if there is just some poor blocking and tackling that is at the root of this?

4.  Our CIO is recognized as a BUSINESS leader, not just as a leader of IT

Over half of the responses say that the CIO is not recognized as a business leader.  I’d be interested to know how this correlates with the CEO’s stance on IT (question #1 above).  I would also like to know how these CIO’s spend their time versus those who are seen as business leaders.  (I will write another post soon on the how a CIO spends his/her time.)

5.  The CIO lacks productive working relationships with the Business Leaders

Forty-seven percent say they are neutral or negative on the CIO-business working relationship.  Since these are the people we surveyed, they should know.  I’d be interested to know your experience in good and bad day-to-day working relationships and techniques you or others have used to improve them.

The value gained from IT in an organization depends on everyone’s ability to understand it and access it.  The attitude and culture required to embrace IT starts at the top.

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  • Steve Romero, IT Governance Ev

    Sobering if not surprising results. I would like to see far more CEO interest in IT. I suggest this won’t happen until either the Board of Directors holds them accountable for realizing maximum value for their investment in technology, or the Business Leadership Team (as a collective) prizes IT for its contribution to Enterprise strategy and innovation – as opposed to it contribution to efficiency and cost reduction.

    Steve Romero, IT Governance Evangelist
    http://community.ca.com/blogs/theitgovernanceevangelist/

  • Steve Romero, IT Governance Evangelist

    Sobering if not surprising results. I would like to see far more CEO interest in IT. I suggest this won’t happen until either the Board of Directors holds them accountable for realizing maximum value for their investment in technology, or the Business Leadership Team (as a collective) prizes IT for its contribution to Enterprise strategy and innovation – as opposed to it contribution to efficiency and cost reduction.

    Steve Romero, IT Governance Evangelist
    http://community.ca.com/blogs/theitgovernanceevangelist/

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  • I’m with you, Chris. We can’t hold IT exclusively responsible for botched IT projects.

    I actually touched on this on my podcast with Patrick Gray:

    http://www.philsimonsystems.com/2010/02/technology-today-16-patrick-gray-on-breakthrough-it/

  • I’m with you, Chris. We can’t hold IT exclusively responsible for botched IT projects.

    I actually touched on this on my podcast with Patrick Gray:

    http://www.philsimonsystems.com/2010/02/technology-today-16-patrick-gray-on-breakthrough-it/

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  • Chris:

    I’ve been thinking about your question all day long; Does the CEO Care About IT? My feelings have ranged from; Why did I ever steer my career into a field with such an inferiority complex? To; My CEO always cared about me!

    I think I’ve come to the conclusion that the latter is where I end up. Two specific experiences come to mind. Back in the mid-eighties I interviewed with an EVP at McGraw-Hill for the position of CIO. After a long conversation that included lunch I told him I wasn’t interested in the position. I’d spent two years at the US Treasury with the goal of getting back into finance and while I enjoyed IT and appreciated its role in business, I wasn’t interested in leading IT. If there was an opportunity in finance, I’d reconsider.

    Within a week he gave me a call to tell me that he’d reconsidered the position and wanted me to join his group as Vice President, Planning & Finance. I start my new job several weeks later. Guess what, my first assignment was to restructure McGraw-Hill’s Information Technology function. From a financial perspective I was able to cut spending by 40%, realign IT with the business and implement an innovative cost recovery model that created an incentive for IT to better serve the business over the long run. I’m pretty sure I would never have been able to do this with the CIO title.

    Later, this same executive asked me to assess one of our largest business units, F.W. Dodge, a construction news service. The unit was essentially a monopoly, generated several hundred million in revenues, and had a 40% pre-tax profit. Not bad, but its operations were totally manual and there was no way to leverage its future growth. Thankfully, he didn’t ask me to become CIO for the unit but instead gave me the title, Vice President Automated Dodge.

    My responsibility was to figure out how to fully automate this business from the gathering of the news, creation of a national database and automation of the printing and distribution of 2 million Dodge Reports every day. We sold a $40+ million capital project to the Board of Directors, implemented the new system in 12 months, and produced a one year payback. Again, I’m pretty sure I could never have achieved this as CIO, because my role and responsibilities would have been much less clear.

    My experience leads me to the conclusion that the CEO doesn’t need to care about IT; he/she needs to identify a clear business goal, assign an executive with a strong business background to lead the effort, who is not intimidated by IT, and give he/she line responsibility for the initiative. Bottom line, you can’t ask a staff office, the CIO, to lead major transformations that require line authority to be successful.

    Bill

  • Chris:

    I’ve been thinking about your question all day long; Does the CEO Care About IT? My feelings have ranged from; Why did I ever steer my career into a field with such an inferiority complex? To; My CEO always cared about me!

    I think I’ve come to the conclusion that the latter is where I end up. Two specific experiences come to mind. Back in the mid-eighties I interviewed with an EVP at McGraw-Hill for the position of CIO. After a long conversation that included lunch I told him I wasn’t interested in the position. I’d spent two years at the US Treasury with the goal of getting back into finance and while I enjoyed IT and appreciated its role in business, I wasn’t interested in leading IT. If there was an opportunity in finance, I’d reconsider.

    Within a week he gave me a call to tell me that he’d reconsidered the position and wanted me to join his group as Vice President, Planning & Finance. I start my new job several weeks later. Guess what, my first assignment was to restructure McGraw-Hill’s Information Technology function. From a financial perspective I was able to cut spending by 40%, realign IT with the business and implement an innovative cost recovery model that created an incentive for IT to better serve the business over the long run. I’m pretty sure I would never have been able to do this with the CIO title.

    Later, this same executive asked me to assess one of our largest business units, F.W. Dodge, a construction news service. The unit was essentially a monopoly, generated several hundred million in revenues, and had a 40% pre-tax profit. Not bad, but its operations were totally manual and there was no way to leverage its future growth. Thankfully, he didn’t ask me to become CIO for the unit but instead gave me the title, Vice President Automated Dodge.

    My responsibility was to figure out how to fully automate this business from the gathering of the news, creation of a national database and automation of the printing and distribution of 2 million Dodge Reports every day. We sold a $40+ million capital project to the Board of Directors, implemented the new system in 12 months, and produced a one year payback. Again, I’m pretty sure I could never have achieved this as CIO, because my role and responsibilities would have been much less clear.

    My experience leads me to the conclusion that the CEO doesn’t need to care about IT; he/she needs to identify a clear business goal, assign an executive with a strong business background to lead the effort, who is not intimidated by IT, and give he/she line responsibility for the initiative. Bottom line, you can’t ask a staff office, the CIO, to lead major transformations that require line authority to be successful.

    Bill

  • Chris, Can you share any of the demographics for the company & CEO profiles in the results ? Might be interesting to see what types of organizations are more engaged with IT. Also, would like to know how CEO backgrounds impact involvement of IT. The cross-section of both sets of input might also reveal some areas of opportunity.

    Separately, I would like to see the question rephrased to ask if CEOs care about technology (where IT is but one portion). IT often does not work well with the other areas of automation in the company, so it may help to think about technology from a more holistic perspective. This may help guide decisions for leveraging technology in a more transparent manner rather than the current practice of focusing on “precision” investments in technology to limit expense (creating islands of functionality and information, which in turn drives up costs and impinges productivity). Recall that integration is one of the largest challenges and information consumption is a problem growing at an exponential rate.

    Jeffrey

  • Chris, Can you share any of the demographics for the company & CEO profiles in the results ? Might be interesting to see what types of organizations are more engaged with IT. Also, would like to know how CEO backgrounds impact involvement of IT. The cross-section of both sets of input might also reveal some areas of opportunity.

    Separately, I would like to see the question rephrased to ask if CEOs care about technology (where IT is but one portion). IT often does not work well with the other areas of automation in the company, so it may help to think about technology from a more holistic perspective. This may help guide decisions for leveraging technology in a more transparent manner rather than the current practice of focusing on “precision” investments in technology to limit expense (creating islands of functionality and information, which in turn drives up costs and impinges productivity). Recall that integration is one of the largest challenges and information consumption is a problem growing at an exponential rate.

    Jeffrey

  • Steven Chapman

    Why should the CEO care about IT? He will only care about IT if IT becomes a major problem area. Otherwise he won’t care about it and should not have to care about it. The CEO should be setting overall business direction and managing the collaboration of the C-level leadership team. The CIO should be a business person first and technologist second and be able to translate business goals into actionable IT plans and conversely translate good IT ideas to support business growth or cost cutting/efficiency into terms other C-level business leaders can understand. Unless this is addressed by CIOs, IT will never get a seat at the table. Instead of IT leaders grousing about being the red headed step child, they need to take action to resolve the problem and improve their lot. No matter how many studies are done and interesting correlations developed, other business leaders will not fix the problem for IT. IT will have to take the initiative and fix the problem for itself. And if you are a CIO who does not know how to address this, then swallow your pride, and get some help from an external expert or fellow CIO or mentor, but fix the problem.

  • Steven Chapman

    Why should the CEO care about IT? He will only care about IT if IT becomes a major problem area. Otherwise he won’t care about it and should not have to care about it. The CEO should be setting overall business direction and managing the collaboration of the C-level leadership team. The CIO should be a business person first and technologist second and be able to translate business goals into actionable IT plans and conversely translate good IT ideas to support business growth or cost cutting/efficiency into terms other C-level business leaders can understand. Unless this is addressed by CIOs, IT will never get a seat at the table. Instead of IT leaders grousing about being the red headed step child, they need to take action to resolve the problem and improve their lot. No matter how many studies are done and interesting correlations developed, other business leaders will not fix the problem for IT. IT will have to take the initiative and fix the problem for itself. And if you are a CIO who does not know how to address this, then swallow your pride, and get some help from an external expert or fellow CIO or mentor, but fix the problem.

  • Manoj Srivastava

    I strongly believe in; the CIO has full potential to transform business into next level.

  • Manoj Srivastava

    I strongly believe in; the CIO has full potential to transform business into next level.

  • Hiro Ochi

    The issue has been in the business community for over 40 years. Some of you have already pointed out different ways, but the key is what responsibility CEO has in IT area. Second question is the authority, responsibility and accoutability of CIO. To whom does CIO report? CFO, CEO, president or chaiman? Does CIO have a staff function or a line function in the organization? Therefore, I always get back to the basic of the system question. Why CEO and CIO exist in the organization? What CEO’s visions and goals are; What CIO goals are and what CIO must perform to achieve them as a staff organization or as a line organization. Once you clarify these things, it should be apparent to know how much CEO should care about IT for himself and for the organization as a whole. In the traditional sense, CEO should care about IT as a useful, effective tools to manage business well. However, the survey indicated that there is still a long way to achieve what IT should be doing properly from both CEO and CIO perspectives as we are still discussing the same topics for over 40 years.

  • Hiro Ochi

    The issue has been in the business community for over 40 years. Some of you have already pointed out different ways, but the key is what responsibility CEO has in IT area. Second question is the authority, responsibility and accoutability of CIO. To whom does CIO report? CFO, CEO, president or chaiman? Does CIO have a staff function or a line function in the organization? Therefore, I always get back to the basic of the system question. Why CEO and CIO exist in the organization? What CEO’s visions and goals are; What CIO goals are and what CIO must perform to achieve them as a staff organization or as a line organization. Once you clarify these things, it should be apparent to know how much CEO should care about IT for himself and for the organization as a whole. In the traditional sense, CEO should care about IT as a useful, effective tools to manage business well. However, the survey indicated that there is still a long way to achieve what IT should be doing properly from both CEO and CIO perspectives as we are still discussing the same topics for over 40 years.

  • lars

    Hi Chris,
    Yes – indeed – this is an interesting discussion and based upon some project experience I would like again to use the old concept of separating IT in two task areas:

    1. Standard IT Services

    Except from the recognition that this costs money and is the backbone of an efficiently operating enterprise I do not think that the CEO should care! This is pure CIO territory. I have seen CEOs jumping on topics like desktop configurations or SAP Gui designs. This love for IT is not productive and brings the CIO in awkward situations. IT should align with business in this area, set targets and agree on Service Levels and the like. The service provisioning is managed properly by the CIO and his team subsequently and of course the CEO can measure the performance and outcome.
    The CIO will hardly receive any merits here: It is expected to work well and as we all know in case of outages and downtimes the shouting will be loud.

    2. IT as a core enabler

    Much more challenging is to enable technology to drive business excellence! And here the CEO and CIO need to closely team up! A CEO who fails to recognize the importance of IT in transforming his business does no good (and honestly I have not seen any in recent years). CEO and CIO need to align and jointly decide who is performing which role in a project or in ongoing activities (e.g. technology and industry adaptation screening) – it’s a team effort whereas the CIO contributes his technology expertise (and creative thinking how this can be applied in business) and the CEO often leads the mobilization of the organization! But are CIOs always up to this task?

  • lars

    Hi Chris,
    Yes – indeed – this is an interesting discussion and based upon some project experience I would like again to use the old concept of separating IT in two task areas:

    1. Standard IT Services

    Except from the recognition that this costs money and is the backbone of an efficiently operating enterprise I do not think that the CEO should care! This is pure CIO territory. I have seen CEOs jumping on topics like desktop configurations or SAP Gui designs. This love for IT is not productive and brings the CIO in awkward situations. IT should align with business in this area, set targets and agree on Service Levels and the like. The service provisioning is managed properly by the CIO and his team subsequently and of course the CEO can measure the performance and outcome.
    The CIO will hardly receive any merits here: It is expected to work well and as we all know in case of outages and downtimes the shouting will be loud.

    2. IT as a core enabler

    Much more challenging is to enable technology to drive business excellence! And here the CEO and CIO need to closely team up! A CEO who fails to recognize the importance of IT in transforming his business does no good (and honestly I have not seen any in recent years). CEO and CIO need to align and jointly decide who is performing which role in a project or in ongoing activities (e.g. technology and industry adaptation screening) – it’s a team effort whereas the CIO contributes his technology expertise (and creative thinking how this can be applied in business) and the CEO often leads the mobilization of the organization! But are CIOs always up to this task?

  • Hi Chris,

    For me the big thing to discern is the CIO only a “staff” person, that is they control indirect costs and create value as part of the non-line organization, or are they seen as Bill above from McGraw-Hill obviously was which is to be a major line part of the organization and delivery capability.

    I bet this drives a LOT of the support versus non-support. Also, when we see a CIO in a business where IT is core, like in a bank, and they don’t get respect, that tell you a lot!

    john

  • Hi Chris,

    For me the big thing to discern is the CIO only a “staff” person, that is they control indirect costs and create value as part of the non-line organization, or are they seen as Bill above from McGraw-Hill obviously was which is to be a major line part of the organization and delivery capability.

    I bet this drives a LOT of the support versus non-support. Also, when we see a CIO in a business where IT is core, like in a bank, and they don’t get respect, that tell you a lot!

    john

  • I wish to see the day that we need license to practice IT. Those who are found to be malpractice should be stripped of their capability to work in this field. Without an industry wide governance of IT practitioners, there will be too many situations of pretenders and business people who makes technical decisions on behalf of IT.

    What’s worst, these so called IT practitioners would just hold their tongue and cheekily agree that it is the best decision ever made.

    The business can find a 2nd or 3rd opinion from an IT proposal; but we do not argue with our doctors and haggle on price about how much liver should be removed when its found to be cancerous…

    Until such time, IT is executed and treated like a flee market.

  • I wish to see the day that we need license to practice IT. Those who are found to be malpractice should be stripped of their capability to work in this field. Without an industry wide governance of IT practitioners, there will be too many situations of pretenders and business people who makes technical decisions on behalf of IT.

    What’s worst, these so called IT practitioners would just hold their tongue and cheekily agree that it is the best decision ever made.

    The business can find a 2nd or 3rd opinion from an IT proposal; but we do not argue with our doctors and haggle on price about how much liver should be removed when its found to be cancerous…

    Until such time, IT is executed and treated like a flee market.

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