Chapter 18 The Chief Information Officer’s Role and Responsibilities

Introduction  Drucker said, “Effectiveness, in other words, is a habit; that is, a complex of practices. And practices can always be learned.”  Superior managers are made, not born, and superb management skills are learned and developed, not the result of genetics  Management is a skill, the result of learning

Challenges Facing Senior IT Executives  To a considerable extent, both the CIO’s position and the perception of its incumbent are shaped by this individual’s behavior patterns in the firm  The tasks typically required of the CIO are hazardous to one’s career  CIOs have failed due to  performance deficiencies  caught in organizational consolidations  cost reductions  bad times for the industry or firm  failure to communicate effectively with executive and line management

The Chief Information Officer  The number of firms that have a chief information officer has increased greatly in the past 10 years  Information technology staffers are still viewed in some companies with skepticism  “The CIO position is a relationship, not a job. If the CIO/top management team relationship is effective, the title doesn’t matter. If it is ineffective, the title doesn’t matter.”

CIO’s Organizational Position  Just as chief financial officers are held responsible for their firm’s expenditures even though they may not spend most of the money, a firm’s chief information officer is responsible for the firm’s IT usage even if the IT line organization does not consume most of the IT resources  CIOs are responsible for managing the firm’s corporate IT function and its information infrastructure

CIO’s Organizational Position  CIOs make technology investments and recommend or approve IT investments elsewhere in the firm  Develop and implement IT strategies to increase the firm’s revenue and profits  Set standards for information or telecommunication operations in the firm  Recommend and enforce corporate policy on IT matters including procurement, security, data management, personnel, and cost accounting

CIO’s Performance Measures  The performance of CIOs is measured by their success in applying information technology cost effectively, achieving corporate goals and objectives, and bringing value to the firm  Organizations expect CIOs to identify technological and business opportunities and to provide leadership in capitalizing on these opportunities for the firm’s advantage

Challenges Within the Organization  Organizational changes and new business methods heavily impact IT executives  They must use current information systems innovatively and adopt new computing and telecommunication systems and products to facilitate organizational transitions and deal with competitive threats  IT organizations must promote and support cost- effective technological innovations

The Chief Technology Officer  CTO’s position is that of evaluating technology futures and advising the firm on technology selection  CIO is responsible for business aspects of IT  CTO oversees technology aspects

The Chief Information Officer’s Role Includes  Formulating and obtaining approval of new IT policies  Approve IT strategies  Approve IT resource allocation  Establish IT cost-accounting methods  Develop policy instructions for IT procurement  Oversee outsourcing contracts  Ensure quality IT hiring and training policies  Establish standards for data security, disaster recovery, and IT business controls

Developing IT Management Maturity  Ensure that IT and business strategies and plans are tightly aligned, coupled, and approved by the senior management team  CIOs must ensure the financial integrity of business investments in systems and technology  Create cost-effective IT operations

Evaluating Technology Futures  CIOs are responsible for providing technological leadership in information processing.  Executives depend on CIOs to forecast technology trends and assess significance  Although difficult and risky, technology forecasting and evaluation is critical  Extrapolating present use has limited utility

Important Business and IT Trends  Providing IT services in a cost effective manner  The movement toward outsourcing  Web hosting, application hosting, network operation and management outsourcing  Technologies supporting data transfer and personal interactions – communication and collaboration

Finding Better Ways of Doing Business  CIOs must constantly seek ways to improve the organization’s performance and create or sustain business advantage  Using cost-effective hardware  TCO  Adopting alternative application acquisition methods  Using disciplined processes to manage production operations and networks  Monitor  Measure  Report  Outsourcing all or part of IT operations

Introducing New Technology  Installing new technology involves critical people considerations.  Proponents of a new system must “sell” their ideas to other individuals in the firm, such as operators, users, and maintainers – and especially sponsors  Even good ideas may fail without the support of most of the people involved

Technology Adoption  Individuals become adopters through communication-based processes that include:  Becoming aware of the innovation  Becoming interested and seeking information about it  Evaluating it based on needs  Experimenting with it  Adopting the innovation if conditions are favorable

Innovation Adoption Propensities Where do YOU want to be?

Facilitating Organizational Change  Structure is not only related to new technology or system approaches, but also depends to a considerable extent on management style  Centralized autocratic management styles tend to adopt conservative strategies  Aggressive and competitive companies tend to be less centralized  Highly competitive, high-performance companies adopt flexible structures, especially in critical areas such as IT

New Ways of Doing Business  Mature IT managers believe that operating excellence is a high-priority goal for their organizations  IT managers must seek to promote new ways of doing business for the firm  E-commerce is considered one of the highest growth areas and one of the most important business activities for the next five to ten years

 In order to accomplish this leadership role in reshaping the way the enterprise works and competes, CIOs have the following six primary responsibilities: 1.Understand the business 2.Establish credibility of the IS department 3.Develop a competent IS staff and IT-savvy users 4.Create a vision of the future and sell it 5.Implement an information system architecture 6.Foster relationships The CIO’s Responsibilities

 There are seven approaches CIOs are using to understand the business and its environment: 1.Encourage project teams to study the marketplace 2.Concentrate on lines of business 3.Sponsor weekly briefings 4.Attend industry meetings with line executives 5.Read industry publications 6.Hold informal listening sessions 7.Become a “partner” with a line executive 1.Understand the Business

 It is recommended to ask the following questions about each line of business: A.Are we organized to serve that line of business? B.Do we have an account manager in IS who has responsibility for that line of business? C.Do we have someone within that line of business who oversees IT activity and talks the business language? D.Do we have a sponsor in the line of business? E.Do we have the attention of their management? F.Does the line of business offer an opportunity to use systems in new ways? 1.2 Understand the Business: Concentrate on Lines of Business

1.3 Understand the Business: Sponsor Weekly Briefings  To understand the business, one needs to understand the marketplace.  By sponsoring short presentations by the people closest to a business, IS management can help fix the problem of employees not being given exposure to the marketplace without cutting into working time too greatly.

1.4 Understand the Business: Attend Industry Meetings with Line Executives  Attending meetings with a line executive can be even more enlightening because he or she can explain what the company is or is not doing in areas discussed by the speakers.  It is also likely to foster new friendships.

1.5 Understand the Business: Read Industry Publications  News publications provide information on new products, current issues, company changes, and so on.  They provide better analyses of industry trends, discussions of ongoing research, and projections about the future.

1.6 Understand the Business: Hold Informal Listening Sessions  Employees learn a lot by listening to each other’s needs.  Meetings are held in a setting that is not charged with tension, participation is voluntary, and their purpose is to “just chat.”

1.7 Understand the Business: Become a “Partner” with a Line Manager  The Society for Information Management presents an award each year to honor an IS executive business team who have achieved significant business results through their alliance.  It reinforces partnering which is needed to successfully guide and deploy IT today.

 IS departments have two missions: maintain today’s systems and work on tomorrow’s systems.  The “Today” operation should concentrate on providing services, while the “Tomorrow” operations need to focus on helping the businesses operate better. 2. Establish Systems Department Credibility

 CIOs need to nurture an IT-knowledgeable workforce in business units, and then keep pace with those who have become IT savvy.  IT-savvy organizations are the ones most likely to excel in this Internet-based economy. 3. Increase The Technological Maturity of the Firm: Develop a Competent IS Staff and IT- Savvy Users

4. Create a Vision of the Future and Sell It  IS executives are no longer reactive, providing only support.  They manage some of the most important tools for influencing the firm’s future.  They are becoming more “proactive” by helping to create a vision of the firm’s future and its use of IT and selling those ideas to others.  CIOs must be fully contributing members of the executive suite, providing leverage to senior executives through initiative, creativity, and vision  CIOs must be advocates for IT and must educate peer managers on the complexities and challenges of IT

5. Implement an Information System Architecture  An architecture is a blueprint.  Designing a system architecture used to be considered strictly a technical issue.

6. Nurture Relationships  It is increasingly important for CIOs to develop and nurture relationships. 1.Relationships with senior management 2.Relationships with customers 3.Relationships with suppliers and other external partners  Due to the increased importance of information systems architectures caused by the rise of e-commerce and e-business, the new job of chief technology officer has appeared in IS departments during the past couple years.  The CTO is in charge of the technology and its architecture, whereas the CIO is in charge of the use of information technology.

 The relationship between CTOs and other senior executives, especially CEOs is diversifying.  We see the traditional relationship between CEOs and CIOs diversifying.  The CIO is expected to implement technology to support business plans in a boss-subordinate, and somewhat distant, relationship.  CEOs now know a lot more about IT, and dot-com CIOs know a lot more about running the business. 6.1 Nurture Relationships: Relationships with Senior Management

 A major set of partnerships revolves around internal and external customers of the IS function.  The organization’s customers, who buy services and products, are becoming customers of the IS function.  The first job is to build credibility with business peers, at all levels.  This is happening most often in companies that use multifunctional teams to run systems projects.  Peer-to-peer working can break down stereotypes, improve relationships, and hopefully lead to a “partnering” mentality, which seems to be the goal of the IS departments these days. 6.2 Nurture Relationships: Relationships with Customers

 Due to fast-moving changes, IS departments are establishing cooperative external relationships with all sorts of suppliers to put in needed systems quickly.  Another trend has forced executives to forge “partnerships” or closer working relationships with suppliers that remain after their enterprise has reduced suppliers from thousands to tens.  They tell them of future plans, do joint planning, perhaps work together on projects, etc. 6.3 Nurture Relationships: Relationships with Suppliers and Alliance Partners

CIOs in the Internet World  Firms tend to expect benefits from new technology as a given and tend to forget, despite much evidence these benefits may be mostly intangible, imprecise, and immeasurable  Benefits can and must be translated into returns  CIOs are required to display the seasoned maturity and general management skills worthy of a CEO

Summary  The chief information officer’s position is precarious in both theory and practice  The CIO position stands on shaky ground because information cannot be quantified or measured  Information is commonly created, used, and discarded without the CIO’s knowledge or approval  They are expected to be the firm’s technological leaders