Chapter 18 The Chief Information Officer’s Role

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, others were caught in organizational consolidations, cost reductions, or bad times for the industry or firm

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 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 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 IT services The movement toward outsourcing  Web hosting, application hosting, network operation and management outsourcing Technologies supporting data transfer and personal interactions

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  Adopting alternative application acquisition methods  Using disciplined processes to manage production operations and networks  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  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

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

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

What CIOs Must Do for Success 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 CIOs must develop visions and strategies for the firm’s use of information technology

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