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 OfficerCTO’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 MaturityEnsure 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 FuturesCIOs 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 TrendsProviding IT services in a cost effective

mannerThe 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 BusinessMature 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