Will the CIO Role Be Obsolete?

Twenty years ago, if you’d have told a group of CEOs they might one clay be succeeded by a bunch of techies, the news likely would have been greeted with gales of laughter-or, at the very least, heavy skepticism. What does a technology manager know about running a business, after all?

But these clays, we know better. In the past five years, the role of the CIO has been steadily and rapidly shifting to one that involves as much strategic planning as it does networks and cables. And, as technology continues to play an ever greater intrinsic role in the success of any organization, IT managers are finding themselves more and more on the level of “partner” with their CEO leaders.

But if it’s true, as many say today, that CEOs will need to have a much deeper understanding of technology in order to sustain competitive edge in the future, where will that leave the CIO as the keeper of techno-knowledge? Looking further out, what happens when the children born today and in the new millennium-those kids whose first toys are likely to be neon-colored, Pentium-chipped, GUI-enabled handheld PCs-reach the corner office? Will they really need somebody to head up technology?

We asked the CEOs of a diverse group of companies to look into their own crystal balls and tell us: a) how they see the CIO’s role changing; b) whether the inevitable increase in technology acumen among CEOs would eventually render the role of the CIO obsolete; and c) whether they thought it possible that the CIO of today would one clay rise to become CEO. Here’s what they had to say.

President and CEO

Young & Rubicam Advertising

My opinion is: no, the role of the CIO is not going to change, and no, the (10  is not going to become the CEO. Rather, the CIO will become one of the direct reports to the chief knowledge officer or chief strategy officer. The CIO will be more of an implementation job than a strategy job-more on the back end of the process than the front end.

I’m sure there are those ClOs who are insightful and have many of the skills I commonly see in chief strategy officers or chief knowledge officers, but for the most part, the ClOs I deal with, while very smart and very technically savvy, are caught up in the technology and how to execute and implement against a strategy that they might have had a part in devising but has been basically driven by others.

It’s also getting more and more difficult to expect the operating guys who are busting their chops every day to execute against the existing plan in a hypercompetitive environment to also be the guys who are looking out toward the future, keeping up with technology, with the changing geopolitical environment, here and across the globe-you can’t expect the operating guys to also understand how these things are going to impact the business in the future. You give somebody too many balls, they’re going to drop one of them. Many of us in the corporate world have the bad habit of just continuing to add balls until some of them start falling to earth-and dropping the ball is the wrong way to figure it out.

I see the chief strategy officer or the chief knowledge officer-very savvy, well-schooled, very comfortable in the world of technology with a lot of the CIO’s technical capabilities, but a broader vision-I see that person as very much with future CEO potential.

The really hot (10 who is able to sort of rise above the technology trap is going to become the chief knowledge officer or the chief strategy officer of the future and then he’ll have a CIO working for him. Here at Young & Rubicam, we have a guy named Bruce Benson, whom we hired from Sony; he has an IT background, but he’s morphed himself into a strategy person, and he then hired a CIO who is a direct report to him, who worries about technology and how to make it a differentiator for us.

Chairman, President, and CEO

Ameren Corp.

The CIO role is changing in that he or she is no longer simply keeper of the hardware or software. The CIO must be included up-front in business decisions. Because technology is now an essential ingredient in product development, service enhancement, and even business alliances, the CIO must clearly be closely involved in setting the strategic direction of a company.

The CIO will become an increasingly important player not only because of automation’s role in improving efficiency, but also because of the growing use of technology for developing sophisticated products and enhancing our ability to quickly meet the changing needs of our customers.

Here’s an example: automated metering. Ameren now has the world’s largest automated meter network-one million automated meters. What’s our midwestern utility doing with that? Well, we’re improving customer service, but we’re also developing innovative products that allow customers to track energy use by process and facility-all on the Internet. So someone in Detroit can track energy use for a facility in St. Louis. That’s just the sort of product that can’t be offered without strong technical expertise.

My relationship with our CIO, Chuck Bremer, is based on mutual respect. He comes from a legal as well as technical background and is able to explain technical challenges clearly and precisely. We pride ourselves on our cost-cutting prowess, so some of the price tags for what he proposes to do tend to raise my eyebrows. But his trial experience has helped him argue his case convincingly. The proof is always in whether the technology enhances our ability to serve our customers.

Chairman and CEO

Northwestern Corp.

The focus has shifted over time from engineering and the value brought to operations and businesses during the industrial age toward skill sets of lawyers and people with financial backgrounds ina time of business transformation. As we move into the information age, we see a new type of discipline, one I see, at least within Northwestern, as residing within our CIO and technology group.

I do not subscribe to the view that the CEO needs to be the leading strategist on the use of technology. This approach may limit the opportunities of an organization. Certainly the CEO has many things to focus on in addition to the tools used in the e-commerce or information-based business applications. I see the transitiont to greater use of technology as a relatively permanent type of movement. You’re really asking, when will this mature? I see the impacts of information on our business and how it’s turning things into an e-commerce society as being very profound. I think this movement will extend well beyond our lifetimes.

The ClOs today need to develop a greater understanding of all aspects of the business and gain a better perspective of many other areas of discipline within a company. That depth will enhance their stature significantly as we look to succession planning. I think the phenomenon is new enough that it will still be some five or 10 years before you’ll see widespread impacts of that, but I think it will happen.

As far as who is closer in the race-the CFO or the C10-you will see a kind of natural migration to individuals who are more oriented towards e-commerce. My view of the future is that north of 75 percent of future business will be information-based. Looking at that type of magnitude, those who are the closest to it and understand it best will just have a broader and more demanding skill set that is going to be needed in the CEO office. Certainly, both skills will be important, but the relevance will be shifting to the C10.

The most valuable CIO is going to be the type of individual who can step up and be a very significant contributor to the development of strategy. You’ll see in many instances what may have been a previous form of operations innovated with the creation, distribution, and manipulation of information. We’re going to need to find better ways of attracting customers, learning who they are, what they want, and how to satisfy them, all without meeting or talking to them. That’s going to be a unique skill. How we take these new tools and create the intimacy of a one-to-one relationship has the potential to be absolute dynamite. The most successful ClOs will be the ones who can take that proposition and make it real for a company.

Chairman and CEO

Bristol Hotels & Resorts

I think it is pretty clear that the role of the CIO-or other technology chief-is becoming much more critical to the overall strategic planning for a company, and that will continue. Ten years ago, our company spent very little money on management of technology and today, close to 20 percent of our corporate overhead is technology-related. So I think, if there were three corners to the stool in the past-with the CEO, COO, and CFO as legs-today it’s a four-legged stool.

As far as succession is concerned, if someone is a manager of technology and an effective one, they’re more likely to become a CEO. If they’re a technology wizard but they can’t deal with people, they’re not any more likely. It’s becoming progressively more difficult for a techie who doesn’t have the basic managerial skills to rise to the ranks of even being CIO.

When you manage the technology department, it’s a lot like managing artists. There are all kinds of dynamics that require a lot of management skills to do a good job of running them. And you need to have somebody making decisions about the direction of a lot of those investments so that you have a reasonable expectation that it’s going to have a payback as opposed to just being the most current technologically.

The reason I don’t necessarily think the CIO is going to be on the straight approach to the CEO

job is that unless you’re in the technology business itself, technology is just part of a business, and you have to have somebody to manage how that technology gets integrated into your business. That’s changing so fast that the CIO is absolutely a key job in most companies now.

Chairman, President and CEO

Aftermarket Technology Corp.

I tend to agree that information access and flow is absolutely critical to today’s businesses. I think as businesses move more towards teams, the need for communication and information becomes increasingly critical. I think also as business moves more toward e-commerce, the competitive landscape will be changing dramatically. The CIO, in my mind, should be the catalyst for identifying the information needs of the business as well as providing the access and distribution of that information. This is a significant change from the role of the CIO of the past.

There will always have to be a CIO, though maybe under a different name. But that individual will become increasingly integrated into the senior management team and process. CIOs and businesses, in general-and this means the entire senior management team-will become increasingly challenged as the market and organizational pace of change tends to exceed the ability of the enterprise information infrastructure and the associated tools to respond.

The challenge will be establishing an information infrastructure that’s flexible enough to evolve ahead of the business needs, and the CIO will need to anticipate those changes and the future information needs of the business. I think in order to do that, he or she has to be an integral part of the senior management team.

As far as succeeding the CEOs of today, clearly it depends upon the individual. But increasingly those people are more capable of moving into the CEO role for some of the reasons I mentioned above. In order to be a successful CIO in the future, you have to have a broad understanding of the needs and capabilities of the business and how those components of the business inter-relate with the information needs. So I clearly think, increasingly so, CIOs will be moving into CEO positions.

And I think the CFO and CIO roles, as tracks to the CEO-ship, are probably comparable. The role of the CFO has changed and will continue to change dramatically. It’s becoming much more strategic, much less of an accounting focus. So I see that race as neck and neck.

Chairman, President, and CEO

Mead Corp.

I can’t see the role of the CIO becoming obsolete in the foreseeable future. There are just too many things changing and too many aspects of the issue emerging at any point in time. But I guess, if I put on my imaging hat, and looked way out to the future, I could see where everybody was so knowledgeable about it and so comfortable with it, that it could be part of the way a business is run-but I’d have to stretch my imagination to see that happening right now.

The CIO is extremely important to our company, and I would assume now to most companies. In our case, the CIO works directly for me, and I wouldn’t have it any other way, given his emerging role in the company. It’s a critical aspect in the business for two reasons: 1) he’s literally engaged in and in charge of a large and growing part of the budget of our company, both in the sense of variable costs and in terms of capital costs; and 2) besides having this responsibility for big dollars and important hardware and software initiatives, we’re trying to use all these vehicles to redesign our business processes to make them more effective and more efficient, and our CIO’s influence on all that is very significant.

Five, 10, or 15 years ago the CIO role was viewed as a very esoteric speciality area. In many respects, the inner meshing of their job with the basic business was somewhat tangential, but that’s not true at all anymore. The things we’re doing with technology-ERP systems, e-commerce, and the business process redesign that accompanies all this-are right at the heart of managing and running a business. So I think the probability of ClOs gravitating toward division presidencies, presidencies of companies, and CEOs has got to be going up.

There are tracks to the CEO from both the CIO and CFO spots. I would say the CFO has probably some higher probability than the CIO, but again that gap is changing and those lines could cross in the early part of 2000. I would not overlook the possibility that the CIO and CFO roles could become merged down the road because the initiatives the CIO is now working on strike me as being very much intertwined with the efforts of the CFO. And if you find the right person who has expertise and experience in both, it would make a wonderful combination.

President

NBC Cable

The CEO has to be the CFO, general counsel, chief marketing strategist, the head of sales, head of personnel, and so on.

The CEO has to be almost every element of a company. I think the difference between now and years ago is that a lot of those other functions I just mentioned were always considered issues that got most of the CEO’s time, so the CIO issues were often things that were off in a cubbyhole someplace and maybe once in a while they got talked about or dealt with on the CEO level.

Now I think they get dealt with at the CEO level as an equal of every other function and in some ways, it’s emerging as even greater than any other function because of the importance of e-commerce, the Internet, interactivity, and the role of information technology in all of that. The CIO’s role is not eclipsed by the CEO but becomes more integral and more important and probably takes up much more of the CEO’s time.

Ten years from now you’ll probably find that the CIO has been a more typical path to being a CEO. You’ve had the path of CFOs, the COOS, the heads of sales staff, but, because e-commerce and interactivity are that much more important in the conduct of day-to-day business, 10 years from now you’ll probably increasingly see the CIO role as a stepping stone to the CEO office.

President and CEO

Gartner Group

For much of the past 20 years, the CEO really dealt at arm’s length with the CIO, and it’s only been the more enlightened of the CEOs that have really appreciated and valued the role that technology can play in their organizations.

Today I couldn’t imagine a CEO in America who is not challenged to be technology aware in just about everything they do. You look at the P&L and find you’re spending some 5 percent of your revenues on IT. So you’ve got one of your major cost elements of the enterprise right there on the technology line. From the CEO’s point of view, if you’re not technology astute, you and your enterprise are at a very significant disadvantage. And then I’ll say these two words: Y2K and e-commerce. If a relationship didn’t exist between the CIO and CEO before, then the Y2K issue was an excellent opportunity for them to get to know each other on a very intimate basis.

What we’ve generally found is that organizations have adopted two kinds of roles: the role of the CIO, which typically refers to a business strategist responsible for translating the corporation business strategy into a set of technical initiatives, and the CTO, who is the infrastructure owner. So there’s really a combination of roles there.

The more important one in terms of the CEO’s relationship to technology is the classic role of the CIO -that is, the person who is responsible for sitting at the strategic planning table of the corporation, for understanding technology but also for being a business partner with the CEO, translating business needs and strategy into technology initiatives; it’s an invaluable role and one that is going to challenge many of today’s ClOs in terms of their prior skill sets. Not all are equally qualified to do those kinds of things. We’ve seen many corporations use the CIO role as a developmental role for upcoming and emerging future business leaders where an individual might be doing very well in an operational, finance, or planning role and they’ll move for a two-year tour of duty into the CIO-ship to ensure they have the strong technical awareness, so they become the well-rounded business executive we’ll all need in the future. But there will definitely be a place for the CIO/CTO in the future.

The CIO who aspires to be the CEO is going to have to demonstrate strong fundamental business skills, operational success, broad operations skills, good interpersonal skills. You’re going to need to be broad-based no matter how you attempt to get to the corner office. But one of the things on your curriculum vitae will be a demonstrated awareness, knowledge, and practical application of technology because tomorrow’s businesses are now and will be emerging to be technology enabled and technology driven.

Chairman and CEO

iXL Corp.

The CEO is going to be heavily engaged in the technology discussion because this is either going to be the channel or one of the channels. It is going to be a major focus for companies or they’re going to get left in the dust. And the CEO is going to need a partner to help him or her make these technology and application bets. The CIO can be an active part of this and enhance his or her own standing in the company as well as engage in something that in my view is fascinating-to transform their whole business and be right there on the leading edge of it.

Or they can take the position that this is loosy goosy, it’s not fully cooked, it’s too racy, and we want to think about it longer. But if you try to take an Internet application, think about it, perfect it, build the whole thing behind the firewall, and get it all 100 percent right before you do anything with it, you’re going to be 12 or 24 months behind somebody else, and the game’s over.

In our company, when we approach the CIO, it’s no longer ready, aim, fire-or even ready, fire, aim. We just take the “ready” out. And now it’s just fire, aim. It’s a different mindset that says, “I’m not just here to protect that big box over there that we bought three years ago and amortize every nickel out of it, and get as much use out of it as long as I can until it just quits.”

This is a real-time evolving process that’s changing every single day, and it’s never gong to be perfect, because by the time you get there, somebody else has gone further. CEOs are looking for people to help them with that decision. They’re not looking for an anchor that they have to try to drag along. If that’s what it is, they’re going to say don’t come near me. But it’s a much more proactive position. It’s not somebody you stick down in the basement growing mushrooms and watching a computer.

In 10 years, the ClOs are going to be CEOs-if they get it. If they jump on this right now, they can own the biggest section of growth in their company.