Senior IT decision makers have argued for years that CIOs should be on the boards of companies. While personal ambition or the hope of securing IT funding more easily may have driven some of those arguments, there are now genuine and pressing reasons for companies to bring CIOs into the fold.
The relationship between IT and the wider business continues to change rapidly. Business without IT has been unthinkable in many industries for years but, increasingly, business innovation is IT. Leading innovation through technology has become a challenge for most kinds of firms, whether in traditional or emerging industries.
This blog explores six reasons why CIOs should have a seat at the top table:
- New drivers of competitive advantage
- IT-led innovation
- Cloud economics
- Digital transformation
- Transferable skills
- Digital security
1. Competitive Advantage
For most types of companies and sectors, IT is no longer just a function supporting other lines of business and their processes. Whether formally recognized or not, IT is increasingly a core business capability.
The increasing dominance of technology in many areas of life represents a structural change, not just in the tech industry itself, but in society – and when society changes, businesses must adapt to survive.
In the past, the generic business strategy was to invest in IT so that it could support preexisting business processes. But the dynamic has changed; the strategy must now be to invest in IT to strengthen competitive advantage. This will happen by exploiting new business processes that stem from IT-led innovation.
Many companies whose main business is IT itself are leading the way in technology innovation. For example, Intel recently announced impressive gains based on technology, including
- US$ 656 million in business value from predictive analytics across Intel’s sales, supply chain, factory, and manufacturing operations worldwide
- A 39-week improvement in bringing Intel products to market thanks to a machine-learning platform
The danger is that non-IT businesses may not recognize that these kinds of technology-led improvements can drive efficiency, cost reduction, and speed to market in all kinds of business scenarios. And not having a CIO on the board is only going to increase the likelihood of passing up these kinds of opportunities.
3. Cloud Economics
Discussion of Cloud computing often emphasizes technology with little consideration of the underlying economic model. The model was simply described in a Siemens whitepaper:
“Customers… can lease the cloud computing services temporarily and then return them. The costs incurred in purchasing IT services shift from capital-intensive outlays to money-saving variable costs.”
Most business people would see the shift from large capital outlays to lower variable costs as a typical business issue. CIOs should take accountability and provide leadership for the cloud agenda from positions on the boards of companies – rather than merely shouting from the touch line.
4. Digital Transformation
Of all the reasons there might be to bring CIOs onto the boards of companies, it’s perhaps ironic that digital transformation is the weakest.
Digital transformation isn’t about technology, it’s about transforming the value chain in response to profound changes in society.
The fact is though, these social changes are largely based on technology. For business-to-consumer (B2C) companies, it’s a fact that buyers can now shop anything, anywhere, any time – or at least they can if they are buying from a digitally savvy company. Price comparison is simple, delivery had better be lightning fast, and poor service can result in a snowball of reputational damage.
Digital transformation is also powering changes in the way that all kinds of companies do their work, and again the main driver is information technology. Unified communications – to use the jargon – and project management mash-up technologies are driving faster times to market, cost reductions, and lower product defect rates. CIOs know – or certainly should know – these tools and their benefits intimately, and are well-placed to drive them into non-IT areas of the business.
5. Transferable Skills
CIOs have skills and approaches that the rest of the business can benefit from – and a CIO worth their salt should have deep experience in several areas of huge importance to the business in general.
A good CIO should know how to manage knowledge that helps to solve problems within the organization. Knowledge management is a fundamental building block for a “learning organization” and has huge benefits, not all of which are obvious. Costs can be reduced by spending less time on reinventing the wheel, employee engagement can improve when good knowledge tools are to hand, and continual improvement can be embedded in daily activities.
Talking of which, continual improvement should be a CIO’s bread and butter. From formal IT service management (ITSM) approaches through to Kaizen and Lean IT methods, a good CIO knows the value of business process assessment and improvement.
Risk management is another area in which CIOs can add value. Given the enormous focus on digital security (see below), risk management has risen to the top of IT agendas, and many IT departments now have an unrelenting grip on the management of risk.
On a more psychological level, the best CIOs will be adept at representing complex ideas in a simple manner. They are often people who have come up through the ranks – they will have been coders, process designers, and are probably visually articulate.
Most importantly, CIOs should already be experts in great customer service, whether that’s provided digitally or face to face. They also manage services. If your company’s IT department doesn’t speak “service” rather than “technology” and customer service isn’t great… then your current CIO may not be the best board candidate.
6. Digital Security
Perhaps the strongest reason to co-opt IT expertise onto the board is the pressing problem of IT security. It’s become obvious that many of today’s CIOs have NOT completely secured the technologies they manage; but the CIO is the person in your business who is – or should be – taking a strategic view of how best to combat security threats.
Protecting customer, financial, and other sensitive data, as well defending against hacks that could bring down the whole business, are activities that have to be at the heart of any modern business strategy.
In the end, we don’t invite CIOs onto the board – we invite a person, and the skills, experience, and achievements of individuals should count above all else. My argument, though, is that businesses need to reconsider policies – even if informal, unspoken ones – that CIOs should not be central to strategic business decision making, and therefore not be on the board. This harks back to an attitude that “IT is just a cost center.” And this approach, where it still exists, is way past its sell-by date. The maelstrom of change we are living through needs a new strategy, and for many firms a rethink of the relationship with technology is a great place to start.