By Steve Schuckenbrock
Think back over the last month – during that period it’s likely more time has been spent with the CFO than the CIO. While the CFO plays a critical role in the organization, the separation between the CIO and the business strategy in today’s world is zero. To enact and achieve the strategy for an organization, the CIO might be the key component.
In years past, the IT department was charged with little more than back-office programming, but the CIO office has dramatically changed in the last sixty years. Today, mission-critical IT pervades every aspect of business, and in many businesses, information is the product. Yet there is a persistent disconnect between CEOs and their CIOs. Why? And more importantly, what can fix it?
As a president who is a former CIO, I’ve been on both sides of that divide. Many CEOs, with some justification, argue the IT department doesn’t understand the business, speaks an unintelligible language, and only knows how to add cost. The CIOs, for their part, complain they’re left out of strategic decision-making and aren’t given enough opportunity or resources to drive disruptive innovation agendas. Some feel forced to the position of “order taker.”
At times of major change, this disconnect often accelerates with demands and pressures to increase speed-to-market or improve innovation. The gap widens, causing the CEO to make sometimes drastic changes, including:
But these solutions are expensive and disruptive. To avoid such a situation, the CEO and CIO need to work together to build a solid bridge between the two offices to collectively set the business strategy. A soon-to-be-released study by The Economist Intelligence Unit shows CIO involvement in setting business strategy tends to correlate with financially outperforming the competition.
However, the same research tells a sobering story – fewer than half of surveyed C-suite executives rate their own CIO positively in terms of understanding the business, including the technical risks those businesses face on their journey to the cloud and other IT innovations. That lack of confidence often results in the CIO not getting a seat at the strategy table. One in six CIOs, the Economist Intelligence Unit study found, are merely consulted or have no role at all in formulating IT strategy. This type of exclusion is a strategic Achilles Heel in today’s world.
One example of a major discussion taking place right now between many CEOs and their CIOs is whether and how much, to commit to cloud computing. CEOs are primarily looking to it for cost savings, efficiency and flexibility. But as the cloud matures, it has the potential to transform businesses.
The cloud provides a way for organizations to foster both innovation and efficiency, and in at least one case, it is making a profound impact on the lives of children with cancer. The Translational Genomics Research Institute (TGen) is working on their new cloud-based IT infrastructure designed to help scientists and physicians accelerate and improve targeted treatment for pediatric cancer patients. The cloud will reduce tumor mapping and analysis time from months to days. And it will provide a secure, cloud-based framework for the pediatric oncology community to store, move and analyze genomic data effectively and efficiently.
This is just one powerful example of the potential behind bringing the CIO into the decision and problem-solving process early enough to get both innovation and efficiencies built into a resolution.
We are at an inflection point in time that will require the CIO profession to continue to evolve. The CIO must learn to speak in the language of business rather than the jargon of technology; the CIO must understand the business strategy and articulate how IT advances the enterprise in favor of gaining business value.
Open a dialogue with the CIO. Bring him or her to the strategy table and empower them to lead. Hold them accountable for three critical questions:
Finally, everyone’s got to ask, “What is the scorecard for success?” Just as traditional assumptions of many CEOs about the trade-off between cost and innovation are outdated, so are traditional metrics. CEOs must demand that IT investments aimed at making the business more efficient also produce innovative results that improve business processes, drive revenue or create new opportunities rather than just save money. The scorecard will vary from company to company, but metrics such as “total cost of ownership” should be jettisoned in favor of those that measure real value to the overall business.
To a remarkable extent, the skills required of a CEO or line-of-business president are the same as those required of today’s CIO: a strong end-to-end understanding of the business, a commitment to innovation and a vision for the future. So spend a little more time next month with the CIO. The organization will be better for it.
Dell Inc. President Steve Schuckenbrock has seen the tech future both as a President and CIO. Steve currently serves as the President of Dell Services, Dell’s global IT services and business solutions unit. Mr. Schuckenbrock is based in Plano.
Mar 13, 2017 Comments Off on Business Tax Issues for 2017