Firms reap benefits of board-level IT chiefs

CIOs who enjoy senior management status tend to outperform their peers, according to research

Firms that grant IT chiefs a senior position in business management are more likely to have high-performing technology departments, according to a report to be published next week by US business consultancy The Hackett Group.

The research measured the efficiency and effectiveness of 200 firms’ IT departments and found the top 12 percent all had chief information officers (CIOs) whose position encompassed a senior role in business management.

Of the remaining IT departments, only just over half (56 percent) had CIOs in such roles. The survey also found that more than two-thirds of the top-performing IT chiefs reported directly to their chief executive, compared with just 20 percent of the others.

“Every one of the world-class IT departments had a senior IT person with a seat at the management table and most had direct communication with the CEO,” said report author Scott Holland. “They weren’t necessarily on the board of directors, but they were high up enough to be part of the governing body and be involved in strategic decisions.”

Unless companies give CIOs a senior management position, strategies that require IT support may be planned without technical input, the report argues. As a result the technical component will often fail to meet business needs. “If they don’t have a seat at the table, CIOs are more inclined to just take orders,” said Holland.

The findings were welcomed by Alistair Russell of the National Computing Centre (NCC)’s Impact Programme, which works with the CIO Connect group to provide development support and training for senior IT professionals. “This research aligns with anecdotal evidence that giving CIOs a senior role brings plenty of benefits,” he said.

David Yu of Betfair, who last month was promoted to chief executive after previously working as the company’s IT chief, agreed CIOs should have the ear of senior management. “Reporting directly into the CEO enables the CIO and his peers to align goals while encouraging IT input and awareness during decision-making,” he said.

Some argued that ensuring CIOs have clear communication channels with chief executives is more important than their actually having a seat on the board.

Firms reap benefits of board-level IT chiefs

CIOs who enjoy senior management status tend to outperform their peers, according to research

“I’ve seen firms where CIOs have been given a board position when they have been pretty unsuited to the role,” warned Richard Sykes, former group vice-president of IT at chemical giant ICI.

The Hackett Group said that the group it defined as “world-class” IT departments have better skills to support business. Over a third of managers in these departments have an advanced degree – almost double the proportion found in other IT departments.

Ongoing research by the NCC’s Impact group suggests that IT directors wanting a more senior role need to develop broader managerial and leadership skills. “We find there is a threshold level of technical skills all CIOs have, but the difference with really successful CIOs is that they also have strong leadership skills,” said Russell.

Sykes said that CIOs from industries such as banking and financial services, where IT has become embedded in the business, are increasingly displaying the required mix of skills.

The report concluded that simply demanding a more influential role rarely works. Instead, IT directors should highlight the role of technology in strategic projects and recruit IT professionals with both business and technical skills.