The actual C-suite position a CIO studies to has a significant influence on the diploma to which know-how can assist or drive enterprise technique.
Organizational alignment provides main clues of IT’s place and worth inside a corporation. A CIO who understands their placement within the group can higher align with enterprise objectives and extra successfully advocate for know-how investments. Understanding what their supervisor desires to perform can provide insights to assist justify how the CIO can use know-how to attain these aims.
CIO reporting to the CFO: IT as value middle
In lots of circumstances, we see that the CIO studies to the CFO. What this normally means is that the CFO perceives the IT division as a price middle and can deal with value chopping.
CFOs have an eye fixed on enhancing the underside line, so if the CIO is reporting to finance, the CIO usually must deal with lowering IT spend.
CFOs are inclined to discourage enterprise know-how investments and in any other case instruct CIOs to maintain IT prices low. In response, CIOs must defer upkeep on IT methods and preserve legacy methods operating as an alternative of turning to new, extra trendy know-how. CFOs begrudgingly renew contracts and defer upkeep. Three- to four-year lifecycles flip into for much longer lifecycles.
Within the CIO-reporting-to-the-CFO construction, the CIO hardly ever has finances approval. If the CIO does have some finances approval, it tends to be at a low threshold, round $10,000 to $40,000. IT management autonomy tends to exist just for tactical Opex. The CFO tends to require approval for many IT prices, though the CEO might want to approve the most important expenditures.
The CIO-reporting-to-the-CFO structure works well solely the place commoditized, nonstrategic IT is sufficient to assist enterprise objectives. Some industries the place this may make sense embrace smaller manufacturing corporations, smaller group banks and corporations the place most IT features are largely outsourced. This CIO reporting construction solely is smart if the enterprise basically depends on value financial savings and price avoidance greater than innovation.
Recommendation on making a case for know-how spend
Within the case the place the CIO is reporting to finance, one of the best ways to get approval for know-how investments is to create a enterprise case that outlines a simple monetary justification for the funding. For instance, CIOs ought to make the case {that a} $100,000 spend will save $400,000 moderately than deal with extra strategic objectives reminiscent of improved customer support or lowering errors.
CIO reporting to the COO: IT as effectivity booster
CIOs report back to COOs when the main focus of the group is on process improvement, uniformity and scale — learn: effectivity. This alignment is typical of huge manufacturing corporations and really massive service corporations, the place creating repeatable processes that numerous folks can observe is essential for enterprise success.
Just like the CFO, the COO is normally involved with value financial savings. However when the CIO studies into the operational chief, course of effectivity is simply as necessary as value financial savings. The COO understands the significance of getting requirements, coaching and documentation to scale. With this CIO reporting construction, the IT chief could have extra capability to take a position. Nevertheless, the litmus take a look at for funding is how spending cash can change employees or enable operations to scale higher. The CIO will normally have a bigger signing authority for finances. However spending will normally be restricted to gadgets that finance has already accredited.
This CIO reporting construction is smart in process-driven organizations that rely on requirements growth and refinement.
A CIO who understands their placement within the group can higher align with enterprise objectives.
Recommendation on making a case for know-how spend
CIOs who report back to COOs ought to advocate for investments based mostly on how a selected know-how will assist operational usability, repeatability and scalability.
CIO reporting to the CEO: IT as strategic differentiator
The group of individuals straight reporting to the CEO are those that the chief govt believes lead essential features that decide the success of the enterprise. Consequently, if a CEO chooses to make the CIO a direct report, the highest firm chief sees IT as a operate that has a direct, strategic influence to the enterprise.
CIOs who report back to the CEO have probably the most management over know-how budgets, as a result of IT is strategic for the enterprise and will have a major finances to spend on IT. Whereas CEOs or the board will possible nonetheless must approve massive capital expenditures, the CIO’s position in justifying and influencing this funding is critical. Some examples of such expenditures embrace main information middle migrations, reminiscent of transferring inside methods to cloud IaaS companies reminiscent of AWS or Azure or creating a web-based market for a beforehand bodily service or product. The CEO is prone to see a brand new product or new market as strategic, the place lowering Opex as extra an effectivity play.
Recommendation on making a case for know-how spend
A CIO reporting to the CEO ought to focus on business value to make the case for a selected know-how funding. CIOs ought to focus much less on how to economize and extra on how you can create new alternatives for enterprise progress. IT companies are more than likely to have this construction, whereas IT service corporations are inclined to have the CIO in a main position.
How CIOs can align with enterprise technique
Whatever the CIOs place within the enterprise, it’s sensible to at all times contemplate the influence to the enterprise on any IT resolution. In the end, all positions roll as much as the CEO. The extra a CIO can present how IT aligns with the enterprise, the extra possible they are going to be to get their initiatives funded.
A method the CIO can improve their effectiveness is to construct a justification matrix, which mixes values, advantages and dangers as column headers in opposition to govt roles in rows. The CIO ought to then take into consideration the worth to the opposite individual of an funding they need to make, to allow them to sofa the worth of that funding in phrases more than likely to resonate with the meant viewers.
C-level worth matrix
Particular person
Values
Advantages of motion
Dangers of inaction
CEO
Enterprise, new markets, change
New markets, aggressive benefit
Miss market, shrink market share
COO
Standardization, effectivity
Scale employees, enhance effectivity metrics, repeatable high quality
Unhealthy consumer service, employees turnover, lack of ability to scale
