Who Should The CIO Report To?

The question of who a CIO should report to within their organization only matters if the company places technology on their list of priorities. A CEO or board of directors who considers IT and other technology issues as one aspect of their business will pass off a CIO to other executives. In the case of this hypothetical business, the question of who a CIO should report to is irrelevant. However, most businesses are recognizing that technology is a high priority in taking their products and services to the next level. A CEO that wants the best possible IT system within their company needs to think about who a CIO should report to.

What does any of this have to do with the “Triple Bottom Line”? A lot if IT is a significant part of your organization. Its effectiveness directly impacts the “Profit” portion of the Triple Bottom Line.

Before delving into why a CEO is an ideal reporting source for CIOs, it is critical to understand the origins of the question at hand. After all, it is difficult to answer such a complex question without understanding who is asking it or why it is important to a business. There are four compelling reasons that have been given by both CEOs and CIOs why the question of executive reporting has been difficult to answer over the last decade.

First and foremost, CEOs are often seen as too busy or aloof to deal with the daily issues that a CIO has to contend with. CIOs need to deal with how an IT infrastructure, new technology purchases, projects and future innovations influence activities throughout the company. As such, the work of a CIO is quite meticulous and detail oriented. CEOs at major companies often overlook the specific details brought to them by CIOs because they need to see the broad strokes of the business.

While CIOs often report to busy CEOs who pass the report off to someone else, other CIOs deal with chief executive officers who are looking to play politics in the work place. Many CEOs have achieved their level within a corporation through a combination of intelligence, hard work, and a willingness to manipulate situations to their advantage. One well known CEO told me that when he was a CFO (at other companies) that he had the CIO always report to him because, “Let’s be honest Rick, I like the power”. This perspective is not unique as many CEOs are staving off the pressures by allowing other “C” level executives (CFO, COO) to assume high level responsibility for the CIO.

CEOs who have been asked why they don’t want CIOs to report to them often say that these professionals have a very specific knowledge that does not translate to the general business. Unfortunately many CIOs know a lot about IT issues but often lack the ability to see the forest for the trees. CEOs will take in reports from CIOs about departmental issues but notice that information technology projects lack fluidity in their relation to finances, operations, and other business departments. Another CEO asked about their relationship with a CIO said that he typically redirects the CIO to the CFO or COO, who can better help them assess the effects of their report on the business at hand.

Throughout the world, CIOs have responded to these criticisms by saying that CEOs lack knowledge of technological issues. CEOs often look at operational or IT issues in terms of the immediate bottom line rather than seeing innovation or building a solid IT infrastructure as a long term investment. This issue comes to light when CEOs have to explain why their company has not fulfilled their promise to increase commitment to information technology. In essence, CIOs see a disconnect between the public position of their company about technology and the inner workings of the company.

On the other hand when I was CEO of a company a few years back, the CIO came to me with a proposal for a new piece of very expense equipment. When I asked him why, he kept telling me how it would help the business but never provided me any metrics nor most important a ROI. After asking him the “5 whys”, all he could answer sheepishly was “it is really cool technology.”

Despite all of the reasons mentioned above, many CIOS prefer to speak directly to the CEO. In the March 1, 2002, issue of CIO Magazine, a survey of CIOs reported that 51% of these officers report directly to their CEO. The article in which these findings are reported also reports that the COO is a preferred reporting source for 12% of CIOs and another 11% of information officers report to CFOs. Larraine Rodgers, the president of the Arizona Partnership for Higher Education and Business, stated that she prefers to work directly with the CEO because access to high level clients are gained through connections to their company leader (Tom Field, CIO, 3/1/02). By stating who her immediate superior is, Rodgers can get into any meeting she needs to get her job done.

Indeed, Rodgers is only one of a number of CIOs who are demanding access to the CEO as a precondition of their employment. Talented CIOs are recognizing that their own success is tied into their relationship with senior executives. A CIO who is locked out of the board room or the CEO’s office cannot help develop policies and general business strategy. Determined officers never want to be kept out of the loop and a slim majority of those polled by CIO recognize that the door stop keeping the meeting room open to them is their relationship with a CEO. The only question for these CIOs is whether the effort to get into the meeting room means that their input is as valuable as that of their colleagues.

In the end, a CIO needs to understand the management structure of their employer before dictating their reporting preference or more importantly before they even accept the position in the first place. I have seen too many CIOs walk blissfully into this sweet trap, driven more by the ego’s desire for the title than rational thought. Although, CIOs should take note that dynamic and flexible companies on the global stage are beginning to move away from rigid corporate structures and toward flexible arrangements based on the discretion of the senior executive officers. CIOs like Meg Aranow, who works with Boston Medical Center, and John Parker, CTO at A.G. Edwards & Sons, feel that the level of input and communication are far more important than who is being reported to.

Aranow has said that it is basically immaterial who a CIO reports to as long as they have input and are included in the overall business strategy. Parker states that, “As long as I get the right level of communication and access to the CEO, I’m not too worried about the relationship.” (Field, CIO, 3/01/02) Let us be honest. Can you really achieve this more effectively if the CIO is not reporting to the CEO? Maybe but:

• You will have less access to the CEO and other “C” level executives

• Your job becomes of less strategic value and one of more operational/tactical deployment and maintenance

• You will have less control of your budget

• And your job will not be as inspiring, which in my book is one of the key ingredients for innovation, the lifeblood of any successful IT organization

All judgments aside, if the CIO cannot effectively translate the business mission and goals into a strategic technology plan with supporting tactical milestones… and implement it and… conversely if the CIO cannot clearly and powerfully explain the reasons behind the technology initiative, then perhaps another “C” level executive is more appropriate to act as the go between the CEO and CIO. Frankly, if this is the case, then the company should consider finding a new CIO.