In the last few months, I’ve been reading several books. Some of the titles that impressed me include “Essentialism” by Greg McKeown and “The Phoneix Project” by Gene Kim and Kevin Behr. Since I completed those titles, I am now about halfway through with “The Future Arrived Yesterday” by Michael Malone. I believe that I’m starting to see a pattern of where business is heading if we’re not there today already. I see this pattern specifically about the role of the modern CIO.
In my past corporate life, my career at one company lasted through 6 CIOs and interim CIOs. A common joke in the industry is that CIO means “Career Is Over”. While some held the position longer than others, the joke did seem to have some realistic merit. Early in my career, I was unclear as to what the CIO role was for other than to lead the corporate information technology function. Since then, an ever clearer picture has developed for me over time.
Much of the industry banter regarding the CIO role describes the struggle of the CIO to get a seat “at the table”, whether that be on corporate boards or perhaps at least as a direct report of the CEO. During my time serving in information technology organizations, the CIO reported as high in the hierarchy as to a direct report of the CEO with peers who headed other corporate functions such as legal and HR.
Considering what I have learned from recent reading and reflecting on career experience, I cannot help but be influenced to see the future role of the CIO differently, especially in mid-market companies. Let me see if I can properly articulate what I am seeing.
First, many companies have outsourced IT altogether. They no longer have datacenters. Their operational support functions are outsourced including help desks, network support, application development and support and security. The employees remaining in many IT departments are a small collection of managers who manage the suppliers and their resources as a customer.
Second, many applications including email, calendaring, collaboration and line of business applications are being delivered by third-parties over the internet instead of being run in dedicated data centers by hired IT managed services companies. In some cases, which seem to be increasing in number, critical business functions supported by applications such as ERP and CRM are being not just hosted externally but offered as a subscription-based services to companies of all sizes.
Third, application development is largely outsourced and frequently provided from offshore locations. In the occasions that companies have upgrade, deployment or extension projects affecting their applications, a contract project manager is frequently used to execute the projects tactically.
Without data centers, operational staff, business applications or support to manage, what should the CIO be doing in order to create value for the organization? This is a curious question. Many of the CIO oriented forums and publications that I read would suggest that the CIO should be exploring new technology and driving innovation into the organization. While this sounds great, what does it mean for a CIO when the technology functions are largely or mostly outsourced?
It seems to be somewhat odd that the CIO as a customer of a hosted application service would be trying to “drive technology innovation” for their supplier. As odd as it seems, I’ve actually seen it attempted.
Modern American companies have been changing rapidly since the commercial adoption of the internet. The ability to source knowledge work from anywhere has been incredibly transformational to almost every industry. These changes have not just been commercial and economic but also social and cultural.
From the books, I mentioned at the beginning of this article I have gleaned the following core themes. First, you cannot scale without first doing a few things very, very well. Those need to be the essential elements of your organization. The fewer, the better.
Second, the chaos frequently experienced in IT is largely unrelated to any of the technology. IT problems are still frequently rooted in poor planning, poor process control and poor communication amongst team members.
Third, companies are becoming more modular in order to respond to more dynamic customers, more dynamic markets and complicated legislation.
To try and stich all this together nicely, I offer the following points.
– CIOs are not going to be getting “seats at the table” in many companies.
– The development, support and operational functions of IT are completely outsourceable.
– Government has dis-incented many mid-market companies from taking on full-time employees.
– CIO as a technology leader has become less necessary at companies with mostly outsourced IT.
In large companies, the CIO role as a permanent full-time resource has merit. The volume of change is just too great in spite of outsourcing the operational functions and application development. In a large organization, the CIO role is necessary to maintain continuity of the interface between the business and the IT functions.
What this seems to imply is that the CIO role needs to transform. Instead of being focused on technology the role needs to change to an information focused strategy role. The CIO needs to be the champion of enabling information to create value for the business. Accomplishing this is achieved primarily by focusing on business process, data and integration.
Instead of requesting budgets for new laptops, iPads, data centers, faster networks, etc. the new CIO needs to be talking to business leaders about simplification, fewer tools, less technology, streamlined processes, focused energy on the top business imperatives. The conversation should be about new markets, new customers, business performance and how to improve the balance sheet, income statement and cash flow.
From my perspective, if a CIO comes into an executive committee meeting and even says the word “cloud” or “virtualization” then the spot at the table will remain ungranted. Business leaders focused on running businesses do not care how IT gets their jobs done. There is no reason that new technology should ever be pitched to senior business management unless there is an obvious business case that can be easily articulated. Even then, the story needs to be told in terms of business benefits, not in terms of the technical “how”.
For mid-market companies, this scenario becomes even more interesting. If much of the operational IT is outsourced to a managed services provider and there is not much application change going on then having a full-time CIO on staff becomes a difficult item to cost justify. With no data centers to run, no network to support, no applications to develop what is left is largely a vendor management activity.
For many mid-market companies this is a perfectly acceptable scenario. The trouble comes when it is time for a change.
IT managed services firms are plentiful. Just in the locale where I live I know of at least five off the top of my head. Each firm I have explored is very infrastructure focused. They offer the same set of services: co-lo hosting, network, VOIP, PC support, etc.
So if you are a non-technical business person and you need to make application changes, what do you do? Well, you can shop for applications yourself. You can get referrals from your colleagues. You can get referrals from your IT managed services provider. While these are legitimate sources of information, the bigger picture view is missing.
Even if a company completely outsources all IT, and runs all its applications in the “cloud” or elsewhere there is no escaping the most value destroying challenge still present in business information systems – integration.
Now to the modern technologist, integration means creating interfaces between applications using one or more of several popular techniques. The technical integration however is not enough to ensure that the right value is created from the business process that the applications support.
Consider the basic business processes of a mid-market company. There is sales, finance, accounting, human resources, marketing, legal, payables, receivables, inventory, production, delivery, customer service, etc. Every business is using telephony and email. More savvy businesses are using collaboration tools like portals. Add in a finance package like Quickbooks, a CRM package, a warehouse management package, product lifecycle management packages, project management and countless other processes managed with spreadsheets, and it is easy to get into a data integration conundrum.
The functional integration challenge alone is just the beginning. Once the business process linkage and the data dependencies are understood, now the technology compatibilities must be discovered. Then the security implications need to be identified and addressed. All of this requires planning, strategy, funding, skilled resources and time to do properly.
The IT managed service provider is not going to do any of this business process or strategy work. It is not what IT managed services providers do.
The business leaders should not do this themselves since they have a business to run every day.
While the need for change happens in every mid-market business, it does not often happen enough to justify a full-time CIO. If it is happening enough then something else is wrong.
So what is mid-market business to do?
Consider hiring an outsourced CIO.
An outsourced CIO will get to know your business. They can help you setup strategies and plans to manage your service providers as well as get a handle on business processes, data, security and other information management items that are frequently overlooked by non-IT practitioners or infrastructure focused companies.
A seasoned IT professional with a few decades of experience in both applications, operations and business process can do wonders for a mid-market business. They will understand the major categories of activities that need to be planned and managed to get the maximum benefit from the investments that companies make in information technology. The very best CIOs can sit down with business leaders, talk their language, develop the right relationships and create lasting, valuable partnerships.
Today there are companies who offer outsourced CFO or outsourced CMO. There is clearly market recognition of the need in these areas. Outsourced CIO is no different.
Outsourced CIO is already happening for mid-market businesses today.
Spend a little time discussing the concept of outsourced CIO with your partners. Also, spend some time online searching for terms like “outsourced CIO”, “virtual CIO” and even “CIO as a Service”.
You may find that outsourced CIO could be a benefit for your modern organization now and in the future.