Why CIOs should report to the CEO

We exist in an age where business and technology are wholly intertwined. Therefore it’s impossible to underestimate the importance of a robust IT strategy when it comes to gaining competitive advantage and organisational success.

The 2015 Harvey Nash CIO Survey in association with KPMG – which polled nearly 4,000 IT executives from more than 50 countries – demonstrates a belief that digital innovation is disrupting business models. As a result, CIOs have to move more quickly than ever before when it comes to the development of innovative new infrastructure and applications.

The report also suggests the number of CIOs in the boardroom is rapidly increasing due to the greater importance being placed on business intelligence and analytics.

In addition, recent high profile hackings have made executives acutely aware of the catastrophic consequences a cyber-attack could have on their business, thus nudging IT security well up on their list of priorities.

When IT plays such a crucial role in almost every aspect of a business’s operations, it’s imperative that the CIO report to the individual whose major priority is the company’s overall strategic performance – either the CEO or the COO. It’s also important that they be assessed on their ability to direct and organise the IT operation to add value to the business.

Speaking with Computerworld, CIO and business technology advisor Al Kulber says that CIOs should "…hold a C-level position, and as such they should report to the strategic leader, meaning either the CEO or the COO."

However, this isn’t always the case, and in many instances CIOs report to CFOs. The problem with this line of reporting is that CFOs are often quite risk-averse. Their main priority is securing company finances, so they need to exercise caution, question expenditure and implement rigid processes.

CIOs on the other hand, thrive when given the freedom to take risks. Any CIO reporting to the CFO is therefore in danger of having their wings clipped. They may feel pressure to operate conservatively, potentially missing opportunities to gain competitive advantage, particularly in the long-term.

As Kulber says, in an ideal world each CEO would view their CIO as a partner. The CIO would be given regular opportunities to sell their vision to the organisational chief, ensure they are across key aspects of IT strategy, and explain how they would support the company’s overall strategic goals.

There is also the issue of perception. Considering the important role IT plays in a company’s success, having the CIO report to the CEO acts as a clear signal to all other areas of the business that the IT strategy is of high importance.

With the role of CIO, there often comes the need to make significant organisational changes, which can come up against a lot of resistance. Knowing any challenge to the IT strategy will need to be taken up with the CEO can mean less internal opposition to essential changes.

Marc Snyder, Managing Director, CIO Advisory Global Centre of Excellence, KPMG in the US says that, while a successful digital strategy relies on a committed CEO and an innovative and ‘failure friendly’ culture, "…the glue that seems to hold it together is a CIO who has the ambition, relationships and influence to enable it all to happen."

It is probably rather simplistic to suggest every CIO should automatically report to the CEO, because there needs to be a strong justification for adopting this line of reporting. After all, CEOs need to keep the number of people reporting to them at a minimum. Every organisation is unique and as such, the situation must be assessed on a case-by-case basis.

In conversation with itnews Mark Raskino, Vice President and Gartner Fellow in the Executive Leadership and Innovation group of Gartner Research says, "Some CIOs may aspire to a CEO reporting line as a way to get more visibility for IT and attention to key decisions about its utilisation. In that case, a seat at the operating committee table or membership of the strategic planning committee may suffice. A direct-line reporting relationship of CIO to CEO suggests more frequent contact, a pair working on specific business problems, trust building or personal development is required."

A true C-level CIO should have so much more than technical competence. They should display leadership qualities, and possess considerable business acumen when it comes to strategy, growth and relationships. It is CIOs of this caliber who should most definitely be working closely with their CEOs and should be given the opportunity to offer their expertise when it comes to decision making about the future direction of their organisations.