Is Your CIO Adding Value?

Many organizations are experiencing a crisis of confidence in their information systems (IS) functions and in the chief information officers (CIOs) who lead them. General managers are tired of being told that information technology (IT) can create competitive advantage and enable business transformation. What they observe and experience are IS project failures, unrelenting hype about IT, and rising information processing costs. Chief executive officers (CEOs) often don’t know how to evaluate the IS function’s performance and the CIO’s contribution. Consequently, radical IS management prescriptions, such as outsourcing and downsizing, are being applied, and CIOs are even being fired.1 Some of these fired CIOs are the same heroes of the IT profession whose photographs not long ago graced the covers of business magazines.

For several years, we have been researching IS leaders, doing extensive interviews with CEOs and CIOs.2 One study examined the factors that determined the relationships between CEOs and CIOs in fourteen organizations.3 A second project focused on the survival of CIOs. Ten matched pairs of surviving and nonsurviving CIOs in different industries were studied.4 In a third investigation, ten CIOs who had been interviewed in a 1986 study were revisited in order to understand their experience and learning over a five-year period.5 All of these studies involved CIOs in leading corporations across the spectrum of industries. Face-to-face interviews with CIOs and CEOs explored not only their actions and experiences but also their personal backgrounds, attitudes, and values and the organizational contexts in which they operated. We supplemented CIO interviews by administering psychometric tests. These and other studies give us data on the IS leadership in more than sixty organizations.

From this data, two patterns stand out. First, CEOs appear to be polarized between those who see IT as a strategic resource and those who see IT as a cost. Second, the CIO’s role and actions are crucial in ensuring that IT is deployed for strategic advantage and that the IS function delivers value. The CIO can and must add value, or IS will be seen as a problem instead of as a recognized strength.

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References

1. M.C. Lacity and R.A. Hirschheim, “The Information Systems Outsourcing Bandwagon,” Sloan Management Review, Fall 1993, pp. 73–93; and

J. Rothfeder and L. Driscoll, “CIO Is Starting to Stand for Career Is Over,” Business Week, 26 February 1990, pp. 47–48.

2. The authors would like to express their appreciation to KPMG’s IMPACT Group and to Egon Zehnder International for their funding of these research studies.

3. D.F. Feeny, B.R. Edwards, and K.M. Simpson, “Understanding the CEO/CIO Relationship,” MIS Quarterly 16 (1992): 435–448.

4. M.J. Earl, “The Chief Information Officer: A Study of Survival” (London: London Business School, Centre for Research in Information Management, Working Paper No. WP93/3, 1993).

5. The original study:

R.A. Hirschheim, M.J. Earl, D.F. Feeny, and M. Lockett, “An Exploration into the Management of the Information Systems Function: Key Issues and an Evolutionary Model,” Information Technology Management for Productivity and Competitive Advantage, IFIP TC-8 Open Conference, Singapore, March 1988.

The study that revisited the CIOs:

D.F. Feeny, “The Five-Year Learning of Ten IT Directors” (Oxford, England: Oxford Institute of Information Management, Research and Discussion Paper No. RD93/9, 1993).

6. P. Strassman, The Business Value of Computers (New Canaan, Connecticut: The Information Economics Press, 1990); and

M.M. Parker, R.J. Benson, and H.E. Trainor, Information Economics (London: Prentice Hall, 1988).

7. R.I. Benjamin, J.F. Rockart, M.S. Scott Morton, and J. Wyman, “Information Technology: A Strategic Opportunity,” Sloan Management Review, Spring 1984, pp. 3–10; and

F.W. McFarlan, “Information Technology Changes the Way You Compete,” Harvard Business Review, May–June 1984, pp. 98–103.

8. M.J. Earl, “Experiences in Strategic Information Systems Planning,” MIS Quarterly 17 (1993): 1–20.

9. M.J. Earl, Management Strategies for Information Technology (London: Prentice Hall, 1989); and

J.C. Henderson and N. Venkatraman, “Strategic Alignment: A Framework for Strategic Information Technology Management” (Cambridge, Massachusetts: MIT Sloan School of Management, Management in the 1990s Working Paper 89–076, 1989).

10. Feeny et al. (1992).

11. This has also been observed by:

C.S. Stephens, W.N. Ledbetter, A. Mitra, and F.N. Ford, “Executive or Functional Manager? The Nature of the CIO’s Job,” MIS Quarterly 16 (1992): 449–468.

12. R. Hamilton, “Kendall Outsources IS Chief,” Computerworld, 8 April 1989, pp. 1–4.

13. R.M. Belbin, Management Teams: Why They Succeed or Fail (London: Heinemann, 1981).

14. J.F. Rockart, “The Line Takes the Leadership — IS Management in a Wired Society,” Sloan Management Review, Summer 1988, pp. 57–64.