The extinction of the CIO
The role of the CIO is facing extinction and environmental factors require this beast to evolve if it is to survive as a meaningful creature. So what are the changes that will result in the extinction of the CIO? There are two huge drivers that are pushing the classical CIO towards terminal decline.
Firstly, the erroneous belief that all innovation depends on technology has now been replaced by an atmosphere of deep cynicism. Commentators like Nicholas Carr (who wrote the seminal article IT doesn’t matter for the Harvard Business Review in 2003) are calling time on the deeply ingrained belief that ‘technology = competitive edge’.
Carr argues (most recently in his book Does IT matter?) that IT is now a commodity that is only capable of delivering very short-term competitive advantage.
However, Carr’s thesis misses a crucial point. While it is clear that a huge proportion of the IT that we have and use provides no differentiation at all – a small proportion of it can provide us with a significant commercial advantage, if properly exploited. The secret lies not in giving up on IT innovation as Carr proposes, but in figuring out which IT is a commodity and which IT is capable of delivering competitive advantage.
The only intelligent response for technology users is not to give up on technology as a means of obtaining strategic advantage, but instead to focus on business processes and apply technology to those processes in a discriminating manner according to the level of competitive differentiation that they deliver.
The second factor that will lead to the extinction of the CIO is the growing gulf between ‘the business’ and the IT department. This is by no means a new issue. Indeed, concerns about the ability of IT to properly deliver business requirements (or from the other point of view, concerns about the ability of the business to properly express its requirements) have been with us since the mainframe was first switched on a little over 40 years ago. For four decades we’ve watched this gap widening without actually achieving any success in bridging it. We have made countless half-hearted attempts, but early enthusiasm quickly fades as we discover that solving this problem is going to require a lot more effort than we are willing to put in.
These challenges are too much for the CIO. This lumbering beast has been dimly aware for years that the key to delivering value lies in establishing much closer links to the business and in differentiating between IT as a commodity and IT as a competitive weapon. However, it has been manifestly unable to revise its technological view of the universe.
The genus CIO is in the process of splitting into two new species: lizards and birds. Lizards will be responsible for the delivery of core IT and will be solely measured on the level of service they deliver and the amount of money they spend to deliver it. Lizards will be the unsung heroes of IT, playing a largely unnoticed role (unless things go wrong) in ensuring that the enterprise continues to function. Despite their value and importance, lizards are unlikely to make it to the boardroom – let alone the big corner office with a big brass plaque saying ‘CEO’ on the door.
Birds, on the other hand, will wear suits not lab coats. They will be responsible for business processes, innovation and change management. They will not be measured in terms of cost, but in terms of return on investment (ROI). Birds will be allowed to spend money on innovation, provided it results in definite business results. They will sit on the board, and will stand as good a chance as any of getting the top job. For the most part, lizards will report to birds. Birds also don’t necessarily need to have a technical background; they can come from commercial or supporting functions within the enterprise. Their talent lies not in understanding the intricacies of technology, but in understanding what it is that the business needs to do in order to differentiate itself. They can then work with the lizard to figure out what this means from a technical perspective.
Lizards buy technology, birds buy business outcomes
This splitting of the genus CIO has an important impact on the way technologies and solutions should be sold. Lizards are not in the business of taking risks: they don’t buy ‘solutions’, they buy technology. Lizards have to justify expenditure within a single budget period, and lizards know the cost of everything. Selling to lizards will be primarily about cost and risk. They need reassurance that your proposition is going to save them money without putting their SLA-based performance targets at risk.
Birds, on the other hand, are most concerned with innovation and business process change. Birds don’t want to hear about technology, and they are deeply sceptical about the word ‘solution’ – what they want to know is how the business will benefit.
The shift from a technology sale to one focused on business outcomes is a considerable one. Technology companies and service providers have long used the term ‘solution’ when they have sought to beef up a technology sale. You cannot create a business outcome-based message simply by throwing some technology into a colourful box. Business outcome selling demands that you understand precisely what the goals of the prospect are, and at times you will have to do this even when the prospect isn’t completely clear about their goals.
Service providers have to recognise the breed they’re dealing with, and tailor their pitch accordingly
In order to sell services to lizards and birds, the first key task is to identify the breed that you’re dealing with. If your prospect is terribly concerned about the hardware that you’ll be using then the chances are you’re talking to a lizard. If your prospect wants to know about innovation and ROI, and is capable of talking to you about their requirement for more than a minute without mentioning IBM, Sun or Microsoft, then you’re probably talking to a bird.
Lizards will need to be reassured by the technical excellence of your solution and will expect you to demonstrate that you can run things efficiently by offering keen pricing. Lizards will want you to commit to aggressive cost reduction and, provided you manage their expectations correctly, you should be able to make the link between price reduction and operational stability.
Birds will need to be reassured that you can help them innovate by delivering new technologies without all of the flesh-wounds that ‘bleeding edge’ technology usually cause. Birds will want flexible agreements that contain a framework to manage change; they will not want to be caged by a monolithic agreement which penalises them every time they want to change it.
In many respects this separation of priorities is a good thing – we’ve been encouraging end users and service providers to draw a distinction between utility functions and differentiating functions. Utility functions are stable and can be subject to tightly drawn agreements. Differentiating functions, on the other hand, encapsulate the competitive edge of the client, and flexibility is essential here in order for the organisation to innovate and to gain the birds’ confidence.
Gary Barnett is the Research Director responsible for Ovum's research into open source, intellectual property and on-demand technology, focusing on the strategic issues surrounding technology selection, best practice and strategy. He has written and contributed to many ovum reports, including: The road to on-demand; UK financial services sector: the market for software and IT services; Linux: into the mainstream; Application servers: creating the web-enabled enterprise; and Ovum evaluates: enterprise middleware. Gary is frequently quoted in the worldwide trade press and writes columns for several IT-related publications. He is a well-known speaker at conferences on topics as varied as 'The future of the CIO', 'IT doesn't matter?' and outsourcing.