Through conversations with senior executives, CIOs, and executive recruiters, we've identified three main challenges to effective CIO onboardings that continue to account for high turnover: the CIO's evolving role; the alignment gap between IT and business; and high risks in IT project portfolios. 1. The evolving role. Compared with other senior-executive roles, that of the CIO is relatively new. Nonetheless, organizations see the job not only as a strategic function, but as a key potential driver of value and competitive advantage?a far cry from IT's origins in back-office data processing and technology operations. Many CIOs figure prominently in helping their companies innovate by leveraging information about customers, suppliers, and operations. Progressive CIOs also take advantage of the unique cross-functional perspective they've gained from serving most business units and corporate functions to exploit opportunities for streamlining and integrating business processes. However, the ability to do these things hinges largely on the CEO's tech savvy and trust in the CIO. It also depends on the CIO's credibility and executive leadership skills. These are all subjective attributes that can change over time. In the course of defining their discretionary powers, CIOs must balance the often-competing demands of their many constituents?namely, senior corporate leaders, business-unit leaders, IT staff, and vendors (see sidebar). In this fluid environment, even the very best CIOs continue to struggle to establish a clear charter for their jobs and build consensus on the objectives of the IT function. Therefore, developing a clear sense of the CIO's discretionary powers, how they evolve over time, what metrics and outcomes the CIO is ultimately accountable for, and how to mediate among the various constituents is essential to a successful executive transition. 2. The alignment gap. Much has been said about aligning IT with business needs? another core challenge of IT management. Two trends conspire to make this particularly difficult. First, the organizational structure of the corporate IT function is in constant flux, driven by changes in the technology landscape. The story of the past 15 years is telling: We've moved from highly centralized mainframes to distributed client/servers, only to launch a new wave of IT centralization with the rise of the Internet. As Web services and SOA mature, another wave of decentralization of IT could be in the works. Therefore, it's fair to say that IT is a function in perpetual evolution. At the same time, it's a truism of modern-day management that the pace of business change is unrelenting. As corporations integrate their business processes with external partners, suppliers, and customers, more of IT's job is subject to demands outside the four walls of the corporation?demands that are difficult to control and forecast. In light of this, business units require IT to deliver services with the flexibility to accommodate unforeseen circumstances. This will place the CIO squarely in the midst of a perennial organizational quandary?how to achieve economies of scale through centralization while remaining responsive to business needs (see chart above). It's no surprise that many smart CIOs plan to reorganize their departments every two years, under the assumption that no matter how effective they are at maintaining alignment through good leadership and relationship building, the organizations will need periodic adjustments. 3. High risks in IT project portfolios. One of the hard truths about IT leadership is that most large IT projects are delivered late and over budget, posing significant career risks for CIOs. "We're 75% on time and on budget" for projects exceeding $10 million, says the CIO of a major automaker division. "That's not bad if you're playing baseball?but in a culture that's not really compassionate about defects, it's not a good batting average." The root causes of IT project failure are complex and nuanced. Often, the causes stem from disengaged business sponsors. But at the end of the day, it's the CIO who's held accountable. The bigger the project, the more likely it will fail, seriously disrupting business operations. Project flameouts have burned many a CIO career, and most IT project portfolios contain at least one or two plans that seemed solid at approval time but have since hit unexpected trouble. New CIOs are well-advised to review these portfolios early on to ensure that the project-management organization provides ongoing visibility to the business case and risk profile for each major project. Early intervention in a wayward project can make you a hero. But if you miss a big risk, you could end up exhausting your political capital very early in your tenure.
The pervasive nature of these three core challenges complicates the already difficult task of CIO transitioning and presents daunting tasks for new CIOs. From the outset, CIOs must position themselves not only as technology experts, but as strategic business partners. Incredible as it may seem given the complexities of their job, our research shows that the traditional grace period for new CIOs has shrunk to a mere 100 days, compared with the six-month honeymoon they typically enjoyed just two years ago. "At the end of 100 days, either I have to execute or be executed," says one of our CIO members who works at a large manufacturing company. "The first 100 days should be spent observing, analyzing, and brainstorming, but after that, actionable steps and deliverable results should be the key focus." The CIO Executive Board, an arm of the Corporate Executive Board, has organized its resources around four core imperatives for new CIOs:
To perform their jobs effectively, CIOs must balance the needs of multiple constituencies whose interests and incentives often conflict. Senior corporate leadership. The CEO, CFO, and other members of the executive committee will hold the CIO accountable for the reliability and cost-efficiency of IT operations. If critical systems are down or major projects are delayed, it's the CIO who will be in the hot seat. Yet senior execs are also increasingly counting on the CIO to serve as a strategic business partner, helping to identify and exploit opportunities for deployment of IT to drive competitive advantage and business innovation. Resolving the conflict between these two often-competing demands is one of the keys to being an effective CIO. Business-unit leadership. Divisional and business-unit general managers, highly focused on meeting their profitability targets, will also insist on operational reliability and cost-efficiency. Given their focus on short-term business performance, they're typically skeptical of major-change efforts or long-term projects. That said, an increasing number of business-unit leaders, particularly the younger ones, are demanding more from IT in terms of business functionality and analytics. Although they're tech savvy, they're naive about what it takes to make technology work; CIOs often find themselves having to clarify what's really needed to produce the desired results. IT staff. One of the major challenges facing CIOs is how to transform their IT people from technologists to business enablers. This is a tricky balancing act in itself?no IT organization can survive without its geeks?but the absence of business leadership within the ranks can lead to severe misalignment with business objectives. So progressive CIOs are redesigning competency models, revamping their performance-evaluation processes, and boosting the business-skills quotient of their key deputies. IT vendors. As the tech industry consolidates and matures, CIOs are increasingly relying on a narrower?and often more powerful?set of key IT product and service providers. Relationships between IT vendors and corporate clients are fraught with conflicts. Resolving these effectively requires strong negotiation, analysis, and relationship-management skills to identify the areas of mutual benefit.
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