Today's CIOs are sticking around longer, because they contribute to the business.
Good news for CIOs: Tenure in the top IT spot has lengthened over the last few years, hitting an average of 3.6 years, according to a recent Society for Information Management survey.
The “State of the CIO 2006” survey from CIO magazine, a sister IDG publication of Network World, takes an even more bullish view, citing an average tenure of nearly five years. Theses findings are more optimistic than the 18-month figure that was widely quoted as a CIO’s average longevity just a few years ago.
What’s behind the longer stays on the job? CIOs have found ways to extend their sphere of influence beyond IT, says Sam Marwaha, a New York principal at consultancy McKinsey & Co. For example, one of Marwaha’s CIO clients had extensive work experience in a low-margin industry. When he changed to a higher-margin industry, he took over the running of corporate shared services (including HR, procurement and facilities management) in addition to heading up IT. “He’s part of delivering standard business infrastructure services. That will lengthen his stickiness to the organization,” he says.
Because technology is an integral part of business processes and functions, in many organizations it is second nature for the CIO to take ownership of process-improvement initiatives, such as Six Sigma. “As processes are based more on technology, CIOs can own them. This links the CIO much more tightly to the business, with the potential to have a faster impact,” says Paul Wilmott, a McKinsey principal.
Successful CIOs are involved outside IT to such a degree today one wonders if the role will endure as a separate entity. Another McKinsey client has taken over responsibility for delivering innovation to the business. “Having a CEO-level mandate to drive business innovation gives an ability to be migrated into the lines of business,” Wilmott says. Many CIOs are crossing from technology into business lines and back again, making it even more possible for them to communicate with their business counterparts, as well as to execute initiatives aligned with business goals.
When Tom Shelman assumed the CIO mantle at Northrop Grumman almost a decade ago, he had a strong business track record. Northrop had just acquired Shelman’s employer. To his surprise, the Los Angeles-based global defense company offered him the position of CIO and vice president of technology. Although Northrop’s revenue at the time was about $6 billion, not today’s $30 billion, Shelman was overwhelmed. Outlasting the industry-average CIO tenure was not high on his radar screen.
“My first year I was drinking from a fire hose. We had industry downsizing and brutal budget reductions,” Shelman says. By the second year, he felt more comfortable and ready to roll with whatever changes the job would bring. “It hasn’t been the same job any two years,” he says. Shelman has succeeded in underspending his IT budget year in, year out, even as the business has grown rapidly.
“Now I have VPs under me who are in charge of businesses as large as the one I headed when I became [corporate] CIO,” says Shelman, who attributes his longevity in part to his willingness to be judged alongside every other business leader. “I have a commitment to take out costs or produce increased margin,” he says.
A shift in metrics
Traditionally, CIOs stumble when it comes to the metrics by which they are judged, Marwaha and Wilmott say. Today, even CIOs at large companies typically are measured by their ability to slash IT costs. “The only thing they usually get measured on is the cost of IT. That’s why [CIOs] have to say no to things,” Marwaha says. That’s often the root of the disconnection between IT and the business. If CIOs’ performance is measured on such things as process improvement and number of business innovations, on the other hand, their worth to the business will be clearer.
The trick is to reframe the dialog to deemphasize the importance of cost savings so IT is measured on its ability to affect the bottom line. “We have seen CIOs successfully engaging senior management and convincing them they should be measured on different things,” Marwaha says.
Another factor contributing to greater stability in the CIO position is the end of the last boom-bust cycle at the end of the 1990s and the beginning of the 21st century. “You saw high turnover during the dot-com upswing and downswing. During the boom companies thought they needed a whole new animal to run IT. In the downturn, they thought they needed a cost-based person,” Wilmott says. “Businesses have gotten much smarter on who they need in the job. There is an increasing recognition that IT problems are difficult to solve overnight.”
For his part, Shelman says he expects to be judged on the same time frame as his business peers. “I’m certainly not planning on taking longer to deliver results than anyone else. If you understand how technology enables the business, you should be able to lead the way on that,” he says.
Paul is a freelance writer in Waban, Mass. She can be reached at lauren.paul@comcast.net
