The Chief Information Officer (CIO) is an organization's most senior technology executive who reports to a non-technology executive. A CIO usually reports to the CEO but may also report to the CFO, COO, or another executive. The CIO is responsible for creating and implementing a technology strategy, executing it with people and investment, and aligning it with the CEO's and organization's vision and goals. The CIO is a strategic advisor, a thought leader, and a trusted confidante who is ultimately responsible for the entire organization's technology.
Beyond those immediate benefits, adept CIOs continue to add value by utilizing their understanding of the current technology landscape and trends to lead the technology initiatives that will support business objectives. They'll spend wisely, invest in initiatives that grow revenue and decrease costs, and assist in addressing tech-driven problems that may affect the business.
Experience makes a difference. The right CIO will capitalize on their knowledge of key business processes to be agile and responsive to the organization's needs. Encouraging innovation, they'll also mindfully mitigate risk within a well-crafted governance framework and source and manage the talent, vendors, and providers needed to carry out the work.
An experienced CIO will also connect with leaders across the organization - gathering insights and building relationships. These cross-enterprise perspectives will help them understand developing needs and persuasively represent to stakeholders the right technology initiatives that support business objectives. They'll architect technology strategies within "what's possible" in tandem with crucial business areas. Then, effectively working alongside their peers, they'll conceptualize and lead organizational change. They're also empowered to manage "what's now" and propose a roadmap needed for "what's next."
As a key influencer on the leadership team, the CIO will develop an innovative mindset across the organization and cultivate workflows and processes with innovation at its center.
A recent study by Deloitte's US CIO program found that over half (51%) of US CIOs report to the CEO, with just under half (46%) of global CIOs reporting to the CEO. More importantly, the same study found that the majority (55%) of CIOs who report to the CEO are self-described "digital leaders" compared with a majority (51%) of CIOs reporting to the CFO describing themselves as "digital supporters." Finally, the study demonstrates organizations that purport to have a digital strategy, as well as those in industries experiencing "profound technology-driven transformation or disruption," are in the majority, with CIOs reporting to the CEO.
Whether the CIO is a direct report of the CEO or some other role is a statement about the importance of technology to the organization. When the CIO reports to the CEO, it is both an indication of the organization's awareness and commitment to technology's impact on strategy and a statement about the type of CIO the organization hopes to attract or retain. Organizations are free to determine their reporting relationships concerning the CIO but should be aware of its impact on achieving their goals.
All but the very smallest of organizations can benefit from the advice and insight of a CIO. What varies most is how much of a CIO's time is needed to impact the organization and whether it has adopted a technology leadership model that can scale from a few hours per week to full-time without sacrificing leadership experience.
Organizations with 10 to 150 employees primarily solve their technology needs through an outsourced relationship with a Managed Services Provider (MSP) to manage employee devices (laptop/desktop/phones), cloud productivity solutions (email, Microsoft Office 365/Google Workspace), technical support/help desk, internet/networking, backup and recovery, and security. For these organizations, a fractional (part-time) CIO should participate in selecting the MSP, overseeing the MSP relationship to ensure quality and consistency of service, and addressing the strategic use of data and applications where MSPs don't typically excel. A fractional CIO can add value with as few as 1-4 hours per week and expand to 1-2 or 2-3 days per week as the organization grows, encounters strategic needs such as software implementations or M&A activity, or is burdened with security incidents involving significant legal, financial, and reputational risk. Significantly, the utilization of a fractional CIO can also decrease as the needs of the organization change.
As the number of employees grows, the complexity of the technology and the opportunity to use technology for innovation grows, and the cost/benefit of using an MSP begins to decline. Most organizations will transition from a purely outsourced relationship with an MSP to a co-managed technology model as early as 50-150 employees and progress to a mostly internal technology model by the time they reach 150-250+ employees. As the organization adds employees, contractors, and financial resources dedicated to managing technology, the need for a CIO to oversee the growing technology organization increases proportionately. These organizations will move to higher utilization of a fractional CIO from 1-2 days per week to 2-3 days per week or to their first full-time CIO.
There are situations, however, where the need for a CIO is based on other factors driving the importance of technology in an organization rather than the number of employees:
CEOs naturally expect CIOs to be technology experts. Still, the best CIOs have a deep knowledge of business that is as important as their technical expertise. As part of their role, CIOs must understand the core business processes, competencies, and skills needed for their organization to succeed. They need to know what drives the organization's value proposition and brand, its capabilities, market opportunities, and what it takes to win in the marketplace. As a result, they can play a vital role in designing and implementing strategies that drive innovation and growth.
CIOs must also be able to influence others and build strong relationships across the organization that allow them to lead change effectively. They must communicate strategy and its benefits so that their peers and the CEO will understand and support them. Failing to build these relationships and effectively lead change will downgrade the CIO role from "digital leader" to "digital supporter" and negatively impact the strategic use of technology.
Reaching the suitable security and compliance posture for an organization's industry or customers, directly or via collaboration with the Chief Information Security Officer (CISO), is critical to protect the organization's assets and reputation. Though security and compliance programs are vital, they add constraints and compete with financial and human resources used to increase revenue or profitability or expand into new markets. A keen understanding of how to achieve this balance of security and compliance, on the one hand, and innovation and agility, on the other, is another key attribute of the CIO. Failure to do so can result in intolerable risk or a stifling lack of innovation.
Finally, the CIO plays a crucial role in helping companies make sense of disruptive technologies like cloud computing, data analytics, web and mobile applications, blockchain-based technologies, and artificial intelligence/machine learning. Not only does the CIO help maintain organizational awareness of disruptive technologies, but the CIO also assists in determining how best to use these technologies to enhance existing processes and create new ones that deliver value.
As technology leadership becomes increasingly important and pervasive in business, the terminology used to describe the role and the need for clarity about it becomes more critical. This section discusses other titles used synonymously with the CIO title and some that seek to focus on specific aspects of the CIO role.
The most common title used interchangeably with CIO is the Chief Technology Officer or CTO. With a primary focus on technology, many assume the titles are synonymous. What they do have in common is that CIO and CTO both refer to the most senior technology-specific leader in an organization. The CTO, however, is mainly used for the senior technology role in an organization that derives most of its revenue from creating technology (a technology maker) and selling it to its customers: mostly commonly software companies. Since the CIO is often the senior technology leader in an organization that derives most of its revenue from something other than selling technology, the CIO tends to be primarily a buyer (a technology buyer) of the CTO's products for use within their organizations. Such a definition might not be universally shared but bringing clarity to a topic poorly understood outside of the technology domain is a helpful contribution.
The Director of Information Technology, or the Information Technology Director (IT Director), is another title commonly used to describe an organization's more senior technology-specific leader. The IT Director is substantially similar to the CIO role and usually serves an organization that is primarily a technology buyer rather than a technology maker. The difference is that the IT Director usually leads technology in a smaller organization, typically has less business and leadership experience than a CIO, and reports to someone other than the CEO (often the CFO). The result is that the IT Director has a more operational and tactical focus than a strategic focus. The IT Director typically aspires to the CIO role as they gain more business and leadership experience.
The Chief Digital Officer, or CDO, is a relatively new title used for technology leadership. Its use is part of a trend that includes additional, similar titles, including:
At the heart of the trend is an attempt to separate and elevate the innovation component of the CIO role (the "digital leader" mentioned earlier) from the often less-strategic, more operational part of the CIO role (the "digital supporter" discussed above). But elevating innovation within an organization is a complex undertaking that extends well beyond the title of the technology leader. A more straightforward explanation is that the CIO role has a strategic/innovation component and an operational/tactical component. Both must be well-executed and represented on the executive team.
The biggest challenge hiring a CIO solves is finding someone to take responsibility and accountability for all technology decisions within an organization. More than a simplistic observation, this transfer of responsibility for technology to a highly competent CIO is one of the most liberating and impactful decisions a CEO will make. From that point forward, the CIO sets out to understand the goals and challenges of the organization, the impact and success of past investments in technology products, services, and people, and how to best leverage technology to enable even greater organizational success.
Enumerating the responsibilities of the CIO role has been the subject of countless books and articles - each becoming quickly obsolete as the role evolves with increasing organizational dependence on technology and the technology leadership needed to harness its power. Many of these writings focus on the technology leader's growing need to focus on leadership qualities like teamwork, collaboration, and empathy. While these leadership attributes never go out of style, most organizations still need the basics of technology leadership: responsibility and accountability for making solid investments in technology products, services, and people to further the goals of their organizations.
There are four key responsibilities of the CIO role from which all other responsibilities flow:
Technology changes much faster than any organization can realistically adopt those changes. And the business climate in which the organization operates varies considerably across industries and from one year to the next. The top 3 CIO priorities below remain consistent through changes in technology and business climate across time:
All but the very smallest of companies can benefit from the advice and insight of a CIO. The driver for that need can vary considerably, though, between organizations. Those needs can increase and decrease in importance over time and in response to internal initiatives and external pressures.
There is a natural rhythm within the technology function of periods of innovation and increasing capabilities balanced with periods of stability and exploiting prior change. This technology innovation/stability cycle often influences the type of CIO needed and can play a role in the motivation of a CIO to stay, leave, or be attracted to an organization in search of a point within that rhythm that is more attractive to them.
Some common situations driving the need for a new CIO include:
The drivers for hiring a new CIO can lead to pursuing very different technology leaders, in different life stages, with varying amounts of experience and a range of career goals. The CEO must consider:
With an understanding of what is driving the need for a new CIO, a CEO must then consider:
For an executive role like a CIO, there are three dimensions of relevant experience. The quality and quantity needed for each type of experience will vary between organizations and are at least partially dependent on what is driving the need for a new CIO.
As with industry experience, functional experience relevant to a given organization is almost always positive but can be overused. CEOs may be tempted to screen for CIO candidates with specific functional experience but may overly restrict the candidate pool when that experience may be more appropriate for the CIO's direct reports (or an outsourced relationship). Functional experience may also be more relevant to another point along the technology innovation/stability cycle or simply a case where generalized experience (e.g., a different vendor's ERP or CRM) is sufficient considering other capabilities of the candidate.
The discussion of spend regarding the CIO role has two components: how much an organization spends for the CIO role (technology leadership spend) and how much the CIO spends on products, services, and people within the technology organization as a whole (technology spend). It is too simplistic to assume that more spend is always better or required, and there are nuances to spend that play a role in selecting a CIO.
One of the hallmark capabilities of a world-class CIO is helping an organization align its expectations of technology outcomes with its capacity to invest in, support, and assimilate those outcomes. Similarly, unrealistic expectations of technology outcomes in this regard contribute to higher failure and turnover in the CIO role. Often, an assessment by a highly qualified technology leader can help set realistic expectations in preparation for hiring a CIO.
An organization's needs driving the hiring of a CIO may impact the number of possible candidates based on their availability in two areas:
The previous two sections encouraged CEOs to think holistically about the organizational need driving the selection of a new CIO and reflect on the required experience, spend, and availability before selecting a hiring approach. While executive search remains the most familiar hiring approach, knowing all options empowers CEOs to make the best choice for their organization's short- and longer-term needs. This section reviews the Executive Search and Leadership-as-a-Service approaches to finding a CIO.
Retained executive search firms take a consultative approach to understand an organization considering a search to fill an executive role. The consulting process ensures that each client receives their full attention to craft search priorities and a search strategy that considers their unique needs for the role and the leader. A reputable firm will often understand the organization's culture, explore the reasons for the vacancy or new role, and become aware of any HR guidelines for the candidate. They may also develop insight into the personalities, work styles, and preferences of the CEO and the intended role's peers and spend time crafting a detailed job description and candidate profile specific to the client's organization. Successive interviews and feedback lead to selecting a preferred candidate who, hopefully, accepts the offer and transitions into the new role as a full-time employee.
Larger search firms have specialized practices for specific roles, and some search firms specialize entirely in roles within a particular domain such as Finance, Technology, Human Resources, etc. Fees for retained executive search services typically amount to one-third (33%) of the candidate's first-year cash compensation, including the base salary, signing bonus, and any other projected bonuses. The fee is paid in equal installments upon the start of the search, 60 days into the search, and following the acceptance of an offer by a candidate. For a CIO, this acquisition cost amounts to approximately 7% of cash compensation over the average tenure of 4.6 years (as of 2019). It does not include the cost of equity compensation, benefits, severance, and ongoing employment costs. The time to conduct a search varies but averages between 3 to 9 months from the start of the search to the candidate's start date, during which the client is usually without leadership in the role.
Leadership-as-a-Service (LaaS) is a managed service that allows an organization to engage vetted, world-class executive leaders in as little as a few days to 2 weeks. Technology Leadership-as-a-Service (TLaaS) is the LaaS concept applied exclusively to the CIO, CTO, and CISO roles. In most cases, executives of firms offering Leadership-as-a-Service have decades of experience in the role they are offering. Combined with the tens or hundreds of executives serving their clients in those roles, they are also experts on the role. Role-based expertise and a ready supply of available executives can dramatically reduce the time needed to fill a vacancy or apply senior talent to an important initiative. Technology leaders in a TLaaS model enjoy association with tens or hundreds of other technology leaders incentivized to help one another serve clients in ways that no single technology leader can achieve alone - employed or not.
TLaaS may be appropriate when an objective review of the organizational needs, required experience, spend, and availability allow for a CIO in an interim or fractional role. TLaaS may also offer a CIO in a situational leadership capacity to facilitate an important initiative such as an assessment, transformation, or consolidation for a specific outcome.
Fractional CIOs engage for 1-2, 2-3, or 3-4 days/week and the relationship is generally open-ended - continuing as long as the arrangement works for both the client and the leader. Interim CIO roles are full-time and generally assumed to end when a full-time, employed CIO is found - usually through executive search. Hybrid models allow a fractional or interim leader to be an employee of the client without requiring a long-term commitment while remaining connected to the larger community of technology leaders. Finally, most Leadership-as-a-Service firms offer a path to becoming a full-time employee of the client for a placement fee.
In contrast to up-front fees for executive search, Leadership-as-a-Service embeds fees for the leader in the monthly cost. Fees only last as long as the leader provides the needed value and can increase or decrease in response to the natural rhythm of innovation and stability over time. Models vary, but a general rule of thumb is that Leadership-as-a-Service costs, on average, about 20% more than the base salary of an equivalent leader in a full-time role. However, the cost of a CIO for 2-3 days per week with more experience across all three dimensions without hiring risk may be similar to, or less than, the combined acquisition, ongoing, and severance cost of a full-time, employed, possibly less-experienced, CIO with the associated hiring risk.
Executive search offers a custom approach to finding a perceived perfect fit for an expected long-term role. In contrast, Leadership-as-a-Service provides a ready pool of experienced leaders for immediate engagement under flexible terms.
After considering the organizational need driving the selection of a new CIO, reflecting on the required experience, spend, and availability, and reviewing the two approaches to hiring a CIO, the CEO will need to choose a hiring approach and make a final selection of a CIO. The good news is that either approach can produce equally qualified and effective CIOs. The right choice for a given organization, in a particular situation, at a given time will influence the hiring approach and final CIO selection. The Executive Search and Leadership-as-a-Service options are covered below.
The retained executive search model may be the obvious choice if the organization:
There are over 5,000 search firms in the United States and 20,000 or more worldwide, so there is no shortage of choices. The more specialized the firm, or a practice within a firm, is toward the CIO role and possibly even the CIO role within a given industry, the more likely the firm will be familiar with qualified CIOs when the firm reaches out to discuss the role. Demonstrated experience completing CIO searches with references to satisfied clients is a must. The search process is long, involving many hours of discussing the role, the profile, candidates, and offer strategy. Finding senior leaders and associates of the firm that match the organization's values and are enjoyable to work with can make the entire process more pleasant.
The search process emphasizes crafting a specific profile that will be most successful in the role at a given organization. Great care is taken to get input from multiple sources to arrive at a composite profile representing the perfect candidate. Finding the ideal candidate is a great goal, but the CIO role is relatively static across organizations and industries at any given time. Don't get creative in defining the role. A great CIO knows how to be a CIO and is a living profile. Value candidate experience and tenure most.
The highest predictor of success in a CIO role is past success in a CIO role and is likely not unique to the organization. When evaluating CIO candidates, consider the following observations:
The average tenure of a CIO in 2019 was 4.6 years, so the pool of available and interested candidates will be different on the next CIO search. Organizations cannot eliminate all hiring risk. Select the most experienced candidate available at the time and emphasize being an organization that can contribute to CIO success and commit to early detection of, and fast response to, a poor fit (e.g., fail fast).
If the analysis above fails to suggest a definite choice between Executive Search or Leadership-as-a-Service, or the potential to immediately engage a world-class, full- or part-time CIO with little hiring risk is attractive, Leadership-as-a-Service is a compelling choice.
There are far fewer individuals and Leadership-as-a-Service firms offering fractional and interim CIO services than there are search firms, so finding one may prove more challenging than engaging one.
Most fractional and interim CIO providers will be able to get started very quickly, often providing viable candidates within hours to days and beginning within one to two weeks if speed is essential.
Once the fractional or interim CIO starts, they start doing what CIOs do - assuming responsibility and accountability to support the organization. Generally, they operate like any CIO - attending leadership and Board meetings, providing status updates, managing the technology organization, interacting with customers and vendors, and carrying out the responsibilities and priorities of the CIO role. Interim roles are full-time and expected to be available just as any executive would be. Fractional roles are part-time and expected to be available on a regular, agreed-upon schedule and as-needed on a best-efforts basis. Fees are usually invoiced monthly or twice monthly. Larger firms have sufficient resources for ongoing contact with the firm's leaders as necessary and administrative support for resolving issues and smooth operation. Fractional and interim roles can be short-term or extended for years when there is a good fit and the organization believes the value proposition meets its needs.
As mentioned above, even if the organization has chosen Technology Leadership-as-a-Service to solve their technology leadership needs for a particular time or situation, Executive Search is often used to find a full-time employee. Most providers have good relationships with search firms and can make a referral when needed.
Executive Search and Leadership-as-a-Service are not entirely mutually exclusive. Executive search is almost always part of the interim CIO process and can be a part of the fractional CIO relationship when it's time to transition to a full-time employee. The fractional or interim CIO can be one of the most objective and qualified participants in the search:
Even if the organization has started an executive search and has not engaged a fractional or interim CIO from a Leadership-as-a-Service provider, it's not too late! Doing so will take some pressure off the organization to make a quick decision, provide reassuring coverage for the role while the search is ongoing, and, as explained above, can contribute positively to the search and transition after selection.
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