As with most things about the CIO role, the position’s reporting line tends to be discussed quite a lot. Historically the majority of CIOs reported to the organisation’s CFO as the early mainframe systems that were in use when the role was first created were used to automate data processing and accounting tasks. Reporting via Finance was also a reflection that IT was a back-office function and a cost centre.
However, if you asked any CIO who they thought their role should report to they would have been very likely to say the CEO. This was as much to do with IT being seen as something more than just a cost centre as it was about the CIO’s own career aspirations, and their desire to been seen as an equal to roles such as the CFO.
Fortunately for CIOs it would seem that their wish is coming true. A recent survey by SunGard Availability Services found that 42% of CIOs across UK, Ireland, France and Sweden reported directly to the CEO with 27% reporting the COO and 26% to the CFO. This is consistent with the results of the annual State of the CIO survey conducted by the US version of CIO Magazine which found that 44% of CIOs now report to the CEO. The majority of the respondents to the State of the Survey come from EMEA (41%) and North America (40%) so it would seem that the shift in the reporting lines is happening throughout the world.
A Forbes article based on the SunGard research claimed that the change in reporting lines was a sign that the CIO role was receiving increased levels of recognition at executive level. And this is not surprising given how important technology has become in the digital age. Today we are seeing technology moving centre stage within every organisation, sitting at the forefront of the customer experience and interaction, driving innovation in products and services, enabling new business models and underpinning business transformation. No wonder then that the organisation’s technology leader is now far more likely to report to the CEO than any other executive.
But how important is the CIO’s reporting line? Does it really make a difference to their performance and contribution to the organisation? The CIO 100, which is produced annually by the UK version of CIO Magazine, identifies the most transformative CIOs in the UK. The list recognises those CIOs that are “driving process improvement, using technology to delight customers and the workforce, realising efficiencies and enabling their organisation to remain relevant as a digital revolution sweeps across our economic environment.” 55% of the CIOs on the 2013 CIO 100 reported to their organisation’s CEO. This is significantly higher than the proportions reported in the SunGard and State of the CIO surveys. But then these are the top CIOs in the UK. So there does seem to be a definite correlation between performance and reporting lines for CIOs.
However, possibly more relevant than reporting line is how the CIO role is positioned and viewed by the rest of the organisation; 78% of the CIO 100 hold Board level positions. In other words these CIOs are members of their organisation’s senior leadership team, the body that considers and makes the key business decisions. Based on this, it would appear that membership of the executive team and hence participation in the right meetings and discussions are potentially more important than the CIO’s actual line manager; a CIO in the top 100 is more likely to be on the board than they are to report to the CEO.
But there is a lot more to being an effective CIO than reporting line and board membership. For example, relationship building, influencing and the ability to collaborate with colleagues in the C-suite are just as important. The State of the CIO survey found that CIOs spend 19% of their time on relationship building activities with other executives. The CIO in the digital age is a much more social animal than the CIO from the mainframe days. And the modern CIO is also a lot less technical than they needed to be in the past. In a previous article, New Year, new CIO role?, I explained how organisations were starting to look for a different type of CIO to play a leading role in their digital transformation; they are asking for different skills, experience and qualities to those they required their CIOs to possess in the past.
Reporting to the CEO and being a member of the Board are clearly important factors in a CIO’s performance. However, they are only an advantage if the CIO can use these opportunities to communicate the value of IT, shape the thinking of their colleagues and set the overall direction for how their organisation can exploit technology in the digital age. To make best use of a seat on the Board and a CEO reporting line, CIOs need a broader skill set than was needed in the past. And if they do not have these skills then it is quite likely that they will miss out on the reporting line and Board position their role should warrant.