The role of the CIO and the IT organization is changing. Information systems have become an integral part of the operation of the business. The success of the enterprise is tied to its use of information technology and its business applications. Information technology has driven major changes to the business and will continue to do so.
In addition, the focus of the CIO should no longer be on the management of computers and communications facilities-this has become a commodity service, best outsourced to providers who have the specialists to support it and can realize economies of scale from serving multiple enterprises. Instead, there is a need for enterprise leadership to optimize the enterprise design and utilization of technology.
In a recent Centricity Systems blog, "The Role of the CIO and IT," the writer commented on a suggestion that with cloud computing and SaaS, enterprises would no longer need a CIO. As I noted above, there are commodity aspects to the traditional role of the CIO, but as the writer observed, "Imagine the disarray and disparity within a business if every function in the company could turn on any application or service they wanted or needed with no care or consideration with how this new information is integrated with or shared across other areas of the company."
The next generation CIO has an executive role, much like the CFO or the human resource management executive. From the value chain perspective of Michael Porter (Competitive Advantage: Creating and Sustaining Superior Performance, 1985), the CIO manages a key enterprise support service. The focus is on the management of critical technical resources that pervade the enterprise, and the exercise of controls to ensure effective governance of systems and resource utilization.
In "CIO's old role in agile crosshairs," Mark Everett Hall reviews a new book, Iterate or Die, that suggests that the CIO should be replaced by a CPO (Chief Process Officer). This would be a step backward. While the CIO should manage technical support for process design and optimization, management of business processes, alone, will not achieve an agile enterprise. Agility requires an architecture for continuous change, access to consistent data to support planning and decision-making, and standards that enable rapid reconfiguration of capabilities to address changing business needs. A Service Oriented Architecture (SOA) provides a basis for reconfiguration and leverages technology to support automation and integration. SOA is a much needed architectural context for business processes.
The introduction of SOA reinforces the executive role of the CIO. In an enterprise where lines of business operate as independent silos, each silo can be optimized for its particular product or service. This generally means that the silo will not be able to adapt to changing business needs because it has evolved for a single purpose and its systems are optimized for that single purpose. Automation has traditionally added to inflexibility.
In a SOA enterprise, fundamental business capabilities are packaged to provide services to meet the needs of multiple lines of business. The management of capabilities is separated from the management of lines of business-a matrix organization. The design of services requires systems design expertise, the integration of services requires enterprise data management, and the efficient utilization of technology requires technical standards and skills. The agility of the enterprise will depend on an overall enterprise design in which business services participate to produce customer value.
These responsibilities do not belong to individual functional managers or line of business managers, but require a cross-enterprise perspective-the perspective of the CIO. Effective governance also relies on reliable access to information about the operation of the business, derived from the various business operation systems and integrated into consistent views.
Consequently, as manager of technical resources, the CIO must support the effective use of technology by other organizations, and he must ensure that the solutions are optimized for the enterprise as a whole, not for the particular interests of one line of business or functional area. As manager of systems integration and agility, the CIO must drive the alignment of business and the supporting information systems. In SOA, the packaging of shared business capabilities as services provides the basis for this business-IT alignment. This is discussed in more detail in "Business-IT Alignment: Time for a Paradigm Shift."
Consequently, the CIO has five critical enterprise responsibilities:
- Development and enforcement of technical standards and policies to support integration and optimization of the use of technical resources.
- Management of enterprise intelligence to support analysis, planning and decision-making at all levels. This includes information and models about the operation of the enterprise and its ecosystem.
- Management of the enterprise architecture-specification of business capabilities, the information systems that support them and the processes by which they contribute value to the enterprise and its customers.
- Information systems development and operation. These are traditional responsibilities but with emphasis on outsourcing of commodity capabilities.
- Information protection to ensure the confidentiality, integrity and availability of enterprise data and the systems that process and communicate it.
These five responsibilities are key to enterprise efficiency and agility that cannot be achieved without enterprise-wide strategy, coordination, control and technical expertise.