More than half of Japan’s listed companies today have an executive whose title is Chief Information Officer. But CIOs have not lived up to the requirements of the title, failing to adequately serve other company executives and those outside IT departments, as I explained in my previous article. Even though CIOs have authority over the management and implementation of large-scale IT budgets, their actual performance leaves something to be desired. In this article I want to consider what CIOs might do to truly benefit their organizations.
Are Expectations Too High?
So long as a company is involved in the IT sector, there is no question that the CIO is a necessary executive position. Clearly, the CIO will play a prominent role in businesses with strong connections to IT, such as IT vendors that provide hardware and software, or the media and academic spheres that put out the magazines and websites targeting the IT industry. Within the industry, CIOs are sometimes earnestly described as precisely the ones who need to lead corporate reforms and serve as the right-hand man of the Chief Executive Officer. In other words, raising the profile of the CIO has been seen as a key element of business and market expansion for the IT industry.
In the course of my work as a business consultant, I have had the chance to get an up-close look at many CIOs—and often relate to them my rather harsh views of their performance. But perhaps this is expecting too much, because a lot of CIOs seem to think that it is unrealistic to expect them to handle so much.
Fear of Change
Fundamentally speaking, CIOs are conservative. And the more important IT becomes within a business, the more conservative they tend to be. This is because a key mission for them is to ensure that the system functions stably. There is no question that this is an important task, but if stability is seen as the top priority, little attention will be paid to new initiatives. This fosters a risk-averse style where the CIO worries that trying something new might cause trouble for the existing system, resulting in frequent claims that new ideas lead to waste and losses. It is somewhat ironic that the increasing importance of IT has been linked to an aversion to undertaking challenges.
But there is another important point to consider—the fact that there is a lack of experience when it comes to new projects. This is often a problem with the company engineers.
A company that undertakes a major new project just once every ten years is already ahead of the curve. The rarity of such endeavors is the reason that in-house engineers have so little experience handling new projects. Not just in the IT industry but in any industry, there is an enormous difference between creating something new and managing an existing system. The skills needed in each case are quite different.
There is no way to acquire and polish those skills without experience. And without those skills, it is not possible to start building a new system. Combined with the CIO’s conservatism, this lack of experience and skills leads to a tendency to avoid new initiatives.
Even if new projects are undertaken, in many cases these deficiencies result in a meandering approach. Such companies frequently end up relying completely on an IT vendor once the project is up and running, completely forfeiting their own governance.
Job Profile for a CIO
What, then, should a CIO do? The short answer is that he or she should position new projects so that they become something that has to be done. One approach is for the CIO to be placed directly below the Chief Operating Officer. The COO is tasked with articulating the need for certain IT measures, in line with the company’s strategy and business vision; the CIO then takes the lead in making that a reality. This would be the ideal arrangement. This would of course require rethinking the role and authority of the COO, but it could be a way to avoid a situation where a company neglects essential IT initiatives.
CIOs need to sincerely address their own deficiencies in terms of experience and skills when taking on a new project. For those heading the departments in charge of major system administration at a large corporation, technical prowess is not sufficient; the key is to have the management skills needed to run the new project. It is worth underscoring this point because a surprising number of CIOs are not doing this in practice, even if it had been their intention to do so.
Perhaps it goes without saying that even if the CIO has the right standpoint and the corporation has sufficient scale this will not necessarily be enough to generate positive results. Moreover, even if a CIO knows the internal IT system in detail, it may not be judged highly when seen from the outside. CIOs need to take the obvious but often neglected step of accurately grasping their own weaknesses and then coming up with ways to reinforce those areas.
Even though I have focused on the CIO position, there is the problem of the level of IT literacy among executives. We have already reached a point where executives cannot get by without knowing something about IT. But, having said that, IT is a very specialized field; unquestionably, the hurdles (including psychological ones) to being able to speak knowledgably about IT are quite high. In my next article I will consider this issue of how executives can talk about IT and manage their IT resources.
A partner with Roland Berger Strategic Consultants LLC. After graduating from Waseda University’s School of Political Science and Economics, he worked for US-based strategy and IT consulting firms prior to assuming his current post. Has been involved in a broad range of projects for top-ranking Japanese and overseas companies, with a focus on manufacturing, distribution, and systems industries. Project background includes operations strategies, IT strategies, business process reengineering, project management offices, and support for new enterprise launches, supply chains, marketing, and other key business domains.