The Real Deal: Rick Roth and CIOs in the Executive Suite

This continues a series of guest columns from practitioners and bloggers I respect. The category - The Real Deal describes them well.

I first heard of Hackett Group in 1995 when I was doing research around administrative shared services at Gartner  I was impressed with the world class benchmarks they had at a granular level - to process an AP check, to a  payroll check etc.  I met Rick Roth around the same time as a group of KPMG partners started AnswerThink. They were doing pioneering work around world class administrative functions. So, it was only natural to see AnswerThink acquire Hackett and have Rick run the division. Under his stewardship, the Hackett benchmark footprint has grown considerably. Here he writes about CIOs and their bosses - and how that is a tell tale sign of how progressive  the company's use of IT is likely to be.

"How do you know if you’re truly a world-class CIO, driving a lean, mean operation that understands your company’s goals and provides real strategic support?  For a clue, answer these two questions:

Does your leadership team give you real boardroom access?

What’s the title on your boss’s business card?

The Hackett Group’s latest Book of Numbers analysis, drawn from empirical data derived during IT benchmarks at hundreds of companies in the Fortune 2000 over the past few years, shows that in every case, IT organizations that achieve “world-class” performance levels across efficiency and effectiveness metrics are driven by CIOs who sit on their company’s management committee. At typical companies, this is true only slightly more than half the time.

Of course, it’s not quite as simple as that. Hackett’s research also identified several other key factors enabling CIOs to improve strategic alignment. World-class CIOs are more than three times more likely to report directly to their company’s CEO or Chairman than typical CIOs. World-class IT organizations also hire managers and professional staff with far greater business knowledge and a much higher percentage have advanced degrees than at typical companies. Finally, world-class CIOs have completely eliminated parts of their IT organizations that report locally, and drive significantly higher levels of centralized reporting.

Hackett’s research spans all the major SG&A functions, and this reporting trend is one of the most consistent themes we see in our research. World-class IT organizations go beyond supporting the business at a basic level, helping identify and leverage competitive opportunities.

One fundamental way to ensure that IT is optimally aligned with goals and objectives of the business is to have its most senior executive involved in decision-making at the highest levels of the company. There are few new initiatives in which technology does not play a critical enabling role. But in many typical companies, since the CIO doesn’t have a seat at the senior management table, these initiatives are planned without adequate input from the IT organization. The result is that the technology component is flawed, costlier than envisioned or delivered late – any one of which can sink an otherwise worthwhile new project.

The bottom line is simple: CIOs that report to the CEO are much more likely to be a business executive with deep operational, sales, or marketing experience. But at companies where the CIO reports to the CFO, they are more likely to be focused on technical expertise, maximum efficiency, and cost control. This doesn’t put them in the best position to drive strategic value.

So where do you stand?

Hackett’s research report on this topic is available free (with registration) at the following link"

Rick can be reached at rroth@thehackettgroup.com

Comments

[Wood]

Vinnie,

Excellent guest post. It jives well with a post I'm crafting on CIO mandate versus the creep of shadow IT. I will definitely reference this in my post and track back.

Best,

J

[david axson]

Vinnie,

As the original author of Hackett's IT benchmark it is interesting to see how the findings have evolved (or not in some cases!). The issue of reporting lines has always been a topic of debate and I originally thought it mattered. Now I do not - who the CIO reports to is largely irrelevent; CIO's that complain about not being at the executive table are simply whingeing. Every functional executive can make an argument for being "at the table", however its far more important to ensure that leadership in IT-related projects is vested in the executives who have most stake it the project's success - that is rarely the CIO except for basic IT infrastructure investments. Today there is no such thing as an IT project anymore so having the CIO at the table may actually provide the perfect excuse for the executives who should be acocuntable to abdicate their responsibility.

In short - quit worrying about reporting lines and focus on driving accountability to where it logically should reside.

So there!