Let’s go back to 1995. Large Enterprises own datacenters with so called “Mainframe” computers. Small and medium enterprises operate on machines like an AS/400 or other minicomputer systems, that are hosted in a computer room or datacenter (well, most of the time …). Having access to such a computer room is reserved for the privileged in most companies. The CIO is the king of this universe. The CIO is in 1995 the true “Chief Information Officer”. As in: “owning the information of the company”.
Equally important: computing power is very expensive and difficult to get access to. So, the CIO is in full control over who gets access to this costly computing power. As a real king the CIO manages and controls everything called “digital” in the company. This type of CIO spends most of his time on cost control and keeping the lights on
Fast forward to today. Anybody with a credit card has access to virtually unlimited computing power. And not just computing power. Pre-packaged cloud services and components are available to anybody. Hire of a developer and you can stitch them together to a business solution. Accessible from any place at any time. The IT department doesn’t even need to know about it… The king has lost his kingdom… IT budgets go down in favor of the budgets of the business owners.. So if they find a solution to generate more revenue, why not? The cost is often neglectable compared to the business benefit. And why bother involving the IT department? It only slows things down…
Now wait a minute … What are the CEO or the Board thinking about this phenomenon ? This is where the story becomes really interesting! I’ve seen various scenarios. One of them is truly fascinating. “Let’s bring in a second CIO!”, this time the “Chief Innovation Officer”. When transformation is not happening, when CxOs start to complain about IT slowing them down, when the company suddenly starts losing market share to more digitally innovative competition, this is a common scenario. The “Chief Innovation Officer” is not interested in costs, outsourcing or any of that. His or her interest is in growing the business while becoming more profitable. The Chief Innovation Officer is very close to the business. He or she understands the business, he or she is “one of them”. The most “painful” example I’ve seen is where the “old CIO” reports into the CFO, while “the new CIO” reports into the CEO directly.
What happened here? Where has the “old CIO” lost the plot? In most of these cases the root cause of this situation is that the “old CIO” refused to embrace a cloud first strategy. For several years, companies like Microsoft and Amazon evangelized companies . They promoted a cloud first strategy, but stopped doing that about 2 years ago! That was the turning point where they decided that those who would not embrace the cloud would be left behind. An anecdote: an “old CIO” called me in to complain. His CEO was furious, he was the only CEO on the golf course who could not read his company emails on his smartphone. The CIO lined up 5 of his technical people to explain which components Microsoft was refusing to make available for his on-premise Exchange solution in order to make it secure the way he wanted it. His question was:”What is Microsoft going to do about that? He had the impression that Microsoft was no longer investing in on-premise technology”. The answer was rather simple: that is a correct analysis of the facts. Microsoft is not going to do anything about it.
In an on-premise world, the IT department is often a cost center. It’s not involved in innovation. IT is on an island, separated from the core business. Shadow IT is all over the place. Development teams and Operations teams are disconnected from eachother and from the business. This is the playground of the Chief Information Officer. In these companies you will not find a cloud strategy. In a company with a cloud first strategy, technology is a catalyst for innovation. The IT people have learned to speak the business language and are closely aligned with the business teams. Most of the IT budget goes to business value generation. Development and Operation are merged into DevOps and the CIO has evolved into a Chief Innovation Officer. He or she drives innovation and manage the technology stack at the same time.
How many CIOs would you prefer in your company?