About 70% of Indian CIOs will report directly to CEOs by 2016, compared with 40% today, according to a report by Forrester Research.
IT is increasingly seen by businesses as a revenue generator rather than merely a cost center, which is changing who the chief information officer reports to.
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According to Forrester, projects led by CIOs not reporting directly to the chief executive focus primarily on reducing IT costs and aligning IT to the business. In contrast, projects led by CIOs who report directly to the CEO are more likely to focus on customer acquisition and retention.
“Currently, 40% of Indian CIOs report to CEOs or the senior-most person in the organization. Of the other 60%, most report to chief finance officers (35%), followed by chief operating officers, group CIOs, and chief sales officers.
IT leaders who report to CEOs tend to have a 30% higher IT budget than CIOs who report to CFOs, COOs or group CIOs,” said Manish Bahl, country manager for India at Forrester Research.
The changing role of IT leaders
A change in the roles of CIOs is expected by Forrester.
“As the value of IT changes in the organization, so does the role of the CIO," said Bahl. "Businesses are looking for better, faster, cheaper tools and capabilities to understand and respond to customer needs. Increasingly, to grow the business, CIOs will be asked to develop new revenue streams by engaging better with customers – in big ideas, as well as in disruptive and incremental innovations.”
He said IT managers should link business technology (BT) investments directly to business outcomes, such as revenue and customer satisfaction.
Prasad Ajinkya, CTO at EduPristine, said CIOs have to provide the right information to the right people at the right time.
Projects led by CIOs who report directly to the CEO are more likely to focus on customer acquisition and retention
“With businesses becoming more agile, apart from the typical enterprise role of aligning IT with business, the CIO’s role would have to adapt to quickly understand what information is required not just by whom, but when," said Ajinkya.
“Another major change is the increasing role of being aware of the risk the lack of information represents,” he added. “This would result in a shift in focus, organizational model, business value, and the future for the CIO and IT. The CIO’s focus will shift to empowering employees and customers to solve problems.”
According to Bahl, technology management will be a very small portion of the portfolio of activities assigned to a head of IT.
“The primary focus of the CIO will be to take on business processes, understand them across multiple business functions, and co-create solutions to create efficiencies, reduce costs, or to grow the business," he said.
“As the boundary between IT and business further blurs, CEOs must get more directly involved in business-led technology discussions as a means to differentiate their organization and drive business growth. To this end, most Indian CIOs expect to report directly to the CEO within the next year or two, which is reflected in current hiring practices in India, where the majority of CIO jobs report directly to the senior-most executive in the organization.”