FotolEdhar - Fotolia

Change CIO reporting structure to avoid missing KPIs

The key performance indicators used by heads of finance to measure the effectiveness of CIOs is not sufficient to drive tech-led transformation

CIOs will lose out on a huge opportunity to make a difference in business, unless their reporting structure is changed, analyst Forrester has warned.

In 2019, the analyst firm reported that 96% of surveyed CIOs said they are engaged in a transformation effort. According to Forrester, during 2020, this transformation effort will propel some CIOs into the role of business leaders, developing and showcasing their tech-driven innovation, people management, and ecosystem-building skills.

But Forrester’s Predictions 2020: CIO report noted that enterprises with CIOs reporting to chief financial officers (CFOs) or chief operating officers (COOs) will miss growth targets.

While the number of CIOs that report to C-suite executives other than the CEO has been declining over the years, Forrester found that almost half still do.

“Firms that align CIOs under the CFO or COO will naturally measure them by financial and operational goals, neglecting growth-oriented metrics such as the NPS [net promoter score] and customer experience index,” it said.

According to Forrester, this reporting structure will widen business silos because CIOs will not focus on integrating information and end-to-end customer experiences.

In 2020, Forrester predicted that businesses that do not change the reporting structure for IT to reflect the strategic role of the CIO will struggle to hit their growth targets, as customers get fed up with the lack of information and slow value delivery.

It expected that organisations starting out on their transformation journey will appoint a myriad of new “C-suiters”, such as chief growth officers, instead of addressing the core organisational problems.

Forrester predicted that businesses that have advanced their transformation strategy will elevate the role of the CIO as an orchestrator of information, systems, and business transformation.

It also expected that such businesses would appoint CIOs who can act as collaborative business leaders instead of just being good technology managers.

As firms push more into the cloud and evolve toward real-time systems of insight at the edge, Forrester warned that the transactional cost of data processing and movement will outstrip storage. It is expected that organisations that understand the benefits of getting this right would double or triple their data strategy budget.

The analyst firm predicted that, during 2020, CEOs will aim to make their organisations part of a wider innovation ecosystem. Forrester said it expects the complexity of building an innovation ecosystem will become a board-level challenge as many software suppliers and service providers clamour to help.

CIOs are natural choices to help their firms navigate the complexity because their organisations already have experience with technology, services, and supplier management,” said the report. “CIOs should prepare for this new challenge by facilitating collaboration across business unit-level product and process-oriented innovation teams.”

It also recommended that CIOs should implement innovation platforms that connect business-unit level innovation with emerging technology research and long horizon, disruptive efforts.

Brian Hopkins, principal analyst and lead author of Forrester’s Predictions 2020: CIO report, said: “In 2020, we predict that helping firms solve people issues through automation, employee experience improvement, and workforce management will be at the top of CIOs’ transformation agendas.

“Advanced firms will also ask their CIO to help justify bigger IT and corporate data strategy budgets and untangle complex innovation ecosystems.”

Read more about the CIO agenda

  • Startups in traditional enterprises often feel they are being held back by culture, with legacy tech and business processes hampering innovation.
  • The bods at Gartner may have watched a bit too much Hollywood sci-fi: will people really augment themselves with tech to do their jobs better?

Read more on CW500 and IT leadership skills

Data Center
Data Management