As business and IT merge more and more, many CIOs are taking the step from pure IT into business management positions. […]
The boundaries between IT and business functions are blurring. It is no longer uncommon for managers to switch back and forth between both roles, or for IT executives to pursue purely business functions.
According to the “State of the CIO 2022” report, 84 percent of IT managers describe the CIO as a “changemaker” who is increasingly leading business and technology initiatives. Three-quarters of business managers agree. 58 Percent of the business units surveyed describe their CIO as a strategic consultant, compared to 28 percent in 2021.
“CIOs and CTOs are rapidly evolving into strategic leaders with critical knowledge of the entire technology ecosystem, which is central to the company’s success,” says Craig Stephenson, Managing Director of the North America Technology Officers Practice at personnel consultancy Korn Ferry.
He is increasingly observing that executives with experience in the fields of technology, product, cloud, data and security are becoming successor candidates for positions beyond CIO and CTO.
IT ceos who move into the business world or hybrid business-IT roles often work in the technology industry. But that is already changing.
Dennis Baden, Global Managing Partner and globally responsible for Technology executives at HR consultant Heidrick & Struggles, recalls three CIO searches from last year: “ Here, CEOs were looking for a successor from the CIO function, to whom the CIO would report.“ All three were Fortune 500 companies, two from the financial services sector and one from the retail sector.
According to Stephenson, such ascents usually take place internally. The technical executives who move into business functions are “familiar faces”.
Even if IT executives do not completely switch to the business side, more and more of them are given revenue responsibility. “It’s probably a combination of your current responsibilities with some new challenges,” Stephenson said. They are designed to increase business value, improve the customer experience and ensure that the technology strategy has a positive impact on the product, software, security and technology sectors.
This also applies to Ryan Douglas, who recently moved to the position of chief operation officer of the e-commerce provider Digital River. He previously worked there as CIO for over 16 years. The company has abolished its data centers and uses several public clouds. According to Douglas, this eliminates traditional IT tasks, such as procuring and maintaining hardware.
As Digital River invests more in software, Douglas says the way of thinking about the company has changed. Today, the focus is more on helping customers solve technical problems. “It’s a combination of an IT focus – developing solutions – and an operational focus to provide customer support services based on technology,” he says.
IT is now part of the company’s operations department and Douglas is still responsible for the technology. However, its role has been expanded to include customer-oriented support services. He believes that the IT department “has always been on the business side with one leg”. Today, technology permeates so many aspects of business that it makes sense to blur the boundaries between departments.
In addition, Douglas believes that IT managers can seamlessly move into business areas of non-tech companies. “Today, more than ever, this is possible because the role of IT is changing,” he says. Just ten years ago, technology was mainly supposed to solve problems. With increasing digitalization, business units are now integrating technology independently without the help of the IT department.
For IT, this means taking on an advisory role. To do this, she needs to be more business-oriented. As technology becomes more and more embedded in the business, IT should help other teams to better understand the solutions they use and their impact.
Baden von Heidrick & Struggles agrees that more and more customers are “talking about abolishing the IT function as a business unit and integrating it into business branches”. The two are not separate, it is the business. However, he admits that this change is more likely to be seen in the long term. To dissolve an IT organization today would be quite bold. “But: as gradual as the transition to the cloud has been in recent years, IT will disappear in the next ten years and be integrated into the company,” says Baden.
Kevin Horner was CIO at mining company Alcoa before becoming CEO and board member of IT recruiter Mastech: “My goal was to lead something,” he explains the change. At Alcoa, he had no chance to do so. True, he was well versed in finance, since he headed the services business there. “But no one spends time with you and your balance sheets,” he recalls.
Horner managed IT at Alcoa like an internal service company. If someone used services, they paid for it: “We charged everything per unit and on the basis of internal cost factors .“
He stayed at Mastech for about five years before becoming a partner at Three Rivers Capital, a private equity firm in Pittsburgh. Horner had never once thought of becoming a CIO again. “Once I was on the side of business decisions, I never had a desire to work as an employee again.“
IT managers who want to switch to the business side need to understand how a company is run. This ranges from marketing and finance to operational business. According to Gartner analyst Christie Struckman, you should also have a talent strategy.
In 2019, she conducted a study on CIOs who have moved to other C-level positions. According to the respondents, it is not enough to have a sense of business, you also need to consistently focus on it. CIOs and CTOs know how to deal with complexity, but they also need to be able to combine strategy with implementation.
Some former CIOs advise to use IT as a business within the company. In addition, one should not be afraid of finances. Spending time on procurement and purchasing helps to understand the company. The study also revealed three things CIOs should avoid:
Don’t be risk-averse. The approach of IT should be to find out where risks can be taken so that companies can be innovative and implement their strategy.
Don’t be an island. The CIO should be more concerned with partnership relationships and spend time on sales or marketing appointments. The goal is to understand where added value lies. It’s not so much about working with other managing directors, but about getting out of your own area. What you learn as an IT boss from these conversations will help if you take on a role outside of IT.
Evaluate yourself correctly. „No one wants to admit this, but when you are sitting at the table and having a conversation, you must not say: ‘From a technical point of view’.“ With this, the CIO function basically communicates, it only understands what something means from a technical point of view. This restricts one’s own language and sells one’s person under value. “If you only contribute the technical point of view, you stay in your box,” concludes Struckman.