Information Technology Management with a Purpose

Nov 23 2010   4:26AM GMT

The CIO reporting relationship equation

S R Balasubramanian Profile: S R Balasubramanian

We say that the CIO is an important functionary in an organization — one who plays a significant role in business growth and prosperity. It is but natural that he should occupy a position of responsibility and power. As a result, he is able to execute various projects which help the organization meet its objectives. However, the status is often different in practice, and the management in many such companies needs to take a serious look at this situation.

It’s common to find that CIOs are recruited at the senior manager or general manager levels, and made to report to the CFO. This was perhaps appropriate during the EDP days, when most applications were for the accounts department. Times have however changed over the years.

Today, IT covers all functions and cuts across all organization activities. Hence continuance of this old practice looks totally illogical. The CIO’s position becomes vulnerable, as rest of the organization looks at him as a finance representative and an automatic bias sets in. IT plans get a finance orientation, with greater emphasis on accounting and control. Budgets are tightly controlled, and new technologies frowned upon.

Some organizations make the CIO report to the HR, operations head, or the sales & marketing head, but the story doesn’t change much. The CIO is not senior enough and has no access to the management committee. He is in no position to understand the CEO’s vision or the main business strategies and priorities. He is not powerful enough to drive new initiatives, or to enforce compliance to systems.

Over the years, I have tried to raise the level of IT in organizations that I was with. Apart from some stints during the earlier years when I reported to the CFO, I set the condition of reporting to CEO as a part of my joining agreement. In that position, I was able to bring about sweeping changes and added considerable value to various processes. I could often intervene and help resolve many a disputes relating to cross functional disagreements on business processes that I was trying to automate. I could enforce compliance to systems and seek the CEO’s intervention on matters that I couldn’t handle on my own. Since I was a member of the management committee I was privy to various discussions on organizational directions, goals and priorities, and able to align my IT plans to the organization’s needs.

In all forward thinking organizations, CIOs are normally at the level of vice presidents or equivalent, and at the same level of seniority as the other functional heads. The CIO should report to the CEO, thereby ensuring a total organizational view of systems, devoid of bias, and stand at an equal footing as the other organizational functionaries.

I have chosen to take superannuation in my current company. Now, I discover that the management has decided to replace the position with a relatively junior functionary; one who is being made to report to the CFO. Such examples explain the lack of understanding of IT in many organizations. Therefore, it’s not a surprise that old practices are still prevalent in the industry.

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