CIOs Should Earn More Money and Respect

Friday, July 22, 2011

Bill Gerneglia

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How many CIOs do you know that make as much as, say, their company’s COO or CFO. For that matter how many IT chiefs do you know who sit on their company’s board of directors. You can pretty much do the math on one hand.

Now a few years ago when chief information’s officer’s responsibilities consisted almost entirely of running the IT shop efficiently, it was difficult -- ok, impossible -- to make the case that they belonged in the top managerial tier in terms of salary or deserved a prime seat at the executive room conference table.

That was then. Today CIOs’ responsibilities have grown significantly.

Today CIOs are in charge of managing vital outsourcing operations. We’re not talking here about supervising some offshore supplier that is performing basic processing and transaction tasks in Mumbai. Or running a help desk in Bangalore.

Today mission critical apps and critical core functions are being carried out by a third party supplier offshore.

Now, you might argue that in farming out IT infrastructure and the like the CIO’s job become easier. Not so, the CIO must take the lead in choosing the supplier, negotiating the deal and supervising the work on an ongoing basis. The outsourcing buck stops at the CIOs office, but now the dollars amounts at stake can run into the hundreds of millions of dollars.

One other note here: The outsourced portfolio that the CIO needs to oversee continues to grow with BPO recently being added to the mix. Traditionally, BPO was initiated and managed by business heads and kept separate from IT. No longer.

Not only is the CIO generally in charge of dealing with and supervising ITO, but now he is also in the driver’s seat when it comes to multi-sourcing and using third party suppliers for cloud computing, vitualization and the like.  And if the cloud vendor loses key corporate data, guess who is going the be called into the principal’s office.

The CIO arguably has a better in-depth view of every phase of the corporate operations than any other top executive  because IT is enterprise wide. It touches everything, and the CIO has the tools, or should have, -- see analytics and BI – to A) grasp the big picture and B) to act immediately on any change or trend that needs addressing.

OK, he provides the CEO and, or the CFO with these same tools, but he’s got to be the expert here.

In the top-down days of yesterday, the CIO ran his little fiefdom as a silo. Now, though, collaboration is becoming increasingly common with the CIO at the center of the collaborate efforts.

The good CIO now not only needs to work hand in glove with the CEO and CFO, but he must work closely with risk,  compliance  and governance managers; the CSO as IT security becomes holistic; marketing as it gloms on to social media to reach out to new customers and the business unit heads and responsibility for BPO shifts.

Finally, today’s CIO has to be informed about everything from new security threats to legal concerns regarding to social media use to SEC rulings on data privacy. This is in addition to tracking technology trends, vendor developments, new cost cutting trends and the usual bag of tricks.

This said, I respectfully submit that the CIO is currently one of the top three or four players on the senior executive team and should be accorded the appropriate R-E-S-P-C-T and a paycheck to match.

Reactions from CIOZone Community:

1.  Agree with your argument. During the dot com era many CIOs actually did achieve paychecks that placed them among the top tier of their company's executive ranks - and they were seen as possible candidates for the CEO's chair. However, when the bubble burst CIOs saw their status and paychecks slip back several rungs. One can only hope that if the economic rebound lives up to its promise, CIOs will be able to take the lead and regain some of that lost status.

2. I've long maintained that only 3 execs see the whole firm: CEO, CFO and CIO. And while the CFO sees the vital--but sterile--flows of money, the CIO sees the flows of goods, ideas and processes (within and outside the firm) and so has the greatest opportunity for insight into possibilities.
 
By the way, Financial Services already values IT and often the CIO or Head of IT/Operations is one of the executives in the Proxy.

3.  I'm going to guess that this will become one of the most popular articles ever published on CIOZone.com. ;)
 
I certainly agree with this article; while one CIO colleague that I know is paid (in terms of cash comp) on par with the CEO, that is the rare exception and in even in that case the equity awards are a very different.
 
4. I fully agree that CIOs play a far more critical role these days and deserve more respect + pay.  

One counter-point I came across recently is that CIOs (and other IT professionals) often tend to "dominate" their end-users with the detailed knowledge of the business processes gained during implementation of key IT systems.

This is not appreciated by senior decision makers; Business Managers in the Indian eGovernance are actively seeking to limit this effect. While some of their steps (e.g., frequent job-transfers) may be seen as short-sighted/knee-jerk, this is something we (as IT professionals) need to reflect upon too.

Cross-posted from CIOZone

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