In the words of the legendary Gary Shapiro, “Every company is now a technology company.” Today it is indisputable that technology has become the biggest lever across industries to stay ahead of the competition. In the rapidly evolving digital landscape, the role of chief information officer has grown exponentially in importance. And as businesses become increasingly reliant on technology to drive innovation, optimize operations and gain a competitive edge, it’s crucial to reassess the reporting structure within organizations.
In this article, we will explore why CIOs should report directly to CEOs, and how this shift can drive strategic alignment, foster innovation and enhance overall business performance.
Different industry surveys offer a bit of a conundrum about what CEOs’ top strategic priorities are and a gap in executing the right organization to support those priorities. According to the CEO Excellence survey by McKinsey in 2023, top CEOs identified the rise of disruptive digital technologies as the biggest impact on their organizations. According to a survey by the global consulting company, Deloitte, only 51% of the U.S. CIOs report directly to the CEOs.
Here are five ways in which having the CIO report directly to the CEO makes a significant difference:
Aligning strategy to execution. In the past, IT was often viewed as a cost center, relegated to a support function within the organization. However, this perception has changed drastically. Technology is now a core driver of business strategy and growth. When CIOs report directly to CEOs, it ensures a tight alignment between IT initiatives and the overarching business strategy.
CEOs are responsible for setting the vision and goals of the company. By having the CIO at the executive table, they can leverage technology as a strategic enabler to achieve these goals. A direct reporting relationship facilitates seamless communication, ensuring that IT investments and projects are directly aligned with the company’s strategic priorities.
Speed to market. According to the CIO Agenda 2023 by Gartner, more than half of the digital initiatives lag CEO/leadership expectations. Gartner found that 59% of CEOs feel the digital transformation takes too long to complete, and 52% feel that digital transformation initiatives take too long to realize value.
In today’s fast-paced business environment, the ability to make swift decisions is critical. When CIOs report to CEOs, it streamlines decision-making processes. Instead of having to go through multiple layers of management, the CIO can work directly with the CEO to assess and implement technology solutions quickly.
This speed is essential, especially when responding to market changes, seizing opportunities or addressing cybersecurity threats. With a direct line of communication, the CEO can make informed decisions based on real-time information provided by the CIO.
Driving innovation. Innovation is the lifeblood of any successful organization. CIOs play a pivotal role in fostering innovation by identifying emerging technologies and trends that can give the company a competitive edge. When CIOs report to CEOs, they can champion technology-driven innovation as a strategic priority.
According to a study of about 2,000 companies that was published in Sloan Management Review, only 7% of the digital transformations were led by a digitally competent team. The same survey also found that just 23% of the CEOs and about 12.5% of the CFOs in the sample could be regarded as digitally competent.
CEOs, with input from their CIOs, can develop an innovation roadmap that aligns with the company’s goals and market needs. This approach encourages a culture of continuous innovation, which is vital for staying ahead in today’s rapidly changing business landscape.
Managing cybersecurity risks. In an era of increased cyber threats and data privacy concerns, effective risk management is paramount. When CIOs report directly to CEOs, it facilitates a more comprehensive approach to risk management. Cybersecurity, data privacy and technology-related risks are integrated into the broader risk-management strategy.
CEOs and CIOs can work together to assess the potential risks and vulnerabilities associated with technology initiatives, develop robust mitigation plans, and ensure that the organization is well-prepared to respond to any threats that may arise.
Demonstrating the strategic value of IT. By having CIOs report directly to CEOs, organizations can effectively communicate the strategic value of IT to all stakeholders, including shareholders, customers and employees. This transparency highlights that technology is not just an operational necessity but a key driver of growth and competitiveness.
In today’s digital age, the role of the CIO is more critical than ever. The CIO reporting to the CEO should be a minimum starting point. As a matter of fact, the whole C-Suite and board need to be more digitally savvy. The same Sloan Management Review piece goes further by stating that a team where half of the C-Suite and board members are digitally savvy outperformed the rest by 48% in terms of revenue growth and market valuation. It’s high time NOT to pigeonhole your CIO by having them report to your CFO/COO or other C-Suite leader.
