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Decisions a CIO should not make alone

The success of IT in an organization will require commitment from business managers who stand to benefit from technology. Unless business executives take responsibility for IT’s success or failure in achieving business impact, the role of IT will remain elusive. The main responsibility for CIO is to deliver systems and implement IT projects on time within budgets that has high usage potential and can ensure business growth. It is now the responsibility of the CEO or business executives to make organizational changes required to realize business value from IT.

For many years, business executives are often frustrated with IT personnel due to the failure of IT to accurately understand business needs. IT department in organizations is often viewed as more focused on technical management. Organizations, in order to succeed in digital business scenarios must focus their IT on areas where it will create maximum impact. This is possible only when CIO and IT functions work alongside business in customer facing solutions, data and tools that will provide insight and intelligence and technologies that can penetrate new markets and enable new offerings.

In one international survey done by Forrester Research Inc, it was identified that most of the decisions related to purchase and IT capacity sourcing or co-location in data center companies is done by the CEO instead of CIO. This survey involved senior level decision makers from companies of different sizes. In the digital age organizations focus on using technology to enable new capabilities, create revenue, enhance customer satisfaction and so on, hence the CEO ultimately makes the go or no-go decision for IT deployments by weighing on recommendations from the CIO.

IT executives and CIOs are the right people to decide on IT management in terms of technology standards selection. This decision involves building the infrastructure, designing the IT operations for the company and following standards in implementing new systems and applications. In spite of IT’s important role in establishing an enabling environment for business operations, decisions that have an impact on company’s business strategies must not be given to IT department or to a CIO by default.

In the dynamic business environment where decisions are driven by consumers, it has become highly essential for IT to work alongside business to identify opportunities where technology can create value and accelerate business value. In this scenario, decisions need to be made more broadly to foster business growth and not just a normal IT decision made by a CIO. In order for a CIO to generate full value of their IT investments and to avoid IT disasters, given below are some important decision making areas where the CIO should not take leadership responsibility or accountability.

  • IT spending strategy: IT funding is an important aspect where executives often ponder on the question whether IT spending is high or low. One standard approach to determine appropriate IT spending is to follow the industry standards and benchmarks. There are companies where IT spending is quite high but has failed to develop the right IT platform to execute business strategies. In such situations, the management defines the strategic role played by IT and appropriately determines funding levels required to achieve those strategies.
  • Companywide IT Capabilities: CIOs must understand that flexibility in business units becomes limited if their technical and process standardization is above normal limits. Excessive standardization results in frequent exceptions in IT which can increase costs and minimize business synergies. The management or CEO takes the call on deciding whether to have a centralized IT capability or to have IT systems developed by individual businesses.
  • IT investments and funding: IT becomes overwhelmed when many projects are implemented simultaneously. IT can lack focus when many projects that have less companywide value are scheduled to be deployed simultaneously. Therefore, the CEO or senior management will decide on which IT initiative is funded on priority and which is not funded or scheduled for later funding and deployment.
  • IT services strategy: In certain circumstances companies end up paying more costs for service options which are not worth the money spent. For instance, system characteristics such as responsiveness, accessibility and reliability will incur costs. In such situations, the senior management will decide on spending for various IT features and services. For example, improved reliability, response time, etc., forms the basis for costs and benefits.
  • Acceptance level of risks: IT risk management is a tricky area because if security and privacy is overemphasized this can cause inconvenience to suppliers, customers and also employees. Likewise if security is underemphasized this can make data vulnerable. To ensure a secured environment, the CEO decides on the trade-off between convenience and security.
  • Accountability on IT failure: When there is an IT failure the business value of IT is ignored. In order to monitor business metrics, a business executive must be made accountable for every IT project to overcome disruptions while achieving business metrics.

The above decision making areas suggest that CIO does not make decisions alone in the organization on strategic use of IT. Business decision making in organizations is based on their governance approaches, structure, strategy and culture. For example, IT spending decisions are made by a budgeting process which is approved by the senior management. Decisions related to IT architecture and associated standards are made by the CIO in coordination with business executives. A good governance structure will identify a person responsible and accountable for critical IT decisions and apply uniform principles for the role of IT in the organization.