Companies should launch five new C-Suite roles in the next generation IT organization to transform themselves to become technology-empowered companies. Those new executive roles will enable companies to elevate the positioning of technology within the company, identify more technology application opportunities, build better talent foundation to support the transformation, and shift to a more product-centric agile technology development and deployment model. The creation of these five new roles should be an essential part of new digital and IT strategic transformation roadmaps.
The organization structure for most companies’ IT organizations hasn’t changed dramatically over the last 30 years. Most IT organizations have the following key roles reporting to the CIO:
- Chief Technology Officer/Chief Architect
- Head of Infrastructure and Operations
- Head of Applications
- Head of IT Finance
- Head of IT HR
This model was created when IT was positioned as a supply manager for a company. If we reflect back to the guiding principles of “running IT as a business”, the IT organization model above is exemplary for that. Business is the customer and buyer of IT services primarily. They decide on the demand, which is what applications to build and when they would need it. The CIO is the CEO of the IT supply company and ensures that Business buyers get what they are paying for. The Head of Applications develops all the “products” that IT sells to the business, the applications. The Head of Infrastructure and Operations ensures that the “products” that the business is using are running smoothly. The Head of IT Finance focuses on managing the financial aspects while the Head of IT HR ensures that the organization’s staffing needs are met and that IT people are well managed. The CTO, if there is one, creates the strategic technology vision for IT.
While this model remains popular for many IT organizations, the shift of technology’s positioning in most companies has created challenges for this organization model. Technology is now increasingly becoming a core part of every industry and every business. IT organizations can no longer suffice merely as a supply provider. They need to become the demand originator as well as the supply provider. IT can no longer focus on multi-year programs to launch an application that will be run for 10-15 years. They need to shift to a product model where applications and systems will be upgraded continuously. The software development methodologies are shifting towards agile where the convergence of business and IT and the cross-functional collaboration require IT to break down the functional silos between business and IT and within IT.
How should we think about the new IT organization model for a technology-to-the-core company? What new IT leadership roles should we create to allow companies to effectively adopt and apply technology into every part of their businesses? How do those new roles interact with the current IT leadership positions?
Having worked with a number of companies across multiple industries to launch next generation IT organization models, and having studied how technology companies typically organize themselves, I have identified 5 new or evolved key leadership roles that the next generation IT organizations should create to ensure the smooth transition to make technology a core part of their companies’ businesses. The five roles are: Chief Product Officer, Chief Transformation Officer, Chief Financial Officer, Chief Talent Officer, and the revamped Chief Information Officer.
Chief Product Officer
In the old ways of application driven IT model, Head of Applications (sometimes called BU CIOs) would work well. The Head of Applications work closely with the business to understand the business demand and launch projects and programs to deliver the requirements by creating or enhancing applications.
In the new world where companies are increasingly shifting towards a product-centric technology model, the outcomes from the business are no longer delivered by applications only. We are now looking at Products, where products can be an application, an algorithm, and an enterprise capability (e.g., search). A Chief Product Officer would be the bridge between business and IT and help identify new opportunities to apply technology to create desired business outcomes, be that revenue growth or business process efficiencies. Think the Chief Product Officer as the Chief Marketing/Sales Officer for the IT organization – their job is to spawn additional demand so that the IT organization can continue to grow its business impact.
The Chief Product Officer focuses on assessing all the products that the IT organization provides to the end users and identifying new opportunities to launch new products or to refine the current product set using emerging technologies. They create multi-year product roadmap and adjust the roadmap every quarter to ensure the IT organization is ready to deploy the products to the users. They also actively measure the various aspects of the IT products that are being delivered and ensure that new improvements demonstrate quantitative metrics enhancements.
Some of the Chief Product Officers would even need to actively collaborate with their counterpart product officers on the business side of the company that companies actually offer to the end users and decide how to structure both the business and IT application aspects of the products. The Products here become integrated business and IT products, which cut across end user customer experiences, underlying internal business processes, and the various IT applications and infrastructure required to deliver the customer experiences and business processes. Most importantly, the integrated business and IT products have direct linkage to the actual company’s bottom line, revenue and cost.
Chief Financial Officer
While most IT organizations have IT Finance already, their main jobs have been to create basic transparencies into budget vs. actual. The responsibilities have been more about basic IT financial analysis vs. a true CFO job, which is to look at both cash flow and asset liability management.
A CFO for IT should be about imagining IT as a true standalone technology business and apply financial management rigor to manage the business. As companies shift from an application/project centric model to a product centric model for IT organizations, CFO for IT must be able to create a cost transparency model that supports such product centric paradigm. This would require IT finance to extend beyond the traditional measurement of changing the business vs. running the business, discretionary vs. non-discretionary. A true product based financial cost model is essential.
Furthermore, CFO for IT must also expand the old CAPEX vs. OPEX models. New business models in technology such as software as a subscription and cloud are pushing more and more IT spend into OPEX. However, many companies still manage IT investment in a distinct CAPEX vs. OPEX model. In the new world, CFO for IT must be able to create a Cash view that combines CAPEX and OPEX so that companies can evaluate the total cost of technology and determine what’s the best way to determine how to best determine new IT investment.
Lastly, given that many IT organizations are still focusing solely on supply management, the demand management and the ROI management from the IT investment are viewed as the business’ responsibilities. The CFO for IT must be able to go beyond that and actively track ROIs and work with the business to ensure IT investments are well managed
Chief Transformation Officer
Most companies today are undergoing a tremendous amount of technology transformation. They are shifting technology development and delivery methodologies to agile, they are launching new customer and employee journeys, they are changing the culture to be more cross functional and collaborative, and they are upgrading the talent to acquire the new skills across AI, analytics, etc. It’s an end to end transformation, across both business and IT. While many companies already have Program Management Offices in plan to manage major programs and projects. This transformation work is not your old PMO’s job. The old PMO focuses on creating a program plan and execute rigorously against that. The new transformation across culture, technology, talent, etc. would require us to upgrade the Head of PMO to be more of a Chief Transformation Officer to help the CEO and CIO to execute on the technology transformation.
For most companies, it’s not only about the What of the Transformation, it’s much more importantly to determine the When of the Transformation. The What of a technology transformation is most likely quite universal across companies: it’s about legacy systems renewal, it’s about applying new technologies, it’s about moving to the cloud, it’s about transitioning to agile methodology. The When question, especially for most companies with competing business priorities etc., is a much harder question. I call this “chunking the elephant” since most companies have an elephant of technology infrastructure and they need to carefully sequence the transformation to make sure all the underlying risks are mitigated.
At a one leading global company, the Chief Transformation Officer for IT actually reports to both the CIO and the Head of Business Unit. This allowed the Chief Transformation Officer to influence both the business and IT. His organization consists of both the Plan part of the IT and the Enterprise Transformation for the company. This set up clearly links the end to end business results with the technology transformation is trying to achieve, both on the business side (which is to grow revenue in adjacent space) and on the IT side (which is to modernize the core IT estate).
Chief Talent Officer
This is probably the most urgent but also least created role so far. Most companies’ IT HR function today mainly focus on the administration side of HR: performance evaluation, training administration, and payroll. With the amount of new technologies that are being deployed, IT and business are both struggling with the avalanche of new technologies. The Chief Talent Officer’s job should be to help the companies to win the war on technical talent. The Chief Talent Officer goes beyond the fundamental HR responsibilities such as performance review, recruiting, and payroll administration. The job here is much more about strategically identifying the new skills that the whole company needs on technology related functions, across both business and IT, raising the technology intelligence across both business and IT, and develop a strategic plan to address the gaps. The plan will include both internal recruiting and training plans, and a sourcing strategy to ensure the talent strategy also addresses the ebbs and flows of technology demand within a company.
Furthermore, given the shortage of talent, it is imperative for companies to shift its Employee Value Proposition and create a technology centric culture and image so that technology talents can be effectively attracted. Otherwise it will be difficult for companies to be able to compete to attract top tier technology talent, given the compensation, location, and technology challenges that they often have.
The shifting role of CIO itself
Last but not the least, the CIO role itself will shift. In the old way of “running IT as a business”, CIO is more like a CEO of a technology consulting company. They staff the IT people onto IT projects that business envisions and aims to deliver.
In the new world, where technology becomes a core part of the companies’ business and culture, the Chief Information Officer becomes much more of a Chief Digital, Information, and Technology Officer. In addition to the job of a CEO of a technology consulting company, the new CIO will be the CEO of a strategy and technology consulting company and the CEO of a venture capital fund. They envision new ways of applying technology to launch new products and grow new revenue, they manage the army of developers to deliver the vision, and they keep the infrastructure humming 24×7.
As Marc Andreessen famously stated in 2001, “Software is eating the world”. The advance of technology is pushing more and more companies onto a transformation journey to make technology a core part of their businesses. The traditional IT organization model of application vs. infrastructure will no longer suffice. The 5 leadership roles for next generation IT organization will allow companies to start to make inroads into the transformation. Those new roles don’t have to be new people. The current leaders can be upgraded to start to function in new roles with new responsibilities.