The CIO's Role in IT Strategic Planning and Corporate Governance

Corporate Governance: Structure and Purpose

Corporate governance can be defined as the governing structure that allows a board of directors to ensure transparency, quality, accountability, and fairness within a firm and in its relationships with stakeholders (Monks & Minow, 2011). The corporate governance structure consists of the following elements:

Direct and indirect engagements between a firm and its various stakeholders; measures for integrating the often incompatible interests of those stakeholders; and measures taken for appropriate administration, management, and flow of data to function as a framework of checks and balances (Monks & Minow, 2011).

The aim of corporate governance is to enable operative, innovative, and sensible management that can contribute to the long-term success of the firm. Companies are streamlined and managed through the use of corporate governance. While the board of directors forms the controlling body, it is the responsibility of stakeholders to select these managers within an operational framework (Fernando, 2009).

The board is accountable for the company's strategic goals, how ideas are driven and put into effect, management supervision, and presenting reports to stakeholders regarding their actions and the company's situation (Fernando, 2009). At its core, corporate governance is about performance — how the board of directors acts, sets aims, and positions the company for future success, and how full-time executives create a frictionless operational environment alongside everyday management (Fernando, 2009).

The Role of the CIO: An Overview

The non-listed sector stands to gain considerably from good corporate governance because it is fundamentally about improvement within existing structures. In recent years, corporate governance has become synonymous with management and accountability even beyond the corporate sector (Fernando, 2009). Multiple studies have attributed strong commercial performance to better corporate governance (Fernando, 2009).

The prospects and risks that large IT investments present demand board-level input. Since corporate governance holds board members accountable for operational and financial performance, it is essential that executives make informed decisions regarding IT strategy. However, it is unrealistic to expect board members to be fluent in IT terminology; to address this, a board-level IT oversight committee can be established. IT governance is rapidly becoming an essential component of corporate governance, and poor decisions in this domain can make or break a firm. Such a committee would not only support the board but also aid in achieving superior legal and monitoring compliance (Posthumusa & Solms, 2005).

Chief Information Officer (CIO) refers to the executive delegated with responsibility for information technology (IT) strategy, operations, and management of technical support (Rouse, 2015). A CIO's role is multifaceted and depends on technological and business innovations of the day, as well as the individual's own goals and capabilities.

Although it may seem like a distant era, there was a time when IT executives had unrestricted control over back-office functions, with commands originating from a single mainframe. This was also the era of in-house programmers, when a tightly knit team of professionals created homegrown software and technical solutions. CIOs were strictly technical personnel with little to no knowledge of the business aspects of their organizations (Von Simson, 2013).

The CIO as a Corporate Executive

With the wave of innovations and the dramatic expansion of the IT sector, many CIOs are no longer confined to technical domains; they are also operating in the user's domain, and outsourcing has become widespread. The knowledge base required of a CIO is no longer restricted to software development or installation. By 1998, the first wave of CIOs began emerging from non-IT fields (Von Simson, 2013).

Before technology and data became critically important, the CIO's role was focused entirely on technical matters. In the mid-1980s, the CIO position could not be considered an executive one. Today, it is a vital role that can determine a company's future. Many firms have CIOs who report directly to the CEO, while at other organizations they sit among the board of directors, helping to shape the company's direction. It is the responsibility of the CIO to keep the executive body and employees informed about the advantages and risks of IT frameworks (Rouse, 2015).

The increased importance and expanding responsibilities of the CIO are evidenced by a survey of 2,810 CIOs conducted by the consultancy Gartner Inc. in 2015, which found that nearly half of all CIOs now have a COO of IT. Key statistics from the survey include:

In Asia, 60% of CIOs now have a COO of IT. In North America, the percentage is lower at 34%. Almost 70% of the communications industry employs CIOs. For the wholesale sector, the figure is 30% (Rouse, 2015).

The CIO as a Strategic Planner

The CIO role first emerged alongside the use of computing within businesses in the late 1950s and 1960s. In the 1999 study "The Evolving Role of the CIO," authored by Jeanne W. Ross and David F. Feeny, first-generation IT heads formulated a department called "electronic data processing," later referred to as the information systems (IS) department. According to the MIT Sloan School of Management, this period — known as the "mainframe era" — lasted from the 1960s through the early 1980s. Building an IT or business strategy was not even a remote responsibility of the CIO during this period; the primary focus was on delivering new systems, ensuring their smooth operation, and maintaining high productivity within a set budget (Rouse, 2015).

The tide eventually turned. The IS role evolved, grew larger, and became more contentious. A gap of dissatisfaction emerged between IS departments and managers due to a growing backlog resulting from expanded roles and responsibilities. Today, the primary goal of a CIO is to align IT with business requirements, which naturally diversifies and expands the skill set demanded of the role (Rouse, 2015).

The integration of personal computers into the office environment in the early 1980s expanded the reach of IT systems and staff across entire companies, rather than concentrating them in data processing departments alone. With the growth of specialized IT requirements, IT vendors such as Microsoft and Intel also entered the scene, exposing employees to better and more efficient technology (Rouse, 2015).

As these specialized needs surfaced, so did the associated managerial challenges and costs of maintaining autonomous pockets of IT — often referred to as shadow IT. More than a few companies divided control to save and streamline their operations by adopting a federated model, in which some IT systems remained under central IT control while others were moved under local management.

The CIO's role evolved further to encompass the procurement of efficient systems, their proper integration, and solid networking. This era laid the basis for enterprise resource planning (ERP) software suites, which aimed not only to manage but also to store data collected across the organization. However, since this activity was not centralized in a single department but managed and produced at different levels of the company, implementing such complex systems was both expensive and difficult. CIOs frequently faced massive failures arising from these systems, and the requirement for substantial business process re-engineering (BPR) added further complexity (Rouse, 2015).

When the 1990s brought the general public full access to the World Wide Web, the relationship between IT and business operations was both strengthened and expanded. This new era established the CIO's multifaceted role as the company's foremost authority on all technology-related matters. It became the time for CIOs to map not just an IT strategy but to participate in broader business strategy discussions as well. The web-based era opened the door for CIOs to venture beyond IT management into the commercial interpretation of how public internet usage would affect businesses and the wider economy (Anderson, 2006).

To assess how IT can create business value, CIOs must remain attuned to a variety of market factors, including: technological innovations; product offerings from multiple vendors; disruptive technology; and, most importantly, a customer base that increasingly demands online interaction alongside physical presence.

According to expert opinion, the market pressures and adaptability demands placed on CIOs today are greater than at any point in the thirty-year history of the profession. Consumer culture is becoming fully digitized, and the world is looking toward technologies such as cloud computing, social media, and mobile applications. The role of IT has changed entirely, requiring CIOs to examine every aspect of a business — not just for operational competence, but also to improve employee productivity, consumer interaction, and overall company viability (Anderson, 2006).

The once singular role of the CIO has become an umbrella under which other specialized executive roles now exist to serve a more digitized consumer base. In addition to the Chief Technology Officer, there is now a Chief Information Security Officer, as well as a range of new "information chiefs," including the Chief Data Officer, Chief Digital Officer, and Chief Analytics Officer. More than a few experts believe the CIO role is on a trajectory toward the CEO position. The traditional CIO role is already shifting with the rise of a more digitized marketplace, and competing companies are well aware of these changing requirements (Broadbent & Kitzis, 2005).

If technological growth continues along its current trajectory over the next twenty years, businesses of all kinds will become more digitized and the importance of the CIO role will grow accordingly. Native-digital companies like Amazon, Facebook, and Google are ushering in commercial and IT innovations daily. Commercial applications of apps and programs are repurposing traditional business models toward digitally driven identities, shifting entire sectors of the economy online and making a global audience more reachable than ever before. In such an environment, systems have never been more powerful — nor more vulnerable. IT systems and data face constant threats from cyber-attacks, and a breach can cost a CIO their position. A notable example is the cyber-attack that led Target's CIO Beth Jacobs to resign after approximately four million consumers were affected in the widely publicized incident in 2013 (Broadbent & Kitzis, 2005).

Modern computing demands that CIOs exploit technology to create business opportunities and value. Many CIOs feel they are expected to function across an extremely broad spectrum and are sometimes not as prepared as their companies expect. These pressures make the role one of great potential for both success and failure (Anderson, 2006).

Following the September 11, 2001 terrorist attacks in the United States, the IT function's role in corporate disaster recovery became even more critical. Companies became more vigilant and proactive, with priorities changing and evolving every year (ComputerWeekly, 2005).

Conclusion

Most companies have managed to benefit greatly from advances in technology, and this is only the beginning of what is to come. Mr. Carter is of the opinion that the internet is strategic and is currently in its initial stages, and that the next wave of technology is yet to be conceived. He believes that businesses and societies are only beginning to understand the critical importance of connectivity for value creation.