The eighth annual CIO/Ernst & Young survey reveals that IS and business goals are becoming more closely aligned. And now that more business executives are recognizing the strategic importance of technology, the opportunity to leverage IT had never been greater. But delivering basic IT functionality remains a prerequisite for a CIO’s success.

        Finally, it’s starting to happen: IS and business goals are converging. CIOs and business executives are both looking at IT not just as a cost center but as a strategic tool, and IS leaders are increasingly accepted by their bosses and peers as business partners. Yet even as CIOs take on a more strategic role in the business, they must continue to worry about delivering basis IT functionality.

        The observation that CIOs and business executives are more in step emerged in our eighth annual survey, co-sponsored by Ernst & Young LLP. The survey polled 230 CIOs and their bosses and peers in a range of industries and corporations to gauge how they view the CIO’s role and function, perceive IS’s place in the organization and weight the importance of IT as a corporate investment. "The watchword for IS managers over the last few years has been ‘alignment,’ and that has been achieved in some sense," says Ronald J. Tarro, director of Ernst&Young’s Vienna, Va.-based Navigating the New Technology Landscape program, which analyzes technology, management and strategy. "In the CIO role, there are more business people, which brings with it an inherent alignment."

        Another possible reason CIOs and their bosses are more in agreement than they’ve been in the past is the increasing use of computers by executives. As more executives use PCs-almost 40 percent of managers responding this year said they use a computer constantly, but not one manager responding last year did-their understanding of IT and its potential business uses increases, says Dean Wolf, principal of Ernst & Young’s Center for Technology Enablement in Vienna, Va. "In the old days, there was that unusual priesthood who knew things about computers," he says. "Now, everybody has a computer on his or her desk. Everybody has to know it."

        As IT loses its myself and CIOs understand their business better, bosses and peers are coming to view CIOs more as strategic business partners. "What they are saying now is, ‘We’re no longer going to look at IS as those guys who are off in that other business and don’t really need to know how we do business,’" Wolf says.

        One sure sign that CIOs and their managers and peers are closer to defining the CIO function in the same way is that all three groups agree that aligning IT and corporate goals was the CIO’s most important role in the past year. What’s more, all three concur that overseeing such alignment will continue to be the most important function that will add the greatest value to the business in the future.

        The shift away from the role of infrastructure builder is the most apparent change in the CIO role and functions, Wolf says. CIOs have already established standards, equipped users and influenced users’ IT-related decision making, and now their bosses and peers expect them to play a bigger role in business decisions and to optimize their enterprises’ systems by aligning IT and corporate goals. "This is a departure from what I’ve seen in the past," say Wolf. "CIOs were seen as plant managers in a transaction factory. Now CIOs are part of the company."

        Along with the general shift away from architecture creation, the survey shows that in the future, CIOs and their bosses and peers will focus on adding value by leveraging IT in addition to considering costs. In last year’s survey, CIOs’ bosses ranked controlling the costs of technology as the second-most critical success factor for CIOs over the next five to 10 years, and CIOs and their peers pegged it at number three. In this year’s survey, adding value by leveraging IT tied with cutting costs for the number-two future priority in bosses’ minds. Although just 29 percent of managers said that adding value by leveraging IT was important in the past years, 47 percent said it would be important in the future. The fact that managing the cost of IT ranked this year as only the number-seven concern for CIOs, number eight for peers and number nine for bosses is more evidence that cost may no longer be the sole driving factor in IT decisions. "In the past, if companies didn’t think they were getting value from IT, they cut costs, "Tarro says. "Now people are saying, ‘We’ve cut costs; let’s see if we can maximize value for what we’re spending."

        This year, all three groups also agreed on the top three concern for IS: delivering required functionality, delivering IT projects that improve the business and identifying new strategic applications for the business.  However, differences in how the CIOs, peers and bosses ranked those concerns are telling. While CIOs said improving the business is the chief concern, their bosses and peers said they worry most about delivering functionality-and they’re a good deal more likely to worry about it than are CIOs. About 40 percent of CIOs surveyed said delivering functionality is a concern, but half of their peers and almost 70 percent of their managers listed it as a concern. In fact, when asked which actions or lack of actions increase the odds of a CIO’s termination, bosses and peers said that failure to deliver functionality required by the business is one of the prime reasons that CIOs get fired. Similarly, peers said that delivering an IT project that fails and negatively affects the business could get CIOs the boot. Even though CIOs are trying to play the role of business partner and great communicator, they might perpetuate unwittingly the perception that they aren’t in touch with their users. "IS considers itself to be the business of IS. ‘We’and ‘they’ seem to permeate the language, "Tarro says. "You have this idea of separatism on the one hand and then the feeling that we have to get aligned."

        Not only must CIOs make sure they stay in tune with business requirements and deliver the basics, they need to work harder to communicate to peers and bosses that basic needs are being-and will continue to be-met. Their jobs may, in fact, depend on it. CIOs and peers said that failure to communicate with senior management is the number-one reason a CIO may get fired, and for bosses, it tied with failing to deliver functionality required by the business as the top reason. That marks an interesting shift from last year’s survey, in which peers and bosses didn’t rate communication skills as important for IS executives and primarily wanted their CIOs to play supporting, service provider roles.

        One way CIOs can improve communications and alignment of business and IS goals is through attending executive meetings. Of the 63 percent of CIO respondents, who said they attend at least half of the executive meetings held in their companies, almost 60 percent said they’re involved in select strategic business decisions. At the same time, only a quarter of those CIOs who never attend executive meetings said they participate in setting select business strategies.

        But merely attending meetings does not guarantee participation in making strategic business decisions or the success of IT investment, Tarro says. A meeting can be a proxy for decision making that goes on behind the scenes, and being invited to the executive table could be either a sign that CIOs have voting power and access to their higher-ups or evidence that the CEO doesn’t trust them. "There’s no value to [CIOs] being in the meeting; there’s value in them having a point of view," he says. "If you’re a geek and you go into a meeting with senior management and speak another language, it’s just another way to make yourself irrelevant."

        Rather than think of executive meetings as forums merely to advocate technology, CIOs should use them as venues to present new ways that IT can contribute to the business strategy in order to lay a technology foundation that supports it, Tarro says. CIOs should use meetings to form organizational partnerships, integrate working groups and connect organizations through projects. "If you are working to establish the impact of technology on the business, that’s a better thing [than solely advocating technology]," he says.

        CIOs can also address bosses’ and peers’ concerns with performance head-only by installing flexible systems, says Ken Norland, a research and development partner in Ernst & Young’s Center for Technology Enablement. "CIOs seem petrified by the amount of change they’re being asked to deal with, "Norland says. "There’s a little too much ‘keeping on keeping on.’ There’s not an adaption on the part of CIOs to the decreasing cycle time and need for flexibility."

        Business managers might be concerned with changes in the business environment, but CIOs have to contend with the rate of technological change, too, Wolf says. To be valuable partners, CIOs have to be aware of changes their managers and peers are concerned about and install a flexible technology infrastructure that will be able to respond to those changes. "Dealing with all of this change and doing it with the view of controlling spending just makes the job harder," he says. "They have to be nimble. They have to be responsive. But they can’t spend a lot of money doing it."

        The CIO’s role continues to become increasingly complex. IS executives have more opportunities to be business strategists, but they have to take on those new challenges while maintaining the level of IS service their bosses and peers expect. Achieving this balance requires the skills of a great communicator-someone who doesn’t just preach but listens.
                                                                                                                             
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