By Charles Njogu
1. Research Introduction
This research addresses the question of who is superior to the other one between a CTO and CIO. Organizations are struggling with the question of whether to employ either or both. On the other hand the technological and environmental changes are taking place without warning. As the organizations are still struggling with the above issue a new concept, the knowledge management concept has been born. Therefore, to my point of view both CTO and CIO should be under CKO and in the same rank to avoid conflicts. CTO should be a tech expert while CIO should be a business savvy. This conclusion is based on the analysis that I conducted.
In early 1980s the terms CIO and IT never existed in the market. At that time people were using Data Processing (DP) and Data Processing Manager (DPM). The person who was heading DP department had no technical skills. In most companies DP was a subsection of Finance and Accounting department. As the technology the role of DPM increased. Therefore the concept changed to Management Information System (MIS). Initially the role of DPM was to manage computer resources (hardware, software and liveware) but that of MIS manager was not only to manage computer resources but was in change of the information flow within the whole organization. In most of organizations, MIS department was separate and the manager was reporting to Financial VP or Managing director. In early 1990s technology started changing with more emphasis in business. CIO’s position started emerging with the basic roles not well defined. Today’s CIO is much better than 10 years ago. The responsibilities of a CIO grew to a point of reporting to a CEO.
Today, technology is the key to success and therefore the top management are concerned because of the huge amount that goes to technology. Most of the top managers do not understand whether technology is an expense or investment. They don’t know how to calculated expected returns from technology project, yet it gives an organization a competitive advantage. There is a need to have someone who has both technical and business skills to ease communication between the two technical and top management people. The IT department should be headed by CTO who work together with CIO.
The conflict is that the roles and responsibilities are not clearly stated. Both positions are senior/executive positions that are expensive to maintain. According to a survey conducted by a global consulting firm, conducted in fall 2000, the media base pay for CIO was $ 185,000 plus benefits per year. The top management is concerned whether to have CIO or CTO or both.
In this paper, I collected views from different people in different companies to justify my recommendation.
3. Discussion of results and relation to theoretical framework.
Today the companies are no longer ignoring the strategic role that technology plays in their organizations and therefore their managements are reflecting that change in attitude. According to a survey by Cutter Consortium an IT consultancy, 70% of CIOs report to the CEO and 69% are on their company’s senior management team. The survey also found that 35% of CIOs report to the CFO. According to Steve Andriole, a senior consultant at Cutter Consortium, “IT decision making is better left to a person who thinks more strategically, less long term than CIOs. Technology is getting very expensive and therefore it is getting attention of the CEO because it is critical the CEO to be aware of IT investments. You may not want the CFO to be the gatekeeper to technology investments.”
The same survey showed that 26% of CTOs report to the CIO. According to Andriole says, “CTOs are often charged with developing strategies for using new technology-projects that may be four or five years down the line-because their technological background is usually wider and deeper than that of the CIO”. On the other hand “ CIOs are usually more business savvy and more invested in the day-to-day operation of a company. The best situation is where the CIO reports to the CEO and the CTO reports to the CIO”. This is because the CIO can understand the technical language and convert it into Business language.
According to the same survey by Cutter, 53% of the companies surveyed agreed that their boards as “technology savvy”. This is a problem when both CIOs and CTOs make presentation to the board that has members who don’t have a clue of the value of technology. That is why CIOs need to be a part of executive management.
According to Center of Attention, Insurance Technology, CIOs stands at a point where business and technology meets. Closer to the business means being away from technology and vise versa. CIO serves both business and technology as an ambassador and translator and therefore requires to have combined expertise found in this intersection of disciplines.
According to Mike LaPorta, Deloitte Consulting (New York), “a visionary capable of envisioning how to provide significant value to business users quickly and cost-effectively. S/he is on the front end of technology, stays a breast of what’s happening and recognizes what will work.”
Mike Adler, partner, PricewaterhouseCoopers (New York), described the CIO as, “ someone who can take a really large, diverse organization and get people either in IT or business on board to rapidly make decisions and implement solutions on a consistent basis. S/he must work closely with the business executives in order to understand the business vision and how e-commerce fits into it”. He further said that,” in order to compete with new-economy competitors, CIOs have to foster a dot-com mentally because it’s the only way to establish speed within a company to rival to rival the advantages that dot-come has. The CIO needs to develop a bridge back to the legacy environment because they have the infrastructure and the architecture to connect the start-up e-business projects to what they’ve traditionally been doing over the years.”
According to Benjamin Tomb, managing director of KPMG (New York), “In the information age a learning/relearning commitment is required. Technology executives have to demonstrate a commitment to education for themselves and then set a budget for continuing education for the entire organization. Today’s CIO needs to know how that technology fits into the business. CIOs and CTOs have to be business strategists first, technologists second ”.
According to Darwin executive guide, “CIOs are senior executives responsible for all aspects of their companies’ information technology and systems. They direct the use of IT to support the company’s goals. With knowledge of both technology and business process and a cross-functional prospective, they are usually the managers most capable of ailing the organization’s technology deployment strategy with its business strategy. CIOs oversee technology purchases, implementation and various related services provided by information systems department. CIOs have taken a leadership role in reengineering their organizations’ business processes and the under pinning IT infrastructures to achieve more productive, efficient and valuable use of information within the enterprise.” According to Darwin, “CTO are to be more narrowly focus on tactical issues and the efficiency of the IT organization. The CTO should report to the CIO and their responsible for understanding the evolution of current technology and how to maximize the value of institution investments in technology.
According to Sniji, “CIO is a business person with technology knowledge. CTO is a technology person with business knowledge”, article # 525359.
According to Dunster, “It has been my experience that CIOs serve as a valuable interpreter between techies and non-techies. Furthermore, they have the clout and respect to be the champion that technical people need on the business side of the organization”, article # 525369.
According to Drnomand , “The dot.com company has both CIO and CTO. What I understand is that they have the following roles / tasks within the company: CIO knows the needs of the company. He/she is considered to be a service with the company performance as goal. The CIO does not communicate with technical guys very often. The CIO is focuses on business needs, company’s profit in performance and costs supported with an IT solution to a problem. CTO knows about all projects within the company at technical level. He does not define the requested service, although he communicates feasibility, performance, and technical problems with the CIO. The CTO also does study for new technologies, to be used in new projects. The CTO is focused at the technical face of IT. So, the CIO and CTO actually have different task”, article # 525375.
a. The recent role models that have emerged and their applications.
i. Strategic/Tactical
In this model the CIOs are people with more experience in business or management than in hardware, applications or networking. CTO is typically a senior technology manager who reports to CIO or are in the same level. Some firms started with CIOs and now the function of CIOs has increased and therefore they have to hire CTOs. The two related positions reporting to CIO are Chief Telecommunication Officer (CTO) and Chief Technology Architect (CTA). The CIO does not have all the skills needed to make decisions and therefore rely on the CTO to handle telecommunications and architecture.
A company such as Disney uses this model. It has a CIO oversee the IT business technology. A CTO oversee a division or individual projects. For example a CTO would oversee the animation projects and reports through Disney’s film division rather than back to the CIO.
ii. Internal / External
In this model, responsibilities are split along inside / outside. That is in organization one IS executive would focuses on internal IT needs while the other one would focuses on external IT needs. In this model the CIO handles the operations while the CTO focuses on new business opportunities or on new products research and developments.
Most of large companies are using this model. For instance, at Unisys Corp., CTO Ronald Bell oversees product architecture and operations while the company’s CIO focuses on in-house architecture. At Trecom Business Systems Inc., the CFO serves as CIO. He handles IS operations and business strategy as well as finances, while CTO is in charge of the company’s architecture and selecting vendors. An MIS director oversees the daily IS operations and reports to CFO.
iii. Dispersed
In this model, a non-IS executives play role in linking IS and business strategy, though it is not widely used, but it might be a model for the next generation. The young executives, who have grown up far more computer literate than their predecessors, will be able to actively evaluate IT’s role in improving market share or boost the bottom line, thus eliminating the need for a separate CIO strategists. CIO’s role is basically general business executives because the technology is complicated. In future people will be writing and manage their own applications without IS and therefore the CIO will just provide the architecture.
4. Conclusions
Most of the large organizations have both CIOs and CTOs. CIO comes first and as the roles expand then CTO’s position is created to help CIO. The CIOs are a part of the executives’ management to help them understand the role of technology and the benefits to expect. Almost 50% of the executives in various companies have no clue about the role of technology and how to calculate returns. In most cases CTOs reports to the CIOs. Therefore CIOs must have both strategic and tactic knowledge.
To maintain both positions is very expensive but large organization due to complicated IT, it is worth to invest. On the other hand medium and small companies can have CTO or CIO or outsource.
In the next generation CIOs’ position will have no significant because the executives will be computer literate and therefore understanding the role of technology will be easy to them. Therefore the disperse model will prevail.
The Hypothesis does not hold because not both CIOs and CTOs needs to be Business Savvy. CIOs need to be Business savvy while CTOs needs to be Tech savvy.
5. Stating the main findings and their significance
The best situation is where the CIO reports to the CEO and the CTO reports to the CIO. CIOs stand at a point where business and technology meets. CTO is a technical person who focuses on technology and how to improve efficiency. The CIO would be in a better position to understand the CTO and translate in to business language that CEO could understand.
CIOs must be on front end of technology, stays a breast of what is happening and recognizes what will work. They must demonstrate a commitment to education for themselves and the others within the organization to develop knowledge workers.
CIOs must know the needs of the business by focusing on company’s profit in performance and costs. CTOs must know about all projects within the company at technical level.
The importance of the three role models in business that includes Strategic/Tactic (ST), Internal/External (IE) and Dispersed (D). The ST and ET models are popular in organization today but D is emerging that will be the model for the next generation. In ST model the CIO reports to CEO and CTO reports to CIO. In this model a conflict is likely to a rise. In IE model CIO handles the operations while the CTO focuses on new business opportunities. In D model the executive understand the role of technology. They can write and manage their own applications without IS and therefore CIO will just provide the architecture.
6. Suggestions and Opinions
For any company to gain competitive advantage over competitors, it needs to recognize the role of technology in business and take advantage of it. The executive management requires understanding the returns they expect from investing in technology. On the other hand technology is growing and therefore need someone ready to embraces the new technology for the benefit of the organization. Large companies may have both CIOs and CTOs but those couldn’t afford, then may outsource part-time IT executives.
CIO and CTO must be in the same rank to avoid conflicts. Both must work as one team. They should discuss both technical and business needs so that they can merge both goals to one. The goal of technical people is to improve efficiency and productivity that increases costs. On the other hand the goal of executives is to maximize profit by minimizing costs. Therefore there is a conflict between the two.
The roles and responsibilities of CIOs and CTOs must be clearly stated and communicated. The major role of CIO involves searching for ways in which the information system can help the company. That is the CIO searches for and advocates strategic uses of MIS with the goal of using computer in some ways that attracts customers to provide an advantage over competitors.
Other responsibilities of CIO includes:-
q Long run planning in terms of information technology.
q Communication of business needs and strategies to IT people
q Communicating MIS needs and product development to line managers.
q Testing the compliance between the business and IT units.
q Making sure the IT developments are prioritized and funded.
q To ensure back ups and full participation in ongoing testing processes.
Both CIO and CTO should be reporting to Chief Knowledge Manger (CKM). This is because CKM understand the strategic gaps and identify necessary knowledge to fill those gaps. Technology is a channel or an avenue to take organization where it wants to be. Therefore it is not a part of goals and objectives of an organization. On the other hand, knowledge gives a competitive advantage. Therefore, knowledge management is apart of strategic management. That is why CKM should be the overall boss to resolve conflicts between CIO and CTO.
7. References
www.itmpinc.com/CEO_CIO_CTO_IT_Executives_for_Rent.php
www.sensiblesystems.com/news2.htm
www.cio.com/archieve/rc_model.html
www.insurancetech.com/printableArticle.jhtml?articleID=14706629
www.computerworld.com/printthis/2000/0,4814,45845,00.html
http://guide.darwinmag.com/technology/role/description/
Management Information Systems for the Information Age, 4th Edition, by Haag/ Cummings/ Mccubbrey, 2004.