CIO Reporting Structure: Does it Matter to IT Maturity?

The CIO, like a surfer on a wave, must feel the changes that are constantly happening beneath him / her, and adjust accordingly. One of the bigger shifts happening over time is the CIO’s reporting structure. The reporting structure can tell us a lot about where the CIO position has been, and about where it is going. In her blog, Pearl Zhu gives a brief rundown of this wave.

Retro Reporting: The CFO

The traditional reporting structure that existed in the 1980s was CIO to CFO. That was when IT was perceived primarily as a cost center. There’s one problem with this relationship – CFOs tend to think quarterly. They are risk-oriented and not particularly eager to hear about new innovations or investments that may jeopardize the company’s health.

Value Reporting: The CEO

Fast-forward to present times and you’ll notice a shift characterized by CIOs reporting more frequently to CEOs (about 43% according to one study). This change is indicative of a transformation of IT from cost center to value center:

The most important thing is to keep all senior leaders –CXOs all on the same level of understanding about business strategy, and sitting at the same table. Particularly at the digital era, when IT is involved in so much more than producing financial reports. Information Technology has become such an integral part of Operations, Finance, and Marketing, that it does not make sense to place it hierarchically below any of these other parts of the organization. Any company that fails to recognize this will end up being unnecessarily encumbered by a systemic organizational flaw.

Keeping the Highroad Clear

Each and every CIO is in a position to deliver value to the business in a way that no other CXO can. What is sometimes missing from the chief of IT is a commitment to their line of business beyond fulfilling technical objectives. It would be additionally helpful for many CIOs if they viewed their approach to promoting ideas upwards as a kind of marketing. Instead of hiding behind the risk-cautious CFO, IT leaders should send the signal that they are value creators by preserving a reporting structure that gives them a direct line to the Chief Executive.

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