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CIO Role Shifts From Systems to Strategy

IT heads increasingly need business and communication skills.

In a short space of time the role of information technology has changed enormously, going from back-room business functions to reinventor of business processes and key driver of competitive strategy. As information technology becomes ever more pervasive, CIOs are increasingly expected to have the skills and training of a business leader.

The areas of greatest change in job function for today's CIO include increased interaction with other departments, greater involvement in strategic planning, and a greater role in the organization's bottom-line results, says a recent study from RHI Consulting that polled 1,400 CIOs from a stratified random sample of US companies with 100 or more employees.

Because technology is playing a greater role throughout the entire business, attitudes towards CIOs are changing, says Katherine Spencer Lee, executive director of RHI Consulting. As a result, she says, "CIOs have to be very prominent members of the high-level management team. Their opinion directly impacts an organization now."

CIOs salaries have reflected their changing role, showing a 19.6 percent increase in the salary range average since 1997, according to RHI's research. RHI's 2001 Salary Guide shows salaries across all industries to be highest in San Jose, Manhattan, San Francisco and Boston. The RHISalary Guide shows financial services to be one of the fastest growing industries in all but three of nine geographic regions in the US (South Atlantic, West South Central and Mountain).

Among the particular expectations of CIOs is the ability to straddle the line between the business and technology worlds, Spencer Lee says. "CIOs have to be able to take the desires of business people and be able to provide a technical solution," Spencer Lee says. "They have to be able to communicate what the development of a system means to the overall strategic direction of an organization."

Spencer adds that CIOs polled said that the MBA was the best advanced degree to have. "Arriving at that level of dual-discipline fluency means a different educational approach," she says.

Dennis Callahan, CIO of Guardian Life Insurance Co. (New York,$31.7 billion in assets) says "IT has become less back-room, books and records oriented and more a strategic, competitive opportunity, both in terms of revenue generation and streamlining operations and customer service." Callahan, who was most recently CIO of American International Group's (New York) financial services division adds that he is a member of The Guardian's strategic advisory board, and reports directly to the CEO, unlike his predecessor. "That puts me right at the executive table as a peer within the organization of those who run the profit centers," he says.

Callahan asserts that some businesses "still regard IT as a necessary and very expensive evil," but that at The Guardian there is the recognition that "IT is one of those activities that naturally touches all businesses and represents an opportunity for strategic leverage. We've moved toward much more of a business partnership at the executive level."

Anthony O'Donnell has covered technology in the insurance industry since 2000, when he joined the editorial staff of Insurance & Technology. As an editor and reporter for I&T and the InformationWeek Financial Services of TechWeb he has written on all areas of information ... View Full Bio

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