It Pays to Be a CIO - ' Pay to Payback'

Linking CIO pay to payback isn't easy—largely because there is no simple and uniform way to measure returns on a technology investment.

During the technology boom of the late 1990s, many companies began to view CIOs as visionaries who could transform a business based on smart use of technology, says Nicholas Carr, editor-at-large at the Harvard Business Review.

But as this blurring of business and technology executives occurred, hardware and software technology was becoming a commodity, says Carr, author of the article "I.T. Doesn't Matter," in the Review's May 2003 edition.

Misguided is the company that looks to information technology as a strategic differentiator. Contrary to popular wisdom, the technology skills of a CIO are more important than the business skills, Carr says.

Competitive advantage "comes out of a complex mix of process, not a piece of software," he says. "If you're a CIO and you want to be thought of as a business visionary, maybe you're in the wrong position."

The scenario isn't so simple, contends Ingmar Leliveld, a principal at DiamondCluster International, a Chicago technology-management consulting firm.

Whether a CIO is a utility manager or a strategy setter depends on the executive, Leliveld says. Companies did overspend on technology in the 1990s and now the bleak economy is forcing intense scrutiny of what technologists say and spend, he says. But managing projects like a portfolio of investments—which is a decision-making technique used in other areas of business—can help CIOs prove their worth.

"We're at a very interesting point in time now in the evolution of I.T. as a business function," he says. A sign that CIOs have become true strategists will be when the routine career path takes him or her out of technology. Yet few such transcendent CIOs exist.

John Boushy, former CIO of the $4 billion Harrah's Entertainment casino company, was promoted to senior vice president of operations, products and services in January. But before he was CIO, Boushy had carved a long career in strategic marketing. Both Mike Flynn of Alltel and Terry Talley of Foot Locker were named in their companies' proxy statements last year, when they were top technologists. They have since been promoted out of the job—but their roots weren't in information technology anyway.

"When," asks Leliveld, "are we going to have a Fortune 500 company whose CEO was a CIO?"

For the complete CIO list and last year's tally see www.baselinemag.com/ jun03 or click the above PDF download graphic.