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The evolving role of the CIO

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Title from cover. "August 1999." Includes bibliographical references (leaves 18-21). Jeanne W. Ross, David F. Feeny.
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Chapter 19
The Evolving Role of the CIO
Jeanne W. Ross and David F. Feeny
385
From humble beginnings in the back rooms of most large companies, information tech-
nology has emerged as a topic of considerable interest in many, if not most, corporate
boardrooms. In 1999 executive teams were reviewing their companies’ progress toward
Y2K compliance; directing often massive IT infrastructure investments, such as ERP
systems and pervasive intranets; and speculating about potential impacts of their own
Internet and e-commerce initiatives as well as those of new information age competi-
tors. Over the years executive teams have experienced a high degree of discomfort in
these discussions of IT-related topics. Consequently, the functional IT head has often
been on the “hot seat” to address persistent concerns about the firm’s ability to identify
opportunities presented by new technologies, respond to those opportunities in a
timely fashion, and achieve demonstrable benefits from IT investments.
As business dependence on IT—both operationally and strategically—has
grown, the IT leader has increasingly gained acceptance as a member of the execu-
tive team. Since the mid-1980s, this individual has typically been labeled the chief
information officer or CIO (Bock, Carpenter, & Ellen, 1986). But soon after this ter-
minology came into use, the signs of distress began to appear. CIOs have struggled
with noticeably short tenures (e.g., Rothfeder & Driscoll, 1990), a lack of credibility
within the executive team, and problematic relationships with their CEOs (Feeny,
Edward, & Simpson, 1992).
More recently, CIOs have felt the impact of the dramatic development of the IT
services industry and increasingly computer-literate line managers. If all or most of
IT activities are outsourced, what then is the role of the CIO (McFarlan & Nolan,
1995)? As line managers become comfortable assuming responsibility for their com-
puting needs, do many of the CIO’s responsibilities become redundant? Does the role
of the CIO have a future or merely a problematic past? In this chapter we review the
role of the CIO, taking a historical perspective on its evolution to better understand
the potential sources of CIO value and its continuing relevance, and leading to fur-
ther research questions that may help to illuminate the future of the role.
PROJECTING THE FUTURE THROUGH
THE PAST: A MODEL OF THE CIO’S ROLE
Clearly, dramatic technological changes have transformed computing from a back-
room utility to a strategic organizational resource. This transformation has led to
many changes in the use and management of information technology, including the
reach and range of the technologies (Keen, 1991), the requisite skills and qualifica-
tions of the users of information technologies,1the requisite skills and qualifications
of IS professionals,2the impacts—real and intended—of the technologies,3and the
amount of organizational spending on IT.
Changing technologies have also led to major changes in the responsibilities of
the CIO. We would argue, however, that the effects of technology on the role of the
CIO are not direct. Rather, the CIO’s role has evolved through its interaction with
three intermediate forces. Figure 19.1 depicts these forces in a model that we shall
use to examine the evolution over time of the role of the CIO. It suggests that
changes in the role are related to wider changes in (1) existing and planned applica-
tions of technology in the host organization, (2) attitudes of senior executives toward
386 Jeanne W. Ross and David F. Feeny
Applications
portfolio Dominant
suppliers
Executive attitudes
CIO role
and
responsibilities
FIGURE 19.1 Forces
Influencing the CIO
Role
technology and its potential impacts and role, and (3) characteristics of the principal
vendors who deliver and service the technologies.
First, an organization’s actual and planned applications portfolio influences
the role of the CIO by establishing the extent to which the organization’s operations
and strategy are dependent upon IT and the range of people within the business
who are impacted by IT. Second, business executives’ attitudes toward IT influence
the role of the CIO by defining the level of investment available for IT and the orga-
nization’s predisposition to apply IT strategically. Third, dominant IT suppliers in-
fluence the role of the CIO by determining the range of technological architectures
and solutions that are perceived to be reliably available, as well as the quality and
extent of external resources and services that can be acquired to substitute for or
complement internal resources.
We also note that these three forces interact with one another. Business exec-
utive attitudes toward IT help to shape the existing and anticipated applications
portfolio while the success (or otherwise) of that portfolio in action strongly influ-
ences the ongoing attitudes of the executives. The dominant suppliers of the day, be-
cause of their prominence, often gain access to senior business executives and use
that access to further influence executive attitudes. Meanwhile, dominant suppliers
become dominant by proactively influencing the applications portfolio of early-
adopter businesses, generating a momentum that convinces additional businesses
of the importance of investments in their products and services.
Clearly, the CIO is not a passive pawn at the mercy of three surrounding
forces. On the contrary, successful CIOs influence their own roles in the organiza-
tion and create further interactions among the elements of the model. We argue
that CIOs influence their roles by addressing the forces we have identified: through
relationship building and education, they influence the attitudes of key executives
toward IT; by identifying and working with (both existing and emergent) dominant
suppliers, they shape their vendors’ offerings and thus the services and technologies
available to their firms; by successfully managing and extending the applications
portfolio, they directly influence the strategic impact of IT in their organizations.
Finally, we note that the model makes no specific mention of corporate
strategy. We would argue that corporate strategy does have a pervasive impact on
the role of the CIO but, like the technology itself, its impact is felt through the three
intermediate forces. In particular, a firm’s applications portfolio is a reflection of or-
ganizational strategic priorities. Similarly, executive attitudes toward IT invest-
ment and the status and role of the CIO define how the firm has decided to position
itself to shape and enact strategy through IT. Finally, the offerings of dominant
suppliers reflect vendors’ perceptions of the aggregate strategic imperatives of their
existing and potential customers.
We will use the model to examine the changing role of the CIO across three
technological eras:
1. The mainframe era covering roughly the 1960s into the early 1980s, during
which time IT was largely synonymous with mainframe computers.
2. The distributed era, starting at the end of the 1970s, during which corporate IT
became characterized by integrated networks of workstation PCs, minicom-
puters, and mainframes connected through local and wide-area networks.
3. The Web-based era, starting for most in the mid-1990s, with a rapidly growing
emphasis on the use of Internet and Web protocols to drive both internally and
externally oriented applications of IT.
Chapter 19 387
We distinguish between these eras because, as we shall demonstrate, there are
clear discontinuities in the elements of our model as each new era becomes estab-
lished. We can also chart more evolutionary change in the elements of the model as
each era follows the S-shaped adoption curve first identified for the mainframe era
by Gibson and Nolan (1974) and graphically illustrated in Figure 19.2. The eras are
defined by major technological innovations, which provide vastly more powerful
opportunities for business applications of IT than did earlier technologies. The
impacts of the innovations are realized gradually as the technologies mature and
organizations learn how to apply them. Taken together, Figures 19.1 and 19.2 pro-
vide the platform for analysis of the changing role of the CIO.
FORCES INFLUENCING THE ROLE
OF THE CIO—THE MAINFRAME ERA
The introduction of mainframe computers into the back offices of business organi-
zations in the late 1950s and 1960s represented the first application of computing to
business. At the start of the mainframe era, firms recognized the potential of sys-
tems to cut time, cost, and human error from repetitive business tasks. Years later,
computing had penetrated most functional areas, and the typical business had
moved from pure cost-reduction objectives to recognizing the value of on-line data
for organizational decision making (Gibson & Nolan, 1974). Along the way, the data
processing department evolved into an information systems function (Rockart, Ball,
& Bullen, 1982). Although “distributed” has long since supplanted “mainframe” as
the dominant paradigm, mainframe computers still retain an important role in
many large organizations’ computing environments. Indeed, migrating from or
managing the legacy systems created during the mainframe era still challenges
many CIOs (and their host organizations).
388 Jeanne W. Ross and David F. Feeny
Business
exploitation
of IT
Mainframe era
Distributed era
Web-based era
1960 1970 1980 1990 2000
FIGURE 19.2 Major
Technical Eras
MAINFRAME ERA—APPLICATIONS PORTFOLIO
The applications of the mainframe era started with the automation of clerical tasks.
Over time, companies developed large-scale and highly efficient transaction-processing
capabilities. In most cases, electronic data processing (EDP) started in the accounting
function, simplifying general ledger entries and account reconciliation. Shortly there-
after, firms took on production planning and control tasks and began to make avail-
able on-line the data captured through their systems until ultimately mainframe
computing touched most organizational activities in the order-to-delivery value chain
of large organizations.
MAINFRAME ERA—EXECUTIVE ATTITUDES
Business executives experienced a common pattern of attitudes toward, and expecta-
tions for, information systems as the mainframe era evolved (Gibson & Nolan, 1974).
Initially, they viewed EDP as an accounting tool. Then they became enthusiastic about
the range of tasks that systems could support. Later they became concerned about the
cost of ongoing operations and runaway systems projects. Because business executives
during the mainframe era viewed electronic data processing as a cost-cutting tool, they
typically based IS investment decisions on the expected ROI of new information sys-
tems. As they established information systems functions, business executives agonized
over the gap between the information utopia they were promised and the reality of
data labyrinths that they experienced (Ackoff, 1967; Zani, 1970; Rockart, 1979). Most
often executives looked for an IS leader who could successfully manage large projects,
contain IS costs, and respond effectively to their personal needs for information.
MAINFRAME ERA—DOMINANT SUPPLIERS
IBM was unquestionably the dominant supplier of computing products and services
during the mainframe era. It sold and serviced the computers and accompanying
operating systems. If the internal staff could not solve a technical problem, IBM
could usually handle it for them. Through its System 360 series, IBM provided an
evolutionary route for its customers to increase capacity and move to new technology
while protecting their existing systems investment. It was easy for customers to
grow with IBM and very difficult and expensive to move away from them. IBM be-
came the safe choice. “Nobody gets fired for buying from IBM” became a familiar
mantra. User emphasis on the need for high reliability in increasingly pervasive
transaction-processing systems further reinforced a conservative approach to pro-
curement. As a result, the DP managers of the day rarely engaged in appraising
technology innovations from new entrants, preferring to wait for IBM to market
more reliable industrial-strength versions. IBM was also perceived to be adept at
using its high profile to gain access to corporate business executives, further en-
hancing its ability to set expectations and influence the pace of evolution.
MAINFRAME ERA—CIO ROLE AND RESPONSIBILITIES
From this discussion, we can see that, during the mainframe era, the role of the
DP/IS manager—precursor of the CIO—was predominantly that of an operational
Chapter 19 389
manager (i.e., a delivery orientation). With the dominant supplier nearly dictating
the pace and direction of applications portfolio development and procurement
strategy, the key tasks demanded of the IS leader were to develop new systems to
time and budget and to operate existing ones to a high level of reliability.
As the era evolved (Gibson & Nolan, 1974; Nolan, 1976), the IS leader became
more visible and frequently more controversial, paralleling the evolution of systems
development, implementation, and use in the organization. IS departments took on
large projects with big budgets and high expectations. Accordingly, applications
backlogs increased, high-profile projects often experienced runaway costs, and
firms felt the impacts of operational service failures. Those experiences led to
rapidly growing IS staffs, introducing issues of internal organization and personnel
management. Negative systems experiences also resulted in increased scrutiny of
IS departments using the types of service and financial management measures ap-
plied elsewhere in the firms. Increasingly, the IS leader and IS department were ex-
pected to understand and be responsive to the context and needs of the business.
But while the level of challenge was increasing throughout the era, the nature of
the role remained essentially that of operational manager in a specialist domain. Not
surprisingly, therefore, the status of the IS leader was that of senior or middle manager
reporting to an established functional head—often the first applications champion—
typically the chief financial officer or perhaps the director/vice president of operations.
Arguably the biggest evolutionary change during this era was in the skills and
abilities sought in the IS leader (Ives & Olson, 1981). Increasingly, the emphasis
moved from personal technical aptitude to effective management and communication
abilities. Toward the end of the era, some companies had begun to appoint as IS
leaders proven managers from elsewhere in the business. Their mandate was to instill
in the IS function the necessary performance orientation, processes, and disciplines.
ROLE OF THE CIO—THE DISTRIBUTED ERA
By the early 1980s, the distributed era was becoming well established (Withington,
1980). Departmental minicomputers (often installed as a reaction to a lack of re-
sponsiveness in the IS function) had liberated the computer from the back room and
invited more decentralized control over organizational computing (King, 1983). Per-
sonal computers began to proliferate rapidly on the desks of corporate staff, also
commonly representing acts of independence from central IS control. However, as
the era progressed, its evolution was influenced by three further developments:
1. Rapid developments in telecommunications technologies brought the potential
to link the distributed pieces together in local and wide-area networks.
2. The client/server concept argued convincingly that the various elements of com-
puting should be seen to have complementary rather than competing roles in a
distributed network.
3. Business managers at all levels learned that direct business ownership and op-
eration of computing did not result in cost-efficient or effective computing; IS
professional skills—from either a coherent corporate IS organization or the
rapidly growing external market for IS services—were required to manage an ef-
fective distributed network that supported organizationwide goals.
By the time the Web era had started to emerge, most firms had recentralized re-
sponsibility for a standardized and enterprisewide IT infrastructure.
390 Jeanne W. Ross and David F. Feeny
DISTRIBUTED ERA—APPLICATIONS PORTFOLIO
At the start of the distributed era, business applications developed for minicom-
puters and personal computers were typically targeted at the needs of local knowl-
edge workers. Consequently, distributed technologies initially resulted in “islands” of
computing in organizations, and corporate needs were subjugated to the demands of
local users (McKenney & McFarlan, 1982). Desktop computers exacerbated the ten-
sion between corporate and local needs as users experienced the responsiveness and
flexibility provided by personal productivity software. However, the emergence of
networking technologies and the reworking of applications and database software to
operate in distributed environments led to a new emphasis on integration. Indeed,
IT increasingly began to be perceived as a tool for enabling new levels of integration
and collaboration across the functions of the business (Rockart & Short, 1989).
In the mid-1980s a series of influential articles (e.g., McFarlan, 1984; Porter &
Millar, 1985) took the argument further. IT, it was suggested, was now a competi-
tive weapon: By using technology to link activity across firm boundaries, companies
such as American Airlines, American Hospital Supply/Baxter Travenol, and Merrill
Lynch had changed the basis of competition to their own advantage. Other compa-
nies then strove to innovate with applications that linked to customers, distribution
channels, or suppliers. Although few were seen to emulate the business success of
the referenced exemplars, many had established systems that reached out along the
supply chain by the end of the distributed era.
The theme of using IT as an agent of integration became evident in two other
contexts. The first was globalization. As large corporations sought to coordinate more
closely their international operations they made major investments in data networks
to support EDI and electronic mail traffic, often subsuming the corporate voice com-
munications network as well. The second, quite different, development was triggered
by the idea of business process reengineering (Davenport & Short, 1990; Hammer &
Champy, 1993). Rather than automate existing business processes that had been
evolved within a functionally driven business structure, the firm should, it was ar-
gued, redesign its processes to take advantage of the capability of new technology.
Finally the applications portfolio of the distributed era was influenced by the
emergence of packaged enterprise resource planning (ERP) systems. ERP offered
the ultimate in systems integration: the seamless operation of all required transaction-
processing systems across a distributed network. Frequently encouraged by the addi-
tional need to have systems that were Y2K (millennium) compliant, firms committed
huge sums to ERP rollout in the later stages of the distributed era.4
DISTRIBUTED ERA—EXECUTIVE ATTITUDES
The espousal of IT as a new competitive weapon was a high-profile wake-up call for
business executives. Not only did Porter—the most prominent business strategy
guru of the day—add his imprimatur to the ideas of McFarlan and other information
management academics, but also the practitioner press took up the call (e.g., Busi-
ness Week, 1985). Increasingly, business executives began to demand the develop-
ment of an IT strategy that was aligned to the strategy of the business. Globalization
and business process reengineering were further boardroom-level topics that clearly
had significant IT content. Later, the millennium bug issue served to highlight to
executives the extent to which their businesses had become dependent on IT.
Chapter 19 391
The mad rush to develop competitive advantage through IT led to burgeoning IT
costs and tumbling systems reliability. The increasing importance to the business of a
robust and coherent IT infrastructure often contrasted with the situation on the
ground, where multiple technical architectures had come into use. Recessionary pres-
sures reinforced the urgent need, in the minds of executives, for IT activities to be
rationalized and IT costs to be brought under control and significantly reduced.
At the same time, executives were becoming aware of a seductively attractive
new option—the outsourcing of IT activity. IT is not a core activity of this business,
the argument ran; we should look to outsource it to a world-class supplier whose
core business is IT. Leading IT outsourcing companies were happy to reinforce the
argument with claims of substantial potential cost savings, typically on the order of
20 percent. The promise of ERP systems struck a further chord with many execu-
tives. Surely it made obvious economic sense to standardize on packaged software,
millennium compliant and maintained for the future by the vendor, rather than
allow further in-house reinvention of the necessary wheels. By the late 1990s, IT
outsourcing and ERP systems were industry sectors worth tens of billions of dollars
each (Lacity, Willcocks, & Feeney, 1996; Kirkpatrick, 1998).5
But as IT in various forms became a frequent topic for the boardroom, execu-
tives found that pursuing the new ideas was not straightforward. The idea that IT
was a new competitive weapon—rather than a competitive necessity—was widely
questioned (Warner, 1987; Kettinger et al., 1994; Mata, Fuerst, & Barney, 1995).
Hammer and Champy’s (1993) warning that the failure rate of business process
reengineering might be as high as 70 percent was echoed elsewhere (Moad, 1993).
Various authors challenged whether wholesale and simplistic IT outsourcing con-
tracts were viable (Lacity & Hirschheim, 1993; Lacity et al., 1996; Earl, 1996). The
real business benefits of massive ERP projects began to come into question (Feeny &
McMullen, 1999). By the mid-1990s, it was suggested (Earl & Feeny, 1994) that ex-
ecutive attitudes toward IT had become polarized in the distributed era. While some
senior management teams viewed IT as an asset that could transform the organiza-
tion, others viewed it as a liability with uncertain benefits and high costs. Conse-
quently, some firms invested in the development of highly competent IT organiza-
tions (Clark et al., 1997; Earl & Sampler, 1998), while others slashed IT investment
spending or outsourced the entire function to save money (Huber, 1993).
DISTRIBUTED ERA—DOMINANT SUPPLIERS
As individuals in organizations gained computing power through distributed tech-
nologies, organizations lost IBM as the guardian of their computing environments.
The dominance of IBM was dispersed across a wide variety of suppliers. Microsoft
and Intel emerged as the first influential suppliers of the era as they created a de-
mand for desktop computing products by addressing the demands of individuals,
who learned to expect powerful, flexible technologies on their desktops. Concur-
rently, individual users learned to live with the idiosyncrasies of new technologies.
They substituted a demand for “bulletproof” systems upon implementation with a
demand for responsive support organizations and continuous improvement in the
postimplementation stage. As firms developed corporate IT architectures, they al-
most invariably featured products of the so-called Wintel alliance.
Another important group of suppliers built the IT outsourcing industry. Firms
such as EDS, Andersen Consulting, CSC, and IBM sold economies of scale and service
392 Jeanne W. Ross and David F. Feeny
expertise to firms that viewed their IT functions as commodities rather than unique
business competencies. The major outsourcers were particularly aggressive in ap-
proaching the business executive team directly with offers that were hard to refuse. As
a result, a number of multibillion-dollar deals involved the outsourcing of the entire IT
function. Over time, however, most firms elected to selectively outsource specific IT
activities (Lacity et al., 1996).
The final rise to prominence featured the software development firms—such
as SAP, PeopleSoft, and Oracle—that built enterprise resource planning packages.
While these software package providers allowed firms to outsource primary respon-
sibility for transaction-processing systems development and maintenance, major
consulting firms assumed a major role in systems implementation. Most noticeably
the so-called Big 5 firms, who had long had access to the boardroom through their
accounting activities, became involved first in BPR initiatives and then ERP proj-
ects. External providers were substituting their services for more and more of the
in-house unit’s traditional activities.
DISTRIBUTED ERA—CIO ROLE AND RESPONSIBILITIES
With all of these changes in the elements of our model, it is not surprising that CIOs
experienced difficult and turbulent times in the distributed era. After the relative
stability of the mainframe era, CIOs had to learn and master multiple roles to sur-
vive and prosper. Earl and Feeny (1994), Ross, Beath, and Goodhue (1996), and
Rockart, Earl, and Ross (1996) provide examples of the pressures and imperatives
that CIOs faced. We can capture the essence of their findings by identifying and dis-
cussing in turn four CIO roles for the distributed era: organizational designer,
strategic partner, technology architect, and informed buyer.
In the role of organizational designer, the CIO had to devise and continuously
adapt an IT organization that responded to the business-side realities of the distrib-
uted era. Generally, this meant the creation of a “federal” IT structure (Rockart et
al., 1996; Sambamurthy & Zmud, 1999) in which a central IT unit shared responsi-
bilities for IT with IT units that were located within business units and commonly
had a dotted-line relationship with the CIO. The tasks required to fulfill this role
included clearly delineating responsibilities between central and distributed units.
This involved the management of a broad and dynamic array of coordinating mecha-
nisms (Brown & Sambamurthy, 1998). At the same time, the CIO was responsible for
recruiting and developing a professional staff that was both technically proficient
and business oriented. Even as the selective use of IT outsourcing grew, the CIO had
to ensure that the firm retained the capability to exploit the changing technology
(Ross et al., 1996; Feeny & Willcocks, 1998).
The objective of the CIO’s role as strategic partner was to achieve strategic align-
ment between business and technology (Rockart et al., 1996). Key tasks within this
role were twofold. On the one hand, CIOs engaged in persistent efforts to educate busi-
ness management about the opportunities presented by information technologies. On
the other hand, CIOs focused IT resources on solving business problems and identi-
fying business opportunities (Earl & Feeny, 1994). These tasks demanded a continuous
investment in relationship building with business executives (Henderson, 1990). In
fact, studies of the activities of CIOs (Stephens et al., 1992; Applegate & Elam, 1992)
indicated that they spent much more of their time outside the IT function compared
to their mainframe era predecessors (Ives & Olson, 1981).
Chapter 19 393
Shorn of the mainframe era’s IBM security blanket, the CIO had to support
corporatewide computing requirements even as much development and operations
activity became dispersed. Accordingly, the CIO’s operational responsibilities ex-
panded beyond those of the previous era and evolved into a technology architect role
(Ross et al., 1996; Rockart et al., 1996). Tasks included first scanning emerging tech-
nologies to identify existing and future capabilities. The technical architect was also
responsible for designing a corporate IT architecture that satisfied firmwide com-
puting needs and then persuading IT and business management of the necessity to
adopt consequent technical standards. Finally, in the role of technology architect, the
CIO was responsible for achieving high service levels across what were invariably
highly complex platforms involving multiple vendors. Whether or not they used ex-
ternal service providers to resource some or all of these tasks, the CIOs’ personal
credibility was critically affected by the track record established in this role (Earl &
Feeny, 1994).
Finally, a shrewd CIO mastered the role of informed buyer to strategically de-
ploy external resources in a manner that maximized the effectiveness of internal
resources and lowered organizational costs. The tasks involved proactively scanning
the developing IT services market; analyzing how IT activity could be successfully
disaggregated and appropriately contracted; building relationships with chosen sup-
pliers; and monitoring service provided against both the contractual requirements
and the developing capability of the marketplace (Lacity et al., 1996; Feeny & Will-
cocks, 1998). CIOs such as BP’s Cross deliberately made intensive use of the service
marketplace to reorient remaining in-house IT resources in support of the strategic
partner role (Earl & Sampler, 1998).
CIOs who mastered all four of these roles came to enjoy the status of executive
team member during the distributed era. Whether or not they reported directly,
they enjoyed excellent relationships with their CEO and indeed often achieved a
special relationship (Feeny et al., 1992; McKenney, 1995). In achieving such status
(many did not), the single most important role seemed to be that of strategic partner,
the person who could successfully provide the CEO and other executives with an
understanding of the role of IT within a future business vision. CIOs who convinc-
ingly fulfilled this role were forgiven relative weaknesses in other roles (Feeny et
al., 1992), provided they built a strong team of subordinates. Rockart et al. (1996)
suggested that it would become increasingly common for CIOs to create the position
of chief network officer (CNO) to focus on the roles we have labeled technology ar-
chitect and informed buyer.
Consequently, the most important personal skills for CIOs in the distributed
era can be seen as those required for relationship building and for strategic and
organizational development. Earl and Feeny (1994) stressed the importance of con-
sultative/facilitation/communication skills together with an orientation toward goals,
ideas, and systems thinking. In their experience, the most successful practitioners
had emerged from predominantly IT backgrounds, like the “maestros” chronicled by
McKenney (1995). But Applegate and Elam (1992) noted that new CIO appointees
commonly had mainly business or hybrid (business and IT) experience. And one
large-scale empirical study (Armstrong & Sambamurthy, 1996) concluded that the
extent of the firm’s IT deployment was positively associated with CIOs who had
both IT and business knowledge, as perceived by other members of the business
executive team. Whatever their career record, it seemed clear that successful CIOs
had to demonstrate a strong business orientation and understanding as well as a
mastery of the fundamentals and directions of IT.
394 Jeanne W. Ross and David F. Feeny
THE WEB-BASED ERA
The Web-based era began with the commercial introduction of the public Internet in
the early 1990s. The evolution of the Internet introduced concepts such as e-commerce
and e-business and a flurry of activity within existing organizations to try to under-
stand the implications of the Internet for their business.6Because the Internet was
fundamentally an information technology with enormous strategic implications, its
importance firmly cemented the link between IT and business strategy. As CEOs
proclaimed that their businesses had embraced e-commerce, IT could be seen to be
influencing corporate strategy (or at least the discussions of it) to an unprecedented
degree.
Technologically, the distinction between the distributed era and the Web-based
era is that networks in the distributed era were centrally designed around a
vendor’s protocols to link internal machines. Networks in the Web-based era use the
public Internet protocol standard (TCP/IP), which allows rapid growth in internal
and external links and at much lower costs. But the felt difference between the dis-
tributed and Web-based eras is that senior management’s earlier concern for
aligning IT with business strategy shifted to a concern for aligning business
strategy with the opportunities presented by new technologies better or faster than
their competitors.7As we write this, the Web-based era is very young, and it is not
clear how it will evolve, but some early developments allow us to speculate on how
the Web-based era may affect the role of the CIO.
WEB-BASED ERA—APPLICATIONS PORTFOLIO
The development of Internet, extranet, and intranet applications has implications
for the customer interface, for the supply chain, and for intraorganizational com-
munications. While the longer-term expectations are that the Internet will drive
new organizational models (Venkatraman & Henderson, 1998),8the early impacts
are dramatic for just a handful of organizations. New Internet firms—the darlings
of investors—that substitute electronic exchange for brick-and-mortar facilities
have emerged. Meanwhile, existing firms have more often extended existing busi-
ness models to incorporate an electronic customer interface, but they are increas-
ingly recognizing the opportunity to offer value-added services to customers at low
cost across the Web.
Initial intranet applications have focused on general organizational communi-
cations. These could have useful implications for strengthening individuals’ sense of
belonging and their general awareness of organizational policies and services, but
they are hard to view as strategic developments. Over time, intranet applications
are expected to allow significant changes in the infrastructures used to share data
across business units and to standardize business processes. The communications
they foster will facilitate new, more virtual organizational designs (Venkatraman &
Henderson, 1998). In addition, intranets have the potential to support the knowl-
edge management initiatives that are already at the core of corporate strategies in
companies such as BP (Prokesch, 1997).9
Extranet applications have, in many cases, represented marginally revised elec-
tronic data interchange (EDI) applications. These, too, however, offer the potential for
new and more sophisticated linkages with larger numbers of suppliers, designers,
customers, and alliance partners. At GE, a purchasing extranet has allowed the firm
Chapter 19 395
to relax its policy of working with a limited number of suppliers in order to minimize
procurement management costs. Now GE uses the extranet to display its needs to an
expanded supplier base in perpetual competition with one another (Meyer, 1999). Web-
based technology is also being used to support the alternate procurement philosophy of
ever-closer collaboration with supplier-partners to achieve reduced time to market for
new products or the build-to-the-customer-order approach of companies such as Dell.
WEB-BASED ERA—EXECUTIVE ATTITUDES
While many executives were cynical about the “competitive advantage” applications
of the 1980s, the idea of new Web-based opportunities has attracted universal at-
tention in boardrooms. The hype around Internet start-up firms and the publicity
given to Web applications of existing firms suggest that executives who do not move
quickly may be putting their firms at risk (Hamel & Sampler, 1998). At the very
least, CIOs are the individuals to whom executives look to ensure they have the nec-
essary IT infrastructure in place to support e-commerce initiatives. Most often CIOs
are also expected to help senior executives understand the opportunities and the
business implications of competitors’ e-commerce initiatives.
A second important factor for CIOs is that executives seem to have changed, at
least temporarily, their attitudes toward investment appraisal. Given the rhetoric of
Internet time, more emphasis is being placed on urgent pursuit of promising applica-
tion ideas than on the traditional and lengthy development of detailed cost-benefit
cases. Furthermore, the investment required to pilot new ideas and the time required
for application development are seen to be dramatically lower than in previous eras.
In the minds of executives, IT-based initiatives are at last demonstrating the favorable
characteristics of low cost, short time scales, and potentially high rewards.
WEB-BASED ERA—DOMINANT SUPPLIERS
The fortunes of vendors in the Web-based era seem likely to rise and fall as readily as
Internet start-up firms. Network systems and equipment providers such as Sun,
Cisco, and 3Com seem to have secure commercial positions as providers of critical
components, but there is little evidence that they are influencing the strategic
thinking of their corporate customers. Companies that provide technologies such as
browsers, portals, and search engines offer important support to firms that are
forging ahead in Web-based applications, but it is unclear whether they are estab-
lishing positions of lasting influence and bargaining power. Most likely, the important
dominance will belong to whichever of the many large suppliers now “betting their
future on e-business” proves the most effective. The list includes what traditionally were
hardware or software companies such as IBM, Hewlett Packard, Microsoft, Oracle; the
big service companies such as EDS and CSC; and the major consulting companies, in-
cluding PricewaterhouseCooper and Andersen. Uncertainty currently abounds.
WEB-BASED ERA—CIO ROLE AND RESPONSIBILITIES
We saw in the distributed era how three elements of our model each presented con-
siderable difficulties for CIOs, and their fortunes varied as a result. Earl and Feeny
(1994) argued that the CIO was personally instrumental in determining whether
396 Jeanne W. Ross and David F. Feeny
the host organization positioned IT as a liability or a strategic asset. In the early
years of the Web-based era, we see these same three model elements in a much
more favorable light: Executives are in listening mode, looking for ideas; there is
almost unlimited scope for new applications, and it is relatively straightforward to
build them quickly and securely; and suppliers are desperately keen to help, and
hence secure their own position in the new era. How then will the role of the CIO
evolve? Anumber of scenarios seem possible.
One clear possibility is that the CIO will take increasing responsibility for
defining an organization’s strategic future—as the networker, who has an unrivaled
understanding of the ideas that are being deployed throughout the organization
and even outside its boundaries; as the strategic thinker, who leads the executive
team in developing a business vision that captures the opportunities presented by
IT; and perhaps even as the entrepreneur who line manages the market introduc-
tion of new business initiatives. The CIO surely has a better opportunity than ever
before to influence the organization at the highest level.
If CIOs are not able to step up to these roles, the roles presumably will be distrib-
uted among other executives. There will still be a need for someone to play the roles of
technology architect and informed buyer. But this scenario implies that the CIO essen-
tially becomes the CNO described earlier, a valued member of the organization but a
senior operating manager rather than a member of the top executive team. Alterna-
tively, the CIO might migrate to another specialist role such as chief knowledge officer,
or CKO (Earl & Scott, 1999), as the various strands of the full CIO role unravel.
In a third scenario, greater interest in IT-related issues across the organization,
greater availability of external expertise, and minimal enthusiasm for centrally man-
aged IT lead to the rebirth of decentralized IT. In this scenario, communications, net-
working, data, information, and knowledge initiatives spring up throughout the
organization, and responsibility for managing both the initiative and the underlying
technology rests with the interested business. This arrangement is likely to result in
pockets of innovation and excellence. Experience from the distributed era, however,
has taught that this governance arrangement typically results in a high-cost, unreli-
able infrastructure, as well as difficulty responding to strategic imperatives. Thus, we
anticipate that a lack of strong corporate IT leadership during the Web-based era
will invariably lead to disillusionment with IT.
To avoid the third scenario and to maximize the chances of the first, we see
CIOs having to pay particular attention to a number of tasks. First, the CIO needs
to persuade all concerned that the Web-based era is more about fundamental busi-
ness change than about technology. Technology is now the easy bit, relatively
speaking (especially if the CIO has built a competent IT management team). The
challenge is to think through new business models that address concerns about cost
structures, pricing, and channel conflict and to introduce new management
processes that leverage the intranet. Vision and holistic thinking rather than tech-
nology rollout are the key requirements.
Second, the CIO will need to argue for a greater measure of central coordination.
In the Web-based era, the corporation will be more directly visible to stakeholders of
all varieties. As they access Web sites, these stakeholders should experience a consis-
tent and coherent picture of a purposeful company, but they may instead view a smor-
gasbord resulting from a myriad of individual initiatives.
Third, the CIO must work with executive colleagues to define and implement
approval processes appropriate to the Web-based era. There has always been a
temptation to do the many things that technology allows. Now it allows many more
Chapter 19 397
things than ever before. Afinancial analysis filter is unlikely to sort the wheat from
the chaff. More likely, all proposals must be ruthlessly assessed for their relevance
to a small number of corporate strategic directions.
Through particular attention to these tasks, we would expect the CIO to
emerge with the status of leading member of the executive team—increasingly an
obvious candidate for a future CEO position. The skills CIOs will need most seem to
be those we have already rehearsed in the discussion of the distributed era: the skills
of relationship building across an even wider base of stakeholders and of strategic
and organizational development in now more innovative and far-reaching directions.
Although the Web-based era represents a revolution in technology, for the ambitious
CIO it may feel more like an evolution—with the benefit of a trailing wind!
SYNTHESIS OF THE EVOLUTION OF THE CIO ROLE
Table 19.1 brings together the highlights of our discussion of each of the three eras
and positions us to overview the evolution of the CIO role. As the table shows, we
see the CIO role changing from functional manager to (potentially) business vi-
sionary as the firm evolves from the mainframe to the Web-based era. However, this
should be seen as a growth process. Clearly, the CIO who has become successfully
established as an executive team member in the distributed era is far more likely to
become a business visionary than one who has not. To illustrate this idea, we can
adapt a model first proposed by Hirschheim et al. (1988) and subsequently devel-
oped by Feeny (1997) as a result of a longitudinal study of 10 leading CIOs. Figure
19.3 shows our adapted version. It depicts growth in CIO credibility and status
through three stages as a function of organizational learning.
In the first of the three stages, the CIO is a functional head with responsibility
to deliver on promises. The promises involve developing new systems to time and
budget; achieving the ROI expected when the investment was approved; and oper-
ating the portfolio of developed systems to the agreed service levels and satisfaction
of the user community. The success (or otherwise) of the CIO’s track record for
delivering on these promises determines the initial credibility of the CIO and the
CIO’s ability to convince executive management of the appropriateness of further
investment in IT. At the same time, successful organizational experience with each
new system supports the organizational learning of both how to apply technology
and how to recognize its value.
The credibility generated in the first stage is a prerequisite for progressing to
the second stage. In this stage, we have emphasized the CIO’s position as strategic
partner, recognizing the suggestion of Henderson (1990) that CIOs should view their
roles as being akin to a strategic partnership with the business. The key task is to
align, and be seen to align, investments in IT with strategic business priorities. This
involves designing and developing a complex IT organization that can address imme-
diate business needs while building an infrastructure that supports ongoing needs as
well. Success in this stage further promotes CIO credibility and organizational learning
about IT. In particular, it brings the realization that IT can be integral to new ways of
organizing and doing business. The approach to evaluating IT investment also begins
to change as it becomes obvious that the contribution of IT cannot be meaningfully
separated from the wider impacts of the strategic initiatives in which that investment
is embedded.
398 Jeanne W. Ross and David F. Feeny
Chapter 19 399
TABLE 19.1 The CIO Role and Its Driving Forces
Mainframe Era Distributed Era Web-Based Era
Applications Transaction processing from Knowledge worker support; Electronic commerce; knowl-
portfolio order through delivery interorganizational systems; edge management; virtual
process reengineering; ERP organization and supply chain
systems reengineering
Executive IT for cost displacement and Increased involvement in IT IT, particularly the Internet,
attitudes automation; from enthusiasm to issues and governance; polariza- viewed as transformational, a
cost consciousness tion of attitudes: IT as strategic driver of strategy; IT investments
asset or cost to be minimized now more attractive in terms of
costs and time scales
Dominant IBM Desktop providers—Microsoft, Network product firms—Sun,
suppliers Intel; ERP software providers— Cisco, 3Com; browser/portal/
SAP, Oracle; outsourcing search engine providers?
companies—EDS, Andersen, E-business consulting and
CSC, IBM service companies
CIO role and Role: Operational manager of Role: Executive team member; Role: Business visionary?
responsibilities specialist function organizational designer; Tasks: Develop new business
Tasks: On-time delivery; reliable strategic partner; technology models for the Internet; intro-
operations architect; informed buyer duce management processes
Tasks: Manage federal IT that leverage the intranet
organization; recruit and
develop staff; educate line
management; align IT with
business; design corporate
architecture; scan technologies;
stabilize and standardize
infrastructure; scan services
market; develop alliances
with key vendors
Stage 1:
Functional
head
Deliver on
promises
Stage 2:
Strategic
partner
Align IT
with
business
Stage 3:
Business
visionary
Drive
strategy
?
Organizational learning
CIO credibility
FIGURE 19.3 The
Evolution of the CIO
Role
This paves the way for the third stage, in which the CIO potentially becomes a
more proactive business visionary. In this stage, the CIO begins to be one of the
main drivers of strategy by recognizing the emerging capabilities and applications
of information technology and arguing their significance to the business.
For some organizations, the three stages of the model will align with the three
technological eras. However, the model’s potential power is to highlight two crucial
points. Firstly, organizations and their CIOs do not automatically progress through
the three stages as technology changes. In any of the technological eras, it is pos-
sible to identify organizations and CIOs in each stage of the model. The eras deter-
mine the forces with which the CIO has to contend, not the organizational learning
achieved in any specific company.
Secondly, the stages of the model define growth, not substitution in the CIO’s
role. A CIO in stage 3 is still held responsible for delivering on promises and for
aligning IT with business strategy as well as developing the business vision.10 The
means of achieving the imperatives of stages 1 and 2 may have now changed, but
imperatives they remain. It is therefore possible for CIOs to regress rather than
progress through the stages of the model. Earl (1996) and Feeny (1997) provide in-
stances of such regression in which CIOs were fired or pitched back from stage 2 to
stage 1 due to high-profile systems delivery failures or the arrival of new CEOs with
different attitudes.
We suggest that the variability in CIO roles, CIO credibility, and organiza-
tional learning about IT are far greater than the variability in the positioning of
firms within each of the technological eras. This is so because firms are generally
pushed into subsequent technological eras, whereas changes in the role and atti-
tudes of management can evolve more slowly. Clearly, however, the model suggests
that firms that are attempting to function in the Web-based era with a CIO who is
positioned as a stage 1 functional manager risk a troublesome mismatch.
QUESTIONS FOR FURTHER RESEARCH
Research questions associated with the role and responsibilities of the CIO can first
be reviewed by reference to debates arising in each of the technological eras. For ex-
ample, in the mainframe era, questions arose about the background, skills, and
characteristics of the effective IT manager; in particular, executives wrestled with
the question of whether a business or IT background provided the best preparation
for the new CIO role, and arguments continued over the appropriate reporting line
and level for the CIO. As a few firms started to unveil strategic applications of IT,
organizations became interested in understanding the role of line management in
systems implementation. In addition, business executives and IT management
alike searched for insights into whether the IT unit should be centralized or decen-
tralized as the applications portfolio grew to the point where multiple mainframes
were a corporate commonplace.
These questions have, for the most part, been researched and understood to
the point that we believe they no longer prove interesting. For example, it is clear
that CIOs should have both IT and business understanding, but there are plenty of
examples of successful CIOs acquiring missing experience in one or another area
after accepting the CIO position (Applegate & Elam, 1992; Earl, 1996; Feeny, 1997) .
Similarly, it is clear that the optimal reporting level of the CIO depends on the firm’s
400 Jeanne W. Ross and David F. Feeny
sophistication and expectations for the strategic use of IT—and the extent senior
management expects the CIO to fulfill the role of strategic partner or business vi-
sionary. The centralization-decentralization debate is another one that depends on
organizational demands for IT, although the federal model has become a dominant
model that allows firms the benefits of both alternative structures (Rockart et al.,
1996; Von Simson, 1990). Finally, line management’s role in systems implementation
includes both clarifying needs for the system and ensuring the organizational change
that must accompany systems implementation (Davenport, 1993; Rockart, 1988).
A second set of research questions addresses issues that arose during the dis-
tributed era. This includes questions about how firms should govern IT and assess
its value; how firms can move IT from a cost to be minimized to a strategic asset;
and how firms make successful IT outsourcing decisions. All of these questions have
been researched, and some general parameters have been provided. However, these
issues still trouble IT management. The success rate in handling these distributed
era concerns is still remarkably low. Researchers can provide useful insights by
identifying how to elevate current practice, perhaps by doing large-scale, multidis-
ciplinary research or by applying important learnings from other disciplines.
Finally, a whole set of questions is just starting to emerge that will help us better
understand IT management in the Web-based era. The questions will address issues
such as management responsibilities for IT, business models for firms in the Web-based
era, the role definition of the CNOs and CKOs versus CIOs, and the development of
core IT skills in organizations. Because firms are just entering into the Web-based era,
these questions are not, we suggest, well suited for large-scale studies. Instead, a few
leading-edge organizations can provide insights through case studies into how firms
might address the opportunities and challenges that IT continues to present.
Focusing specifically on the future of the CIO, we make two suggestions. First,
it seems the right time now to be studying the activities and time usage of CIOs in
firms that are demonstrably living in the Web-based era. Some of these firms may
be long-established corporations in sectors that are particularly impacted by Web
technology (e.g., publishing, financial services); others might be Internet start-up
companies. For example, what is the role of a CIO at Amazon.com? At E-bay? Such
studies can contrast with their equivalents in earlier eras (Ives & Olson, 1981;
Stephens et al., 1992; Applegate & Elam, 1992). Second, it may be a good time to re-
search IT leadership by considering the future of the IT function through comparison
with the evolution of other functions. Will the evolution of the IT function parallel
that of finance and accounting, with retention of a strong professional community?
Will it become more like HRM, where typically the HR executive takes a primarily
policy role with business line managers directly responsible for execution? Does
marketing provide a better analog? Or R&D? Or will IT evolve a distinctive model of
its own? More than 20 years have passed since Dearden (1987) predicted “the with-
ering away of the IS organization.” Whither now the CIO?
ENDNOTES
1. In this book, the chapter by Todd and Benbast on decision making provides in-
sights into changes in the skills and qualifications of users.
2. See the chapter by Ang and Slaughter on IT personnel for background on
changing skills and qualifications of IS professionals.
Chapter 19 401
3. The chapter by Robey and Boudreau on organizational consequences discusses
organizational impacts; the chapter by Barua and Mukhopadhyay on informa-
tion technology and business performance analyzes financial impacts.
4. The chapter by Markus and Tanis on enterprise resource planning systems dis-
cusses success and failure in the implementation of ERPs.
5. See the chapter by Lacity and Willcocks on IT outsourcing for a discussion of
the issues associated with IT outsourcing.
6. The chapter by Sampler on the Internet describes the extent to which it will im-
pact businesses.
7. See the chapter by Sambamurthy on business strategy.
8. See also the chapter by Segars and Dean on information technology and radical
change.
9. See the chapter by Alavi on organizational knowledge for an overview of knowl-
edge management issues.
10. See the chapter by George on the origins of software and by Kirsch on software
project management as examples of how CIO responsibilities have evolved.
402 Jeanne W. Ross and David F. Feeny
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