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Make IT your boardroom ally

Few IT directors are involved in strategy decisions - but their input and investment is crucial to delivering shareholder value.

A plethora of surveys about the finance and IT functions have hit desks recently – and they tell a mixed tale. First in line is a heart-warming story of strategy-minded FDs: according to recruitment specialist Executives Online, top-level FDs are well qualified to make CEO in large organisations. Of the CEOs in FTSE-100 companies, 27 have a background in finance management.

The message is that, as a strategy-minded FD, you are well placed within your organisation to set expectations, create shareholder value, drive the business forward, and deputise for, then eventually replace, your CEO. Presumably, then, you are also qualified to represent a major cost centre like IT on the company board.

IT managers may argue differently. But, as a new report by Cranfield’s Dr Robina Chatham* states, even though senior IT managers have a good knowledge of their business, few make it to board level. “In some organisations the most senior IT person holds a main board position; however, it is far more common for the top IT person to report into a main board director, usually the FD … Indeed, if one had aspirations to become a CEO, few would recommend a career in IT,” Chatham says.

In a new Reuters management report, The Changing role of the Chief Technologist, (www.reutersbusiness Mark Polansky, managing director of executive recruitment firm Korn Ferry, also comments on the limited career-advancement opportunities available to senior IT managers in business.

“The CIO role has traditionally been a terminal role and I’d like to think of that as more positive than negative. Terminal in the sense that you’ve taken your career to the ultimate,” Polansky says in the report.

“There are some cases, growing in number, but still small, where CIOs are going out to run businesses. Clearly, there have been more of those in the technology industry, meaning the CIO of company X becomes COO (chief operating officer) or CEO because the transition is easy. We wouldn’t necessarily expect the CIO of Procter & Gamble (for example) to become COO or CEO.”

The IT department’s lack of involvement in business management is not great news for techies. And this may be a reason why your organisation is not getting the best value out of its IT strategy. As research conducted by Unisys, in association with Financial Director and IT Week suggests, board representation of IT solely via the finance function risks alienating IT staff to a point which jeopardises business growth (for more on this survey see this month’s cover story, pages 40 to 44).

Nearly a fifth of finance and IT directors surveyed (both IT managers and FDs alike) reacted negatively to all questions, rating the appreciation, representation and confidence in IT in their organisation only satisfactory or poor. Most worryingly, 35% of these doom-mongers said their IT function was represented on the board by the finance director, and not by IT.

This may be the result of what Chatham sees as a defensive attitude to decision-making at board level. “Why is it that senior IT people are left out in the cold? They are often left out of the decision-making process and told about the decision after the event,” she says.

So are FDs ignoring the importance of IT? Probably not. As we have determined from the research findings in this month’s cover story, FDs appreciate that IT is critical to business strategy, it’s just that communication between departments is poor and IT managers are not visible enough in many organisations to make a difference to top-level decision-making.

FDs and chief executives need to encourage IT managers to contribute more directly to business development.

Take the example of Tim Hardcastle, Anglian Water’s CIO, quoted in the Reuters report. “Our CEO Chris Miller looks to me for development of the eBusiness strategy, and I’m quite happy to do as much as I can. But it is probably more to do with my personal attributes and our history together than what I would consider to be the true role of a chief technologist,” he says.

Finance directors should look to their IT managers as allies – people to be encouraged to help the finance function deliver best value through investment. In the end this may mean more business-oriented IT directors will vie with FDs for the top spots in business. But, then again, as anyone whose PC breaks down knows, it is better to have IT on your side than against you.

* Beyond the Role of the IT Director, distributed at the IT Directors’ Forum, May 2002.

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