BrainTrust Query: Who Really Needs a CIO?
We’ve seen a huge change in the role of the internal IT department as retailers have gone from building their own solutions to buying prepackaged software and services. As cloud computing introduces more alternatives to in-house solutions, the role of the internal department moves further from software design and development toward software support and implementation. More emphasis is being put on interpersonal skills and the ability to organize and manage projects and less on understanding the “magic behind the curtain,” i.e., developing software to run unique business processes.
As retailers turn to applications built on more sophisticated platforms, much more of the development effort is spent on the “touch and feel” of the application — the machine to human interface. The technology used to integrate with different PC platforms, tablets, smartphones and touch screens is the same across many applications. It’s analogous to what biologists have learned about genes in chimpanzees and humans; that 98.5 percent of the code is the same. The unique portion of an application that creates a list of the items in a retailer’s catalog or optimizes a work schedule for a selecting shift in the warehouse is only 1.5 percent of the development effort. It simply does not make sense to have staff devoted to developing this internally.
Without internal development, retailers no longer need to manage development processes. By using software as a service and purchasing solutions rather than developing them, retailers can get results more quickly and reduce their ongoing overhead. It seems that the remaining processes fall more under the traditional role of the human resources department. HR is where the change agents reside who can focus on training and organization modifications required to adapt to newly purchased applications.
So what does a CIO do when they realize the best thing for their organization is to dissolve their own department? I am being a little facetious, but only a few technicians are required to integrate the input and output of various applications. Under the eyes of a project manager, independent contractors hired for specific projects can provide these skills. The modern retail CIO may very well be a project manager who reports to the HR.
Discussion Questions
Discussion Questions: How is the role of the CIO changing in big retailer organizations? Do you see a lot of the responsibilities traditionally assigned to CIOs moving over to human resources departments? Will in-house IT development ever go away completely?
The theory has always been that the role of the CIO is to manage IT investments in a way that supports and enables the company’s strategic priorities. Those IT investments have been changing dramatically over the last few decades, but the role of the CIO has not.
As far as the impact of the cloud, 30 years ago they called it a “service center” where companies that couldn’t afford the technology would buy time and development resources. Then equipment costs dropped dramatically and the IT function moved on-site for the company.
I am not sure I totally agree with the statement that the CIO no longer needs to manage the developmental aspects of technology and systems. Even if the process is outsourced, a knowledgeable c-level professional that can evaluate systems, software, applications, and the growing number of other technical aspects of competing in the current environment is needed. Further, with outsourcing becoming a major expense, without this scrutiny, there is likely to be wasted investment on systems and processes that do not fit the enterprise.
I do agree that the role of the CIO will change. I also agree that internal staff will likely shrink. But if I am CEO, I want someone in the boardroom table with a strong technical and strategic view of systems and processes rather than rely on a project manager who does not have this broader perspective.
Now if you want to talk about eliminating CFOs in favor of business managers….let’s talk!
Organizations will always need a team dedicated to finding the right software, staying on top of technical changes within the industry and in changes in consumer usage. This is not something for the HR department.
Following the absurdity of the premise of this article, one could argue that the CIO and his/her team of employees who are dedicated to service, should take over HR functions, since the concept of service on the floor of most stores is frequently regarded by consumers as severely lacking in effectiveness.
If a retailer could run all of its business solutions and IT data center solutions on a single platform from one of the major IT retail systems vendors and if that retailer was committed to not bringing on new technologies/solutions as retail continues to evolve, then the CIO role might be in trouble. However, because most retailers today (and in the future) will run solutions from a variety of vendors on a variety of platforms with new solutions constantly being offered that provide competitive advantage, reduced costs, and improved operations, then retail CIOs will be OK.
In-house development won’t go away, but some of the focus will likely shift to developing more analytics and BI systems using big data tools and services. The CIO may use more outsourcing or hosted solutions for systems and applications, but the importance of their role to the retailer should become even more visible as retailers navigate multi-channel, BI, and digital shopper marketing technologies.
Wait, wait. I have to stop laughing before I can comment!
Several retail companies have tried going CIO-less (Border’s comes to mind) and you can see how well THAT worked for them. Any company in the 21st century that doesn’t think that IT provides them a competitive advantage is a company to dump from your stock portfolio….
A CIO with an operational improvement perspective will always have an important role. Not unlike the CFO being more than the chief accountant. Larger firms should have their own analysis for package selection, where smaller firms should rely on consultants. Managing and securing the network will never go away. Providing users continued education and training would benefit many companies that are not getting the maximum out of their purchased software. A roll that should be added is one of data integrity. Companies should audit their data like they audit their inventory.
CIO roles are evolving, taking on more responsibility for some business-driven functions. Additionally, the CTO role, as originally defined holds more of the responsibility for many of the technical tasks described in the article. The CIO has more of a technology strategy role, while the CTO/VP IT, etc., has the more “execution” role. Further, I don’t see either of these roles going away anytime soon in retail, since the next level of “ERP” via cloud is moving into the industry and the implementation of these applications will require far more than the “only a few technicians required to integrate the input and output of various applications.” This is a massive undertaking and there will be job security for years to come.
I think the question is not without merit. Cloud computing is definitely changing how big companies operate.
At Compliantia, our primary interface is not, in fact, the IT department. We tend to deal with senior management in the operations group at each retailer. In other words, cloud computing and SaaS is allowing the end users, those people who actually USE the service, to guide the selection and the configuration of the product. If you are a retail operations professional with 15 years of experience, do you really think you can do a brain dump of your knowledge in 30 minutes to an IT analyst for that person to select and configure a product for you? I think that is the biggest unsung benefit of cloud computing. Give the business the means to conduct the business. IT always was a means to an end, the means have changed.
The IT department is not going away however. You need folks to keep the computing and information landscape coherent and secure. Besides, even if you deal with a cloud vendor, the CIO may very well (and should) want to ensure all cloud vendors meet security requirements and best practices to ensure systems are deployed, secured and interfaced coherently, efficiently and securely.
The CIO is not going away. The composition and skill set of his/her staff are definitely changing.
Cloud or no-cloud, the “not invented here” syndrome won’t go away soon. Companies feel in their bones that IT is a strategic discipline. Cathy is right: I’d run screaming from any investment that ignores this reality.
Bloated, proprietary, staff-heavy IT departments, however, are another matter entirely. Moving key software-based services, even data-marts, outside the firewall is looking more reasonable every day.
A certain amount of expertise and control is essential, to be sure, but when trusted suppliers have greater expertise in many aspects of application design and security, it seems like pure hubris to try to do it all in-house.
How is the role of the CIO changing in big retailer organizations?
The CIO role has never been a static entity; in 3 decades in this role I have seen countless swings in who does what, who owns the data, who manages the resources and who stays up all night long making it all work. The biggest change a CIO will face is his/her ability to ‘go with the flow’, which today is changing and moving at a viral pace. The impact of social media on a business was something that was never part of our vocabulary, but today it is mainstream. What tomorrow brings requires a bigger crystal ball, and faster track shoes.
Do you see a lot of the responsibilities traditionally assigned to CIOs moving over to human resources departments?
Never! HR can be a valuable partner in finding and selecting the right people to fill a position, and to make sure candidates fit in the corporate culture, but they will never have the insight (nor do they want it to decide what type of resource and for how long is needed at any given time.
Will in-house IT development ever go away completely?
No, but it will change form with the selection of technology. There is no off-the-shelf product I have ever seen that works well in a specific environment, and there will always be a need for in house expertise to bridge third party apps into a corporate environment. Also, the more we focus on packaged solutions, the longer the time line becomes for changes to be incorporated. And there will always be changes.