Q: Let's start with what you call the changing role of the CIO, the shift from tactics to strategy. How far along are we?

A: If you ask that of CIOs, many would say they're already there and operating that way. But the best judges are the people the CIOs work with and work for, namely, the business units and the CEOs. CIOs must understand that as right as they may think they are, their constituents are the masters of what's going to happen.

So how far along are we? To use an example, one of our clients spends about $600 million a year on IT, while many of its revenue-producing business units don't throw off $600 million in revenue. So it has a very large IT expense. This client has CEOs running the business units, and these CEOs must meet certain expectations in terms of fiscal management, budgets, organizational discipline, and other kinds of performance measures. Yet the same disciplines haven't been expected of the CIO. Why not? If you have somebody sitting atop a $600 million operation, wouldn't you expect him or her to run it like a CEO?

Q: Are many CIOs prepared to run their IT operations as a CEO would?

A: No. Many CIOs grew up within the IT structure. They weren't apprenticed in training programs that CEOs normally would go through. Yet the CIO's role and the expectations of that role are now at a CEO-like level. So CIOs have been thrust into a role for which they don't have the skills.

Where do they get these skills? How do they round out their capabilities to be able to accomplish that? The short-term answer is, the CIO can't acquire that set of skills overnight. They need to reach out. They should ask other people in the organization who do have those skills to work with them and help them address the budgetary, fiscal, organizational, marketing communications, and sourcing activities.

That's what needs to happen in the transition. Then, over time, you would expect the CIO's role to change, to move toward a business-manager role as opposed to a pure technical role.

Q: In fact, don't you believe that IT management is really relationship management, and not primarily about managing technology?

A: Well, what it's really about is helping the business understand how to use technology to achieve its objectives—not technology for the technology's sake, but for the business. Technology is just one lever in the portfolio of things a businessperson would consider to increase revenue or otherwise enhance the business.

If technology can't bring the value to do that—and, increasingly, people believe that it's not bringing the value—then there's a disconnect. People outside IT think it's all about technology toys. With that, you start to see rifts between business and IT management.

Of course, the technology component is important. But it really comes down to how well the CIO and the CIO's organization can help the businesses accomplish what they need to do. Without that kind of relationship, you can have the best technology in the world, but what you're sitting on is something the businesses don't view as value.

Q: Which, in turn, helped lead to the downturn in IT spending. Speaking of which, do you see pent-up demand for IT products and services with your clients? Or have they, in effect, reset the dial, learning to live with lower levels of IT spending?

A: It depends on the company and how it approached the constriction. Some companies have taken the approach of deferring certain spending, backed up with the view that they'll pick it up again as things emerge. But others have attempted to make more fundamental changes with regard to their cost basis. They've changed the way they do things, including IT governance and prioritization. The businesses that IT supports have changed, too, so the IT spend level doesn't need to be as high in certain areas as it once was. Having said that, it seems to me that the trend is about to reverse itself. The IT spend is going to come back, though perhaps not the same way or at the same levels we saw prior to the bubble bursting.

Q: How will this new return to IT spending compare with what the industry enjoyed during the bubble?

A: The IT spend is going to come back in a way that people never wanted to do again. As the business comes back and companies want to do new things, they'll require more from an IT infrastructure that won't be able to handle it. That, in turn, will mean they'll be looking at big upgrades and big expenditures.

Let me give you an example. Some companies have placed the CIO under the CFO's thumb. For them, cost became the focus. Under the CFO, IT was cut, often across-the-board and indiscriminately. People hunkered down and did what they needed to do to save their domains. For example, people deferred acquiring new PCs as a way to save money. But now they have all this older equipment, and they have break/fix maintenance that's more costly and involves lots more help-desk calls. Many of their companies now must go through a desktop-renaissance program. They need to completely upgrade everything. So where did they save the money over that period of time? Those supposed cost reductions actually resulted in additional costs.

Q: So would you prefer to see a CIO reporting to the CEO, as opposed to the CFO? Not just for reporting status, but with the idea that the CIO's focus will be more on strategy and less on pure costs?

A: My preference is for a CIO to report to someone with the business focus, whatever level that is. There are some CFOs who fit that bill. But the tendency of CFOs is to focus on the financial and cost side; therefore, they're viewed as cost cutters. The problem with reporting to the CEO is that sometimes the CEO doesn't give IT the proper time or, in some cases, is afraid of it or doesn't understand enough about it. Then the dialogue between the CEO and the CIO doesn't happen.

The problem isn't just the reporting line; it's also the ability of the CIO and whomever that person reports to to have that connection, that communication, that ability to translate for each other, and to work together. Without that, there's a major gap-a breakdown. That's why you often see business executives saying, "No, I'm not going to sign up for that same IT spend, because we spent all that money before, and I didn't see the value."

One reason could be that the CIO wasn't effective in communicating IT's value. But it could also be that the CEO doesn't really understand IT. We need the equivalent of a Rosetta stone between IT and business-a kind of translation from technology to business value. If there's a breakdown in that communication, if CIOs are always talking the IT or technical component and don't bring that translation to the CEO, then it doesn't matter whom they report to. They aren't going to make the connection.

Q: Why is it up to CIOs to communicate the results of their projects to CEOs and other business executives? Don't IT results speak for themselves?

A: Not necessarily. Again, if you're running a stand-alone business, you report back to the shareholders on what you're doing with their money. Along the same lines, communication between IT and the business units has to be regular and more formal. The business units need to know what you're doing with their money.

Another important area is rolling out new projects. For example, if you ran a large consumer-products company that was rolling out a new product, you'd best believe that you'd apply marketing and communications muscle to it. Part of that would be a campaign to get people to think about the product differently. Well, if you're rolling out a new IT system to someone's desktop, then you need to get the whole organization to think about the change. You need to communicate that. Think of it as a campaign to change that mental set: You need people to understand what's coming, what they have to do, and to accept it and get ready to move on from there. If you don't, you'll have difficulties with your rollout. Yet, as important as this is, how many CIOs have a marketing/communications person working directly with them?

What's more, while I've been talking about communications external to IT, what about the communications within IT? In some companies, you have thousands of people reporting to the CIO. How well does the CIO communicate with them? How well does the CIO orient the staff to the culture and the values the CIO wants them to focus on?

If you grew up as an IT person in the IT organization, to what extent do you think of communications and marketing as skills you might get promoted for? Chances are, it's not in your top 10. So, lo and behold, when you become a CIO, why would anybody be surprised that you don't have those communications skills? After all, no one expected you to have those skills before, and no one helped you to gain them.

Q: What can a CIO who wants to improve his or her working relationship with the CEO do about it? Are there specific steps they can take today?

A: First, you need to look at your IT organization. Do you have all the pieces you need? Do you place enough emphasis on the nontechnology stuff? Be honest with yourself; it's a self-assessment. And if you don't have these pieces in place, how would you get them?

Then ask yourself if you feel comfortable dealing with the huge organizational skills required. Do you feel comfortable that you can handle the financial and budgetary disciplines? The marketing communications? Be honest. If you don't feel comfortable in those areas, then you need to fill those gaps in the short term. You may need to reach out to the CFO and say, "I need to borrow a finance person to help me with this." Or you may need to reach out to HR or marketing. These people don't need to join you on a full-time basis, but get their help however you can.

Don't be afraid to ask your CFO, CEO, or business constituents for help with these skill areas. Tell them you're looking to improve your nontechnical skills. Right now, the people sitting on the business side assume that because they're coming to the party with those skills, the CIO should have them, too. In many cases, it's an erroneous assumption.

Those are short-terms things you can do. But the long-term answer is that it's not the CIO's issue alone. In many cases the CEO, CFO, and/or COO haven't taken the time to understand IT, or they're afraid of it. They may not even know what questions to ask. The bottom line is: The IT gravy train is over. Today, the amount of pressure that's being placed on the CIO is pretty intense. CEOs aren't going to sign on the line anymore, because they have other expectations; they're going to push back much harder. That's what they'd do with a regular business unit, and that's what they're finally applying to IT. CIOs who understand this and realize what they need to put in place will succeed. The rest will either become irrelevant or be replaced.