Worried about the rise of the CTO? Well, maybe you should be. The trend represents both threat and opportunity for sitting IT executivesThe halls of executive recruiters and IT consultancies, not to mention the trade press, buzz with conjecture about the future of IT leadership and the momentum building up around the title of chief technology officer, or CTO. At its most dire, the rumble prophesies the demise of the CIO position- or at least its relegation to a less strategic, more internally focused supporting role. This debate over title is a bit of a red herring. The real issue is that IT leadership needs are being transformed by the dominance of e-business on corporate agendas. In fact, more often than not, CIOs themselves are being tapped to fill these newly created posts. But one thing is clear: as the demand for a new set of technology and business competencies increases, CIOs who don't develop these skills will miss out on the best jobs with the best companies - regardless of title.
Corporate recruiters say the demand for CTOs is indeed growing, because chief executives think a CTO will infuse their company with much-desired e-business know-how. Yet when one examines the job descriptions for current CTO and CIO postings, they are often interchangeable. The trend seems to be strongest in the dotcom world, where the CTO title is particularly fashionable.
"Out of 15 [executive job searches] I am currently conducting, 14 are for CTOs and one is for a CIO," says Phillip Schneidermeyer, technology officers practice leader at the executive recruiting company Korn/Ferry International. The majority of these jobs are at start-ups and dotcoms, he says, but it reflects the demand in the market. According to Schneidermeyer, it started about a year and a half ago, when the "rest" of the business world realised that the Amazon.com phenomenon was real and that the Web had to be dealt with. "Many CEOs just don't think that the CIO can handle it all - and so they are seeking CTOs to round out the IT leadership. What this says is that CIOs need to roll up their sleeves and start getting that Internet experience," he says.
Does this mean the end of an era for CIOs? Far from it. "A lot of this is just nomenclature," says Richard Brennen, managing director of the information technology practice at Spencer Stuart in Chicago. "A lot of new age companies are using the term CTO when they really mean CIO. There is a lot of panic among the CEOs; they're coming to recruiters and saying: Get me one of those [CTOs].' But when you ask them why, they haven't thought it out, and they don't know where they want to go with it. There is a lot of blurring of the roles."
This trend is being fuelled from the supply side as well. The CTO job title has attained such a glossy sheen that many IT leader candidates - especially young people - are seeking it, even if the duties laid out in the job search include many classic CIO duties. "It's just seen as a sexier title," says Brennen. "It's very buzzy and attractive, especially to young people. It says: I know technology."
At the heart of the matter for CIOs is the threat that they will be supplanted by new Web-savvy colleagues grabbing control of pivotal Internet agendas and strategies. Yet there is opportunity here as well. CIOs can decide that they want to lead the Internet stampede at their companies. Taking that bull by the horns, they can deflect worried CEOs from knee-jerk copycatting when they queasily read about competitors hiring CTOs. Or CIOs can decide they want to delegate the Internet stampede but direct it by working closely with their CEOs to reshape the company's IT leadership structure. In any event, it's an excellent time for CIOs to do some serious career soul-searching and examine both the needs of their companies and their own skills, especially regarding the Internet and systems that interact with the customer.
"The world is changing," says Debra Robinson, CIO of CVS.com, the Seattle-based spin-off of CVS Corporation. She works closely with the CTO of CVS.com, as well as with the CIO of CVS, ensuring integration between the two entities. "I know some CIOs who fear being replaced by CTOs. But the point is that you have to become more customer-centric - more externally focused - no matter what your title is, or else you will be pushed to the back office."
There have been two traditional models for CTOs in the past. At companies whose products are technology-based - whether that be information technology, pharmaceutical technology or electronics or appliance technology - the CTO usually heads up new-product development. A second model arose five or six years ago, as CIOs in all industries focused more of their attention on strategic issues and business goals and needed someone to bird-dog emerging technologies that might serve those goals.
What's happening today represents a blurring of these two roles with that of the CIO. As more companies are increasingly information driven and technology enabled, the "product" blends with the operations of the organisation. Is Amazon.com a bookseller over the Web or a technology vehicle? As a consequence, "CEOs are looking for a technology visionary and strategist who can think not just in terms of the implementation of technology but also in terms of where technology will be in the future - and how it impacts the core of the company," says Tony Ibarguen, president of professional services and managing director of the Internet Capital Group in the US.
CIOs - at least those who really live up to the title - have a good part of the equation. The rising popularity of the CTO title points out where they may be falling short.
"The ascendancy of the CTO role points to the importance of understanding e-business technologies," says John Puckett, former CIO at GTE Internetworking and now CIO at Toysmart.com. "It's a sign for even those CIOs who feel comfortable in their jobs that they'd better start brushing up on the Internet. Many of them aren't - and they will be left out in the cold for new jobs, be they CTO or CIO."
While there are no clear-cut divisions between roles as yet, Brennen of Spencer Stuart says that many companies now recruiting CIOs are searching for someone who is more of a business executive, more of a resource manager, whether of internal resources or externally outsourced operations. The CTO, on the other hand, is typically more Web-centric and closer to the technology than the typical CIO. In the end, title choice depends on the industry, size and business goals of the company - and its personal preference. In terms of leadership structures, variations are abundant, but a few basic models stand out.
One model that's developing, especially in larger companies, is to split IT leadership between a CIO and a CTO. Although many CIOs have worked with CTOs in the past, today's CTOs are being given more responsibility because of the overwhelming demands and complexities of leaping into the e-business fray. In many of these cases, the CTO reports to the CIO.
At Kraft Foods (US), the growth of e-business has led to a duopoly in which the CIO and CTO work closely together with some blurring of responsibilities, according to Jim Kinney, former CIO (now retired). Kinney hired Steve Finnerty two years ago as CTO. At that time, Kinney was already well into succession planning, and he saw Finnerty as a good potential replacement. Finnerty has now succeeded Kinney, and Mansour Zadeh is the new CTO.
In the Kraft model, the CTO reports to the CIO, who is a member of the operating committee.
"Both Steve and I began to spend much more of our time looking out externally from the company - for different reasons, but the driver was e-commerce in both cases," Kinney says. Kinney increasingly focused on building relationships outside Kraft but within the food industry, such as searching out consortiums for supply chain management and seeking partnerships with other food industry companies. Meanwhile, Finnerty spent a good deal of his time meeting with infrastructure and technology providers to form strategies for external connections with customers and suppliers. This model will continue with Finnerty in charge and Zadeh as CTO.
"The point is that these jobs are too big for one person," Kinney says. "There is no way a CIO can do it all today and still be able to move his or her company into e-commerce."
The growing importance of the CTO at Kraft is evidenced by Zadeh's responsibility for globalisation of the technology infrastructure, which will allow Kraft employees worldwide to share applications and collaborate. Just a couple of years ago such a strategy would have been the sole responsibility of the CIO, Finnerty says.
As CIO, Finnerty retains oversight of the strategic aspects of technology planning. "If there needs to be a discussion with our CEO about service levels and how things are running, I have no trouble with the CEO having that discussion directly with the CTO," he says. "But if we need to have a discussion about possible strategies driven by technology - that is something we would do in tandem, after reaching an agreement together and then going to the CEO."
Such CIO-CTO partnerships exist in the dotcom world as well. At Esurance, an online insurance company based in San Francisco, CIO Glynn Evans sees himself as a business evangelist who works closely with the CTO, one of the first employees hired at the growing company. Evans, formerly the CIO at Reuters International, was brought in to lend his seasoned management experience to the fledgling operation. Evans oversees the call centre and other operational infrastructure, but he also does marketing. "I am the one who handles external communications, who meets with clients, who tries to sell people on the business, who is more the business strategist. I demystify the technology for the business users in the company. [Huyen Bui], the CTO, is a very bright guy who focuses completely on technology, probing it. We work in tandem."
Evans thinks focusing on titles is silly. But he acknowledges that he is "the kind of CIO that's comfortable with speed and with the lack of hierarchical organisational charts. There's lots of room and opportunity for CIOs like that now. But I do think it is difficult to do [the whole] job today - you do need both CIO and CTO roles."
Smaller, newer dotcoms seem to be the exception to that rule - as long as they stay small enough for one person to be able to manage all of IT. Once these companies grow to thousands of employees and a billion dollars in revenues, it's unlikely the solo structure will remain. The reason many of these companies are choosing the CTO title is because for them technology is the business; if the IT leader doesn't know the new technologies, the business will simply grind to a halt. Still, many are sticking with the CIO title - witness Barnesandnoble.com, eBay, Toysmart and even Amazon.com.
So who are these new technology executives? As often as not, they were CIOs in a former life. Scott Dinsdale, the CTO at FirstLook.com, a music sampling site, formerly held the title of both CIO and CTO at BMG Entertainment. In his new role, Dinsdale focuses on new technologies. Because his company is so small and new, he also performs more traditional IT duties, such as setting up the network and e-mail accounts. When he jumped over to the realm of Internet start-ups, he said the title of CTO just made more sense. "Technology has a tremendous impact on our business," Dinsdale says. "My definition of CTO is of a role that is externally focused, looking at the future. I do marketing, I look at how technology will help get us attention and draw in customers. It's very different from the classic CIO role."
Like Dinsdale when he was at BMG, some IT leaders avoid the whole title debate - and the pigeonholing it implies - by taking on both titles. John Keast, former CIO of Pacific Gas and Electric, became both CIO and CTO at Branders.com, a Web site that sells promotional products. When he made the switch to a dotcom, he wanted the two titles to lay out the totality of the landscape. "I can't really identify a significant skill set [difference] between the two roles . . . some of this conflict is just semantics." According to Keast, a good CIO or CTO should be able to do it all. The difference today, regardless of title, is the new emphasis on external customers. Keast has recently become the CIO and CTO at NetworkOil, a Houston-based Internet marketplace for trading petroleum equipment and services.
The buzz about titles may seem like the wolf at the door, but that's just the decoy. The real danger is in overlooking the root changes in business that bring these permutations and opportunities to the CIO's career path. CIOs need to continue to show business leaders that they understand the business enough to know where the technology is relevant and necessary, advises Rajan Srikanth, director of Delta Consulting Group in San Francisco. This includes working closely with the CTO and, if possible, being in on the hiring.
"With that credibility, you can say, I can't do this all myself, I need to bring in the best in the business,'" Srikanth says. "Then make sure that person has a high profile in the organisation. If the CTO is marginalised and therefore fails, you will be blamed anyway." Despite lurking anxiety about diluting the CIO position, this kind of action will increase your strength with the executive team, not lessen it. "You want to be able to say, I took the lead here, and I had an impact; I am doing more than putting in an ERP system."
Judy Shapiro, the CIO of Bowne and Company, a New York City-based financial industry printer, did just that. She was hired to replace a CIO who primarily focused on the operational, back-office functions of the job. The company was sailing on a distinctly e-business tack, and Shapiro decided that for her to be able to focus on the business strategy and strategic alliances, the company also needed "someone who could worry about the integration of the technology across the business units," she says. "We needed to build up our technical abilities tremendously." She and the CTO bring complementary skills, and "we have a mutual respect and shared vision."
So who's afraid of the CTO? Only CIOs who don't grasp that business is changing, the Web is here to stay and agility is as important as (99.999 per cent) reliability. Maybe one of the IT leadership models outlined in this article will suit you, or maybe you'll have to devise a whole new scenario. But if the job is getting too big for one person, be the person who figures that out and finds a solution, whether you want to be called CIO, CTO or Czar of IT. "The worst thing you can do," says Spencer Stuart's Brennen, "is sit back and hope the whole thing goes by you."