01. new information systems leaders

8/7/2019 01. New Information Systems Leaders

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CIO: Changing Rol

New InformationSystems Leaders: AChanging Role in aChanging World'

By: Lynda M. ApplegateHarvard Business SchoolSoldiers Field RoadBoston, Massachusetts 02163U.S.A.

Joyce J. ElamDecision Sciences and InformationSystemsCollege of Business AdministrationFlorida International UniversityMiami, Fiorida 33199 U.S.A.

AbstractIt is widely argued that the information systems(IS) leadership function has undergon e funda-mental changes o ver the past decade. To betterunderstand the changes, this study compares thebackgrounds, responsibilities, reporting relation-ships, and power of newly appointed IS execu-tives (who had be en in their position for two yearsor less) with established IS executives (who hadbeen in their position for five years or more). Thestudy found that approximately half of the newIS executives were external hires, whereasalmost all of the established IS executives werepromoted from within the company. More thantwo-thirds of the new IS executives had more thanfive years' experience manag ing a non-IS func-tion within the past 15 years. Established IS ex-ecutives had spent the majority of their careerwithin the IS function. The activities receiving themost attention from new IS executives were in-

dards development, and huma n resourmanag ement. For established IS executives, tactivities receiving the most attention were architecture management and standardevelopment, hu man resource management,operations. An increasing numbe r of new IS eecutives reported d irectly to the CEO, and almhalf were members of the senior managemenstrategic policy com mittee. Thes e findings haseveral important implications. First, the seniIS executive must be able to bring a broabusiness perspective to the position. Curresenior IS executives who have not broadenetheir own know ledge, skil ls, and experiences business strategy,manag emen t, and operatioshould immediately develop a personal caredevelopment program to gain these valuabperspectives. Second, senior IS executivshould implement career developme nt strategiwithin their own organizations that ensure thIS professionals have the oppo rtunity to acquthe business managemen t experience necessto advance to higher IS management leveThird, graduate and executive programs dsigned to prepare future IS managers and leadmust provide both a business and IT perspectithroughout the curriculum.Keywords: IS leadership, IS and businealignment, IS managers, CIOACM Categories: K.6.0, K.6.1

IntroductionMost senior executives are now well aware of tcritical role information technology (IT) plays enhancing organizational competitiveness in t1990s. Stories of the use of IT as a major competitive tool are legendary (Ives and Learm ont1984; McFarlan, 1984). Some argue that the roand qualifications of the leader of the informtion systems (IS) function should be radicachanged to ensure that opportunities to use in this m anner are identified and exploited (Caseta l . , 1992;Synott, 1987). In the "data proces


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demands that the executive responsible for ITthroughout the corporation also possess strongleadership skills, power, and business expertise.Given such circumstances, one would expectsignificant turnover among IS executives, and,indeed, a recent study reported in Computerworld(Wilder, 1992) found that 33 percent of the seniorIS executives surveyed had recently replaced ISexecutives who had been dismissed or demoted.This percentage was up from 32 percent in 1990and 29 percent in 1989. These results are con-sistent with reports from the popular IS andbusiness press on changes in senior IS positionswithin Fortune 500 firms over the past decade.Finding the right individual for the senior IS posi-tion has never been easy. "No one from our in-ternal IS unit." remarked one CEO, "had thebusiness pe rspective that we needed, and no onefrom the business units had the requiredtechnology perspective." He continued:

We expanded our search to the outsideand could find only one candidate whopossessed the combination of both thetechnology and business backgrounds thatwe were looking for. But this individual wasnot familiar with our company and itsculture and. we believed, would not be ef-fective in leading the company throu gh themajor organization transformation uponwhich we were em barking. We hired some-one from within who had the broadbusiness and organizational backgroundand the strong leadersh ip skills that wo uldbe required and then helped her get up tospeed as quickly as possible on thetechnology.

The ideal candidate for the senior IS position ina company is apparently an individual who hasa combination of business, technology, andleadership skills. However, the ideal candidatemay be hard to f ind. Most likely, someone fromthe IS organization will not have the businessperspective needed, while someone from abusiness unit will not have the technologybackground needed. Someone from outside theorganization often lacks the organizational

agenda for actionthe set of key activities twhich they devote attention. For this study a newly appointed senior IS executive was defined aone who had assum ed his or her position durinthe period January 1986 to January 1989 anhad been In the p osition for less than two yearsIn-depth interviews with nine new IS executivewere followed by a survey of 64 new IS executives. Additionally, we surveyed establisheIS executives to identify differences between th"ne w " and the "o ld . " For purposes of this studyan established IS executive was defined as onwho had assumed the IS leadership positiobefore 1984 and had been in that position for fivyears or more. The data collection phase of thestudy took place between March 1988 andOctober 1989.This article presents a picture of contemporaryIS leadership. When compared with previousstudies, differences between new and established IS leaders highlight important trends foIS leaders in the 1990s.

Research QuestionsThe study addressed the following questions:1. What are the job experiences of new IS executives? Do they differ from those oestablished IS executives?2. Why did the previous senior IS executiveleave? Is there a relationship between his oher reasons for leaving and the kind oindividual hired as a replacement?3. What is the new IS executive 's agenda for action? Does it depend on the job experiencesthat the executive brings to the position? Doesit differ for established IS executives?4. To what extent has the new IS executivedeveloped professionai networks with key individuals in the organization? Do previous jobexperiences influence the ability to use thesenetworks? Do established IS executives have

the same types of networks?


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Previous research pertaining to these questionsis discussed in the rest of this section.

Job experiencesIn 1974, a review of m ore than 3,000 stud ies at-tempted to define and characterize leadership(Stodgill, 1974). This review found that manydefinitions of leadership existed. Though therehas been much debate about the definition ofieadership and the characteristics of ieaders,most agree that leadership is a process of socialinfiuence (McCaii, 1983). Bennis and Nanus(1985) state that the one qu ality without which aleader cannot lead is power, which they defineas the "basic energy to initiate and sustain ac-tion which translates intention into reality."Power, according to Bennis and Nanus, can berealized only through (1) the development andcommunication of a vision that has high per-ceived value for others in the organization and(2) the em powe rment of others to initiate the ac-tions needed to achieve that vision (Evans, 1970;House, 1971). Kotter (1988) summarizes thisconcept by identifying two major tasks of aleaderagenda setting and network buildingand defining six major characteristics of effectiveieadership in accomplishing these tasks: Broad business and organizational knowiedge Broad set of relationships in the firm and in theindustry Exceiient reputation and a strong track recordin a broad set of activities Keen mind and strong interperson al skiiis High integrity and personal vaiues High level of mo tivation (energy and drive tolead)The first three characteristics derive primariiyfrom education and job experience. The iastthree, though infiuenced by education and job ex-perience, are dependent upon inborn character-istics and personai/sociai vaiues. Though manystudies have attempted to identify specific per-sonai characteristics and values that could be

on the last three characteristics of effectivleadership. Instead, our study specificaiiy identifies the level of business, technical, anorganizational knowledge possessed by newlappointed IS executives, as reflected in their paseducational and job experiences.

W hy predecessors ieftNew leaders are often sought w hen an organization faces new opportunities or problems thacannot be reaiized or solved by established structures and processes (Bennis and Nanus, 1985Effective leadership requires "some level of congruence" between the objectives of the leadeand of those being ied (Pfeffer, 1977). As a resulorganizations undergoing a change in goaisvalues , and priorities often also undergo periodof instabiiity in ieadership. Requirements foleadership positions tend to remain stable iorganizations as iong as the organizationthemselves remain stable (Pfeffer, 1977Organizations in the process of transformatioand change often find that the requirements foleadership have changed. Consequently, individuals selected to lead the IS organizatiomight be expected to have special characteristicthat make them uniquely qualified for the postion. In this study, we sought insight into thunderlying stabiiity of IS leadership in aorganization by obtaining information on wheand why the predecessor of the new senior executive left. We also examined the nature of threlationship between the reasons for thpredecessor's departure and the job experienceof the person selected as his or her replacemen

Agendas for actionThere has been much specuiation in both thacademic and practitioner literature on the neeto redirect and change the role of IS in thorganiza tion. Similarly, others have tried to definthe responsibilities the successful senior IS executive must assume in this transformed roleThese responsibilities include (1) ensuring thaIS initiatives support business strategies, (2) ide


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career development o f IS professionalsthroughout the firm (Elam, et al., 1988).A change in the senior IS position provides theopportunity for an organization to reassess,redefine, and rearrange the priorities of IS andset a new IS agenda. The essence of the agen-da will undoubtedly be influence d by the factorsthat motivated the change in the first place. Inthis study, we were interested in identifying therespons ibilities undertaken by new senior IS ex-ecutives and the extent to which these respon-sibilities were influenced by the job experiencesthey brought to the position.

Networi


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CIO00 list (Alter, 1988) and the InformationWeek00 list (Layne, 1988) to Identify individuals whot the study 's criteria. Finally, word of m outh and

nies in which a transition in the top IS posi-he establishm ent of a new IS leade rship

a detailed ques tionnaire. We also used theand InformationWeek 100 lists to iden-ons for five years or m ore; weestionnaire. Nine other IS

ievel of importance. We expectnies and those in which IS has

Interview dataSenior IS executives from nine large corporationsheadquartered in the United States were inter-viewed. Aii had assumed their positions duringthe 1987-88 period, and al l had variedbackgrou nds. Six were promoted from within thecompany. Of them, four had strictly businessbackgrounds; two had IS backgrounds. Of thosebrought in from outside the organization, two hadstrictiy business backgrounds, and one had anIS background. Eight of the nine were responsi-ble for corporate iS, and one was in charge ofIS for the firm's international subsidiaries. Threeof the nine were women. The industriesrepresented in the interviews included financiaiservices, aerospace, manufactur ing, andpetroleum . We used a sem i-structured interviewformat to gather data that we re then used to help

was sent to newly appointed senior IS executivesUnpublished survey instruments developed byArthur Andersen C ompany and Touche Ross &Company also provided heipful information in thedeveiopment of the survey instrument for thisstudy. The survey addressed the following areas(1) predecessor inform ation; (2) job experiences(length of time with company, previous positionprevious work experiences, educational back-ground); (3) reporting reiationship; (4) pro-fessionai responsibiiities and activities; (5)salary range; and (6) IS budget and employeeinformation.Of the 87 surveys sent to new senior iS ex-ecutives, 64 usable questionnaires were returned(74 percent). Table 1 a presents a summary of thcharacteristics of the companies represented bythese individuals, and Tabie 1b presents infor-mation on iS budgets and salary levels. Sixty-twoof the respondents were in charge of corporateIS organizations; two were in charge of divisionaIS organizations. Two of the respondents werewomen. There were a few cases in which thesenior iS executive served in a staff roie withresponsibility for a very smaii percentage (lessthan 1 percent) of both the overaii IS budget anIS employees. However, for the most part, newsenior IS executives were directly responsible forthe m ajority of IS professionals em ployed in theorganization (average of 66 percent).Of the 50 surveys sent to established iS leaders,35 were retu rned, but only 17 (34 percent) wereabie to be used in the study. The remaining 18surveys w ere filled out by individuals new to theposition, and not by the executives to whom theywere originaiiy sent. Tables 2a and 2b summarizethe company characteristics for the establishedIS executives. The set of responses covered alof the industries represented by new IS ex-ecutives, with the exception of retailing andhealth services/pharmaceuticais. All of therespondents were in charge of corporate ISorganizations. There were no women in thegroup.New and estabiished IS executives differed inanother significant way: 73 percent of the


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Tabie 1a. New iS Leaders Surveyed: Revenue and Empioyees

industryFinancial ServicesRetailingConsumer ProductsHigh-Technology ManufacturingUtilitiesPetroleum, Chemicals, ancManufacturingTransportation/Aerospace

Number ofCompanies153963Plastics 9

Media/Entertainment/RecreationHealth Services/Pharmaceuticals

Tabie

3745

Revenue {in millions)Average

$8,658$22,721$5,954$15,036$5,336$17,249$6,788$5,671$2,760$4,200

Range$114$2,617$2,000$1,781$1,900$100$5,365$450$1,818$758

1b. New iS Leaders Surveyed: iSNumber ofIndustry Companies

Financial ServicesRetailingConsumer ProductsHigh-TechnologyManufacturingUtilitiesPetroleum, Chemicals,and PlasticsManufacturingTransportat ion/AerospaceMedia/Entertainment/RecreationHealth Services/PharmaceuticalsTotal

15396393745

64

IS Budget ( in millions $ 2 0 0912313-21-

22

EmployeesAverage

28,556260,00060,789103,91732,17032,11037,03352,35719,67537,135

and Saiary

Range8735,000

9,60019,3004,61088634,1006,44015,8007,600

84,200485,000225,000389,00080,90102,00039,000190,00030,00089.000

Salary (in thousands)$1501239

5223435

48

Note: Some categories may be incomplete because of missing data.organizations in which the senior IS leader hadsignificantly iess control of the firm's IS resourcesthan the sa mpie of new IS executives. (As men-tioned earlier, of the 50 companies sampled, 18surveys were returned but were not usablebecause they were filled out by a new IS leaderwho had recently replaced the estabiished ISleader to whom the survey had been addressed.In addition, of the 15 surveys that were not re-

ecutives? Until this question can be answereand until a broader and more representative saple of established IS leaders is obtained , we alimited in our ability to generalize study findinthat compare new and established IT leader


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Table 2a. Established IS Leaders Surveyed: Revenue and Employees

IndustryFinancial ServicesConsumer ProductsHigh-Technology ManufacturingUtilities

Number ofCompanies

2141Petroleum, Che micals, and Plastics 1ManufacturingTransportation/AerospaceMedia/Entertainment/Recreation

251

Revenue (in millions)Average

$4,840$6,900$8,000$82,000$48,400$8,599$6,200

RangeN/A$4,840$3.360-$15,400$8,000$82,000$26,200-$71,600$5.023-$12,100$6,200

Average31,25051,80014,25067,100102,000245,50080,460194,000

EmployeesRange

15,100- 47,40051,80038,800- 161,00067.100102.000122.000-307,00048.200- 116,000194,000

Table 2b. Established IS Leaders Surveyed: IS Budget and Salary

IndustryFinancial ServicesConsumer ProductsHigh-TechnologyManufacturingUtilitiesPetroleum, Chemicalsand PlasticsManufacturingTransportat ion/AerospaceMed ia/Entertain ment/RecreationTotal

Number ofCompanies21411251

17

IS$50-$99

11-

--13

Budget (in millions)$100-$199 >$200

2-11123

-0 10

Salary (in$100-$150

11

2-4

thousands)> $ 1 5 0

2

111231

11Note: Some categories may be incomplete because of missing data.

xecutives were classified as internal hires if theyhad been with the company for more than fiveears at the time they had assumed the IS leader-hip position. Individuals were classified as ex-ernal hires if they had been with the companyor five years or less. Five years was chosen asuse individuals are typically con-idered to be part of the corporate establishmen t100 percent vested in retirement plans and

less relevant than more recent work ex-periences.) At least five years of work experiencewithin the past 15 years in either IS or businesswas required to qualify for having "broadbackgrou nd" in either of these areas. A "h yb rid "was defined as an individual who had five or moreyears of experience in both IS and businesswithin the past 15 years.A summary of the background of new IS ex-ecutives is presented in Table 3. Despite muchspeculation in the popular press that m ost firms


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Table 3. Background of New IS Executives

IndustryFinancial ServicesRetailingConsumer ProductsHigh -Technoiogy ManufacturingUtilitiesPetroleum, Chemicais, and PlasticsManufacturingTransportation/AerospaceMedia/Entertainment/RecreationHealth Services/PharmaceuticalsTotal

IS3-11-1--118

Internal HireBusiness

114232-1-1

15

Hybrid1211-32-.1

11

IS2-12-113-1

11

ExternalBusiness

41-

.1--6

HireHybrid

4-1-2-231

13

Total15

396393745

64Note: Hybrid = more than five years' experience in both IS and business between 1977 and 199

transportation/aerospace (six of seven were ex-ternal hires), and mediayentertainment/recreation(three of four were external hires). For all butthose three industries, knowledge of theorganization appeared to be an important factordriving the selection of a new senior IS executive.Choosing an internal candidate afforded aknow ledge of the organization not found in an ex-ternal candidate. During our interviews, the im-portance of this organizational knowledge wasstressed in those companies undergoingcorporate-wide change initiatives, such as struc-tural reorganizations, development of new pro-ducts and markets, and major cost-cuttingprograms.

In line with the observations of the CEO quotedin the introduction to this paper, we expected thatmost CEOs would be searching for a new ISleader with a combined business and technicalbackground. A 1988 Coopers & Lybrand surveyof CEOs' satisfaction with their MIS departmentsfound that 78 percent w ould prefer an MIS leaderwith both a business and technology background(Alter, 1990). But we also expected individualswith these qualifications to be hard to find. Wewere surprised to find that 24 of the 64 new senior

the top IS leadership position through ttraditional IS function.How did these new senior IS executives com pawith established senior IS executives who hbeen in their positions for more than five yearTable 4 summarizes these data. All but one 17 established IS executives (94 percent) weinternal hires. Only two of 17 (12 percent) weciassified as hyb rids. Ten (60 percent) had risto their positions through the IS organization apossessed strong technical experience but general business experience.A study commissioned by the Society of Informtion Management (SIM) in the early 198(Rockart, et al., 1982) predicte d that future IS eecutives would be required to have an in-depunderstanding of the business to complemetheir technical knowledge. Most likely, thknowledge w ould be acquired through actual eperience In the overall management of tbusiness. Our study indicates that this predictiis being realized. The majority of individuals hirinto senior IS positions in the later part of th1980s had direct managerial experience outsiof the IS func tion. The group of IS executives whhad remained in their positions throughout th


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CIO: Changing Roie

Table 4. Background of Established IS Executives

IndustryFinancial Sen/icesConsumer ProductsHigh-Technology ManufacturingUtilitiesPetroleum, Chemicals, and PlasticsManufacturingTransponation/AerospaceMedia/Entertainment/RecreationTotal

IS2121--3-9

Internal HireBusiness

-1-11115

Hybrid

-1---1-2

IS

----1--1

External HireBusiness Hybrid

------

0 0

Totals21411251

17Note: Hyb rid = more than five years' expe rience in both IS and business between 1977 and 1992to have actual management experience outsidethe IS function.

Why predecessors leftInformation on the predecessors of the newiy ap-pointed senior IS executives is shown in Tables5a and 5b. Interestingly, 21 of the 64 respondents(33 percent) assumed a new position; therefore,there was no incumbent. In most instances thenew senior IS position was created at a higherlevel in the organization than any previous ISposition. In some instances, it was a corporatestaff position with dotted-line responsibility for theexisting IS function. In others, the existing IS ex-ecutive reported to the new IS leader but con-tinued to manage m ore operational aspects of theIS fun ction.Of the 43 incum bents w ho were replaced, 32 (74percent) left the company. Of those who left, 13(41 percent) were dism issed. Ten (31 percent) leftvoluntarily, and nine (28 percent) retired. Sevenof the 10 individuals who left voluntarily had beenin their position five years or less.Of the 11 incumbents who remained with thecompany, only three (27 percent) were promoted.These three individuals had all been in the ISleadership position less than five years. Six in-cumbents moved laterally and two w ere demoted.

job expectations have been cited as major frustrations contributing to the decision of ISexecutives to leave their companies (Carlyle1988).How did the exit status of predecessors relate tthe backg round of the individuals hired to replacthem? Though the small number of individualin each category makes definitive comparisondifficult, two interesting patterns are revealed (seTable 6). First, of the 13 incumbents who werdismissed, nine (69 percent) were replaced by aexternal candidate a nd six (46 percent) by an individual classified as a hybrid. Second, of thnine incumbents who retired, only two (22 percent) were replaced by an external candida te; si(67 percent) were replaced by a hybrid.Our interview data were consistent with thesfindings. Of the nine IS executives interviewedthree were external hires and two of thepredecessors were dismissed. Conversely, apredecessors who retired were replaced by internal candidates. These da ta suggest that, in thcase of dismissals, companies often look outsidthe firm for a candidate with a strong businesand technology background. In the case oretirements, companies, though still requiring candidate with a strong business and technologbackground, may have time to develop thescapabilities internally.


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Table 5a. New IS Executives' Predecessor Information: Length in Position Before Leaving

Predecessor Exit StatusRemained with Company:PromotedMoved lateraiiyDemotedSubtotal

Left Company:Left voluntarilyDismissedRetiredSubtotal

Total

Length 5 yrs and < 10 yrs > 1 0

1

1CMCC

89

yrs

1

1

13489

Totals362

11

101393243

Table 5b. New IS Executives' Predecessor Information: Status by Industry

IndustryFinancial ServicesRetailingConsumer ProductsHigh-Technology ManufacturingUtilitiesPetroieum, Chemicals, and PlasticsManufacturingTransportation/AerospaceMedia/Entertainment/RecreationHealth Services/pharmaceuticaisTotal

N e wPositior)622111152

21

Retired

61

29

Left CompanyLeft Remained With CompanyMovedVoluntarily Dismissed Laterally314-

--11

10

4-3-11112

13

2--21.-11-6

Promoted

21

-3

Demoted

-1.

1.

2

Totals1 53

9639374S

6 4

Table 6. Background of New IS Executives Based on Exit Status of P redecessors

Predecessor Exit StatusRemained with CompanyPromoted

Moved iaterallyLeft Company:

Internal New ISIS11

Business23

ExecutiveHybrid

--

External New ISIS

-1

lusiness--

ExecutiveHybrid

-1

Totals36


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CIO: Changing Role

their time and eiiergy has beeii an ongoiiig topicof research in the MIS f ield. The 1982 SIM-sponso red study m entioned ea rlier in this articlepredicted that the direct-iine responsibilities of ISexecutives wou ld diminish as they were requiredto spend m ore time on the developmen t of infor-mation systems strategies, long-range plans, andstandards (Rocka rt, et al., 1982). The responsibili-ty to create and maintain the company's infor-mation architecture, however, would remain animportant responsibility. A subsequent study ofsenior iS executives in 25 large companies foundthat this prediction was being realized (Benjamin,et ai., 1985). Of the critica l resp onsibilities of ISexecutives in the 1985 study, 20 percent invoivedIT strategic pianning an d con trol, and 31 percentwere related to IT architecture planning, manage-ment, and standards. Twenty-three percent of thecritical responsibilities involved direct-line ac-tivities such as operations and development. Theremainder (26 percent) were split among suchareas as human resource management (6 per-cent), consulting (11 percent), and education(9 percent). Increased responsibilities in thefuture were seen for IT strategic planning, ITarchitecture planning and management, andconsulting.In general, our study found that the agenda ofthe new IS executive also reflected the changesin IS respon sibilities predicted by the 1982 SIM -sponsored study and verified by the subsequent1985 study. There was one notable exception.Hum an resource management w as consistentlycited as a critical responsibility by the new ISexecutives in our study.All of the nine individuals interviewed empha-sized the critical importance of deve loping eitheran "inform ation " or "information technology" in-frastructure for the company. This seeminglyminor difference in terminology reflected a ma-jor difference in approach. Those individuals whohad risen to their position through the ISorganization often used the term "informationtechno logy" in f ras t ruc tu re , s t ress ing thetechnical standards and policies that would beneeded to support business process integrationthroughout the organization. In contrast, thoseindividuals with strong business backgrounds

linked their "information" agendas to majocorporate-wide organization change initiatives. one company, which had recently consolidateits three strategic business units into one gioborganization, information technology was seeboth as a critical enabler of successful integrtion and management of the reorganized firand, paradoxically, as a major impediment successful reorganization because each of thpreviously independent business units had dveloped widely diverse business and managment systems. Three of the intervieweementioned the critical role the IS organizatiowould play in corporate-wide business procein teg ra t i on , redes ign , downs iz ing , andelayering.Human resource management and IT planniand control tied for second place as major ageda initiatives for the interviewees. Both were metioned by six of the nine. Cross-training business and technology professionals to develfuture hybrids was the most common focus of thuman resource management agenda. Four wedeveloping programs for rotating IT professionathrough business positions, and two of the fowere also developing programs for rotatibusiness professionals through IT positions. Oof the latter had developed a training progracalled "Let's Communicate," in which smgroups of 10 to 12 business and technolog y prfessionals met to discuss common issues aproblems.The linkage of business and IT planning prcesses was the most common theme of the planning and control initiative, m entioned by sof the nine interviewees. Cited as a criticinitiative by three of the six was the need to taa proactive stance in looking for ways that could promote as well as support strategy. Alcited by three of the six was the operationaliztion of the IT plan through the development strategic IT systems. One individual mentionthe impo rtance of developing IT control measurbased on business effectiveness criteria (e.inventory reduction, business process productity increases, cost reduction, and specific strategmeasures). It is not surprising that this individu


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CIO: Changing Roles

das of the nine interviewees translated into ac-tion, we asked our survey respondents to estimatethe percentage of time they spent on variouscategories of activities. Table 7 and Figure 1 pre-sent a summary of those data for new IS ex-ecutives, and Figure 2 does so for established ISexecutives.The survey data for new IS executives confirm thetop three agenda items men tioned by the nine in-dividuals interviewed for the study. Surveyrespondents reported spending approximately 27percent of their time on activities related to ITstrategic planning and co ntrol, 19 percent on ac-tivities related to IT architecture m anagement andstandards developm ent, and 17 percent onhuman resource management activities. The pat-terns for these three categories of activity werefairly consistent for individuals with past job ex-periences in IS-related, business-related, orhybrid categories, as well as for internal an d ex-ternal hires. A minor difference was noted in thegreater percentage of time spent on IT architec-ture and standards development activities by ex-ternal hires than by internal hires. It is alsointeresting to note that internal hires with a broadbusiness background spent approximately 17 per-cent of their time on non-IS related activities,which frequently consisted of other businessresponsibilities that could often be traced to theirprevious internal business positions.The survey data for established IS executivesreflected an agenda associated with the tradi-tional IS executive of the early 1980s (Rockart,et al., 1982). Although established IS e xecutiveswere similar to new IS executives in the timespent on human resource management (20 per-cent vs. 17 percent) and IT architecture manage-

ment and standards development (20 percent vs19 percent), they differed markedly on the timdevoted to strategic planning (16 percent vs. 2percent), and devoted more time instead to thtraditional IS responsibilities of operations ansystems development (31 percent vs. 22 percent). This finding is surprising given that thesindividuals, unlike the new IS executives, had litle direct control over the majority of the total corporate IS budget and total number of ISemployees. It may indicate the difficulty or reluctance in changing emphasis from traditional directline management to staff-oriented consultation

NetworkingAs mentioned earlier, the essence of leadershipinvolves the development of networksboth internal and externalfor accom plishing the agenda. The IS executive has traditionally been veryweak in establishing such networks. A 1981 studof the day-to-day activities of IS managers foundthat 61 percent of their time was spent interacting with subordinates within the IS organizationand only 8 percent with business users (Ives andOlson, 1981). Such a situation may be acceptableas long as the role of IT is primarily one of support. However, as IT becomes more critical toachieving corporate strategic objectives, IS executives are called upon to reach out to corporateand user management (Cash, et al., 1992)Research has found that IS executives who haveregular communication with corporate/businessmanagement have a better unde rstanding of theiorganization's goals, objectives, and direction andconsequently are in a better position to ensure thanew opportunities m ade poss ible by IT are seizedand that capital expenditures for information

Table 7. New IS Executives' Percentage of Time Spent on Various Activities:Internal vs. External Hires

ActivityIT Strategic Planning and ControlIT Architecture Mgmt. and Stds. Dev.

Internal New ISIS38

Business26

ExecutiveHybrid

29

External New ISIS30

Business31

ExecutiveHybrid

25


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CIO: Changing

2%Other IS

Figure 1. New IS Executives' Percentage of Time Spent on Various Activities(Internal and External Hires Combined)

3%Risk


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CIO: Changing Roles

resources are ranked according to business needs(Lederer and Mendelow, 1989; Watson, 1990).When asked to describe how they planned to ac-complish their agendas, all nine of our inter-viewees stressed the importance of networking.Frequently mentioned internal network categoriesIncluded corporate senior management, especiallythe CEO. president, and other influential membersof the executive committee; business unit ex-ecutives and influential managers; and ISmanagers under their direct control. Frequentlymentioned external network categories includedvendors, senior IS executives in other com panies,academics, and consultants. Most of the inter-viewees spent the majority of their time develop-ing internal networks, with external networkdevelopment accounting for only about 30 percentof their time. {One individual, who had been in herposition approximately three months when initiallyinterviewed, estimated that she split her time even-ly between internal and external networking ac-ivities. Subsequent interviews revealed that twoears into her position, she spent approximately percent of her time on external networkingctivities.)

urvey respondents were asked to estimate theercentage of time spent working w ith co rporateS m anagers and staff. The results for new IS ex-

and established IS executives is presented

(IS. business, hybrid) and internal hireshalf their time dealing with managers

evenly among corporate, business un it, andect the internal executive's broader network of

posi-IS. In addition, ourthe established

time, the pattern for external hires would chang eto match that of internal hires.Established IS executives spent 40 percent of theirtime within their own IS units. 40 percent withbusiness units, and 20 percent with corporatemanagem ent. This finding is consistent with thatof a recent study by Stephens, et al. (1992) inwhich the activities of five ClOs were observedover a one-week period. They found that 42 per-cent of the senior IS exec utives' time w as spentinteracting w ith subordinates. Using the classifica-tion framework employed in our study, four of theirfive ClOs would be classified as "internal" hires;three of the five had IS backgrounds and two ofthe five appeared to be hybrids; and three of thefive would be classified as 'ne w " IS executives.(The study is published in this issue of MISOuarterly.)Established IS executives spent the majority oftheir time on activities relating to their own ISorganization and to the business units theyserved. An examination of the agenda typicallyassociated with established IS executives provid-ed one possible explanation for this findin g. Theyreported spending a significant amount of timemanaging system development, maintenance,and operations, which would imply the need forinteracting with their staff and the users of theirservices. Because less effort was devoted tostrategic p lanning , less time needed to be spentwith corporate executives. In addition, only fiveof the established IS executives were membersof the senior management/strategic policycommittee.

PowerAs mentioned earlier, examining reporting rela-tionships and membership on the senior manage-ment strategic policy committee can provide ageneral sense of the formal organizational powerinherent in the IS leadership position. Salarylevels also can be used to determine this levelof power.Figure 5 summarizes the reporting relationshipof new senior IS executives in this study. Tradi-


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CIO: Changing Ro

44%3 8 %

Internal IS Internal Business Internal Hybrid53%

44%

H I = Corporate Executives^ = Business Unit Manage^ = Own IS Unit

External IS Externa l Business External Hyb ridFigure 3. New IS Executives' Percentage of Time Spent With Different Groups

early 1980s (Benjam in, et al., 1985) found 80 per-cent of the senior iS executives p ositioned threeor more ieveis down in the organization with 20percent reporting directiy to the CEO. Eighty per-cent reported to an area outside of finance. Amore recent study (Raghunathan and Raghuna-than, 1989) found that 22 percent of IS executivesreported directiy to the C EO, 56 percent reportedone ievel down, and 12 percent reported twolevels down.In our study, the new senior IS executives wereasked to indicate the corporate officer to whomthey currently reported and the corporate officerto whom the IS function reported two yearsearlier. Forty-four percent of the new senior iSexecutives currently reported to finance. This

CEO. Only 17 percent of the established IS eecutives reported to the CEO; 42 percereported through the finance function.Three insights can be drawn from these datFirst, the trend toward IS executives reportindirectly to the CEO, identified first in the ea1980s, is continuing . Se cond, the reporting retionship is often redefined when a change in leadership takes piace. Third, even thougchanges are occurring in reporting relationshipthe traditional reporting relationship througfinance remains in many companies.When analyzed as a group, 45 percent of the nesenior IS executives were m embers of the senimanagement/strategic policy committee. If hirin


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CIO: Changing Roles

8%Business Un i t New IS ExecutivesApplegale and Elam (1992)

Established IS ExecutivesIves and Olson (1981)Established IS ExecutivesApplegale and Elam (1992)

Figure 4. Percentage of Time Spent With Different Groups:Comparison of New and Established iS Executives (1981 and 1992 Studies)

4B%

is ExACUttvesReporting toVar iousPositions

= Position previously reported lo- Position currently reporis lo


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CIO: Changmg Role

Table 8. New IS Executives' Membership on Senior Management/Strategic Policy CommitteeDemographic VariableInternal HireISBusinessHybrid

SubtotalExternal HireISBusinessHybrid

SubtotalIndustryFinancial ServicesRetailingConsumer ProductsHigh-Technology ManufacturingUtilitiesPetroleum, Chemicals, and Plastics

ManufacturingTransportation/AerospaceMedia/Entertainment/RecreationHealth Services/PharmaceuticalsTotal

Yes

25310

75719

1023113162

29

No

610824

41611

5165262143

35

% Yes

25332729%

63835363%

6767331733333386040

45%

background, 48 percent with a businessbackground, and 42 percent with both businessand technology backgrounds were members ofthe senior m anagem ent/strategic policy comm it-tee. Hiring status (external versus internal),however, appeared to be more strongly related;63 percent of external hires were members of thecommittee, whereas only 29 percent of internalhires were members. Across industries, 86 per-cent of the new senior IS executives of transpor-tation/aerospace companies and 67 percent offinancial services and retailing companies weremembers. During the time frame in which ourdata were collected1987 to 1989these wereindustries in which IT played a strategic role. For

a greater oppo rtunity for IS executives to becompart of top management, especially if threplacement is hired from the outside.Finally, it was expected that the salary of new Ileaders would reflect their growing importancwithin their firms. (Tables 1 b and 2b provide summary data on the salaries of the new senior Iexecutives by industry.) Of the 64 new IS executives surveyed, 48 (75 percent) received morthan $150,000 per year in base salary; an addtional 14 (22 percent) received between $100,00and $150,000. Only one individual received lesthan $100,000.


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CIO: Changing Roles

more than $150,000. These data are consistentwith data from Figure 5 and Table 8, which in-dicate that seven of the nine new senior IS ex-ecutives in this industry reported to the financefunction; six of nine were not members of thesenior management/strategic policy committee.Second, the transportation/aerospace industryexhibits some inconsistency among salary,reporting level, and policy committee member-ship data. Although three of the seven (43 per-cent) new senior IS executives received less than$150,000 in salary, two of those three reporteddirectly to the CEO/president and were membersof the senior management policy committee. Intotal, six of the seven (86 percent) new senior ISexecutives in the transportation/aerospace in-dustry were members of the senior m anagement/strategic policy committee.

Implications andRecommendationsThrough a comparison of new IS executives withestabiished IS executives, this study suggests thechanging nature of the IS leadership role inorganiza tions. The a bility to generalize our find-ings is limited by the method of identifying oursample population (which biased the sampletoward large companies in which IT had attaineda h igh level of importance), the sm all size of theestablished IS executive sample, and the smallpercentage of IS resources controlled by thelatter group. Despite these limitations, someinteresting patterns have emerged.Individuals who are currently being selected toprovide IS leadership appear to have very dif-ferent job experiences from those of the tradi-tional IS executive. Whereas established seniorIS executives tend to have little exp erience ou t-side both their own organizations and the IS func-t ion, new IS executives are just as likely to comefrom outside as inside the organization and tohave business experiences outside the IS func-t ion. New senior IS executives are becomingmore powerful. Their agendas focus on the linkbetween business and IT strategy. They quickly

on the senior management/strategic policycommittee.An important question is: How successful wiithese new senior IS executives be? Althoughthere have been a few well-publicized successesof some of these individua ls, (Layne and Pe lton1989; LiCaIzi, 1989) the high level of change andinstability associated with the IS leadership rolewill undoubtedly affect their success.Although many large companies are going togreat lengths to find, reposition, and compensatenew senior IS executives to ensure that thestrategic importance of IT in their particulabusinesses is addressed , a recent survey of CEOsatisfaction with the IS function fou nd that manycontinue to evaluate the IS executive on the basiof traditional cost-effect iveness measures (Alter1990).A iack of clarity on the evolving role of the IS function in the business and, more critically, on theappropriate measures for evaluating IS performance and its leadership may be con tributing tthe lack of stability in the IS leadership role. Inthis context, our study confirms the high turnoverate among top m anagem ent IS roles during th1980s. Business and IS leaders are attemptinto clarify the role and are instituting programdesigned to better understand the crucial intersection between technology and business aall levels of the organization. They are also actively working on career development programthat will help develop this understandinthroughout the organization. But much morneeds to be done.

Recommendations to business andiS ieadersAn important finding of our study is the growinnumber of senior IS executives who combinboth business and iS management experienceDuring the 1980s, many large companies founthat IT was a criticai tool for gaining and sustaining competitive advantage. But the ability to exploit this new-found pow er was seriously limite


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equipped to deal with the dizzying pace oftechnology evolution and the management deci-sions and challenges required. Dissatisfaction,lack of role clarific ation , and inconsistent perfor-mance measurement criteria on the part of bothsenior business executives and the new ISleaders often resulted in voluntary leaves, demo-tions, and dismissals. Our study indicates that thelatest trend has been to hire individuals with bothbusiness and IS management experience. Thus ,the challenge for business and IS leaders of the1990s is to develop future leaders who are ableto manage organizations in which IT is not onlycritica l to strategy but is also a critical componentof the organizational and industry infrastructure.Many large companies that participated in ourstudy are creating hum an resource managem entunits within the IS function that are specificaiiyresponsible for developing and implementingcareer development strategies that will ensure"cross-fertilization" of skills, knowledge, and ex-perience between business and IS at all levelsof the company. Many of these programs haveconcentrated on providing business training andexperience to IS professionals, but we recom-mend that they place equal emphasis on pro-viding IS training and experience to businessprofessionals.A number of companies have redefined"management fast-track" programs to requirefuture general management executives toassume direct responsibility for various aspectsof the IS function. Early in their careers, thisresponsibility may involve system developmentproject management experience. Later, careerdevelopment opportunities may involve assum-ing responsibility for data center or networkoperations or technology research and develop-ment. Participation on interfunctional IT manage-ment and planning committees is also critical butcannot substitute for direct management respon-sibilities. It has been suggested that this ex-perience shou ld begin w ithin the first three yearsof employment and continue throughout anemployee's career (Elam, et al., 1988).Current senior IS executives who have not

and career potential, as well as the effectivenessand career potential of the people who report tothem.This study also has implications for those making the decision to fill the senior IS position in theorganization. Our study shows that individualswith strong business, technical, and organizational experience are increasingly being chosento fill the top IS leadership position. External hiresspent most of their time with the IS uniregardless of their business and technologybackground. Internal hires with strong businessbackgrounds, however, tended to balance theitime am ong business, information systems, andcorporate contacts. We beiieve this reflects theseindividuals' already existing, broader organizational networks. Senior business executivescharged with hiring a new IS executive shouldcarefully w eigh the organization's needs w ith thecandidate's qualifications and experiences. Ibroad know ledge of the organization and accessto a broad network of organizational contacts arcritical requirements, the company may wish tosearch for an internal can didate. If a suitable internal candidate does not exist, or if top management wishes to "shake up" an entrenched ISorganization, the orientation program should provide the appropriate balance of requireknowledge, skills, and experience along with focus on developing appropriate organizationanetworks. Formal "leadership partnerships" cabe used to offset lack of either business otechnical experience in internal or externacandidates.It is important to note that simply elevating thIS leadership position to report to the CEO, appointing the senior IS executive to the seniomanagement committee, and raising the salarto be commensurate w ith other top m anagemenpositions will not ensure that the individual hirefor the senior IS leadership position will bcapable of assuming the role expected of a toofficer within the firm. Roies must be clarified anunderstood among the senior management teamand pertormance measurement and evaluatiocriteria must be consistent w ith these new role


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CIO: Changing Roles

unacce ptable for the new breed of senior IS ex-ecutive being sought by CEOs of today's large,technoiogy-dependent firms. New organizationaiarrangements may be necessary to meet thischallenge.

Recom mendations for research andeducationThis study has just begun to reveal the impor-tant challenges facing senior IS executives in the1990s. The IS ieadership role rem ains in a stateof transition. Attempting to study it without con-trolling for the important differences in back-ground, power, roles, and responsibilities canperpetuate the confusion that has surroundedresearch in the past. Our study can be expand-ed in several ways. First, we recommend that itbe repeated on a larger, more representativesam ple of both new and established senior IS ex-ecutives. Additional studies are also needed toshow how job experience, roles and responsi-bilities, and power c ontribute to the ultimate suc-cess of IS executives in their orga nizations. Thesurprising finding of the small percentage of ISresources managed by the established IS ex-ecutives should also be explored further. Final-ly, additional studies on role perceptions andperformance expectations by OEOs and ISleaders should also be undertaken.Our study has implications for the design ofundergraduate, graduate, and executive educa-tion programs for both business and technotogyprofessionals. Education programs must reflectthe broad business and IT backgrounds that willbe required by organizations in the future.Educators m ust recognize that organizations willstill need highly trained technology specialists,and undergraduate M IS programs m ust continueto em phasize technical training. In the junior andsenior years, however, there should be increas-ing emphasis on developing a business perspec-tive. Graduate and executive programs de signedto prepare future IS managers and leaders mustprovide a broad business and IT perspectivethroughout the curriculum.Recen tly, there has been much spec ulation that,

of IS executives rise to new positions of prminence and influence over their companystrategic directions (LiCaIzi, 1989). We beliethat the continued rapid pace of informatiotechnology e volution during the next decade wdemand strong technology leadership if companies hope to sustain technological advantagor even stay in the game . As we move into th1990s, the head of the IS function will be calleon to assume even greater responsibility as business integrator and catalyst for change, athe while ensuring cost-effective deployment information and technology resources. Globaliztion of markets, industries, and organizations wdemand even more sophisticated technologbased communications, coordination, and cotrol systems. The challenge to IS professionaand educators is to ensure that we are leadinthe way in meeting these demands.

AcknowledgementsWe wish to thank Tony Mayo, Sue ThirwaCahalan, and Nicole Wishart for their help widata collection and analysis, and the senied i tor, associa te ed i tor, and anonymoureviewers for their helpful comments, whicgreatly strengthened the paper. We would alslike to thank the Harvard Business School Divsion of Research and the Marvin BoweFellowship Program for providing the fund ing fothis study.

ReferencesAllison, G.T. "Conceptual Models in DecisioMaking," in The Strategy P rocess: ConceptContexts, and Cases, J.B. Quinn, H. Mintberg, and R.M. James (eds.), Prentice HaEnglewood Cliffs, 1988, pp. 314-330.Alter, A. "Mak ing a List," C/O{1:9), August 1988p. 10.Alter, A. "Good News, Bad News. . .," C/O (3:4January 1990, pp. 18-29.Benjam in, R., D ickinson, C , and Rockart, J

"Cha nging Role oft he Corporate InformatioSystems Off icer," MIS Quarterly (9:3September 1985, pp. 177-188.


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Cash, J. , McFarlan, W., McK enney, J., and Ap-plegate, L. Corporate Information SystemsManagem ent: Text and Cases. Richard D.irwin, Homewood, IL, 1992.Elam, J. , Ginzberg, M ., Keen, P., and Zm ud, R.Transforming the IS Orga nization, iCIT Press,Washington, DC, 1988.Evans, M. "The Effects of Supervisory Behavioron the Path-Goai Relationship," Organiza-tional Behavior and Hum an Performance (5:3),May 1970, pp. 277-298.French, J.R. and R aven, B. "Th e Bases of SocialPower," in Studies in Social Power, D. Cart-wright (ed.). Institute for Sociai Research, AnnArbor, Ml, 1959, pp. 150-167.Hambrick, D.C. "Environment, Strategy, andPower Within Top Management Teams," Ad-ministrative Science Ouarterly (26:2), June1981, pp. 253-276.Hayley, K.J. and Boiek, R.W. "CIO Survival,"CIO (3:3), December 1989, p. 10.Hopper, M. "Rattiing SabreNew Ways to Com-pete on Information," Harvard BusinessReview (90:3), May-June 1990, pp. 118-125.House, R.J. "A Path-Goal Theory of Leader Ef-

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McFarlan, F.W. "Information Changes the WayYou Compete," Harvard Business Review(62:3), May-June 1984, pp. 98-103.Pfeffer, J. "The Ambiguity of Leadership,"

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About the AuthorsLynda M. Appiegate is associate professor athe Harvard Business School. She received Ph.D. in business administration from the Univer


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CIO: Changing Roles

pointments at the University of Michigan, theUniversity of Washington, and the University ofArizona. Dr. Appiegate is an active consultantand teaches regularly in corporate executive pro-grams. Her research and recent publicationstorus on the role of information technoiogy inorganization transformation. Recent articles havebeen pubiished in Harvard Business Review,Journal of Qrganizational Computing, and Jour-nal of Operations Research. She recently co-authored a book. Corporate Information System sManagem ent: Text and Cases, with ProfessorsJames Casii, Warren McFarlan, and JamesMcKenney. She is an associate editor for MISOua rterly, Journal o f Organizational Com puting,and Group Decision Making a nd Nego tiation andis on the editoriai board of Qrganization Science.She won "best paper" award at the Hawaii In-ternational Conference on System Sciences in1986 and 1987 for papers on the design of infor-mation systems to support group decisionmaking.Joyce J. Elam is the James L. Knight EminemSchoiar in Management information Systems in

the Department of Decision Sciences and Infmation Systems, Coiiege of Business Administtion, Florida International U niversity, Miam i. Shas held previous positions as assistant professat the University of Pennsyivania's WhartSchooi, associate professor in the College Business Administration at the University Texas at Austin, and a Marvin Bower Feliow the Harvard Business School. Dr. Elam earnboth her Ph.D. in operations research (1977) aher B.A. in m athem atics (1970) from the Univsity of Texas. Her research deals witii the copetitive use of information technology, tmanagement of the information services functioand the use of information technoiogy to s uppoboth individual and group decision m aking. Sis the author of numerous articies appearing such journais as Information Systems ResearcDecision Sciences. Qperations Research, aDecision Support Systems. She is a co-authorthe book Transforming the IS Q rganization, puiished by ICIT Press. She has served as associaeditor for MIS Ouarterly and is currently on teditorial board for Information SystemResearch.


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01. new information systems leaders

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