The reporting structure for IT that makes sense in a customer-centric era

Who’s really calling the shots in the new customer-centric enterprise organization?

Esteban Kolsky believes it’s increasingly the COO. Kolsky, a CRM veteran and former Gartner analyst, addressed the matter in a recent blog. His own research suggests that operations (there’s your COO) now oversees customer service at 24 per cent of the organizations surveyed. That’s up from 19 per cent of organizations in 2013.

Kolsky calls it “the operationalization of customer service.” Besides customer service, he also sees COOs wielding greater power and influence over other business units too, from accounting to supply chain management.

What does it all mean for the CIO or network manager?

First, let’s take stock of where the IT department currently sits. Recent years have trumpeted the rise of the CIO and CMO in this digital era. IT had to be better aligned with business objectives; marketing had to be tied more closely to measurable results via big data and analytics. In some cases, the CIO and CMO roles were consolidated into the Chief Digital Officer.

Although Kolsky talked up this idea in 2013, he now argues that the reality hasn’t lived up to the hype.

“The consolidation of the CIO and CMO didn’t yield the results they expected,” he told me over the phone from Sacramento, Calif.

Enter the COO, now seen as the one who can actually Get Stuff Done. Managers with no budgets to spend during the recession spent long hours strategizing instead. Today’s enterprise is gung ho to finally put all those big plans into action, Kolsky said. The new model puts the CEO firmly back in charge while giving the COO way more clout.

The CIO and CMO can bend the CEO’s ear more easily than they did in the past. But they’re ultimately returning their focus to execution rather than strategy, he told me.

Are CIOs losing the seat at the C-suite table they fought so hard for?

“I don’t want to see it as a demotion,” Kolsky said. “It’s more like a restructuring of the executive suite. So the CIO and CMO continue to be chief executives to their respective branches. But now the reporting structures have changed.”

Specifically, “we’re seeing more and more CIOs beginning to report either to the CFO or COO like they used to,” he added.

When I pressed Kolsky on whether this trend is a step backward for CIOs, he framed it for me in musical terms.

“It doesn’t make sense to have every executive in a company be Chief Marketing or Chief Everything Officers when they’re supposed to be focused on their own strengths and deliver concepts towards a better implementation. We see CEOs and COOs basically being the conductors for the orchestra and all the other players being focused on their own instruments – instead of making everybody play every instrument.”

It makes you wonder if playing all those extra instruments has placed unrealistic burdens on CIOs during the past few years.

Australia’s IT Masters magazine pondered the same thing in a November 2014 editorial provocatively titled, “Are we asking too much of our CIOs?” It mused about whether CIO really stands for Chiefly Impossible Officer – but only half-jokingly.

“It is understandable (that) the CIO should know the business mission and values and be able to align technology (to them),” the editorial states. “But the role of CIO should not be stretched too thin.”

Kolsky said operationalization allows each business unit to “focus on what (they) do best and then deliver against that.” Might be good advice for CIOs and IT managers navigating their evolving roles in the customer-centric enterprise.