Why The CIO Position Is In Jeopardy

The retail markup on these parts is sufficient that there are online stores in Boulder that do no more than take an order, buy it at one of the local parts wholesalers, and ship it to you. Or you can buy a part on Amazon or eBay, have it in a couple of days, and save 10% to 20%. If necessary, you can take the part and bike to a local shop, where an expert mechanic will install it for the same fee had you purchased the part there.

The same pattern is happening with cycling clothing, which can be expensive and complicated to get the right fit. But once you know the right style and size, you can save money buying the exact same clothing online. In the end, all the bike shop has that can't be purchased cheaper online is the expertise of the cyclists selling the bikes and the expertise of the mechanics maintaining the bikes.

Meantime, the bike mechanic--like other expert service providers--is under pressure from the online distribution of information and disintermediation of expertise. Which brings us back to my icemaker. When it stopped working, I Googled how to replace an icemaker and found numerous YouTube videos on the subject. All insisted that it's easy, so I decided to try it myself. I looked up on the refrigerator manufacturer's website what icemaker model to buy and where, and I could have ordered it online from the manufacturer but wanted a fallback to the parts retailer if I got into trouble. And I installed the icemaker myself.

The refrigerator repairman lost a service call and any markup he would have had on the part. I saved, and he lost, probably $150 because that expertise is now online.

Big Changes Ahead

The Best Buy situation and the icemaker story portend big changes for IT organizations. The fundamental market changes generated by IT are now turning on IT's builders and managers.

Cloud computing, mobile apps, software-as-a-service, etc. will change the way IT works in most companies. I feel certain that it will be a smaller, more externally focused, higher-expertise IT organization, with most of the infrastructure and operational expertise outsourced. What the internal IT pros will be doing, what their expertise will be in, and what role the CIO will play (if there is one) are still undetermined.

Few companies have ever re-invented themselves, and fewer still have gotten the public to see them as a different company. It's the same with CIOs. This monster of a market force will change the role of the CIO, forced by CEOs, CFOs, and CMOs. In most cases the role of the CIO will be gone or significantly diminished.

There's a lot of chatter about CIOs becoming chief innovation officers. I don't see that happening without a lot of painful churn. If the CIO isn't already accepted as a strategic partner and innovation driver, he or she never will be--at least at that company. Companies will always see the current CIO as the same person with the same skills and deficiencies (real or perceived).

Overall, the number of CIOs will decrease over the next five years. Currently, there are more CIOs than readily identifiable companies, as every operating unit and every global region tends to have its own CIO, at least at the biggest companies. Most of these positions already are superfluous and will get eliminated with the next one or two management shakeups.

Of course, this upheaval won't happen all at once, and it won't happen evenly across industries. Big IT organizations in IT-intensive industries such as banking, airlines, and transportation (e.g., FedEx and UPS) will be the least impacted. But then, those companies already have some of the best CIOs, and the scale of their operations gives them options (such as private versus public clouds) not available to smaller shops.

In most businesses, the CEO or CFO will start asking why, if cloud computing is so cost beneficial, their companies aren't doing it. And if someone else starts managing your company's infrastructure and its key software is now provided and managed as a service by someone else, those execs will ask why the company needs a CIO and that expensive IT organization.

Dr. Larry Tieman has been a senior VP at FedEx, a CIO, or a CTO for the last 20 years. He has worked with some of the great CIOs, including Max Hopper, Charlie Feld, and Rob Carter. He can be reached at [email protected].

At this year's InformationWeek 500 Conference C-level execs will gather to discuss how they're rewriting the old IT rulebook and accelerating business execution. At the St. Regis Monarch Beach, Dana Point, Calif., Sept. 9-11.