Slowly IT (Information Technology) is becoming BT (Business technology). Traditionally the CIO of an organization (the core business is not IT) is a leader with strong technical background who understands the technology, systems, IT processes and have a less functional knowledge comparing to the IT knowledge.
Due to the role and function of IT changing rapidly, I predict that trend is going to change so quickly. In the near future, the companies are going to look for an extensive functional knowledge as a requirement for CIO. With increasing success of SaaS, ASP models, the hard core IT function (SAN, NAS, Network architecture, load balancers, SSL accelerators and etc) are not required to be directly performed by IT organization. It will be done by service providers and it is requirements by an IT organization to better manage the SLA, vendor relationship. Since the IT function is to enable and drive business (IT is not a service provider to the matured innovation organization) the functional knowledge is extensively required for a CIO to make the right decision. It is not going to be nice to have competencies of a CIO.
For example, for an Oil & Gas company, the CIO MUST clearly understand how OIL & GAS function generally work and it will be required that CIO must have worked in that sector as a Business Director or business senior manager.
How much functional knowledge required for a CIO?
Significant business functional knowledge is REQUIRED for future CIO to run the IT shop.
To test my theory, let us take Toyota Financial. As I understand (as per their web site), they are looking to fill the CIO position. Toyota financial organization goal is to support the consumer (who buys Toyota and Lexus product) by providing financial products like loan, lease, insurance and etc and dealers by providing financial products like floor plan, whole sale and etc.
As per my theory (or speculation), the new CIO will have an extensive business knowledge in the financial lending industry (like mortgage, auto loan, banks, etc). Let us wait for press release and verify my speculation.
Enterprise Architecture, IT Strategy & Others 
If this is speculation, it is informed speculation. Any CIO that wants to be “strategic” simply can’t be business ignorant. Otherwise, how would he/she be able to distinguish among projects in the portfolio:
3.) Utilities, or projects that keep the firm “in the game”
2.) Players, or projects that help “win the game”
1.) Differentiators, or projects that “change the game”
Business ignorance isn’t a valid option for all but the simplest IT shops.
Best,
Paul
http://crossderry.wordpress.com
Dear Paul,
The informed speculation is that the degree of the business knowledge required by the CIO is going to be SIGNIFICANT. In the current state, the CIOs are not business ignorant for the obvious reasons you stated.
Thank you,
-Praba
Hi,
I think you are absolutely right here.
It is not only applicable for CIOs but also for other CXO levels. As a firm believer and follower of “Genchi Gembutsu”, I too agree with you that it is essential for senior executives in any organization to know the nuts and bolts of the business of the organization -Otherwise, they can only rely on others for any crucial decision making (and hope that it will produce desired results).
Also, deep functional knowledge is one of the main reasons why Toyota is leading the pack in terms of getting the right decisions right!
Cheers
Muthuvelan
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