CIOs should have IT budgets taken away from them and "only eat what they kill", according to boardroom advisor Ade McCormack.
"The budget is like a charity, and if you have to rely on budget, you're not really empowered," said McCormack, a columnist for the Financial Times and author of 'The IT Value Stack'.
Instead McCormack advised CIOs to surrender their budget and then operate on a 'eat what they kill' basis. Speaking at the Gartner Outsourcing & IT services Summit in London, McCormack told CIOs to go out, win business and compete in the wider market place.
"Most CIOs are hermetically sealed in the company. If released into the wild one day, it would be a shock. But if we ate what we killed, we would have a lot more money. We would make the money that we spend."
If CIOs rely on budgets, he said, they are more vulnerable because it's very easy for management to just cut the expenditure.
McCormack added that it's up to IT vendors to help get CIOs into the boardroom, and focus on becoming a trusted advisor rather than hitting sales targets.
The relationship between vendor and the CIO needs to be equal, he said. If the vendor is too strong, the CIO could become a "puppet", which in turn brings about their demise.
"The CIO becomes your chief sales officer, they represent you in the boardroom. If the CIO is too disempowered, they will get fired, and you [the IT vendor] are back at square one," said McCormack.
Equally, if the CIO has too much power in the relationship, and the vendor's role is weak, then there is little innovation, he said. Services are "adequate at best" and there is "legal nitpicking" around contracts.
In an ideal scenario, the IT vendor and the CIO work together. McCormack advised vendors to relax pressure on its sales staff to hit targets because it puts at risk a long-term relationship with CIOs.
Instead, the vendor should help the CIO make the value case and become more boardroom-ready. But the CIO also needs to understand how to talk to the board and to articulate the value of IT.
"The problem is the boardroom doesn't know if it puts a Euro in to the IT department, will it get two Euros back. The CFO wants to measure IT as a black box with an Excel interface, particularly when value can't be articulated."
In some cases, the CFO does get the CIO on the board, "but if that CIO then uses words like .Net, Web 2.0 and C#, software as a service, then the CIO won't be on that board for long", he said. "The board knows words like share price, profit, loss, balance sheet, governance, risk, prison."
"A lot of CIOs haven't woken up to that, it's a problem,"said McCormack. "I'd encourage CFOs to interview CIOs, the first question: What is our share price today? If the CIO can't answer that: Interview terminated."
When asked about the rise of cloud computing, which treats IT as asset-based rather than forming strategic relationships with CIOs, McCormack said: "I don't have strategic relationship with stapler suppliers."
"There will be vendors that focus on technology that will be pushed down the value chain. The danger with IT is that it works so well that it is no longer interesting, and becomes boring. CIOs want something interesting.
"But cloud is a compelling model, and CIOs should buy into it as it allows you to scale very quickly, so you can scale and setup organisations and outlets around the world."