A recent survey from Black Book Research documents the changing tide for CIOs.
In December, the research arm of Tampa, Florida-based Black Book released a survey that showcased a significant statistic regarding chief information officers (CIO): in three years their power over IT purchasing decisions fell from 71% in 2015 to only 8% in 2018.
While the amount of the decline took some CIOs by surprise, the trend is definitely on point, they told HealthLeaders, reflecting their changing role in healthcare organizations.
The news is not all doom and gloom these insiders say, but it does portend a need for transformation of the CIO role, as well as the willingness to embrace new opportunities. HealthLeaders takes a look at the survey findings while insights from seasoned healthcare CIOs provides further context.
Survey Documents Power Shift
The most dramatic finding in the survey of more than 1,500 hospital leaders was the shift of power in purchasing decisions from the CIO to line of business (LOB) management teams. While CIO control has slipped, responsibility has increased elsewhere in organizations.
Some 88% of non-IT hospital leaders report the demand for technology expertise in their role is intensifying, according to Black Book. "The strategic role of CIOs is markedly decreasing as the shift toward decentralized tech management moves to department heads and LOB executives," the report indicates. Another trend noted by the survey: 45% of all respondents expect that more than a third of all dollars spent on IT will originate from outside the IT department in 2019.
"I think [the survey] makes a valid point," says Marc Probst, vice president and CIO of Intermountain Healthcare in Salt Lake City, Utah, a not-for-profit system of 23 hospitals. "I wouldn't say the influence of the CIO has lessened, but I would say the interest and the influence of the end users has increased significantly.
Pamela McNutt, FCHIME, LCHIME, FHIMSS, senior vice president and CIO of Methodist Health System in Dallas, a nonprofit system with four wholly owned hospitals and six affiliates, agrees. In remarks emailed to HealthLeaders, she says, "To some degree, things are becoming more cloud-based and subscription[-based], and hence can be purchased without the need to run in the IT data center. Also, most organizations have moved away from building their own applications, so packages are often being pitched directly to our business lines."
While both CIOs agree that a transformation in purchasing decisions is underway, neither has experienced the sensational drop indicated by the Black Book report. Probst reports that the purchasing dynamic has shifted by about 10% from his department to others in the Intermountain organization. "I do sense the role I'm playing in decision-making has changed a lot," he says. "Once upon a time, indeed, we made all the technology decisions. Now we share that with others."
When asked if the conclusion of the report was reflective of her own experience, McNutt responds, "Yes and no. In our organization most enterprise software (subscription or purchased) still falls in my budget as far the control over the money. That said, a good CIO would have never been in a silo making a decision on IT systems, ever. The purchase of systems should have been—and remains—a stakeholder, IT, and executive team joint selection process and purchasing decision."
Probst sees a silver lining in the shift of power. "That is an incredibly positive thing from my perspective—more ownership of decisions [by end users], and more desire to understand what technology can do, and how it can apply to their jobs," he says. "That's all really positive, assuming it's all done under appropriate governance. It's exactly what [CIOs] have been trying to encourage for years."
While the decision point may be moving, McNutt says the role of IT is still essential. "Most systems require interfaces from a core enterprise application supported by the IT shop or need to be accessed by the end user," she explains. "Hence every proposed system and contract for said system should still be run through the CIO for approval regardless of who is paying for it or where it will reside (cloud versus on-premise). That is how it works in our organization."
Because of the way technology is changing, the Intermountain CIO feels that setting up ground rules and educating constituents in the healthcare system is an essential role he and his counterparts should play. For example, they should know security requirements, be aware of regulations, and understand that it's not good practice to mix different operating systems in the same environment.
"If a CIO is doing their job and appropriately educating the organization on what those boundaries might be," says Probst, "it's incredibly good that [end users are] making decisions because they're the ones that are going to make the technology successful, not us."
A shift in purchasing power is not the only trend noted by Black Book. Among other highlights from the report:
- Only 21% of CIOs felt they were meaningfully involved in the creation of market-facing innovations and strategic departmental software selections.
- Of CEOs surveyed, 29% think of their CIOs as tactical, but not strategic enough to navigate the complex healthcare business systems to drive financial success.
- 88% of colleagues in the C-suite perceive CIOs as developers and deployers of technology, and not usually as a source of innovation and transformation to deliver business value. "In other words, says the report, "they leverage technology; they don't deliver it." At the same time, 81% of CIOs identify themselves in a transformational, yet underutilized, role as opposed to a functional role.
According to the report, hospital CEOs and board members are seeking consultative-type executives who can orchestrate integrations, strategies, business goals, digitalization opportunities, and evaluate innovations and consult with LOB managers. "That doesn't suggest that the CIO is headed for extinction, says a Black Book press release, "but the role of the CIO in hospitals is changing dramatically towards information management."
At many health systems, chief digital officers may be gaining the responsibilities and power that CIOs once held, says Doug Brown, managing partner of Black Book to HealthLeaders. Chief information security officers also are coming to prominence as well. The rise of these positions also factor into the changing role of the CIO.
"As CIOs, we have to be careful that we're just not threatened," says Probst. "It's going to continue to change. That's our world, right? We introduced this thing called technology that started to move the cheese, and automate, and do things across the organization. Now we're going to start experiencing some of that [change] ourselves. We just have to be nimble, and confident in our capabilities, and the value we provide to organizations … or we can get into our shells and do things the way we've always done, and then we'll probably go extinct."
Survey participants included 247 CIOs and 1,305 non-IT C-level and senior management leaders who participated in a six-month polling sweep from June to November 2018. Information was gathered through Black Book's mobile apps, online services, and a call center. Data was supplemented by in-depth input from 28 health system CIOs.
CIO Role Is Shifting in Every Industry
Because of digitalization, the changing role of CIOs is well-documented, regardless of the industry in which they operate. The 2018 Gartner CIO Agenda Survey gathered data from 3,160 CIO respondents in 98 countries and all major industries. Survey results indicate that 95% of CIOs expect their jobs to change or be remixed due to digitalization.
Healthcare CIOs may be able to learn from their counterparts in other industries. The Wall Street Journal's CIO Journal (sponsored by Deloitte) published a blog in late December with CIOs from a variety of industries weighing in about their changing roles:
- Sheila Jordan, CIO of San Francisco–based Symantec said, "Technology is a critical element of all strategies, so CIOs must find ways to optimize how they run the organization and spend more time deciding where to help the business change, improve, and most importantly, grow revenue."
- Comments in the same article from Diana McKenzie, CIO of Workday in Pleasanton, California, which provides cloud-based ERP (enterprise resource planning) systems, sound as if they could have been spoken by a CIO at a progressive health system. "We’ll be reimagining and designing a digitally enabled, seamless customer journey at scale, to continue to drive amazing experiences for our customers," McKenzie said. "We’ll keep a continued focus on driving self-service analytics and uptake of machine learning and artificial intelligence capabilities in all areas of our business, guiding our customers into the future."
Mandy Roth is the innovations editor at HealthLeaders.
Photo credit: Shutterstock
CIOs are losing power in purchasing decisions.
Responsibility is shifting to line of business management teams.
Digitalization, cloud-based technology, and software subscriptions are changing the dynamics.
Transformation is needed to focus on driving revenue, innovation, education, and consultation.