The importance of the CIO role: Can you benefit from a virtual CIO?
FINANCIAL INSTITUTIONS INSIGHTS |
Financial institutions face growing regulatory responsibilities and shrinking margins, and many are evaluating ways to better manage costs. However, when assessing technology investments, institutions should not lose sight of the importance of the chief information officer (CIO) to help ensure compliance and increase security and efficiency. Even institutions with limited resources require a technology executive to make strategic IT decisions, and in many cases, a virtual CIO is an optimal solution.
The CIO fills many key roles for an institution, serving as a business partner, strategist and innovator. In many cases, a technology disconnect exists with many institutions where key stakeholders are not satisfied with technology, but the IT department does not have an effective plan in place.
A recent study showed that stakeholders are 3.5 times more likely to be highly satisfied with IT if an effective IT strategy is in place. However, 47 percent of business leaders feel that business goals are unsupported by IT and 92 percent of IT departments claim their strategies are less than adequate. Stakeholders and IT both want improved strategic planning and alignment with the business, but many institutions fail to accomplish these goals.
A CIO’s role is to eliminate that divide between business executives and IT, developing and implementing an effective technology strategy that aligns with institutional objectives.
Note: For more information on what to look for when selecting an institution’s CIO, read RSM’s article Beyond the techie—CIOs must be versatile leaders.
The decision whether to employ a CIO is generally dictated by resources, and many institutions don’t want to dedicate additional funds, especially with margins down and other costs increasing. Smaller institutions face the same regulatory and margin pressures as larger counterparts, and often do not see room in the budget for another executive. The common solution is to rely on an IT employee to make strategic technology decisions, but without the connection with the C-suite, this approach can create further issues.
For example, we recently saw a bank implement an infrastructure-as-a-service (IAAS) solution with a second data center for disaster recovery purposes. Unfortunately, the strategy failed to meet expectations, resulting in only its backups being stored off-site instead of creating a responsive disaster recovery location. Another institution thought it was deploying an IAAS platform, but it actually signed up for co-location with a provider, basically moving files and servers to another location, but not backing them up for disaster recovery purposes.
These scenarios underscore the importance of a CIO to help institutions make sound technology decisions and get the most from IT investments. However, for institutions that think they don’t have the financial flexibility for a traditional CIO or have gone without a technology executive in the past, a virtual CIO can provide the best of both worlds—a higher level of technology and industry knowledge at a more manageable cost than an in-house executive.
A virtual CIO is a resource from an external technology provider that fills the senior technology role within the institution, providing strategic IT guidance and advice. The virtual CIO has regular, direct contact with both senior executives and IT staff, helping to eliminate gaps and manage expectations. The virtual CIO allows institutions of all sizes to take advantage of evolving technology, providing direction on how to leverage solutions for greater security and performance.
The virtual CIO can get up to speed and understand the business quickly by becoming involved with steering committee meetings and integrating with other members of the C-suite. The goal is to better align technology with business goals and effectively remediate past pain points. The virtual CIO can initiate stronger planning initiatives, not just for recoverability, but for preventing outages in the first place.
The main advantage of a virtual CIO is getting the same value as a traditional CIO at a more manageable cost; the institution can leverage knowledge and experience as needed, rather than employing a salaried executive. For a similar cost of an internal CIO’s salary and benefits, an institution can implement an entire team of virtual technology resources.
Cybersecurity concerns and related regulatory measures are driving more attention toward business continuity initiatives, and more pressure on technology resources. Institutions must have effective security measures in place to protect sensitive data, and also have an efficient design to maintain productivity. This area is where a CIO is a critical resource to understand the balance between security and regulatory compliance, as well as the business impact of these necessary measures.
While the strategic insight a CIO offers has become critical for institutions, many do not have the funds, or have never employed a technology executive. For these institutions, a virtual CIO can provide significant value with cost savings versus hiring in-house and better alignment with institutional strategy. The role brings the understanding of financial industry and technology necessary to address gaps between the IT team and executives, and implement the right technology solutions to remain compliant and successful.
If you have any questions or would like to discuss any of these topics in more detail, please feel free to contact Julie Starnes at +1 319 896 5421 or firstname.lastname@example.org.