As organizations continue their digital transformation (DX) journeys, the role of the CIO evolves. However, the metrics used to evaluate CIOs are hindering progress. As digital transformation becomes a critical driver of business success, many organizations still measure CIO performance based on traditional IT values rather than transformative outcomes. To drive change, a reworking of what defines CIO/IT success is needed, with a focus on strategic business goals, innovation, and market differentiation.
The status of digital transformation
Digital transformation is a complex, multiyear journey that involves not only adopting innovative technologies but also rethinking business processes, customer interactions, and revenue models. According to recent data from IDC’s CIO Sentiment Survey (Figure 1), only 38% of organizations have reached a high level of maturity in their digital transformation efforts (with only about 13% claiming full transformation). This data shows that a majority of companies — 62% — are still focused on short-term or functional goals rather than long-term strategic transformation.
IDC’s CIO Sentiment Survey, July 2024, n = 395
The gap between digital transformation aspirations and outcomes is partly due to how CIOs and IT leaders are measured. While the CIO role has expanded significantly, the metrics used to evaluate their performance often remain tied to traditional IT values like cost management, operational efficiency, and system uptime. This creates a disconnect between the strategic role that CIOs are increasingly expected to play and how their success is measured.
Traditional IT metrics: Still the norm
For decades, IT departments have been viewed as cost centers, and CIOs have been measured primarily on their ability to maintain operational excellence. Common metrics include:
- Cost management: Reducing expenditures while maintaining performance
- Efficiency: Ensuring optimal processes with minimal waste
- Application effectiveness: Delivering reliable tools that meet user needs
These metrics do not align with the goals of digital transformation, which are often focused on innovation, customer experience, and revenue growth. These metrics are for a “run the railroad,” traditional, back-office IT organization.
The CIO is no longer the chief of “keeping the lights on.”
Business is too dependent on technology as a key driver for both business value and differentiation. And yet, these types of metrics are the limpets of IT measurement — encrusted, intractable, and creating drag.
CIO leadership metrics: Operational over strategic
In IDC’s CIO Sentiment Survey (Figure 2) that asked about the top metrics used to evaluate CIO performance in 2024, a startling imbalance was revealed. Of the top seven metrics, only two — innovation and profit growth — are directly tied to digital transformation goals. The remaining five metrics, including uptime and availability, cost control, operational efficiency, compliance, and security, are deeply rooted in traditional IT priorities. Those operational metrics are table stakes for most IT departments at this point.
IDC’s CIO Sentiment Survey, July 2024, n = 395
This continued focus on operational metrics reflects a broader organizational mindset that still pigeonholes IT as a support function rather than a strategic driver of innovation. It’s a case of “you get what you measure.” As long as CIOs are incentivized to focus on operational excellence, their digital transformation efforts will be deprioritized.
Insights
IDC’s CIO Sentiment Survey offers valuable insights into how organizations can better align CIO metrics with digital transformation objectives. Here are three key recommendations for CIOs to share with business management:
- CIO metrics should align with strategic business outcomes.
To drive digital transformation, CIO measures must evolve beyond operational metrics to include strategic business outcomes. Organizations should introduce key performance indicators (KPIs) that measure CIO contributions to innovation, revenue growth, and market differentiation. For example, instead of measuring success solely by system uptime or cost reductions, CIOs should be evaluated on metrics like digital revenue growth, customer experience improvements, and market share expansion.
- The weight of transformation-focused metrics should be increased.
Transformation-focused metrics, such as innovation, digital adoption, and customer experience improvements, should carry as much weight as operational metrics (e.g., uptime and cost control).
This shift requires rethinking how to measure IT success. For example, a CIO’s performance evaluation should include progress on transformative digital initiatives, such as the implementation of AI-driven solutions, industry use cases, or the creation of new digital revenue streams.
- Collaborative initiatives should be established between IT and business units to boost transformation.
One of the challenges of digital transformation is that it requires collaboration between IT and business units. Historically, this has been a problem, because IT was focused on keeping costs down (so, being perceived as “Dr. No”), while digital transformation requires a mindset of collaboration between the business and IT.
To drive this collaboration, organizations must establish joint metrics that incentivize co-ownership of transformation efforts (mutual “skin in the game”). For example, IT and business leaders could be jointly measured on metrics such as the adoption rate of new digital platforms or improvements in customer satisfaction. This approach not only encourages cross-functional collaboration but also ensures that transformation efforts are aligned with broader business objectives.
Conclusion: Recalibrate CIO metrics
The metrics used to evaluate CIOs must evolve to reflect technology’s critical business role. The metrics must reflect this necessity.
Where innovation and agility are key drivers of competitive advantage, traditional IT metrics that shaped IT for the past 50 years are insufficient. If you haven’t already aligned your CIO metrics to the new reality, you are late. And being late places your organization at a competitive disadvantage.
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International Data Corporation (IDC) is the premier global provider of market intelligence, advisory services, and events for the technology markets. IDC is a wholly owned subsidiary of International Data Group (IDG Inc.), the world’s leading tech media, data, and marketing services company. Recently voted Analyst Firm of the Year for the third consecutive time, IDC’s Technology Leader Solutions provide you with expert guidance backed by our industry-leading research and advisory services, robust leadership and development programs, and best-in-class benchmarking and sourcing intelligence data from the industry’s most experienced advisors. Contact us today to learn more.
Daniel Saroff is group vice president of consulting and research at IDC, where he is a senior practitioner in the end-user consulting practice. This practice provides support to boards, business leaders, and technology executives in their efforts to architect, benchmark, and optimize their organization’s information technology. IDC’s end-user consulting practice utilizes IDC’s extensive international IT data library, robust research base, and tailored consulting solutions to deliver unique business value through IT acceleration, performance management, cost optimization, and contextualized benchmarking capabilities.
