Information Technology (IT) has become such an essential part of retailers’ strategies (and capital spending budgets) that the unthinkable is happening: Chief Information Officers (CIOs), once just a nondescript box on the organizational chart, are now being ushered into the Chief Executive Officer’s (CEO) chair.
Bigger Budgets …
Many retailers are devoting a substantial and increasing portion of their capital-expenditure budget to IT, with IT spending growing much more rapidly than revenues. In several cases, IT spending can even comprise the majority of a company’s capital spending budget.
- Home Depot: In its fiscal 2015 business year, the company plans to tilt its capital investments more toward interconnected retail and technology within its $1.5 billion total capital spending budget;
- Nordstrom: Nordstrom plans to plow 30% of its capital spending into technology over the next five years, up from 20% historically, which represents roughly $250-$265 million within its planned $840-880 million capital spending budget for fiscal 2015;
- Target: The company’s mix of U.S. capex will continue to tilt from investments in new stores toward supply chain and technology. In fiscal 2013, Target spent $1.1 billion of its $1.9 billion capital budget (or 57% of the total budget) on information technology, distribution and other; and
- Walmart: Walmart will keep spending big to extend its e-commerce capabilities, spending $1.2 to $1.5 billion for e-commerce and digital initiatives in 2016, up from about $1 billion in the current year, representing 9.7-12.1% of its projected fiscal 2015 capital-spending budget of $12.4-13.4 billion.
… and Nicer Offices
Originally, CIOs were a long-shot for the CEO chair, as their original duties centered on managing the firm’s IT budget, whereas the CEO’s job is to determine the company’s strategy and drive revenue growth. Typically, it was often the Chief Financial Officer (CFO) who got promoted due to his or her strong financial knowledge. In recent years, IT has become such an essential tool for retailers to retain customers and capture new revenue opportunities that CEO chair is increasingly being pulled out for the CIO.
Here are some examples, in retailing and outside, of CIO-to-CEO promotions (as well as to other operating roles):
Michael P. Huseby was appointed CEO of Barnes & Noble in January 2014. He had been named President of the company and CEO of NOOK Media LLC in July 2013 and CFO in March 2012. Before that, he served as Executive Vice President and CFO of Cablevision Systems Corporation.
GAP appointed Tom Keiser as EVP Global Operations. He had joined the company in 2010 as CIO and had previously served as CIO of Limited Brands (now L Brands).
Hudson’s Bay appointed Gerald Storch, a former management consultant who as Chairman and CEO of Toys”R”Us grew the e-commerce business to over $1 billion, as CEO and to the Chairman’s office starting on January 6, 2015.
There are also several examples of non-retailers promoting the CIO to CEO or similar roles.
Margaret McCarty served as Aetna’s CIO since 2005 and was appointed Executive VP of Operations in November 2010;
David Hall was appointed CEO of Jetstar Australia & NZ in August 2010, after previously being responsible for Qantas’ group strategy and the QFuture transformation program.
Medidata appointed Mike L. Capone as Chief Operating Officer (COO). He previously served as VP of product development and CIO of ADP.
New Republic Magazine appointed Guy Vidra, previously General Manager of Yahoo News, as CEO.
Philips appointed Jeroen Tas, previously group CIO, as CEO of Philip’s Healthcare Informatics Solutions and Services division.
Finally, Suncorp: appointed Matt Pancino, formerly CIO and head of business technology applications, as CEO of business services.