2006 is proving to be an extraordinary year in the technology and operations executive talent market with more CIO candidates fielding multiple job offers at the $1MM+ level than ever before. The sharpest increase in activity is in the financial services sector.

For every candidate that we present to a client at the $1MM level we can be sure they are being courted with at least 2 other offers including a counter offer from their present employer. This is a super hot market with companies vying for candidates who are already ranked among the highest paid CIOs in the country.

To succeed in such a competitive market what does a company have to give the candidate they want to ensure that their offer is accepted? Even if candidates are not focusing solely on the compensation package, and that is certainly one of the deciding factors, what they are demanding is a voice in influencing the course of the business.

CIOs want their seat at the table to give them the right to be an active participant in setting the strategy for their company. They want the opportunity to prove they are worth those 7 figure compensation packages, and to be respected as one of the thought leaders of their firms.

While they are being subjected to a stringent interview process for a $1MM+ opportunity with a Fortune 500 firm, they are simultaneously scrutinizing the company leadership equally as deeply as they are being evaluated to determine if they will truly have the impact they desire if they accept the position.

Over the coming months we will be monitoring whether this feeding frenzy will extend over into other industries.

The care and feeding of intellectual capital within organizations is vitally important in order to keep up with the latest business trends and technologies, and be able to exploit them competitively in the global marketplace.

Businesses today have many choices from which to draw intellectual capital, whether it's for strategic road mapping and decision making, running their data centers, call centers, systems integration, clearing and settlement of trades and many more functional categories. In each case, deploying the intellectual capital within the organization can easily be supplemented with outsourced services, whether offshore, near-shore or on-shore, consulting services, and organizations set up to process the customer transactions of a particular business.

Costs are usually cited as a primary reason for turning over part of a company's operations to outside providers. Lack of internal knowledge and experience to perform these functions competitively is another popular reason.

The key challenge for any organization relying on outside providers is to retain control of the intellectual capital required to make the right decisions for the customers being served, while at the same time competing effectively in the marketplace.

But what happens when the cost of maintaining high powered intellectual capital within an organization becomes prohibitively high? An example is what happened to the equity derivatives market in the past 3 to 4 years, particularly in London, Tokyo and New York. High demand for knowledgeable technology and operations leaders in this space, brought on by heavy hedge fund participation as well as by investment banks, led to salaries in the $1 Million and up range.

At the end of the day, compensation has to be calibrated to the value of the player in relation to the business that he/she is part of. For example, many people think it's crazy to pay ARod $20 Million a year just because he happens to be very good with a bat and a baseball. But the franchise that he's a key part of earns enough money, with him as a key contributor, to justify his salary.

Analogously, if an investment bank decides to pay the Head of Equity Derivatives Operations $2 Million a year, it's fairly safe to conclude that the level of profitable incremental business derived from running this operation justifies the salary.

But like any other commodity, if the demand for high powered derivatives expertise diminishes due to changes in the investing landscape, then the supply side will experience a drop in salaries offered.

This points to the logical business conclusion that intellectual capital has to be paid at the going rate, whether internally or externally derived, as long as the return on investment justifies the expenditure.

The IT Value Matrix has the potential to become the universal standard for measuring the value of IT and its leadership to the success of every corporation.

CIO Magazine's Executive Council has created the IT Value Matrix as a visual guide to explaining why IT is essential to their companies. You can access a PDF version of it at www.cioexecutivecouncil.com/it_value.html The IT Value Matrix is extremely user friendly - easy to understand and navigate.

The IT Value Matrix is broken down into 3 key areas that form the foundation of the relationship between IT and the rest of an organization - the alignment of IT with the stakeholders, communication, and how to clearly define the role of the CIO. These 3 key areas are then broken down into additional components that can be easily explained to non IT professionals. These components include defining the measures IT needs to take in order to be considered an effective partner to their internal business clients.

One of the most exciting byproducts of creating a visual roadmap like this is that it can become a forum for discussion between the business and technology as to whether the IT organization is fulfilling the goals that it has set for itself and whether they align with the goals the company sees as core to the success of the enterprise. If this alignment is not currently present, using the IT Value Matrix as a talking point allows both sides to determine where the disconnect is taking place and to create solutions for how it can be overcome.

The IT Value Matrix also can be of assistance to the CIO in the creation of liaison roles that allow for stronger alignment between technology and the rest of the enterprise.

From the perspective of those of us in executive search, the IT Value Matrix is also an exciting new assessment tool. It gives us a set of parameters by which to qualify candidates at the CIO level, and to get clients to reach consensus on what they believe those qualifications need to be. It also gives clients a way of evaluating if they are happy with the current configuration of their IT organization, and how to create a more effective future state.

From the perspective of current and future CIOs, the IT Value Matrix gives them a set of parameters for self-examination to determine whether they are either meeting these criteria or how they have to address those weaknesses either in their organizations or in themselves. It is also a wonderful way to create succession planning by creating a roadmap for rounding out both the work experience and client interaction of their direct reports that aspire to executive roles.

The IT Value Matrix should be adopted because it creates a common set of standards and language for communicating the function and the value of the IT organization and what it takes to be an effective IT leader for CIOs, their clients and those of us in Human Resources and in executive search who have to bring them both together in harmony.

Is your firm recognizing the importance of I/T security in assuring the complete integrity of the business infrastructure? Historically, I/T security was a low priority, but now companies are approaching the risk associated with their infrastructures as a business-critical initiative and allocating greater resources to limit their exposure.

Management now understands that the integrity of their business infrastructure is critical to mitigating security, operational and compliance risk and securing their technology foundation from all types of threats. Government regulations are imposing greater responsibility on management for faulty business processes and with the increased risk of electronic threats business units want an increased effort by I/T to protect from all possible risks. With data growing up to 50% per year by many estimates, the sheer act of protecting a firm's data can put a strain on I/T resources.

Typically risk management projects have been isolated from vulnerability with a patchwork of intrusion protection and some sort of firewalls. This has ultimately created a legacy of software and service issues, which, through their attempt to manage security threats individually and their lack of integration, struggle to keep infrastructure integrity under wraps and creates high ownership costs.

Firms are now totally realizing the risk involved in not securing their infrastructure and business comprehensively. Not only can a leak in security cause monetary damage it can also jeopardize their reputation. Collectively there appears to be realization that staying ahead of the game will avoid regulatory issues associated with the requirements covered by Sarbanes-Oxley.

With risk issues being of paramount concern to the business, technology executives will have more flexibility in implementing risks controls for the entire enterprise. Cost associated with these projects will be viewed as a necessity when CIOs make their business cases as new fears of accountability and reputation come to the forefront of the firm. Deploying technologies, removing legacy systems and staff training are just a few of the cost associated with the new-risk management movement.