02 Mar CEOs and CIOs must be 'joined at the hip'
Madison, Wis. — The president and CEO of Alliant Energy said Thursday that chief executive officers and the chief information officers must be “joined at the hip” if information technology is to support a company’s core business.
William Harvey, delivering a keynote address Thursday at the Fusion 2006 CEO-CIO Symposium produced by WTN Media, offered a CEO’s perspective on how to leverage information technology. He said it starts with alignment between himself and Alliant Energy’s chief information technology officer, David Cagigal. “The management of technology, once implemented in your organization, falls under the rubric of ‘who is driving the business?’ he stated. “David drives the business in our organization because we are joined at the hip in terms of what the business model of our company is.”
If there is a disconnection between the CEO and the CIO on a company’s core business objective, Harvey said the organization’s information technology department will be seen as a cost and a burden rather than an integral part of a company’s business model. “The CIO’s role in an organization can be fundamental to the success of the business model that I’m in charge of exercising, but it can be if and only if the CEO’s and the CIO’s minds are melded.”
That meeting of the minds must occur in an environment of rapidly changing technology that creates high expectations within a business culture. How does a company know when to pull the trigger on a major new IT initiative? By making sure upper management understands and thoroughly communicates the business objective of the company, Harvey said, and adhering to it “dogmatically,” especially when confronted with the possibility of change. In addition, the organization must understand its key business drivers and its appetite for risk, all of which is done in the corporate strategic planning process, not the IT planning process. Without this predicate, the CIO and the IT organization will be “helpless in making good judgments and providing good counsel,” Harvey stated.
Alliant Energy, a Madison-based utility, provides electricity and natural gas to more than three million customers. The clearest example of the essential alignment between information technology and the corporation’s business model is in asset utilization. Alliant builds expensive power plants and distribution systems, and wants to achieve maximum utilization because of the tremendous amount of capital it deploys. The same standard applies to information technology, and Harvey said one of the CIO’s tasks is to say ‘no’ to new technological toys and ask employees, ‘What can I do to help you exploit the toys you already have?'”
According to Harvey, the best way for technology officers to establish credibility in the boardroom is to exhibit dogmatic alignment with business objectives in a way that demystifies information technology within the corporate setting. Such dogged pursuit of the company’s business model creates stress and friction between information technology and other departments, “but that’s why they call it work,” Harvey said. “There is no IT strategy that is separate and distinct from the business objectives of the company.”
Alliant Energy invests between $400 and $500 million in capital improvements as a normal burn rate, and a key portion of that investment is IT based. Yet Harvey described Alliant as a late adopter of new technology, and that’s by design. The company’s approach is to evaluate the experience of others before it decides to move, which is the approach it is taking with automated meter reading systems. Many utility companies have made the switch to automated systems, but Harvey said Alliant has much to gain in terms of capability and cost by deploying mature technologies. “Our business model states that the pioneers get the arrows, and the settlers get the land,” he stated.
For his part, Cagigal would like to field more employee questions about new or existing technologies. “We don’t have enough churn in our organization to test the mettle of our [IT] folks,” he said.
Tom Koulopoulos, founder and CEO of Delphi Group, a Boston-based thought-leadership firm, said alignment can be achieved by fear of regulatory or other consequences, by successful examples from other organizations, and by incremental internal success. The latter method, he said, is the most successful, even if progress is measured in small increments. “Find a foothold somewhere,” Koulopoulos advised. “Incremental progress, internally, is the single biggest motivator.”
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