26 Feb Fusion 2007: CEOs say bar is raised for CIOs
Madison, Wis. – In the context of how business is conducted today, how important is the CEO-CIO relationship to an organization’s core mission?
Important enough that the expectations bar has been raised significantly for CIOs.
Given all that has transpired in recent years with the number of costly or failed information technology implementations, the relationship clearly has grown in importance. But IT failures are just the tip of the iceberg, according to prominent executives taking part in WTN’s annual CEO-CIO Fusion Symposium this week in Madison.
John Swainson, president and chief executive officer of CA, Inc., and Tom Koulopoulos, CEO of the Delphi Group, said the CEO-CIO relationship has been transformed by a number of considerations.
“The days where the CIO and IT department were left alone are long gone,” said Swainson, who will deliver the conference keynote address. “The CIO now must work with the CEO and other senior executives to ensure that the company’s IT resources help drive business success rather than hinder it.
“That said, CIOs are now on the hot seat to deliver those benefits, but in my discussions with them, that is the place they want to be.”
Koulopoulos, who views the relationship as “incredibly important, more so than ever,” said organizations no longer can draw a line between the business and the IT that supports it. He said the line must be clear, not blurred by distractions.
“You might as well try to separate a person’s mind from his soul by drawing a line down the middle of his brain,” Koulopoulos said. “The difference today is that we are quickly coming to the realization that organizations need to figure out what is core to their business and focus their in-house IT on this while getting rid of everything else, which is just a distraction, by sending it to a partner.
“The CIO has to be involved in this decision. Unfortunately, many CIOs see this decision as a threat to their existence. Nothing could be further from the truth.”
The responsibility for making sure information technology is aligned with the core mission of a business is not the sole province of upper management or the IT department. It’s a shared burden with separate responsibilities.
In Swainson’s view, upper management needs to clearly state its business objectives, and then work with the CIO and IT department to fund and build the IT infrastructure required to cost effectively meet those goals.
“You can’t develop your business objectives in a vacuum, and you can’t build your IT infrastructure in a vacuum,” he said. “IT must map to business requirements, or it is doomed for failure.”
The need for alignment is another case where trying to draw hard lines between business and IT is “an illusion at best,” Koulopoulos stated.
While business managers may understand the core competency of the business, they still need to understand the degree to which information technology can support that core. The dynamic of this relationship influences another key component of contemporary business – the need to consistently drive innovation.
“Innovation is a chemistry between IT and the business,” Koulopoulos said. “You can come up with innovative ideas all day long, but without the technology backbone to enable them, your ideas will spend the rest of their lives on a white board.”
Even with the CEO-CIO line obliterated, CIO credibility in the executive suite and the boardroom is not guaranteed. CEOs might have the most unique perspective when assessing how CIOs can get a seat at the table, and the necessary qualities are not difficult to quantify.
“A CIO has to have a dual personality,” Swainson explained. “In one aspect, the CIO needs to deeply understand technology; on the other hand, the CIO needs to understand the business so he or she can best create the IT environment that will give the company a competitive edge.”
As an example of why the CIO needs to map technology to business needs, Swainson cited the IT infrastructure for a property-casualty insurance company. This infrastructure needs to be built not only on massive data centers, but also on a mobile component that supports adjusters out in the field, where they are taking and processing claims without ever coming to an office.
Koulopoulos linked board credibility to innovation, and provided an answer that illustrates just how much the CIO’s bar has been raised. The best way for CIOs to establish credibility with the CEO or with the board, he said, is to establish “a track record of integration with our core mission, and measurable success in helping us to innovate our core.”
Winging it with ROI
With IT implementations, there is a growing emphasis among CEOs on proving business value in the form of actual, measurable ROI, but the bottom line is still whether IT provides an edge in a number of competitive categories.
While CA looks at every IT expenditure with a “clear eye” toward return on investment, the most pertinent questions pertain to whether the IT expenditure enables the company to be more competitive. Does it help the sales force sell? Does it enable CA to be more responsive to its customers?
“An IT department should give a company a clear competitive advantage,” Swainson said.
Koulopoulos said ROI is only half of the equation because you can cut costs all the way to zero and still fail if there is no business growth. The situation reminds him of an anecdote told by the 20th century flying ace John Boyd, who probably knew more about how an aircraft behaves “than anyone in or out of the cockpit,” Koulopoulos said.
The anecdote goes like this: One day a “hot shot” aerospace engineer was trying to sell the Pentagon on a new fighter plane with reduced wing surface area. The hot shot made the claim that wings were very expensive and if you have less of them the fighter would be much more cost effective and efficient in flight due to the reduction in drag.
Boyd pushed back, but “Mr. Know It All” persisted in his argument. Finally Boyd said, “So let me get this straight. As wing area decreases, efficiency increases, right?”
The hot shot was gleeful that he had won Boyd over. At which point Boyd said, “so why not just eliminate the wings altogether?”
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