IT leaders are under increasing pressure to keep their business knowledge and leadership skills sharp.
Business transformation means fundamental changes to a company’s organization, strategy and vision. It can be driven by external factors such as regulation, competition and consumer demands; or by an internal desire to discover new markets and create groundbreaking innovations.
The CIO and the technology resources he or she directs represent a powerful transformative force. But that’s been true for the 50 years that IT management has existed. What’s new is how market-leading companies are defining the role of the CIO, and the extent to which top CIOs are leading business transformation.
According to an e-book, Aligning Technology with Strategy (Harvard Business Press, Feb. 2011), companies that most successfully manage their IT investments — including hardware, software, services and staff — generate profits and revenue as much as 40 percent higher than those of their competitors. Factors that distinguish these top performers include collaboration among CIOs and top business executives around priorities and deriving value from IT initiatives, says the book, a compilation of recent articles from the Harvard Business Review.
“The benchmarks for the CIO role have changed pretty radically in the past two years,” says Shawn Banerji, Managing Director and Co-head of the Information Officers Practice at Russell Reynolds Associates, a global executive search firm. Market-leading companies are looking for business people with technology expertise who can identify new technologies that will enhance the business. They also want individuals who understand big data and analytics to see what’s happening with personnel and resources, observe consumer trends and anticipate future markets and needs, Banerji says.
“Keeping the lights on is still an important responsibility for the CIO, but it’s a baseline,” adds Banerji, who has extensive experience in head-hunting CIOs for major corporations. The best CIOs, he says, are not attracted to organizations where IT is just a functional backbone, but to those where IT is strategic.
According to a recent survey of 685 CIOs conducted by CA Technologies, those IT leaders are still in the minority. In the survey, 16 percent of CIOs said they were always involved in strategic activities, 29 percent were sometimes involved, and fully 55 percent reported never being involved, says George Watt, VP of Corporate Strategy at CA Technologies and co-author of a new book, The Innovative CIO: How IT Leaders Can Drive Business Transformation (Apress, 2012). One of his co-authors, Andi Mann, VP of Strategic Solutions at CA Technologies, also says that IT leaders need to communicate IT’s business value to all business units.
Some researchers believe this is starting to happen. A 2012 report produced jointly by INSEAD, a leading graduate business school, and CIONET, an IT organization of 3,500 European CIOs, says CIOs spend a significant amount of their time doing things other than managing information services. The report, “Three Ways to Thrive: How CIOs are enabling their organizations to grow and strengthen in today’s challenging economy,” identifies three areas as emerging responsibilities for CIOs: collaborating with non-IT colleagues, managing enterprisewide business processes, and working with external customers and partners.
Further, of the 188 CIOs surveyed for the report, 37 percent defined their roles as technology-driven, 41 percent as business-process-driven, and 22 percent as client-driven. Nearly 60 percent also say they expect their role to become more client-driven over the next three years, says Nils Fonstad, Associate Director of the INSEAD eLab.
The Customer-Facing CIO
Five years ago, it would have sounded strange to hear that a CIO’s duties included working with customers and partners. Now, the customer-facing CIO is in the vanguard of management trends.
Cisco System’s Rebecca Jacoby, for instance, is both CIO and Senior VP of the IT and Cloud & Systems Management Technology Group. This means Jacoby runs the IT operations and also heads a customer-facing product group. With both a degree in economics and an MBA, and company experience dating back to 1995, Jacoby has a unique and highly desirable collection of business and technology skills.
Another highly regarded customer-facing CIO is Oliver Bussmann, Global CIO of SAP. The INSEAD report states that during his first 100 days at the German software maker, Bussmann developed an award-winning strategy: transform the IT structure from silos into an agile department aligned with the various business groups. Bussmann then went on to launch the “SAP Runs SAP” project, whereby SAP is the first customer of new ERP software products. He then met with more than 250 SAP customers to share his IT department’s experience and best practices.
CIOs can enhance their skills and become transformational CIOs in a number of ways. The first is on the job: participating in key strategy initiatives and demonstrating for other C-level executives how new technology and processes can deliver business results.
Other approaches involve education, such as an MBA, which takes about one to two years to complete; certificate programs, which are shorter in duration and more targeted; and executive education programs, which focus on tactical business functions, such as financial or change management. Formal MBA programs in the U.S. and Europe stress a T-shaped skills portfolio, which includes vertical skills such as software architectures, data analytics and information security, and horizontal skills such as finance, marketing and customer relationship management.
A growing number of graduate business schools have been adding technology skills to the MBA course lineup. Rutgers Business School, located in New Jersey, for instance, added the Master IT Program in 2008. Its main focus is to give both technical and business professionals a grounding in data analytics. “We teach both technical and business analytics,” says Hui Xiong, an Associate Professor who runs the Rutgers program. “In addition, to succeed in this field, students need domain expertise, such as how analytics is used in retail or in pharmacology.”
One example of analytics in the healthcare domain comes from Premier Healthcare Alliance, which aggregates huge amounts of healthcare and business data for its member organizations. Premier’s business is organized like a professional society. Members include 2,700 hospitals and 90,000 healthcare facilities. Premier focuses on helping its affiliates transform their businesses through improved performance. “A substantial amount of what we offer involves IT,” says Randy Thomas, the company’s VP of Portfolio Strategy and Design.
By aggregating financial, purchasing, clinical and supply chain data, Premier is able to spot patterns and recommend business changes that lower costs and increase efficiency. Member CIOs are crucial in helping their organizations understand how to use this data to bring about process change, Thomas says.
CIOs wishing to deepen their business and leadership skills will find many targeted university programs. The State University of New York’s Institute of Technology, for one, offers an MBA in technology management, an online program that combines business essentials with a technology focus.
Another program, the Information Technology Leadership Program offered by the Leavey School of Business at Santa Clara University, provides IT executives with general management and executive-level skills. “For most of its history, IT has been an operational and functional resource, not a strategic [one],” says Peter DeLisi, the program’s dean.
For IT leaders in the public sector, the Harrisburg University of Science and Technology in Pennsylvania offers a Certified Government CIO program to help them respond to changing requirements. The program focuses not on technology, but on leadership skills, strategy setting and business management.
Educational programs that provide business and leadership skills help CIOs collaborate effectively with other executives. Business executives need to be involved in conversations about IT, but such conversations should not be about technology. Ultimately, it’s about how the business can leverage information to innovate, inform product decisions, affect the customer experience or create new business models, says Joe Peppard, Professor of Information Systems and Director of the IT Leadership Program at Cranfield School of Management in the U.K. “This is what transforms forward-thinking companies into industry leaders,” he says in a report from CA Technologies entitled, “The Future Role of the CIO.”
Another expert, David Houle, author of a new book, Entering the Shift Age (Sourcebooks, 2013), says CIOs can no longer focus only on technology. Instead, he says, CIOs should aggregate the intellectual property of their companies, then make sure it’s dispersed throughout the business. Houle believes the rapid technical and business changes taking place make this knowledge-sharing imperative.
MBA: Essential?
So, is an MBA or other advanced degree crucial to CIO success, given the CIO’s growing role in business transformation? “Having an MBA is helpful,” says Marv Ritter, a former CIO and CTO at many large companies, and the holder of an MBA degree himself. “It enables CIOs to speak the language of their business counterparts.”
Even without an MBA, CIOs need certain business competencies, argues Ameet Patel, a former CTO at JPMorgan Chase and now a business-transformation adviser to start-ups and other growth companies. First is finance. “You need to understand the numbers and be able to talk the language of the CFO,” Patel says. “The CIO needs to focus on cost and risk mitigation.” As CIOs can be responsible for thousands of employees, hundreds of systems and millions in costs, “They need to explain to the CFO how the IT investment leads to revenue generation,” Patel adds.
For CIOs, having a strong interest in emerging technologies and an entrepreneurial spirit can also be important. “When you have a deep understanding of how new technologies can move the company forward, and you combine that with the ability to create, prototype, deploy and iterate, then you have the classic McKinsey case-based approach to looking at complex problems and innovative solutions,” says Patel.
In fact, many highly recognized and successful CIOs do not have MBAs. Randy Mott, VP and CIO at General Motors, holds an undergraduate degree in mathematics. Ben Fried, CIO at Google, has a bachelor’s degree in computer science.
Others have advanced degrees, but in fields that closely align to their company’s business. Daniel Lebeau, Group CIO at GlaxoSmithKline, holds a doctorate in nuclear physics. What’s more, in his previous position as CIO at the company’s Biologicals unit, which produces vaccines, Lebeau did not hire anyone with an IT background. That’s because his BioIT group was responsible for business process management. Of the 100 people on the team, only 12 were responsible for IT infrastructure services, and just two had degrees in computer science.
To be sure, there are many ways to learn, and many ways that CIOs can gain the skills and influence needed to advance business transformations. CIOs stand at the crossroads of all of critical business data, and all the systems that drive key business processes. CIOs with leadership skills in both technology and business should remain in demand.
Customer Engagement Through Social Media CA Technologies launched a social network in 2010 that connects customers, partners and employees, enabling them to pose questions, share expertise, and access a variety of online resources. Called MyCA (communities.ca.com) it represents the evolution of the old-style message board to a much richer, multidimensional environment centered on a community of knowledge. This platform represents a transformation in how CA Technologies engages with customers and provides them with support and insights. It also lets customers help other customers based on their real world experience. CA Technologies took the concept of the online forum, in which technical professionals pose questions, get answers and share code, and turned it into a full online community with blogs, online libraries and thought leadership about emerging industry trends and best practices, says Samuel Creek, a Senior Principal Business Analyst with CA Technologies in San Francisco. CA Technologies has applied the latest thinking around B2B social communities to this effort. According to social media guru Clay Shirky, speaking at a recent industry event (hosted by LinkedIn), companies should no longer think about a straight transactional environment where an order comes in and a product goes out. They need to identify key networking individuals who have lots of useful connections, can share ideas and offer insights that make the social network more valuable. MyCA also has a recognition component that rewards members based on behaviors ranging from answering questions and posting code to reading blog posts and/or responding to them. “It’s a system of social equity that rewards activity and expertise,” says Margaret Brooks, VP of Customer Success at CA Technologies in Memphis, Tenn. Members can collect points and achieve status such as contributor, aficionado and champion. The program is based on the notion that people are geared toward social recognition and are naturally acquisitive, so they want to complete missions and collect points. This facet of MyCA is often referred to as “gamification” because it shares the achievement and reward principles of computer gaming. In addition to publishing weekly statistics on the system, Creek meets with managers at CA Technologies regularly to spread the word. The result is that several individual departments are researching their own versions of the system. Ultimately, Creek hopes MyCA will provide a virtuous circle of communications between customers and our software engineers. “We need customer insights integrated with product creation, testing, deployment and ongoing usage,” he says. That will help improve products, cut costs and increase customer satisfaction. So far, MyCA is on track: With 35,000 members, 1,000 participate daily and 100 new members sign up every week. – K.S. |
Karyl Scott is a freelance writer in San Diego.