It seems like every time I read a computer magazine or peruse a computer blog I am told that there is a new role for the CIO. I read about the new requirement that the CIO must become business savvy or the CIO can no longer be technical or that the CIO must be more aggressive in defining the automation agenda for the company. Others say that the CIO job will soon be obsolete and will be disbursed throughout the corporation. On the pages of the Center for CIO Leadership we read about “The Essential CIO” and CIO 2.0.

I really think that a lot of this clamor for the CIO’s to grow up is due to the great difference that we find in CIO’s across the corporate playing field. In large, sophisticated companies the CIO role has been defined as a business role for a long time. In many of these companies the CIO is a true officer of the company and is a member of the executive team and is involved in all aspects of the business. These individuals usually report to the CEO, understand the business of the company and use IT technology to advance the needs of the business.

It is important to understand that these people usually do not act as technology czars but rather as consensus builders who help to establish the automation agenda along with their IT Steering Committee. This is the same process that any officer uses to move his/her agenda.  The advertising V.P. usually presents the new advertising program to the executive staff for comment and approval.  The Distribution V.P. seeks consensus from Sales and Marketing for the new D.C. The Sales and Marketing V.P. seeks approval for the new marketing plan. The CFO works with everyone to finalize the annual expense budget. Everyone tries to work together to achieve corporate goals and objectives.

In other companies, the CIO is not really an Officer but rather the top technology person. This individual is not a true officer, does not sit at the table, probably doesn’t report to the CEO and has to fight for his/her share of corporate attention. These are the individuals that need to take the next step and become a business leader. The problem could be that this person, because of his/her skill set, will never be able to fill this expanded role. Or it could be that the company CEO and executive staff just doesn’t understand the need for IT to attain this level in the company.

The bottom line is that the pundits are right that a more business savvy CIO is necessary in today’s complex corporations. If companies do not have this, then they must let their current IT person rise to this level or they must hire someone who can operate at this level. This is not a new problem. It is something IT has been dealing with for a long time. Please no more “New roles for the CIO.” Lets push for more CEO awareness of how to properly utilize the role we already have.

The Center recently hosted a virtual roundtable on an important topic to CIOs, Partnering to Drive Change through Analytics, where we explored how organizations are applying analytics best practices today, the business value that the best performing organizations are experiencing.

In preparing for the session, I developed some observations on the topic that I think provide a useful perspective for CIOs as you all consider taking action on getting value from leveraging analytics and creating business value in your own enterprise.

Not a new topic

In researching the literature prior to the session to provide some historical perspective on how far back this topic goes, I discovered that people have been talking about what we describe as this massive explosion of data, initially called information overload, for longer than many of us have been in this industry. From what I could ascertain, the earliest known attribution of the term “information overload” was credited to an IBM advertising supplement in the New York Times on April 30, 1961. So obviously this is not a new topic.

So what’s different now: more data than ever before

That being said, we are clearly at a new frontier of information overload and explosion of data, which is astronomically more challenging, but at the same time very exciting from the point of view of being able to impact the way we do business.

To put this into a context for today, I like to look at the retail industry, which is at the forefront of collecting massive amounts of data, and more importantly putting that data to use in changing the way they go to market, manage the customer experience, streamline the supply chain, and create the next generation customer. Walmart is often cited as a great example as a retailer leveraging data and analytics across all of these elements. A fact that I found particularly noteworthy - as of about nine months ago, Walmart was processing over a million customer transactions per hour, feeding databases that were estimated in excess of two and a half petabytes (roughly the equivalent of 167 times all of the books in the Library of Congress.)

Walmart has unprecedented insight into what their customers are doing, what they want, and how to respond across their 8,500 stores worldwide. At the same time, they need to find a way to translate that insight into actions that drive customer benefit and stakeholder value.

How should CIOs respond to this incredible opportunity?

“Revolutions in science have often been preceded by revolutions in measurement,” said Sinan Aral, a business professor at New York University, in a 2010 article in the Economist. He went on to say that just as the microscope transformed biology by exposing germs, and the electron microscope changed physics, the proliferation of data is turning the social sciences upside down.

I see that as representative of the conversation we as CIOs should be having now – how to apply this insight, these data, to become the microscope for how businesses can learn and advance ourselves and our industries. There are a few takeaways for me from Katharyn White’s presentation that I would encourage CIOs to consider in looking to manage these conversations.

• It’s a journey – the research presented reflects the evolutionary process of adopting, implementing, and embedding the value of analytics in the enterprise. And as Katharyn emphasized, the process of gaining buy-in and creating change is actually a core part of the implementation. In leading change management efforts myself over the years, I see that implementing analytics is the type of program that requires deep change across the enterprise, and core shifts in the way people make decisions, operate and go to market. CIOs can leverage their expertise in change management, as well as their enterprise-wide view of data and information, to make the journey more successful.
  

• Learn from others – the research also showed that companies can be successful getting to value across many industries; success in analytics is not industry dependent, or even geography dependent. There are companies of all types applying best practices and getting exciting results – whether it is in growing sales, increasing efficiencies, or improving individual customer interactions. Katharyn shared the view that success with analytics benefits greatly from a cross-industry perspective, and from seeking out examples from many other environments as a way to leapfrog in your own industry. This echoes my own experience – and that of the Center’s commitment to peer-sharing. CIOs should seek to systematically leverage learning from others to innovate in an emerging area like analytics.
  

• Leverage your C-suite relationships – by definition, getting value from analytics, especially as companies migrate from aspirational to experienced or experienced to transformed (as described in the research), clearly requires data or information to be collected across functional silos and/or across multiple business units. Whether or not the data collection and management moves to the point of being centralized within the enterprise, there needs to be an integrated and shared view of who is doing what, and how they data can be cleaned, verified and leveraged across the silos. This is an important opportunity for CIOs to leverage your hard-won C-suite relationships, and reach out to connect on an integrated view of the possibilities to move to value in your enterprise. One partnership in particular that Katharyn mentioned – the one with the Chief Marketing Officer – struck me as interesting for CIOs to consider. Analytics is at the forefront of where marketing and technology are coming together, and the partnership represents an emerging opportunity for CIOs to truly push the needle on analytics and how the company goes to market.
  

What are you doing in your organization to move the needle on the path value through analytics? What lessons can you share with others?

"This environment presents a game changing opportunity for CIOs.  This is why I believe the Center is critical to the profession – it is focused on enabling CIOs to lead in their business.  CIOs should use the Center and these types of discussions to take the reins." 

Salon Participant, CEO, Financial Services Company

The Center for CIO Leadership and more than 40 CIOs, CFOs and CEOs gathered in NYC on October 21st to discuss a question that is increasingly being reflected in industry surveys, trade publications and analyst reports - of why CEOs see technology as a game changer, and yet their peers in the C-Suite – the CIO and CFO – do not.  The discussion also focused on how CIOs can shift this view and ramp up their opportunity to lead business growth.

The question sparked some provoking thoughts from our panelists – CEO Marianne Brown from Omgeo, CFO Jim Metzger from TM Forum and CIO Lou Trebino from The Harry Fox Agency – and our participants.

Here are some excerpts from the evening and some proposals for how we at the Center might help CIOs and their C-Suite partners to advance this discussion and, more importantly, to enhance the value of IT within their organizations.  We hope you will take some time to add your thoughts to this important discussion.

The C-Suite Responds to CIOs Partnering with the Business

In reference to how CIOs can get the attention of the business on new technology opportunities, a number of the participants agreed with one CEO’s recommendation that "CIOs need to speak the language of business." Some of the CIOs in the room suggested that they need to become "bilingual" in business and technology speak, while others raised the concern they are still unsure of how to acquire that new language.  The CEO went on to provide a concrete suggestion – partner with your business colleagues to tell the story.  "When my CIO and my head of sales walk in together to my office to tell me they want to make an investment, I say no problem. It is a slam dunk."  A CFO in the room agreed, and followed up on this point to suggest to CIOs, "Don’t come to me saying we need a CRM system.  Tell me instead how this system is going to help the sales force drive new revenue."

Does Reporting Structure Matter?

Reporting structure surfaced a few times in the discussion, with several CIOs voicing their frustration with the increasing trend of CIOs reporting to CFOs, and questioning whether this will result in CIOs losing their seat at the table.  Additionally, there was concern expressed over the inevitability that the CIO’s role and the IT function [while reporting to the CFO] will be further relegated to supporting back office and more operational processes where cost reduction becomes the major focus.  Other CIOs disagreed with this perspective.  One suggested "whether or not the CIO reports to the CFO shouldn’t matter… we need to be moving to the same business outcomes regardless."   Others proposed that opportunity for the CIO to lead is affected more by the culture than the reporting structure.   One participant explained, "reporting to the CEO in a company that doesn’t see technology as critical to its future isn’t better than reporting to the CFO or to anyone else.  Culture is critical to setting the tone for how important technology is to the company strategy."  One CFO in the room offered "I have the CIO report to me but he can spend as much time with the CEO as he wishes because he’s earned that relationship and he is deemed as critical to our future.  Yes I make him justify costs, but I don’t see technology as a pure cost center."

CEOs Agree CIOs Need a Seat at the Table

Many in the discussion agreed with one CEO who stated that "CEOs are seeing a paradigm shift in competitiveness.  Most businesses see technology as critical to their time to market and innovation – these are important issues for today’s companies and the CIO has to have a seat at that table."  Another C-Suite executive chimed in – "I cannot imagine why you would not want your CIO at the table."

Most CIOs in the room agreed that they have the seat at the table, and went on to share their views on how to best use that seat.  "The key is engaging with the business to understand the pain points, and get a shared view on the possibilities technology can bring to think about the business differently." One observed that the business is not ‘rewarded’ for understanding technology – "you have to make the case for technology – the business is not going to become competent in technology unless it is critical to how the business makes money – that’s the CIO's job to make the connection."  Another observed that CIOs must go beyond listening and translating opportunities to truly creating the vision for the future, and getting the executive team excited about how technology will create growth.

The need for the business to understand technology sparked further discussion, with one participant asking the group "what if the CIO’s office was a mandatory passing for all businesses executives?"  A number of CIOs agreed that this would shift the conversation dramatically.  Others offered that perhaps the business and IT partnership needed to start at much lower levels in the organization so that the integration is not only happening at the senior-most levels.

Recommendations and Best Practices

The group then brainstormed together a set of recommendations for CIOs as best practices in closing the gap that exists on the importance of technology as a game changer for businesses.

1. Partnership:  Create strategic partnerships with the business, engage early and build the business case collaboratively
   
2. Talent:  Recruit IT leaders that have both technology and industry expertise
   
3. Market a Vision:  Good CIOs are CMOs too:  convey a vision, manage expectations and communicate the great results
   
4. Growth:  Identify opportunities where technology is the differentiator that will deliver gains and drive the business forward
   
5. Business Immersion:  Immerse in the business – spend time with customers and the colleagues who touch the customers most
   

I just finished listening to the recent press conference of Secretary of Defense, Robert Gates, on his planned restructuring and rationalization of the Department of Defense. I was struck by his description of the IT function within the Department as inefficient and the duplication of basic IT capabilities across the organization. It sounded as if every command at all levels had their own independent IT functions.

This in and of itself is not surprising in a large bureaucracy, but it does cause one to wonder who is running the show. There is an overall Department CIO and most likely many Command level CIO’s. I’m sure they all want to protect their turf but there is a more important public service responsibility to run IT in as cost effective a manor as possible using the technologies available today.

Addressing this problem requires that senior management at all levels understand two basic principles of managing IT. First, the value of IT is delivered through applications and the design, development or purchase of these applications needs to be close to and under the control of the end users. Second, the technology tools supporting these applications (data centers, servers, networks, desktops, mobile devices and most support functions) need to be managed at the enterprise level of the organization. The reason is simply that there are enormous economies of scale in acquiring and managing these resources.

One additional reality is that end user demands drive the need for IT resources and this demand needs to be controlled in two ways. First, the enterprise needs to make sure the capability being requested doesn’t already exist within the organization to avoid duplication. Second, truly new capabilities need to be justified by a strong business case.

So what does DOD need to do to get it’s hands around the issues it faces? Here are some ideas:

1. Consolidate data centers into an overall DOD network. EDS and all the major outsourcers have known for years that there is an optimal size for a data center, and all suboptimal centers should be closed and their functions transferred to the enterprise’s data centers. I’d did exactly this years ago at McGraw Hill and we generate substantial savings, though I admit it was a difficult political job. I also supported doing this in Oregon’s state government, proving the politics can be overcome if the rational is strong enough.

2. Consolidate networks which are a major IT expense and in most cases duplicative and overlapping.

3. Virtualize servers where ever possible. We all know that servers dedicated to a single application are typically underutilized and that the technology now exists for servers to support multiple applications

4. Centralize the purchase of desktops and mobile devices to gain the purchasing economies of scale.

5. Centralize all support functions into centers of excellence.

I would not be surprised if DOD could cut it’s IT cost by as much as 50% without negatively impacting service. This was exactly my experience at McGraw Hill when I was asked to rationalize the IT organization in the early 1980’s.

The principles for effectively managing IT in large organizations is not a mystery and they have been proven over and over again. Unfortunately, there have been classic failures in applying these principles, the Texas and Virginia debacles come to mind. It’s essential that leadership at all levels clearly understand they are wasting valuable resources that as Secretary Gates said can and should be redeployed to meet the organization’s primary mission, goals and objectives. Selling these principles to the organization’s leadership and then executing these principles is the primary mission of the Department’s CIO.

I would appreciate your thoughts on this blog through your comments or you can contact me direct at any of venues below.

William A. Crowell

Wcrowell@asuret.com

LinkedIn: Bill Crowell

Twitter: billcio