In this video presentation, "The 21st Century CIO" Harvey Koeppel  talks about  the “new normal” and discusses how the role of the CIO is  evolving from IT cost  center manager to business savvy CIO.

Harvey  was a featured presenter at the  conference, "From Information Systems  to Innovation Systems: Establishing the  Next Generation Information  Systems Department," hosted by Pepperdine  University, the Graziadio  School of Business and Management, and the Graziadio  Center for Applied  Research.

In 2008, I wrote an article for Computerworld describing these ten qualities of a great IT shop based on my observations during my 40 years in IT. Here is the link to the entire article Top 10 qualities of a great IT shop. My idea was to try to list the 10 items that need to be present in a great IT shop to help a person analyze a company where they were thinking about taking a job or for consultative analysis. Here is my top ten list:

1. IT Reports to the CEO (or COO)
2. An IT Steering Committee determines the company automation agenda
3. IT participates in the long-term planning process
4. IT uses an system development life cycle (SDLC) for project management
5. IT uses up-to-date hardware and software
6. IT has a commitment to IT training
7. IT has technical and management career paths
8. IT has a defined business continuity program that is regularly tested
9. IT has a high visibility system security function
10. IT regularly uses metrics and status reports to show performance

It seems to me that each company manages IT in its own way and there is no universal consensus. This is not true for other organizational roles. For example, most if not all, CFOs report to the CEO, while CIOs may report to the CEO but just as frequently report to the CFO or some other C-level executive. I believe there’s value in coming together as a group of CIOs to evolve my list to create a universal top ten list of best practices for all IT shops.

While I initially wrote the list as a way to help ITers evaluate a company that they were thinking of joining, I realized that it could also be used to critique one’s own operation.

I recently was asked to put on a seminar at a firm in California discussing these ten qualities. It was very productive and at the end of the presentation, the team discussed how to implement the ideas in their IT department. There was consensus that these ten qualities would greatly solve many of the issues facing the department.

My challenge to you is to think about my list and let me know what you think about each item and what should be added, deleted or changed, and how it has evolved since 2008. Maybe you don’t agree with me on any items.

What is on your top ten list?

Paul M. Ingevaldson

Former Sr. V.P. International and Technology, Ace Hardware Corp. (Retired)

U.S.A.

In my last position at Ace Hardware, I was responsible for all IT operations at Ace. In addition, I had responsibility for Ace’s international business with stores in over 70 countries. I previously worked at Sears and was in IT for over 40 years upon my retirement.

Top three CIO priorities for 2012

I believe that world events will have more effect on the IT department’s priorities in 2012 than any time in recent history. The major events I’m referring to are:

1. The perceived recovery of worldwide financial markets
2. The U.S. Presidential elections
3. A major cyber warfare attack

Let me discuss these developments one-by one. I believe that there will develop a consensus by mid-2012 that the worst is over and that there will be growth again in the major western economies. Once this belief begins to pervade the mindsets of corporate boards, there will be lengthy discussions on how to maximize competitive advantage and begin to utilize the hoards of cash that is sitting on balance sheets.

These growth decisions will put great pressure on IT budgets since most CIOs have been cutting costs and downsizing during the last several years. As usual, companies will have no sympathy for the plight of an understaffed IT department and will expect IT to react quickly to the demands of the business. Once again, IT’s ability to move quickly will be challenged.

This will likely result in more outsourcing, cloud solutions and ERP solutions. There will be little time to evaluate long-term impacts. Instead, the cry will be to implement as fast as possible for the good of the corporation.

I believe this trend will also spawn a dramatic increase in mergers and acquisitions. This will have an even greater impact on IT resources since IT is usually brought into the picture too late and after the timeline has been negotiated. These actions tend to cause the development agenda to be put on hold and field expedient solutions which are favored just to get the work done.

The second major trend will be the U.S. elections. Again, if businesses begin to feel that a more business-friendly administration will win and taxes may be reduced, the power of the U.S. markets will be unleashed. This will have an equal if not greater effect on IT than was mentioned above.  Combine an improving financial environment and a business-friendly Washington, D.C., we would have the beginnings of a renaissance in IT development and great pressures on IT departments to deliver innovative solutions to move their companies forward.

The third trend that will impact IT in 2012 will be outside cyber attacks. Over the past several years, we have seen a rising escalation in these incursions. So far, none have had lasting effects on countries and companies although I’m sure some attacks have not been reported due to public image concerns. On an international scale, the attack by Stuxnet on the Iranian centrifuges is a case in point. The Economist magazine had a cover story about cyber warfare in its July 3^rd 2010 issue. The U.S. now has a cyber command established in 2009 and commanded by a four star general.

I believe that there will be a major attack somewhere in the world in 2012 and this will result in placing even more attention on IT by corporate boards and management to assure protection from similar attacks. This will put pressure on CIO’s to learn more about the subject, enhance internal security measures and prepare action plans should the worst occur. It will become clear to business that this is a major vulnerability that could put their company’s very existence at risk.

Therefore, I think that it is necessary for CIO’s in 2012 to become more politically savvy and more internationally savvy in order to anticipate the development of these trends.  In addition, CIO’s should be thinking today of how to protect their firms from attack and at the same time figure out how to grow in the post-recession economy. As usual, the CIO role is ever-changing, demanding new and different skills as the world adapts to growing technology dependence.

Arun Gupta, Customer Care Associate & Group Chief Technology Officer, Shoppers Stop Limited, India

You can read more about Arun on his blog Oh I See ! (CIO Inverted)

The Center for CIO Leadership has requested CIO members and other industry experts to answer three questions regarding predictions for the CIO in 2012. Here's my approach to answering thse questions.

Like the sun goes down in the west every day, the earth goes round the sun, people make New Year resolutions and the IT industry makes predictions for the coming year. These lists offer hot technologies, CIO priorities, business priorities, technologies that will not last the year, ad infinitum. So what kind of list am I going to create ?

Every CIO already knows his/her current priorities, for the next year, and over the next 3 years (broadly) that fits in somewhere in the organization long-term strategy. These are dependent on many factors, some are (though not limited to) industry, size of the organization, geopolitical situation, global market dynamics, consumer sentiment, organization dynamics, profitability of the company … The broad collation of priorities through research conducted is generic enough to statistically fit over 80% of the CIOs globally and is available free or paid depending on whose list it is. So I will not pursue this line.

Different matrixes once again based on widespread research and opinions will tout waves, quadrants, hype curves, scatter charts, bubble charts and so on about disruptive technologies that would matter in the future. Stay with the bleeding edge or lose competitive advantage is the mantra. Some remain emerging technologies for decades like a solution searching for a problem to solve, while many remain niche or never get out of the lab to be adopted in mainstream business. I do not believe I understand enough about these esoteric technologies to offer predictions.

Having been a CIO or equivalent for more than decade and half across 7 different industries, I think I do understand the CIO travails and tribulations. To me every industry brought new opportunities for learning as well as new paradigms on how existing or new technology can be used. Every slowdown or black swan provided a platform to introspect on successes and lack of some. The next decade and half will bring disruptions unimaginable today. So here is my list for 2012 and beyond; can’t predict that all of these will be applicable to everyone, but statistically over the year you will find some connect.

1. CIOs globally will continue to be challenged on operating budgets. Capital investments will become relatively easier; operating expenses will need to be controlled very tightly.
2. BITA (Business IT Alignment) will fall off the priority list for many as it will no longer be an issue. Business will acknowledge IT contribution and will work with IT to plan business goals. There will be no separate IT goals.
3. Attrition will not be the problem, retention will be; with economic and political uncertainty, staff will hang on to their respective jobs. CIOs will have to take some hard decisions.
4. Clouds will be the first choice for deploying apps for the mobile workforce. The rest will continue to access applications behind the firewall. Hybrid clouds will remain experimental as CIOs figure out that it really does not save money. CIOs will no longer build data centers.
5. Lead by Consumerization, mobile devices will be out of IT control (for good) and the personal device will find a way to get inside; resisting CIOs will have to provide equivalent additional device, which eventually the Business will turn down. Managing multiple screens will become a pain for the Executive who will challenge IT to make it simpler. The phone as a corporate device will thus be replaced by the tablet over the next 2 years.
6. CIOs will or be forced to challenge the cost of sustaining big ERP (licenses, support, etc.) as it keeps growing; alternate support vendors will gain market share. Usage will shift out from the office to using marketplace supplied micro-apps thereby challenging the existence of big ERP in 5 years.
7. Social media fatigue will set in and even marketing teams will be asked to create ROI for expenses and investments on such initiatives. CIOs will need to manage expectations around social analytics while Consultants will thrive with maturity models and make loads of money.
8. The CIO will continue to be tasked with managing information security with the CISO reporting into him/her. A few cloud bursts (cloud security breaches) will make matters worse before things settle down over 2013 and beyond.
9. Big Data will remain high on hype with vendors pushing and CIOs scratching their heads if it really gives the benefits promised.
10. Custom development of solutions will wane with ocean of micro-apps promising to enable business processes as effectively. At the same time appliances will replace generic hardware.
11. Many CIOs and research analysts will not agree many with the above points.

I could have gone on and on but will stop now. I thought 11 is good for now; why 11 and not 10 ? According to Hindu scriptures it is an auspicious number and if you don’t believe in such things, then I would ask why 10 ? I know Moses had something to do with it !

IT Risk is present in most organizations and companies.  IT Risk is a "derivative risk": when an IT incident occurs, it will affect "main risks", such as continuity risk, confidentiality/privacy risk and reliability risk.  CIO's and IT directors tend to focus on technology.  However, most of the time, people and the lack of a proper IT risk framework are causing the major weaknesses and highest IT risks.

Organizations should start with identifying the (IT-) risks, define a risk-appetite and design appropriate measures to mitigate the risks.  New technologies emerge and the CIO should check whether they fit into the risk-appetite of the organization.  If not: new risk mitigating measures must be implemented, or the use of the new technology has to be postponed or cancelled.  The use of new technology can reduce operational costs and create a competitive advantage.  New technology has a cost itself and costs to reduce the IT risk related to the new technology.  A business case must support the implementation and use of any new technology.  Examples of new "hot" technologies are the Cloud and the iPad.

All participants of the roundtable agreed on two points:

- IT risk is not only for IT-people: it is a multi-discipline subject. E.g. IBM has an IT-risk committee (with all CxO's and representatives from operational departments);

- People are the weakest part in the "IT-risk/security"-chain.

Some measures which are proposed to manage the "human risk" are the use of social media (to engage and educate employees) and the certification of employees.  One participant suggested to link architects and security specialists together.

The roundtable agreed on the fact that there is a positive correlation between IT Complexity and IT Risk: the higher the complexity, the higher the risk.  So, reducing IT complexity reduces also IT Risk.  Architects can play an important role in reducing complexity.

Bigger companies should also think about cyber warfare departments.  Hacker communities are attacking companies when they don't agree with the company policies (e.g. credit card companies were attacked when they refused to accept Wikileaks payments).

I think the discussion was quite valuable.... for larger organizations.  Smaller businesses cannot afford risk-committees: they must rely on the quality of technology suppliers and IT-service suppliers.  In the Netherlands we had a very large scale security issue where a company, Diginotar, which supplied security certificates, was hacked - by hackers from Iran.  All websites from the Dutch government used those certificates.  Even Microsoft was affected.  A lot of websites had to close down for days and Diginotar went bankrupt within two weeks... (http://www.pcworld.com/businesscenter/article/239639/dutch_government_struggles_to_deal_with_diginotar_hack.html).

How can an organization avoid the use of non-secure certificates?  The security of Diginotar itself was a mess... Is certification of companies and people a solution?

The major question of the roundtable was whether IT Risk could be turned into a competitive advantage.  I think it cannot.  It will be a competitive disadvantage when the risk mitigating measures are not in place when an incident occurs. In that case a company can go bankrupt (and the owners are in a position get sued as well...).  Companies must be able to trust "IT- security" suppliers and they should define their own IT-Risk appetite with risk mitigating measures (with an allocated budget).

A "general" security/IT-Risk baseline (generally accepted by the market) could be of great help, especially to small- and mid-sized companies.

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?

Having implemented analytics myself as CIO in a $1.4b manufacturing organization, the topic is of interest to me. Presenting analytics to transform insights into action for an organization are one of the benefits of having a high performance Information Technology team that is well connected to the business.

From my experience, there are three key elements to successfully implementing analytics. 

1) FOUNDATION - The organization must have a reliable IT solution in place that is delivering on the basics of uptime and meeting the fundamental needs of the business first.  This is critical to having the credibility to drive change and the resources to add higher-level value.  The basics must be in place first.

2) START THE ANALYTICS WORK AT THE TOP – Partner with the executive committee, CEO, CFO, or the highest level executive you can to find and identify a handful of analytics that the management team wants to be publicly known by the workforce at large.  Example: Continuous Improvement goals and attainment levels, quarterly revenue budgets and attainment, new account wins by customer segment.  Pick just a few that will become the cornerstone of the analytic reporting infrastructure.  I would recommend these early picks are easily implemented and are used to accomplish the management goals of focusing the organization on some of the top goals and issues in the company while building the infrastructure to deliver analytics and gaining momentum on the analytic program.

3) DELIVER AND TEST FOR USAGE – Once the early analytic targets are set it is absolutely critical that the goods are delivered and you test for usage.  In one of my early deployments of analytics, we delivered manufacturing performance data (uptimes, quality #’s, etc.) through a screen saver app to every desktop in a $1b engine manufacturing organization.  We had the infrastructure in place to deliver accurate analytic numbers, the information being served to the 3000 employees were the metrics selected by top management for publication, and everyone in the organization used the tool.  People would talk about the metrics and we all stayed very focused on the key events affecting our performance. 

After getting the first install in place, it is a matter of repeating the discovery / implement phase at the top and then proliferating this analytic capability further down in the organization.  In another installation, we developed enough choice that users would have a business intelligence home page on the intranet and the ability to select the analytics that were important to them and that they had access to.  The biggest difficulties to implementation were not around delivery of the analytic information but the exposure of flawed infrastructure or data that became evident as analytics were being developed.  While this slowed implementation of some metrics, it became a positive side effect of the program to expose these issues and resolve them.  An example was the different methods our manufacturing organizations used to calculate uptimes.  Some included planned downtime and some did not in their uptime numbers.  The publication of analytics highlighted the disconnect and forced our team to get on the same page.

A company with analytic systems in place is a sign of a company with a solid IT solution well connected to the business strategy and that the business leaders understand what to measure as important to their company’s future.

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Steve Holt is a large enterprise Chief Information Officer whose mission is to lead Information Technology teams to be the IT provider of choice for the organizations they serve through business alignment and efficient delivery of information services.  With 24 years experience as an Information Technology executive who “gets business”, he most recently worked as a CIO for Accuride Corporation ($1.4b). Many of his colleagues from Accuride including two former CEO’s, SVP’s, and GM’s have strongly endorsed his work. In addition to leading IT as CIO, he has had responsibility for corporate strategy development, continuous improvement, new product technology business development, and P&L leadership for three business units.

Steve Holt

www.stevenholt.net

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