How to build a business – to be or not to be a CIO

Many of my partners are CIOs, and so are many of our clients. I have attended loads of conferences and CIO Days, and the last few years my company has participated as a juror in the CIO of the Year Awards. And although CIO conferences and platforms tend to waste at least some of their time together on the position of the CIO (“Should the CIO be in the Board, or can he be successful when reporting to the CIO, too?”), there were also many occasions where we could discuss the role and the agenda of the CIO, and – maybe more interesting – the profile and attitude of the CIO. I have met some extremely capable and interesting people in this network, and came across a remarkable diversity of backgrounds, motivations, and views on the role of the CIO.

This week I was approached with the question whether I wanted to be candidate for a CIO role for a large multinational company. I have held this position before at Reliant Energy, at a Multinational Manufacturing company and at a large Commodity Trading company. The question made me think about what it would take to be successful in such a role, at what would be on my plate this time, and especially about the motivation to say yes or no.

The Why

What drives a CIO? In many cases the CIO can play a role that looks a lot like the tightrope walker’s balancing act. He is right between strategy and execution, between Technology and Operation, between Data and Intelligence, between Clients, Internal stakeholders and his own team of experts.

It is not the best paid of the C-level jobs, it does not come with the decorations and respect of the Executive role, and it can be a risky position, too. The change a CIO is fired is considerably higher (43%), than that he is promoted (10%), according to research published by Hence: CIO equals Career Is Over. So external motivators like money, respect and security are not the ones to look at. The best people have a drive caused by intrinsic motivators such as Autonomy, Mastery, Making a contribution, Connecting to Peers. Successful CIOs can can set their own goals and decide on the way they will reach them. They will take responsibility for their own success and their own failures. And are able to set their expertise on processes and technology to work for the greater good of the company and it’s customers.

Creating value for the client, as well as for the clients’ customer is a key ingredient to an interim CIO. Let’s not talk about business-IT alignment. Let’s instead start with convergence, or even better: Customer Centered Convergence. Of course creating value for customers is the focus and responsibility of an entire organization, not just for sales and services units. The supply chain processes, not directly visible are an integral part of the strategy, and in these processes, as in all other processes, information and technology will be involved. In many businesses the client-touching processes, the supply chain processes and the back office processes require a convergence of business, information and technology. That is what makes the CIO role one of the most interesting ones. That is where he can make a difference, and that is why the balancing act is so much fun.

If I could be a CIO in a company that understands that the reasons for combining Strategy and Execution, Technology and Operations are all based on customers’ needs. And you can only serve your customers effectively if the vision, the operation and the technology are integrated from beginning to end into a company that moves beyond the individuals, and beyond their silo’s.

Now more than ever before the companies that have done this are successful, and the themes on the agenda are of the sort that make the CIO role the most interesting one of all the Chiefs. Who can afford not to think about Customer Centric Convergence, or Mobility Solutions, or about Data, Analytics and Business Intelligence, not to mention Outsourcing, Cloudsourcing, Cloudcomputing?

The What

Now what are the are the focus areas and the mandates of the CIO? I have not come across a better and more balanced description than the one given by Faisal Hoque and Tom Trainer, Global CIO of PepsiCo, and Information Week’s “CIO of the Year” as well as CIO magazine’s “Quintessential CIO” , in “Winning the Three-Legged Race.

Business Technology Management Framework

Their views are reflected in a collection of dimensions and capabilities that quite accurately describe all those areas the CIO has to focus on.

The four dimensions are pretty straightforward:

1. Processes: a set of robust, flexible and repeatable processes, defined and consistently optimized to ensure:

  • General quality of business practice—Doing the right things
  • Efficiency—Doing things quickly with little redundancy
  • Effectiveness—Doing things well.

2. Organization: an appropriate organizational structure based on clear understanding of roles, responsibilities, and decision rights, including

  • Participative bodies—involving senior-level business and technology participants on a part-time basis
  • Centralized bodies—requiring specialized, dedicated technology staff, for instance for Enterprise Architecture and Portfolio Management
  • Needs-based bodies—involving rotational assignments, created to deal with particular efforts, such as projects

3. Information: Data must be available, relevant, accurate, and reliable. Metrics distill raw data into useful information, for instance for decision-making. Information should be distributed across all layers of the process, from client, through the organization to the partners and suppliers.

4. Technology: Effective technology can help connect all the other dimensions. Appropriate technology helps make processes easier to execute, facilitates timely information sharing with and about customers, and enables consistent coordination within the organization.

Four capabilities

1. Strategy, planning, and management, to establish a joint business-technology agenda. Capabilities such as Business Technology Strategy, Strategic Planning & Budgeting, Strategic Sourcing & Vendor Management, and Consolidation & Standardization can drive toward innovation, agility or resilience in specific areas .

2. Technology investment, or
 Investment Management: Defines business and technology management roles in making decisions on assets and value rationalization. Capabilities such as Portfolio & Program Management, Approval & Prioritization, Project Analysis & Design, and Resource & Demand Management can create a performance-driven decision matrix for resource allocation.

3. Strategic enterprise architecture. Provides end-to-end enterprise visibility. Capabilities such as Business Architecture, Technology Architecture, Business Technology Standards, Application Portfolio Management, and Asset Rationalization drive the execution of a converged business model with an actionable enterprise blueprint. It shows the connection points between business processes and technology.

4. Governance and organization. 
 Establishes what decisions should be made, the people responsible for making them, and the process used to decide. The enterprise should seek a set of networked governance capabilities. Capabilities such as Strategic & Tactical Governance, Organization Design & Change Management, and Communication Strategy & Management underpin the success of critical networked governance models:

  • Visioning networks that create and articulate a strategic vision
  • Innovation networks that foster collaboration to conceptualize and implement new business models
  • Sourcing networks that enable multi-sourcing arrangements, joint ventures and strategic alliances

How the organization sees the role of the CIO, and which capabilities deserve more time and attention is key in establishing the CIO mandate, according to a report from IBM entitled “The Essential CIO: Insights from the Global Chief Information Officer Study,”.

In the Leverage Mandate, the organization demands high-performance IT and the CIOs focus on managing essential IT activities and getting information to decision makers faster and more accurately. The business expects CIOs operating with the Leverage mandate to concentrate about half of their efforts on the fundamentals of delivering IT services.

Internal collaboration and client interaction are among the principal goals of Leverage mandate CIOs.

CIOs focused on cross-enterprise growth continuously tune business processes and internal collaboration to gain tighter integration. Like allCIOs, those working with an Expand mandate are responsible for the fundamentals—a well-run ICT infrastructure that offers data security, integrity and system availability. Yet, they must also continually refine operations to optimize efficiency and seek competitive advantage with the help of IT. Still the focus is mainly on internal processes and better decision-making.

CIOs looking beyond the boundaries of the enterprise to simplify business processes and generate real-time insights up and down the value chain, might be operating with a Transform mandate and are expected to be a provider of industry-wide solutions to support business. Transform mandate CIOs are leading efforts to simplify both internal and external processes for clients and partners alike.

With a Pioneer mandate, CIOs are seen as critical enablers of the organization’s vision and typically spend less than one-quarter of their time or budget on delivering fundamental IT services or business process efficiency. CIOs exhibit an entrepreneurial spirit and enable the radical redesign of products, markets and business models. This group of CIOs ranked product- or service profitability analysis their top priority for turning data into usable intelligence. And they cited adding new sources of revenue as the highest impact of IT on their organizations

The How

I always believed that you cannot manage people. People need leadership. Still good leaders – and definitely great IT leaders – are Executives (and that implies they have political sensitivity and timing), adept at interaction with people (including other executives), and at managing projects, financials, and contracts.

If we are to do the right thing and do the thing right, we need to interact with all stakeholders (Shape Demand), set reasonable expectations, deliver on what we promise and Lead our own team, while building and maintaining relationships with peers, clients and partners.

On the one hand there are the Leadership skills, that enable the CIO to Execute Strategies through sharing a vision, inspiring by example, connecting, generating real traction, showing and generating interest, maintaining momentum and measuring and celebrating success, while on the other hand he needs to have a set of capabilities that need continuous adaptation to a changing world. At the moment understanding the importance of a Enterprise Architecture, with a lot of decentral decisions and responsibilities is crucial, combined with contract management as a core competency. More and more services are provided by outsourced developers, software and hardware vendors, consultants, and other third-party IT service providers, and not always to a central IT department. The CIO coaches more than he prescribes, supports more than he delivers, and enjoys the interaction more than the transaction. The Demand-Supply model is dead.

The most important trends, according to Forrester:

  • From alignment to convergence. To succeed, the CIO will have to converge with the business and not think of IT as a separate discipline but infuse technology in business decisions.
  • From execution to innovation. Drive innovation and boost business-partner relationships.
  • From technology supplier to services orchestrator. . The new CIO will not just supply technology but will be responsible for sourcing technology solutions and developing services for business.
  • From operations to business outcomes. Today many CIOs are being measured on revenue growth, customer intimacy, and their contribution to innovation. This focus on business outcomes ensures the CIO is focused on business priorities.
  • From rules to guardrails. For many, this will be a radical change — from layered technology management to new rules for ownership, accountability, and responsibility.

The more I think about it, the more I am convinced that the CIO role is the most interesting one in a company, even if it is your last job at that company. That is why we went independent isn’t it… so we could not be promoted or fired.

11 Responses to How to build a business – to be or not to be a CIO

  1. Why does your car dealer not ask you to draw the specifications of your new car on a piece of blank paper.. ? because nobody is able to specify their ‘demand’ in sufficient detail, nor do consumers have the gift to design beautiful and safe cars. Car companies build cars that sell, and if they don’t they will go back to the drawing board.
    The idea that somebody formulates ‘demand’ and somebody else organises ‘supply’, was never going to work. It just helped getting IT reorganised and prepared infrastructure departments for outsourcing. It also created a sub-industry of service-level-watchers.
    Given the state of the IT services industry, outsourcing performance is not consistent, and often below the mark. A CIO will be successful not if the service levels are met, but if relevant business performance and innovation are obtained at a competitive cost.
    Leadership of a CIO extends beyond the boundaries of the company he or she works in ensuring motivation and dedication from all involved parties.

    • Thanks for your comments Paul. I agree. Although I would not consider my car dealer as a partner. But then, most suppliers are not partners.
      Demand-Supply thinking probably came with the outsourcing industry, who had an interest in defining (scope) and limiting (responsibilities and risks), much less in innovation, let alone business performance.

  2. Interesting comments by Casey Hall (on LinkedIn):
    Your article is intriguing. Given the statistics on CIO firings (and all the anecdotes we hear!), the IBM categories of Leverage, Expand, Transform, & Pioneer seem to leave out the one that frustrated CEOs want the most: “Just Fix Things” (aka Remediate). Now, I think it would be easy to say that a remediation should target one of the 4 categories. But, what it means is that a new CIO likely requires a broad competency in building and rebuilding things. Even if they can get a solid alignment on which of the 4 goals is the near term fit, they have to make progress quick enough to survive long enough to reach the promised land. It’s definitely a challenging role but rewarding when done well.

    • Making things work is essential. In a demand-supply model this means meeting service level targets, sadly enough meeting service level targets is almost never a guarantee for end user satisfaction. Service level agreements are often a ‘advisor inspired system of measurements that allow the inhouse IT dept to prove that it is not their fault’. Multi sourcing also helps to pass the blame around. The CIO in a remedial mode, needs to take firm grip and cannot escape full responsibility for performance

      • Thanks Paul. Sometime soon we need to bring out the real stories about “advisor inspired measurements”, outsourcing and multisourcing. Are you aware of any genuine success stories that can be shared?

  3. Cesar Castelli says:

    I loved the idea of custumer centric IT
    It with the mission of creating value for its customers or the clients of our custumers

  4. yes, there are some success stories and I think they all break the chain between consumer – business – internal it- supplier.

  5. organization…

    […]How to build a business – to be or not to be a CIO « Wouter Hasekamp’s Qhuba Blog[…]…

  6. […] Technology Integration: Making money with technology. CIO’s need to be much greater strategic partners for the businesses they support Business Model […]

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