A good, strong relationship between a CEO and CIO is not only a nice thing to have, it is essential to doing business and remaining competitive, according to participants at our EDGE magazine roundtable.
Business Technologies Manager, Schneider Electric
Peter Gustavson, CEO,
Custom House Global Foreign Exchange
CIO, Custom House
Jacques van Campen,
Director, Victoria Operations, Schneider Electric
EDGE: For CEOs, how has your relationship with your CIOs evolved?
PURA: When we started, we didn’t have distinctions like CEOs and CIOs. We had a chief cook and bottlewasher, and if we had to do things like laying a carpet in the new office, we did that too. Now I think that is one of the best things that we could have had because one of the things we see happening in the industry is less compartmentalization all the time. The CIO is not the member of the team with a thick set of glasses on and sitting in a separate room. He or she is as just as much or more a member of the executive team in that their decisions will affect not just what your company does but what it will be capable of doing. I would say the CIO has to be a member of the executive team and as involved in business decisions as much as the CEO, the COO or the CFO.
GUSTAVSON: When we started the business, we had hired some fairly junior programmers and as soon as they were finished, we were going to fire them. But they are still here today. We were falling behind in our technology and I could see we weren’t processing transactions fast enough. I asked a friend what should I do? He said, “What you really need is a CIO, somebody with the skill sets to take your business plans, look at them and ask what kind of infrastructure do you need.” It was a great move bringing (Eugene) on and he sits on the executive at the highest level and he has been a significant if not the biggest contributor to our success so far.
VAN CAMPEN: Power Measurement was originally a homegrown company with about 300 professionals in the Victoria area which last year was acquired by Schneider Electric with 91,000 people worldwide so, as you can appreciate, that has really changed the landscape for myself and Jordan substantially. In the early days, you did whatever job came to you. Over time, the roles become more structured in nature and more silo-ed. The IT department was actually classed as a corporate service underneath the finance group, but a year ago, IT became a part of the operations side of the business. For me, the job is to make sure that IT is integrated, and that first and foremost, we have business managers in that department. That is for me what Jordan represents, that they understand the business and apply that business knowledge to their area of responsibility.
EDGE: As CIOs, how would you describe your relationship with your CEO?
NIZKER: I absolutely agree that the CIO is a very important part of the senior executive team. And one of the things I have been saying is ‘You know guys, if you still need to convince your CEO that you need to be at this level, then you should update your resumes because your company won’t be around that long anyways.’ If business leaders don’t understand the place of technology today, your company is doomed.
DAGG: I do agree that be a business manager first and then technology can fit in from there. I come from both an IT and operations background and I was able to bring that in the IT fold. I am now in on all the management meetings, and the process meetings. All of our business decisions aren’t really made by one person or by one IT person who says ‘we have the best technology, where can we fit that into the process?’ ‘No, it’s we have a very good process and where can we fit the IT in.’ Obviously you need a very good foundation when you grow as quickly as we did.
EDGE: A good relationship at the CEO/CIO level is one thing, how do you extend this into the business units?
PURA: We are in an era of transition where everything you are doing on paper is simply being transcribed onto the computer. You would have an adversarial relationship because the IT department wanted more money to do it faster and the rest of the company would say what do we need that for. You get the spirit of co-operation today because the problems are different. It’s not just about how to do it faster, it’s also about how to do it differently. I think what a lot of people don’t do on either side is a cost-benefit even if it is a simple mental calculation. A lot of people seem to instinctively avoid that but it helps to lay it out, and when you do that, most people will agree.
VAN CAMPEN: I think shared goals are incredibly important and the common language we used for shared goals is profitability and the organization. Some people are working in a technology space, some in a manufacturing space, some in a services space and some in a customer space. But if you can get everybody to talk about in terms of the economics be that in ROI, be that in value-added, and so that everybody understands these tools, then they have the lens to look through so they can see if that initiative or idea will stand up to the scrutiny of the executive board.
GUSTAVSON: My advice to you is that your job is not only to manage the IT department, it is also to be a great communicator to the operations side of the business. The operations side has certain goals and aspirations they want to achieve and you can be the great enabler. So you understand the direction they are going, the timetables. I see this as a critical part of going forward.
DAGG: I went from a position when I first started with the company from a service technical role to one in manufacturing and automation. When I was in the services role, I was very involved with the business process. But when I went to manufacturing, a lot of people didn’t see the types of business processes that we were putting together. Going from one environment to another environment, I was able to understand why this would be a poor decision. Instead, I gave them more background, here are the alternatives, this is the technology we chose and this is why we felt this was the best decision to make. Now you’ve got buy-in with the people who actually have to use the technology
NIZKER: That’s why one of the first things we established was IT governance, a steering committee with all senior executives participating in it. When it comes to making strategic IT decisions, and the shuffling of IT projects in our portfolio, that is the committee that makes the decisions. It is not IT that prioritizes and it is not IT that pushes its own agenda. It is also very important for this committee to see that the demand for IT resources comes from so many different angles.
EDGE: As CIOs, do you have metrics in place that you can measure the service you provide to your business end-users?
NIZKER: I am hesitant to talk about it because I am quite skeptical when it comes to IT metrics. There are lots of metrics around, we know that, but are they applicable especially when your organizations is so dynamic and nimble. Therefore we use a few, what I would say, are subjective measures. We poll our end-users from time to time, we listen to their complaints, we log their complaints, but I wouldn’t say we are very formal in this way. I’ve been in IT since 1975 and I have seen a few generations of metrics and all of them have failed one after another.
DAGG: I’ve struggled with metrics and what to put out there, not because there are no good metrics to use, but the struggle is that if you are going to go with metrics, that is the goal for the business because those people will concentrate on that metric. You need to put a lot of thought into those metrics and it is not just server uptime. I agree that the CEO is going to want metrics, you have to have some way of measuring a department. I do agree that something needs to be in place but I think it has to be right for your organization, and it has to make sense to your people, or they will lose sight of the business.
EDGE: As CEOs, how do you hold your CIOs accountable to these standards?
GUSTAVSON: It’s probably one of the hardest things for a non-IT person to do is to measure the effectiveness of their IT department and their IT investment. And it is a constant challenge. We set a strategic direction, and write business plans, and milestones are set within that but we are quite entrepreneurial and it’s very dynamic, so to say that you are rewarding some milestone that was set way back in January when it is now June. What we try to do now, and this is an initiative that Eugene is involved in, is get some outside expertise and just ask the question, are we being effective and efficient with our IT? These are very general questions, almost like a peer review, and that gives us a comfort level, that as CEOs, things are being done effectively. It’s scary, We have a $12 million IT budget and so, should it be $2 million or should it be $20 million?We don’t know.
PURA: One of the dangers of metrics, and we saw this at Abe, is that not everyone does the same job in the same way. Some people would turn out a program in a day, some would turn it out in a week, but which was better quality? You can’t just use it as a form of measure, you have to use judgement to balance the two.
VAN CAMPEN: I’m fascinated by the fact that the IT managers here don’t want metrics but I agree. Sometimes, they are an end unto themselves rather than a means to an end. The further away you are from senior management, the more you can be driven by metrics, and your decisions can be driven by ‘I have got to get 95 per cent.’ And they are actually defeating the business rather than supporting it. In the generic, metrics should really be seen as a way of checking your business, they should not be an end unto itself.
EDGE: Some CIOs are so busy dealing with technology issues that they may not have the time to deal with business strategy or end-users. What do you say to them?
DAGG: You should be able to measure those things fairly easily whether it’s network downtime or calls to the help desk. But I believe it’s the customer that is going to determine which metric you should look at. The foundation of basic metrics is that you should be able to show ‘Yes, we have been very good in all these categories. But I also think you need to look at the business side of things that says, where are we successful and are we getting the projects out on time and the proper product to the right department. Then go back after the fact and make sure about customer satisfaction.
NIZKER: You have to make sure first that the infrastructure is very solid. As you put more bricks onto it, it is going to fail anyways. But you have to make a separate decision about how many nines you want, because every time you add a nine, your cost goes up very quickly. But yes, customer satisfaction is the ultimate metric that we all use.
EDGE: How much does the CEO really need to know about IT given technology is obsolete so fast and can change so quickly?
VAN CAMPEN: If I can change the question a little bit, what happens when the world throws you a curve ball? You have to react to it of course so build me a road map that sets me a direction but acknowledges that things could change. You still have to establish a general direction but also so when the world changes, you can react to it. The second thing is how much does the CEO need to understand the CIO, and obviously, the CEO is a busy person who has many different functions. It has to be communicated in the language of the CEO and I would suggest to you to use economic terms.
GUSTAVSON: What I’ve learned over the years is to try to give to the CIO as much as is possible the information that I have about potential changes to the road map or potential opportunities that we might have to exploit rapidly. I could be meeting with somebody in Thailand and suddenly realize we are going to have to translate a trading program. So I e-mail to Eugene and ask if this is going to be difficult. That’s the sort of good communication that a CEO and CIO must have.