You thought you knew what business-IT alignment was. But fighting the dark forces of recession has really taught the lesson.
To some of you, anyway.
At a truly aligned company, all cylinders firing, every executive, every manager, every employee works on one goal: winning customers. In the past, CIOs saw their role as, say, installing business intelligence tools so that the marketing group could analyze customer data.
Or upgrading enterprise resource planning software for the supply chain guys to improve order fulfillment. Vital work, of course, but inwardly focused and a few steps removed from living, breathing, money-spending customers.
But now, we find in our 2010 State of the CIO survey, top technology executives increasingly see bringing home the bacon as their job, too.
This year, nearly one third – 30 per cent – of the 594 IT leaders we polled say meeting or beating business goals is a personal leadership competency critically needed by their organizations, up significantly from the 18 per cent who said so last year. Eighteen per cent also named “external customer focus” as a critical skill, double last year’s 9 per cent. Double.
Good design for bad economic times
Meanwhile, 22 per cent cited “identifying and seizing on commercial opportunities” – more than triple last year’s 6 per cent. Yes, triple.
It’s clear the recession has deepened CIOs’ understanding of and commitment to business beyond IT.
CIOs are interacting with customers directly and working side by side with product engineers to build IT into new goods and services. It isn’t every CIO, nor even most of you, but it’s the way the profession is going, says Chris Potts, corporate strategist at Dominic Barrow, a consulting firm in London.
Shifting attention to outside the company will kill the CIO job as we know it, Potts says. “The CIO role is going away from worrying about IT specifically,” Potts says. “It can’t happen too soon.”
Focus on the Top Line
While aligning IT initiatives with business goals continues to be the most frequently cited CIO activity in our survey, fewer CIOs than in previous years place it among the activities taking up most of their time: 64 per cent, down from 71 per cent last year and 82 per cent two years ago.
Hilton Sturisky, SVP for information and communciation technology with the $14 billion BCD Travel, thinks that’s because progressive CIOs have made such headway in the past few years that they can turn attention elsewhere.
And to where? To customers.
For several years, we’ve asked CIOs which leadership traits are critical to their personal and company success. Although each year some have said it’s important to understand customers and drive revenue, not many CIOs actually made that a priority.
That’s changing. It had to. Corporate anxiety about the economy created an atmosphere in which if what you’re doing isn’t generating revenue, you need to stop it right now.
About two-thirds of CIOs, or 62 per cent, have canceled or postponed projects during the past year as a result of unfavorable economic conditions, according to the survey. The projects they have focused on are those that can enhance their company’s products and spur sales. (For a complete look at the survey results, see “All That Data”).
“In so many of the products offered now, the differentiating component is the IT capability,” says Drew Martin, CIO of Sony Electronics.
Certain Sony TVs, for example, can stream movies wirelessly, one of several products and features that Sony’s IT group itself helped make possible. CIOs should get their IT departments involved in product development-if IT can truly step up. “You have to have an awareness of where your business is trying to go,” he says.
“Then you have to make sure you have the capability to support that.”
At Konica Minolta USA, the IT group also influences what the company sells, says Nelson Lin, CIO of the U.S. unit that is part of the $9.7 billion Konica Minolta Holdings in Japan.
For example, Konica Minolta printers, measurement devices and medical tools contain enough computer technology that when they break or get replaced, customers must dispose of them carefully to avoid environmental hazards. Who has been dealing with that very issue since the dawn of the PC era two decades ago? The CIO.
Lin saw end-of-life equipment disposal as a service customers would pay for. Lin and other senior executives view Konica Minolta as an advanced technology company and through that prism, he says, the CIO’s input becomes even more valuable.
He stepped up to lead discussion of equipment disposal as a money-maker. “I’m doing it for our own e-waste already. It’s now a matter of doing this large scale,” he says. “It’s the right thing to do, everyone knows. But it could be revenue for us, too.”
Technology priorities reflect this commercial shift, amplified by the recession.
For example, among the projects CIOs canceled or postponed in the past year, most were infrastructure upgrades (39 per cent), followed by enterprise software rollouts (31 per cent), unified communications (21 per cent) and network upgrades (20 per cent). Projects that did get funded, on the other hand, included those that improved end-user productivity (63 per cent), improved the quality of products (53 per cent) or helped create new offerings (39 per cent).
No doubt the urgent, “all hands on deck” atmosphere triggered some of this shift. But it also comes in part from the evolution of different types of CIOs, our survey finds.
The numbers are equalizing among three kinds of CIOs: those focused on IT operations-“keep the lights on” types-those who specialize in large-scale company transformation and those who, removed from the daily fray of running IT, help to set corporate strategy. Last year a clear majority of respondents-52 per cent-fell into the transformational category.
Thirty per cent were operations-oriented and just 18 per cent were strategists. This year, the proportion of transformational CIOs dropped to 45 per cent and the other two categories grew: operations-focused IT leaders count for 34 per cent and strategists for 21 per cent.
While there are still significant differences in how these different types of IT leaders spend their time, the data suggests all CIOs may be shifting toward a more business-focused role. For example, more operational CIOs appear to have divested themselves of one day-to-day responsibility-that of managing security. With only 13 per cent citing security as a major activity (compared to 18 per cent last year), they’re on a par with transformational CIOs.
A handful more operations-focused CIOs are also spending time on leading change efforts, a core activity for transformational leaders. Meanwhile, the per centage of transformational CIOs involved with identifying opportunities for competitive differentiation-a focus for the majority of strategists-grew from 20 per cent last year to 24 per cent today.
Such evolution comes naturally to CIOs with diverse backgrounds. For example, Denise Coyne, CIO of Chevron’s corporate departments and services companies, was previously CIO of the oil and gas giant’s marketing group as well as manager of 200 Chevron gas stations.
She would go to conventions to talk up the company’s point of sale system with gas station operators. “I found out what they wanted,” she says. Her MBA and nine years in marketing have shaped how she approaches IT, she says, assessing projects from finance and business perspectives, for example.
Patti Reilly White has been with Darden Restaurants (DRI) for 20 years, 10 of them as CIO. IT has “always” been customer-focused at Darden, she insists, but the past two years have been particularly intense.
Projects in development include a system to text customers when their tables are ready, doing away with the flashing-light buzzers restaurant greeters now hand out to waiting diners. “What our guests want is for us to value their time and personalize the experience for them. We in IT try to find ways to do that,” Reilly White says.
Some CIOs even run businesses themselves. In addition to overseeing internal IT for the $3.6 billion Nasdaq OMX Group (NDAQ), EVP and CIO Anna Ewing runs Market Technology, a division that sells Nasdaq’s technology to financial exchanges around the world. The unit brought in $359 million in contracts in 2008, for everything from advisory services (helping customers set up various kinds of exchanges) to trading, clearing and post-trade systems.
Before coming to Nasdaq in 2000, Ewing didn’t have profit-and-loss responsibility in her previous positions at CIBC (CM) World Markets or at Merrill Lynch. But at those companies, she chose a commercial direction as much as she could: at CIBC, she was a founding member of the financial services company’s e-commerce site. Among several positions at Merrill, she led client technology. She was named Nasdaq’s CIO in 2005.
At Nasdaq, Ewing and her team recently launched a free iPhone application for checking stock quotes as a way to experiment with hot new consumer technology and seed the ground for some revenue-generating app in the future.
The app debuted on a Friday.
By Tuesday, without advertising, the stock-checker was the fifth most downloaded free financial app at Apple’s site. “We wanted to see if the appetite was there,” Ewing says. “It is.” A CIO’s ability to spot new business opportunities comes from thinking like a CEO, she says. “Product development and technology go hand-in-hand.”
Think Like the Customer
Still, most CIOs have no P&L duties. According to our survey, just 9 per cent head up a line of business. And although we see impressive jumps in the numbers of IT leaders concentrating on customers, the majority of respondents still don’t spend their time with any. That’s a mistake, says Bill Deam, CIO of Quintiles Transnational, a $2.7 billion medical research company.
Starting in 2007, most of Quintiles’ top executives, including the COO, the head of corporate development and Deam himself, were assigned one key customer account. Deam says he tries to cultivate good relations with senior managers at his assignment, a $15 billion biotech and pharmaceuticals firm. Quintiles helps the biotech firm conduct clinical trials for medicines in development. Deam reviews the account with an executive at the customer company every Friday and visits every six months.
He hopes his efforts not only produce closer ties but also more business between the two companies. But that takes time.
“They want to make sure that all the work we do for them is performed excellently, without issues,” Deam says. “Then we can go to the next phase of the relationship.” He sees his role as that of an advocate for the customer within Quintiles, asking a lot of questions.