The Rise Of 'Rent-A-CIOs'

Oct 7, 2002

David Haskin

A chief information officer (CIO) is an essential member of the executive team of virtually all Fortune 100 companies. For companies that count their revenues in the tens of millions or less, a CIO typically is an unattainable luxury.

But what if your company falls somewhere in between? When -- and how -- do you add a CIO to your leadership team?

"It depends how important strategic information technology is to your company and the industry you're in," said Tom Evans, managing partner and CEO of Tatum CIO, which provides a unique approach to helping emerging companies solve the CIO conundrum.

"If yours is, say, a service business and you need a new billing system (to be competitive), the investment in IT comes earlier in the growth cycle," Evans said. "But if you have a fairly simple retail organization, you'd want to wait until a later point when, maybe, you grow to multiple locations and need to integrate your systems with those of your suppliers."

In either case, Evans hopes growing companies think about a unique solution offered by his company: temporarily "renting" a CIO to assist with specific projects and to help decide whether to add a CIO permanently to the leadership team.

Feeling Your Way Through

Evans acknowledged that there are a few benchmarks regarding when a growing company should bring aboard a full-time CIO.

"We try to normalize it so that, typically, once a company hits $100 million in revenues, you have to look beyond an IT manager," he said.

However, a big part of the decision often comes from the gut, Evans said.

"Maybe e-mail is down a lot and your gut feeling is that this is a symptom of broader issues," he explained. "You also have to ask if key metrics are out of whack, such as whether general and administrative costs are too high for your industry and whether your IT expenses too low.

"Maybe if you're a manufacturing organization, you wonder if you have a good handle on production metrics, such as lead times from suppliers," Evans said. "If these factors are unknown or can't be determined with a fair degree of accuracy, it's a symptom that IT is a drag, not an enabler."

The Tatum CIO partners typically are former CIOs who aren't looking for a long-term commitment with a company, Evans said. Besides providing CIOs on a temporary basis, the firm also can place partners permanently. Those individuals become employees of the new company and also remain partners with Tatum CIO, according to Evans.

A Shure Thing

One client, Shure Corp., a mid-sized manufacturer of microphones and other sound equipment, already had a CIO -- Paul Erbach -- who has been transitioning to other responsibilities in the company. Erbach said the company had important but relatively short-term needs that a CIO-level executive had to address, but didn't have the bandwidth to hire such a person.

"We're relocating our headquarters and we have to make sure that the new site has the same or better technology as the old one," Erbach said. "And we're finishing the rollout of SAP to our European subsidiary. We're also carrying the typical load of projects that most companies have to deal with. For example, we're upgrading our engineering software and transitioning some of the manufacturing process to third-party vendors."

The latter task requires changes to the company's supply chain systems, Erbach said.

"As I'm transitioning to new responsibilities, we felt there was a potential gap in leadership at a time in which we couldn't allow that to happen," he said.

One Tatum CIO partner previously had worked with Erbach. That partner signed on with Shure for three months to see the company through this transitional time.

"I felt we needed help quickly as I started my new responsibilities," Erbach said. "I also wanted to buy some time to think more fully about what the future of IS looked like for us. We may still hire somebody into a CIO position, but I wanted to do it on an informed basis."

The temporary CIO is responsible for a variety of critical tasks.

"He's looking at where the business is heading and playing super-project manager on the new headquarters project," Erbach said. "And he's working with my team to roll out a program plan for another year's worth of projects."

"Renting" a CIO gives emerging companies high-level expertise with little risk, Evans said. Ultimately, though, he agreed that successful, growing companies must expand their executive teams on a permanent basis by adding strategic information expertise.


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