For CIOs: 'It's All About Risk'

By Jeanette James

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At this year's annual PC Forum (a 'Who's-Who-in-technology' gathering in the Arizona desert) this week, executives sat down to discuss the challenges CIOs face and to reveal the strategies they use for managing change, competition, and tough times.

"The CIO's problems are beyond issues that technology can solve," said conference moderator Esther Dyson as she opened Monday's panel discussion.

Held every year for more than a quarter century now, PC Forum gathers together executives, entrepreneurs and investors to discuss heavy-weight industry issues. This year, a panel called "The Secret Life of the CIO," included Shai Agassi, an executive board member at SAP, Dawn Lepore, a vice chairman at financial-services firm Charles Schwab and Rafael Sanchez, CIO at the fast-food chain Burger King.

Opening remarks by Lepore -- who was Schwab's CIO for eight years -- provided the overall theme and focus for the panel: "Being CIO is a risk-management job."

Risk: Competition

At Schwab, for example, competition from other financial services firms frequently plays out on the Internet. When one online broker uses technology to add a new "whiz-bang" trading feature, all the other brokerages scramble to keep up.

The key to successful innovation, Lepore said, is to use technology smarter than competitors. Otherwise, you run the risk of offering just another, commoditized service. Lepore said she would prefer to be first with a service that later needs corrections, than following a competitor's technology lead.

"Being an early adopter is good," she said.

Risk: Change

"We are in the middle of a turn around," said Burger King's Sanchez, noting Burger King's management has changed four times in five years.

Launched as a single restaurant in Miami in 1954, Burger King today has more than 11,000 restaurants in 58 countries. But when a consortium of investors bought the company for $1.5 billion in 2002, it was the first time the company had been privately held since 1967.Sanchez's strategy is getting the most from Burger King's existing technology while introducing new products that cut costs and improve functionality. For example, when Sanchez first came into the CIO's role and realized the company was "under using" SAP's enterprise software, he immediately began a campaign to better exploit the software's capabilities.

"Software has become one of the biggest issues for the CIO," said Schwab's Lepore. "It is so complex and costs are escalating so dramatically."

Last year, Burger King also began implementing Oblix's NetPoint, an identity-management application in an attempt to cut costs and increase employee, franchisee and partner satisfaction. Burger King uses Oblix for authorization of employee, franchisee and supplier access to online information.

But as it brought new software on board and strengthened its use of SAP, another risk presented itself and required special CIO attention in order to be prevented: losing the Burger King customer focus.

"You don't turn around a company by taking your eyes away from your customers or your operations," Sanchez said.

Risk: Vendors

Other risks include the choice of key software vendors. What if you pick one that goes bust after you've based your business around them? "It's the same thing at every CIO's shop," said SAP's Agassi, noting that the choice of software vendors is a key CIO concern.

Sanchez said the best you can do to mitigate this particular risk is to investigate the vendor as thoroughly as possible. But, at some point, a decision has to be made knowing full well that new and possibly better technology may be around the corner.

"When you make a decision on technology, you have to put blinders on for a certain period of time," Sanchez said.

Want to discuss any of the issues raised here? Take it over to our IT Management Forum.