Become a Super CIO
At the start of this century, much of the focus was on keeping IT budgets in check, or even reducing them. Fortunately, now in the middle of the decade, the pendulum has swung back toward investing in IT to support growth.
But given the renewed focus on using technology to increase revenues and realize opportunities, organizations also expect more from their CIOs in terms of the business of managing their IT departments.
IT management experts John Baschab and Jon Piot tackle this terrain in the 2nd edition of The Executives Guide to Information Technology, due in March from publisher John Wiley & Sons. bITa Planet recently talked with author Baschab about some of the top issues facing senior business-technology leaders today in terms of the challenges of effectively managing the IT function; the methods senior IT leaders can employ to get the most out of people, vendors, systems, and budgets; and how they can best align with the business.
Q: Whats important for IT leaders to understand?
A: We spend a lot of time talking about the philosophy of how IT departments actually exist. IT is by far the youngest profession if you evaluate other company divisions. Accounting has been around as long as business, and likewise for sales, marketing, and manufacturing, whereas if you look back as recently as 40 or 50 years ago, IT didnt really exist. Maybe it was there as a data processing group that was a subdivision of the accounting department.
IT fundamentally provides a better way of doing things than before. You substitute technology for capital expenditures or labor expenditures. Now people say IT has something to do with [productivity gains in the economy], but a lot of the gains are contingent on what IT does with the money. You cant just throw money at IT and productivity gains magically come out at the back end. Its how well you manage it.
IT you cant live with it and you cant live without it. You ignore it at your peril. Look at the stats anywhere from 2% to 10% of revenue is spent on IT, so you have to do it well because you spend so much on it. Its a young profession and yet it has gone to be close to or to be the top non-direct expense you are going to have in a company. You have got to manage this stuff very well.
If you look at what we think is important from the CIO standpoint as far as what topics are in the book budgeting, decision making, risk management, communication with the business, and so on these are all management, not technology topics.
Q: So, how are IT leaders doing as a whole in terms of management?
A: In general people have gotten better at it. When the money was flowing freely there was almost a mad scramble to figure out what to do with the corporate willingness to invest in IT. Then this was followed by a period of underinvestment that was pretty hard on people. They were suddenly required to do the same or more with less resources.
Now budgets have swung back to a happy medium. The lessons of the 2001-02 timeframe, where there wasnt enough coming into IT, have meant there is an evaluation, on the part of the CIO and the senior management team, that you should be making the investments but soberly considering how to get the most out of those. Thats probably just right.And there is a continuing recognition of the importance of the non-technical management aspects of the CIO role. Business-IT alignment has gotten a lot of press for a long time. That can be a struggle as it assumes theres something to align with the business may have conflicts about what it wants to do, so it can be hard to align. But CIOs are getting better at translating [business goals] into daily decision making.
Q: There are a lot of good CIOs out there, but what defines the ones who truly stand out?
A: Super CIOs are moving beyond business-IT alignment into agenda setting. Business-IT alignment presupposes that as an IT organization you are in a follower role you figure out what the business wants to do and structure activities in reaction to that. When you set the agenda you are leading the business. Instead of coming to IT steering commitee meetings to figure out how to react, you come with the express intent of setting the senior executive teams agenda at the company and leading them through the changes that are going to benefit the company.
Q: There arent a lot of organizations where the CIO has that kind of clout, though. What does IT leadership need to do to demonstrate that it can take charge at that level?
A: There is the equivalent of Maslovs Hierarchy of Needs in the IT department. At the bottom is all the operational and infrastructure stuff organizations are organized around applications and O and I (operations and infrastructure). If those things at the bottom are not working, no one is going to be interested in talking with you about how to align with the business. You are in immediate and direct pain.
A Super CIO will recognize this hierarchy and make sure the stuff at the bottom is nailed before they try to go to the top [setting the business agenda]. Its a big problem to try to talk to the CEO in an attempt to set the agenda when their email is down.
Our advice is to pay attention to this hierarchy and make sure the proper level of infrastructure and expertise is there to nail this stuff on the lower levels, so you can spend your time on the upper levels. If you try to do the upper level stuff first, you wont succeed.
CIOs read a lot about worrying about the upper level stuff ,since thats where the interesting and strategic things happen. The bottom-level stuff tends to be more of technical skill set vs. the management skill set at the top level. But this is where your ability to hire the right people and team is paramount if you get them in place, they will make bottom stuff work well so you can spend your time at the top.Q: But you need more than the right people, right? Dont you also need some sort of IT governance or best practice methodology?
A: Its probably a bit of both. But its the selective use of methodology. Its a pretty well-known fact that the blind application of any methodology doesnt make you better off. Good guideposts and guidelines are what you should be thinking about. Take ITIL no one said it solved all problems, but they did say this was a great investment to figure out what we should be thinking about, and in a few critical areas they decided it was something they would absolutely adhere to. An analysis of how those methodologies can help you and which pieces matter is helpful.
We say that a methodology is a good, generic guideline, but at the end of the day you will be governed by your specific situation. Only the CIO can know that.
Q: What do CIOs need to know about business, and about the business?
A: CIOs have to force themselves to understand how senior executives make decisions. Ultimately the CIO should be an important member of the senior executive team in a company, and if they dont understand how they make decisions it will be difficult for them to operate as such. Getting there is a matter of self-education and run time with the senior team.
The other one is to continue to broaden business skills. If you want to know what marketing guys are thinking about, you need to know a few things about marketing. Understanding other disciplines is pretty important. I would encourage CIOs to understand pretty well accounting its the language of business. Most of the folks running things speak accounting pretty well, even if they arent trained as accountants. That would be the one skill to improve.
The book has a litmus test for CIOs to tell if they have shifted thinking to be more in terms of the business. Can I name our top five customers who are they and what did they spend with us last year? When was the last time I went out and visited a customer of our company or talked with one? Do I know all the other top executives, business unit organizations, corporate processes?
These are the things a senior executive in almost any company can pretty much tell you off the top of his head. Its litmust test to see if you are thinking as a business person.