META Report: Turnaround CIOs: Resuscitating IT Organizations

By Jonathan Poe

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Situation Analysis: All IT executives must eventually face and resolve dysfunctional situations. There are, however, few situations where management know-how can create tremendous value, satisfy customers, and improve employee performance other than through turnaround. Successful CIOs employ well-structured processes to rescue poorly performing IT organizations.

One of the prime reasons outside CIOs are hired is to turn around dysfunctional IT organizations by fixing, improving, or adding discipline. Dysfunction is especially contagious for companies in decline. Poor morale breeds feeble performance, negative energy, lost momentum, user dissatisfaction, wasteful executive micromanagement, declining expectations, mistrust, and inferiority throughout the enterprise.

Our research indicates that, at any given time, nearly 50% of CIOs are in turnaround situations, struggling to establish the trust needed to repair, recover, and restore ITO performances. Currently, less than 10% of Global 2000 CIOs have established processes to mature ITO operations and turn around poorly performing ITOs. By 2004, 15% of G2000 CIOs will have such turnaround processes to produce operational excellence - enabling the ITO to run at maximum efficiency. By 2008, 25% of CIOs will master personalized turnaround processes to parachute into poorly performing ITOs, or smoothly transform core IT competencies to match radically changing business plans, strategies, and models.

Small and medium businesses should hire turnaround CIOs to first fix their broken IT operations. As firms grow rapidly, inherited structures, processes, and organizations are often not successful, applicable, or capable in the next (and larger) life cycle of operations, markets, requirements, and customers. Management gurus have referred to these situations as inflection points, big leaps, and chasms.

Interviews with successful turnaround CIOs reveal key change management activities. In addition to having a clear, well-understood, and personalized transformational process, experienced CIOs employ value management processes to reinforce the value of IT, project management processes to initiate change, and human capital management processes to unlock employee energy and enthusiasm. In applying a transformational process, fast-acting CIOs specifically focus on the following areas:

Vision: Turnaround objectives and stretch targets should be enormously dramatic to inspire and motivate. Many CIOs establish visions early (on day one) to use the "Everest Syndrome" - creating a passionate drive among employees that they are embarking on an endeavor that will demand their utmost. CIOs must persuade employees to take action and go beyond the ordinary, as normal operations are not meeting business expectations and myopic actions reinforce credibility death spirals.

CIOs perform visionary due diligence by interviewing superiors, peers, and subordinates. CIOs hired from outside the corporation should perform this analysis while interviewing. Reviews should also be performed on previous consulting studies for deficiencies and easily accomplished value opportunities (low-hanging fruit). At minimum, this vision should coincide with CEO objectives to establish basic IT credibility.

Plan: Good plans cover communicating IT value (inform), maturing operations (perform), finishing in-process projects and key initiatives (transform), and establishing process, structure, governance, and human capital management (resource management). Knowledgeable CIOs quickly recruit an IT executive team or arrive with one. Many CIOs follow a best practice of bringing with them at least a trusted lieutenant and administrative assistant. A key part of every turnaround CIO is to unlock the power of the existing senior and middle management teams. In 66% of turnaround situations we investigated, much of the know-how, insight, and proven practices were locked up in the current staff members' minds. Experienced CIOs have methods to unlock and involve the best of the indigenous staff.

Inform: Successful CIOs communicate constantly and comprehensively. Business often does not fully understand the value of IT and the ITO. CIOs apply value management processes to communicate the values of information, technology, and the ITO. Unlike growth CIOs who already have dependable, repeatable, and mature operations, turnaround CIOs must boost operations quality while addressing augmentation. To do both well, CIOs must communicate progress frequently, concisely, and in many forms, including portfolio management. Now executing his third turnaround, one CIO's mantra is "gentle persuasion, persistently applied."

Perform: Crucial IT basics must be mastered, made repeatable, regular, and of quality. Core IT operations must be quickly understood to perform multidimensional gap analysis and set performance objectives. Operationally focused CIOs have detailed objectives for the 10-, 30-, 60-, 120-, and 180-day milestones, and every 60 days thereafter. Tactically, the key operations of the largest two lines of business and those of the enterprise (to build CEO and CFO support) are locked down, baselined, and put on a continuous improvement process. Results must be produced, or the ITO will continue to atrophy.

Experienced CIOs build their baseline processes on formal methods (e.g., COBIT, PMBOK, IEEE, AMA). They do not necessarily adopt the entire methodology at the start. Having some initial imperfections causes a maturing ITO to refine, adopt, and grow processes within its IT and business alignment contexts. This renewal strategy creates a speedy continuing improvement culture that applies to other IT processes.

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Transform: One or two major initiatives must be executed during a turnaround's first year to ensure CIO longevity. Poor IT performance typically masks long-simmering business frustrations. CIOs must determine what IT transformations are needed to enable business growth and crisply report progress on these initiatives monthly. Even if the LOBs appear content, smart CIOs practice relationship management, train leaders to handle greater ambiguity, and transform basic operations to operationally excellent ones. Maintaining mediocre performance is not a healthy prescription for tenure.

Resource management: While good CIOs have excellent people skills to manage change, world-class turnaround CIOs are masters at creating collaborative cultures and motivating employees to perform. Infrastructure, project management, and value management are put into place to supplement change and reinforce the informing, performing, and transformingactivities.

Along with relationship and value management processes for tightly integrated business/IT alignment, successful turnaround CIOs possess several fundamental characteristics. They are proactive risk-takers, effective communicators, and passionate enablers. They employ master plans that embrace specific high-impact initiatives, strong CEO backing, and discretionary projects that build teams. Because both good relationship management and technical architecture (reducing system complexity) are necessary for successful turnarounds, CIOs can come from either LOBs or ITOs.