Organization structure is one tool that CIOs wield in their perennial effort to build a better IT group. Now a new structure, the Office of the CIO, or OCIO, has gained favor in government and academic circles, and is spreading to large companies in the private sector.
Simply put, an Office of the CIO structure is a team-oriented approach to IT management in which the CIO delegates specialized IT roles-essentially, the ideal IT org chart. An OCIO is born out of a desire for solid IT governance processes-a vision of repeatable IT processes, clear lines of project accountability and consistent communication of standards. It's meant to leave CIOs time to rub elbows with their executive brethren. Which is exactly what they should be doing.
"Having an OCIO helps me improve the throughput and deal with the complexity that all of the businesses are dealing with, because my time is now more focused on that very valuable face-to-face time that I can spend with my peers and CEO," says Toyota Motor Sales CIO Barbra Cooper, who rolled out an OCIO structure in January. "I was thinking of the OCIO as beginning to blur the lines between IT and the business function."
An OCIO can be a remedy to the increasing demands of business, says Jonathan Poe, a senior vice president at Meta Group. "Every business leader is finding that their world is expanding and that they're having to do their jobs faster. The question comes down to: How should I operate as an executive? The Office of the CIO empowers (deputies) to act as the CIO because they are the better communicator or the operations-oriented coordinator. They're going to do a better job than the CIO."
So if OCIOs hold such promise, then why are there so few?
Perhaps because it takes a lot of work to run one well. It's sometimes viewed as adding bureaucratic layers to IT organizations. And an OCIO demands unusual CIO leadership. "The mark of a good CIO is that he's confident enough to delegate and give up stuff. A lot of CIOs are loath to give up technical kinds of things," says Dr. Frank Clark, CIO of the Medical University of South Carolina, whose OCIO structure is a year old. "They have to have enough confidence in themselves and their teams to delegate to the Office of the CIO. Then it becomes a little less overwhelming."
How to Elect Your Delegates
OCIO structures vary by industry, but most OCIOs have a few core responsibilities: finance, HR, vendor management, communications, infrastructure, project management and new technology. The number of functional directors within an OCIO also varies: CIOs and analysts recommend anywhere from four to 12, though it's better to start with fewer positions and add as necessary.
It follows that no blueprint yet exists for an OCIO-you won't find a cookie-cutter approach. It's based on company and CIO need. Cooper says CIOs considering an OCIO should begin by having conversations with their fellow business executives to find out what they need from IT. You have to know their priorities before you can begin mapping your OCIO, she says. "The objective is to try to look at this as a much more integrated view and a process view-not just within IT, but how the functions need to ultimately map to the business," says Cooper, who settled on 25 specialists in her OCIO.
At the Medical University of South Carolina, Clark has five directors in his OCIO, who specialize in finance and administration, health-care and clinical systems, infrastructure, academics and research, and vendor contracts. "These people oversee and manage all of the IT initiatives that fall under their particular purview," he says. "They have enterprisewide coordination and oversight on those projects."
Ilee Rhimes, CIO of The Ohio State University, has 10 people reporting to his OCIO. He has most of the standard areas covered, as well as some that are tailored to the needs of the roughly 50,000 students and 25,000 employees on campus. For example, a deputy CIO is in charge of educational technology and distributed learning. "Our OCIO works because of the size and scope of our operation," says Rhimes.
Because OCIO directors need to be externally focused, these people should have not just IT experience but also business chops, OCIO experts say. "You need to rotate people in and out of the real world. The CIO has to make sure that there are operationally credible people in there," says Gene Leganza, a vice president at Forrester Research. "It's critical for people to understand that it's not going to be an ivory tower organization. There has to be some thoughtfulness involved in the planning."
Toyota's Cooper, who spent six months thinking about her OCIO, says more than half of her directors are non-IT people. For the finance and resource and contract management areas, she hired specialists who have inked and managed big ventures before. "I needed people who have done deals. I wanted contract specialists-not just programmers," she says.
Oh No, Not an OCIO!
In Spanish, the term ocio means "leisure." In Mexican-Spanish slang, it denotes "no action," referring to someone who has nothing to do. Linguistics aside, OCIOs' lack of popularity might have something to do with the perception that they add bureaucracy and reporting layers, and grind out decision making and action. (Cynics might add: That's why OCIOs are common in government and academia.)
Marc Lewis, North American president of Morgan Howard Worldwide, a technology-focused executive recruiting firm, estimates that fewer than 2 percent of companies have an OCIO. "Generally, adding another office or committee will slow things down, but you are always able to find the exception," he says. CIOs that Lewis has spoken with see an OCIO-type structure as a means of reinvigorating IT's fading role in big companies. "These CIOs have viewed the OCIO as more of an imple-mentation-oriented consulting engagement," he says. "An OCIO can be the first step toward elevating the stature of the IT function to the executive committee level." He contends that the OCIO lifespan should not exceed two years because by then the OCIO should have "moved the authority back into the traditional business and technology units. They are usually created as vehicles of change-not created with intent to be a permanent entity."
"In some ways, (an OCIO) is perceived as another layer, another sticky wicket," concedes Clark. "It's appropriate in certain IT organizations-in organizations where the IT environment is complex, in a fairly decentralized environment. In organizations where the IT is centrally controlled, it obviates the need for it."
Clark says his OCIO has led to huge savings at the Medical University of South Carolina. In vendor and contract management, Clark's deputy has been able to consolidate vendor contracts, acquire site licenses and reduce maintenance costs. "Typically, academic medical centers follow the best-of-breed approach," Clark says. "We do business with everyone, but we have leverage with no one. You dilute your size and scale." That has changed with the advent of the OCIO, he says. His team has also been able to establish consistent job descriptions and salary ranges across his department-all of which were fragmented before.
Forrester's Leganza notes that an OCIO can also help with improving an organization's Capability Maturity Model (CMM) level and with simplifying enterprise architecture management. At the University of Illinois at Urbana-Champaign, CIO Peter Siegel's OCIO is as much an advocacy group as a dictatorial standards-setting office-especially when it comes to enterprise architecture. "We're giving (the university) the confidence in terms of architecture directions and where we want to go," says Siegel, who has four senior-level positions in his OCIO-along with specialists in security and architecture strategy. "We don't want multiple groups going in different directions. We are looking for commonalities. We can't have 10 solutions out there."
Not surprisingly, OCIO users say that their decision making is not slowed by the extra layer of hierarchy. "If you create a single knothole without thinking about how you deal with the business demand side, you're only going to make it worse with one entryway," says Cooper. "We've centralized that inbound demand, but we've set ourselves up on the back of the wall with a much more streamlined set of processes with a degree of transparency about what this stuff is. It's more efficient to manage it and describe it."
But the OCIO's biggest benefit, supporters say, is that it allows them to lead an IT department the way they ought to: focusing on the business needs and educating other executives about IT. "The improved communication at the higher levels allows the executive leadership to view technology as an investment," says Ohio State University's Rhimes.
Gaining that high-level perspective is what every CIO desperately needs. "CIOs can be down in the weeds," says Clark. "But their primary role is leadership: setting a goal, a vision, a direction, and motivating and inspiring. The really good people know how to work smart. Working smart is surrounding yourself with good people and not trying to solve every problem yourself."
How to Implement an Office of the CIO
Before you fill out that org chart, Forrester recommends three steps:
1. Think through the strategic functions that are not being executed well in the current structure. Rather than following a boilerplate design, craft an OCIO design that solves specific problems.
2. Recruit internal or external people to head up each function. Since these managers will be charged with the difficult task of driving an enterprisewide agenda in a stovepipe organization, they must have excellent communication and project management skills and strong credibility.
3. Communicate the broad impact that an OCIO will have on how strategic activities are executed. The only way to use the disruption to your advantage is to communicate extensively your detailed vision for the office.
SOURCE: "The Role of the Office of the CIO in Federated Organizations," Forrester Research, March 2004
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