CIOs know all about change management - from jettisoning legacy apps, to prodding line of business VPs to share virtualised resources. But today, CIOs themselves are in the midst of a make-or-break personal change-management project: CIOs who can only take orders, who can't speak the language of the business, who can't step out of the proverbial back-office and into the front lines of customer service, social media or supply chain management will soon go the way of ancient tech gear - remembered fondly on occasion but sidelined in the future.
Simply put, there is no future for the "order-taking, looking only for efficiencies" type of CIO: Change or be ousted. "Do not expect IT value from a CIO with an operational profile," proclaims a 2010 KPMG report. Chris Potts, an IT strategist and author of FruITion, says "the big game in town now has moved on from efficiency - although that is still important - to how everybody exploits IT to create value and what that does for a company's investment plans and the changes that [the company] makes."
CIOs are not oblivious to their decades-long struggle: They know they need to be more "strategic." And they're certainly sick of hearing about "business-IT alignment." Has there ever been another department so ruthlessly grilled about the value it is (or is not) delivering?
But facts are facts. Those perceptions of the CIO who doesn't get the business big picture still linger today.
The CIO extreme makeover necessitated right now isn't a mere cosmetic rehab, however. It will demand a mighty effort from those IT leaders whose comfort zone involves four walls, lots of servers and voluminous air-conditioning.
In fact, say CIOs and IT strategists interviewed for this article, a CIO who wants to transform must concentrate effort in four key areas. We'll call them the "4 P's": Perception, Profile, Participation and Performance. Each is critical to understand, analyze and explore. Those CIOs who've nailed the "New New CIO" role - and all four of the "P's" - say the job demands much, but can be unlike any other out there.
"The CIO role is a very exciting role to play in when you don't think about it as an all-technology role, but when you think about it as a business leader role," says Wayne Shurts, CIO of grocery giant SuperValu. "You're a part of the strategic leadership team; you're on the inside of all the issues to help the company win today, tomorrow and the next decade."
Do you really want to be CIO?
First things first: Who'd actually want to be a CIO now? The question might sound flip. Naive, even. But consider how companies have traditionally thought of the CIO role and those people given the assignment: Men and women who knew how to keep the trains running on time and lights on. Grown-ups who knew their servers and storage, but were prone to techno-babble once called to The Big Conference Room. Strategists? Hardly. Business leaders? Yeah, right.
For that matter, just what is a Chief Information Officer actually supposed to do? Unlike, say, the CFO title, "CIO" has been a nebulous moniker for many business execs from the get-go. The title is "very diffused," says Abbie Lundberg, the former editor of CIO magazine, now a consultant working with CIOs on strategy and executive communication skills. "It has tons of potential and can mean different things in different companies, depending on what their goals are."
It's no surprise, then, that Tom Davenport, Babson College's Distinguished Professor of Management and IT, says this: "I hardly get anybody ever who wants to be a CIO, which is probably indicative of something. And if they do want to be a CIO, it's like: 'Fine, it'd be useful to rotate through this for a while on my path toward CEO.' I think people respect technology, but there aren't that many people anymore who want to be career CIOs."
Why? "It's just not the center of the action anymore, in terms of technology," Davenport says.
As strange as Davenport's last statement may sound (read it again), one can easily make the case that IT leaders face unprecedented challenges today. First up, there's the "C" word: Complexity. According to the annual IBM (IBM) survey of CEOs, 80 percent of CEOs are worried about growing complexity in their businesses (of which IT is a big concern) and more than half of them admit that they are ill-equipped to deal with it.
Then there's the New Normal economic climate laden with instability; and a push for ever greater business efficiency and "do more with less" mantra. Finally, there's the advent of cloud computing, social media and mobile devices that have greatly empowered workforces everywhere.
"The whole consumerisation movement is really tough on CIOs," says Davenport, "since now, for probably the first time in history, people have more powerful technologies at home and in their pockets than those that are provided by IT. I also think IT is more perceived as a barrier to getting things done now more than it ever was." One stark example: Articles in The Wall Street Journal and Forbes openly encourage execs to bypass IT for their sales, CRM, marketing and business intelligence applications.
Where does that leave the appointed leader of corporate technology strategy?
SuperValu's (SVU) Shurts, for one, doesn't view the "going around IT" managerial initiative on tech purchases as a bad thing, necessarily. "The key is having an IT department that is relevant, proactive and helpful. Because where I've seen business units getting their own technology and implementing it, for some of that, IT has to look itself in the mirror, because IT probably has been slow to act, been not too easy to do business with. That has probably lead the businesses to say: 'I have to go do something, because the world's getting by me.'"
In short, he says, "We, as IT, need to get on the front foot, because we've been on the back foot."
If you're ready to move to the front and change into a strategic executive, dive into the four areas where you must concentrate.
We all know that perception does not always equal reality. But most any CIO's transition from "order taker" to "strategic player" is going to be that much tougher if he and his IT staffers are perceived mostly as geeks who manage the help desk, PC passwords and data centers.
Here's the rub: Before CIOs even start talking about being more strategic, they first have to nail the IT basics. No one is arguing that the bread-and-butter IT deliverables are going away. It almost goes without saying these days. Almost.
Ken Harris, CIO of nutritional product maker Shaklee who also had senior IT roles at the Gap (GPS), Nike (NKE) and PepsiCo (PEP), says that the elevated, strategic CIO position today is "a mix of two dramatically different roles." One part is composed of the operational requirements: keeping systems, applications and data centers up; having security and disaster recovery covered; and ensuring subsecond response times on queries, just to name a couple, Harris says. "That is absolutely critical to be done," he says, "but by itself, it's not a sufficient condition for success."
If the perception is that IT can't even keep the trains running on time, then there's no way that CIO will ever be considered a business leader by peers. Perhaps just as critically, CIOs also have to maintain the respect of the IT department while in pursuit of the brass ring from Mahogany Row. Which is no small feat.
Yet even if a CIO does master operations, that doesn't mean a CIO will suddenly be seated next to the CEO in the boardroom. That comes from the second role that a CIO has to play today. Harris calls it the "change agent" role - "finding ways to enable the strategic opportunities within the company." (More on this later.)
To Monte Ford, the CIO of American Airlines, the status of the CIO is related to what he calls the "earned political capital" of the IT leader. In his mind, there are those IT chiefs who work in systems development roles, and that's what they are known for, more or less; and then there are CIOs, he says, whose roles are "integrated into the fabric of the business."
"That's as much a function of the person as it is the view of the senior leadership of the organisation - not just the CEO, in particular, but the rest of senior leadership team," Ford says. He contends that some CIOs subjugate themselves to a lesser standing among peers - they let the role define them rather than them defining the role. "A big part of this is how you treat yourself, as well as how you allow others to treat you," Ford says.
So what does that look like? Says Ford: "If the company has some strict financial goals and objectives, and you're ahead of everybody trying to help not only your group but everyone else to fulfill their goals and objectives unsolicited, then you will be viewed differently than if the CFO is chasing you around about 'Can you get your expenses down by 1 percent,' and you're fighting him on it."
When it comes to the perception of IT's strategic worth these days, CIOs will continue to have to overcome plenty of skepticism. Ford's appearance on Fortune's 2010 "Smartest People in Tech" list was gratifying to him. Yet he was the only CIO who made it.
A decade ago, it was easy to tell the type of profile a CIO had within a given company: Was the CIO listed among other execs on the "Senior Management" page on the corporate website? Though it's rare not to see the CIO's photo on that webpage today, it doesn't mean that the CIO's stature among peers is that elevated. Or secure.
One reason CIOs have struggled: CEOs require that their CIOs should innately be both operationally and strategically sound, Shaklee's Harris points out. That combined skillset is highly sought-after yet not easy to come by.
In a June blog post, Patrick Gray, the president of IT consulting firm Prevoyance Group, writes that the CIO role continues "to suffer from a multiple personality disorder of sorts." At one moment, Gray says, CIOs must understand and capably discuss the strategic direction of their company and, seconds later, consider a complex technical problem with costly ramifications.
"Some CIO job advertisements laughably demonstrate this dual role, in the same sentence asking for a 'strategic partner' and 'extensive Cobol knowledge,'" Gray writes. "It is as if the CFO was called on to make journal entries after discussing the latest M&A activity, or the COO running down to the shop floor to spend a few hours on the drill press after pondering a complex rethink of the global supply chain."
CEOs want what they want, of course. And if they want a CIO who can discuss brand positioning and blade servers in the same breath, then so be it. "I think most CXOs have a vision of what a change agent can do, but there's a lot of them who don't really know how to help make that happen or find the right person to make that happen," Harris says. "That's one of the big challenges that CIOs face: To try to educate the executive committee, CEO and CXOs on how a CIO truly becomes successful and becomes that person that they want the CIO to be: that change agent. By and large, CIOs won't get there by themselves."
Lundberg concurs with Harris's assertion. "Part of it is: Does the CIO have the right combination of skills, mindset and abilities?" she says. "And part of it is: Is the rest of the organisation there as well?"
According to Lundberg, there are many leading companies that are knowledgeable of and adept at using technology to the fullest. Inside those companies, CIOs can flourish. "But at the majority of companies - even the ones with executives who understand that this is the future and where value will come from - they don't have all the pieces in place yet to do that well," she says.
Of course, there's been a limitless amount of discussion around CIO reporting relationships - as in, can a CIO be a strategic leader if she doesn't report to the CEO, but into, say, the CFO? Some CIOs are steadfast in that to be truly strategic they have to report into the CEO. Others, such as SuperValu's Shurts, disagree. "Reporting to the CEO helps, but it's not required," he says.
At his previous job, Shurts reported to the CFO at Cadbury. "But I stayed relevant to the business," he says. How? "It comes from approach: Do I approach my job from an information and technology approach? Or from a business approach? To me, that makes all difference." (At SuperValu, Shurts reports into CEO Craig Herkert.)
The IT agenda, Shurts says, must flow from business strategy and need. "I'm going to be spending a lot of time with the head of marketing, CFO, the head of supply chain, and the CEO and all their direct reports working through issues and figuring out what role IT role plays in helping delivering it," he says. "The role of a CIO today and tomorrow is always going to begin from the business and then work back into the technology issues."
When interviewed in July, SuperValu's Shurts had not been on the job for long, having taken the reins in late April. When asked what "boardroom expectations" had been placed on him, he replied that "it's probably fuzzier than most jobs, I'll give you that." But that lack of clarity (at that point in his tenure) didn't bother him in the least. He was taking initiative to set the overall expectations - for his department and for himself.
"I've gone out of my way to make sure that my expectations here are not all around IT," Shurts says. "I'm not shying away from all of those [IT] things: I own them all and am completely responsible for their success. But I want it to be more than that. I want to be playing in the strategy and business transformation areas as much as the IT area.... To some degree, I want people to think of me maybe as the chief transformation officer as well as the CIO."
Shurts isn't waiting for his invitation to the inner sanctum of SuperValu's strategy planning. And neither should other CIOs.
At Sony Electronics, CIO Drew Martin says "waiting to be asked" is a mistake that too many CIOs make. "I think it's more a matter of understanding what's important to the business - and then engaging in dialogue around what tech innovations can be brought to bear to accomplish those business objectives," Martin says. "If you wait to be asked, it's too late. If you have to ask for permission, there's a credibility gap there."
More and more of Sony Electronics' products are enabling new customer connections via the Internet and social media platforms. In turn, Martin and his group are side by side with business peers ensuring that when, say, the marketing group wants to engage with customers via Facebook, YouTube or Twitter, or via a Sony product-support site, they have the CRM tools to do that.
For instance, Sony maintains a "Sony Listens" customer service on Twitter. Martin says it's critical that when there's "conversation out there regarding dissatisfaction or confusion we have the infrastructure support to listen and respond effectively."
IT also needs to be out in front of line of business managers' burgeoning interest in cloud computing - guiding them through the hype to figure out "what's valuable in the hype and what things should be avoided, and making trade-offs and decisions," Martin says. "That's a fundamental thing we have to do."
The growing trend of line of business managers circumventing IT is also an opportunity for CIOs to raise their profile and ingratiate themselves into the business to show real leadership, says SuperValu's Shurts. "We have to be proactive," he says. "We need to tell the story [to our business peers] around integration and data being the same in different places, since you'll end up with siloed applications at the end if we don't work together and get the data right across the enterprise."
Many CIOs today can claim additional responsibilities outside of traditional IT duties. For instance, there's CIO Gary Reiner who also runs GE's $55 billion procurement group. Or CIO Steven Gillett who's in charge of Starbucks' Digital Ventures team that's working on in-store tech and media offerings.
American Airlines' Ford terms this CIO personal development strategy "getting outside your comfort zone." When he first joined American, for instance, he asked for and received the additional role of building out AA's e-commerce and online efforts. And though that's no longer his direct responsibility (he handed it off to a new marketing hire some years later), he's still helping co-innovate Web-based and mobile applications today.
One of the most vexing and divisive questions CIOs have faced over the years is "What is the value of IT?" The inherent slight contained within the question is matched only by the difficulty in attempting to give an accurate and honest answer.
"It's rare to find an executive who doesn't think technology is important," says IT strategist Potts. "They don't always know why, but they do. Yet you can't put a number on it."
How, then, are businesses supposed to measure the performance of CIOs and overall value of their IT departments? The easy answer is: It's difficult. Sure, a CEO can look at uptime/downtime figures, project portfolio management numbers, and budgetary considerations to gauge how IT is performing.
But identifying precisely what differentiates an operational CIO from a truly strategic one is less metrics-based and more based on the perception of IT, the profile of the CIO and the how often the CIO leads or co-innovates outside the IT department.
Just what do today's and tomorrow's strategic CIOs look like? Shaklee's Harris says: they have to be creative and excellent negotiators; they have to be out there with the business all the time, not back in their office or IT shop; and they have to be, at least to some extent, visionary - able to see beyond today and how things are done now.
Those who will be called CIOs in the future will come from anywhere and everywhere, say CIOs and analysts interviewed for this article. "People are going to flow in and out of technology as you move up the ranks in the organisation," says American Airline's Ford, "rather than just having a career in the technology world." These IT leaders will still have to know technology - but a top-notch CTO will likely be any CIO's right-hand man, say CIOs.
Shurts, whose background was not predominately in IT, refers to the next generation of CIOs as being "tweeners - someone who's always been between IT and the business," he says. "To me, they are some of the most valuable people a company has, and they are people who will end up being great CIOs. But you have to grow them." Rarely does a CIO move beyond the CIO role: Kevin Turner (former CIO of Wal-Mart (WMT) and now COO of Microsoft) and Dawn Lepore (former CIO of Schwab and now CEO of Drugstore.com) are two notable examples.
But that should change in the future. Babson's Davenport recalls a research project he did in the late 1980s on aligning IT and the business. "We talked about what would be the best possible state in the future. Our conclusion was a state of pervasiveness where you could no longer tell the difference between IT people and businesspeople, and it would just be everywhere. I would say that we're closer to that with IT in some organisations, like at Google (GOOG), where everyone's an IT person."
As to American Airline's next CIO, Ford has some ideas. "Being the only position where technology is thought about or implemented is not going to be the role of the CIO in future," he says. "It's a partner role that provides a platform and leadership model for others to be able to take advantage of that of inside the corporation."
CIOs today who want to be CIOs tomorrow had better take note of the momentous changes happening all around them.
"The IT market of buyers, sellers and intermediaries has evolved all over again just like it did 10 to 12 years ago with consumers and businesses becoming increasingly expert at how to invest in IT and create value from IT," says Potts. "So the greatest danger in any environment where evolution has happened is not spotting that the evolution has happened."
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