What makes a successful CIO in the eyes of a CEO? And what do they expect from their technology leaders? We get the words from the horse's mouth. A common goal
NAB's CIO has earned a seat on the bank's board and the respect of her boss.
And it's not only in technology that she wields power, Michael Crawford reports.
NAB Chief information officer Michelle Tredenick and chief executive officer Ahmed Fahour can almost finish each other's sentences. They trade tongue-in-cheek jibes and joke about working with each other, but when it comes down to business they are all business.
If, at first, life in the NAB boardroom seems full of laughs then the idea is quickly dismissed. On the homecoming stretch of a $1.2 billion operational change project, it is clear that in the three years since they have been working together there "have been plenty of big decisions" and Tredenick hasn't had to fight for airtime.
Tredenick is one of 11 on the NAB board and the CIO's position is seen as that of a direct business partner. Discussions naturally gravitate towards people and strategy and the information technology officer or CIO is expected to have an opinion on a variety of issues in the same way as the human resources officer or marketing director.
Fahour says a successful CIO must become the enabler and supporter of change and innovation. Information underpins customer service in the retail banking sector and better back-office functions are regarded as crucial. Leveraging the relevant information for staff is critical and doing it requires knowing both business distribution channels and the technology behind them.
Fahour says creating single reference points of information for staff to deal with customers is an interesting concept when cutting across multiple channels, and would present staff with desktop suggestions and ideas on improving customer service.
"This issue is not something for the marketing department, but a big opportunity to convert manual processes and bad service by using technology and information for change and for customers to help us do our jobs," Fahour says.
Managing internal talent is key for Fahour and one of his strategies is to move staff across all elements of the business, both horizontally and vertically. He believes in promoting and recruiting from the inside but warns against developing a culture of "inbred management". He believes moving staff between business and technology units creates opportunities for those coming up through the ranks.
Tredenick is such an example. Before becoming NAB's CIO, she was chief executive of MLC Corporate Solutions. She was appointed to that position after working as director of MLC technology and corporate development, as well as being CIO of MLC's technology division and running the group's mutual fund vehicle, Plum.
In short, she has had many executive positions in finance and wealth management, and has left technology only to come back again. By the time she became CIO of NAB, she was, in her own words, a living example of diversification.
Tredenick says doing a graduate program in technology for 10-12 years before taking on business-focused roles taught her to better understand the business and the different drivers.
If you have earned a seat on the NAB board, chances are you know the business of banking. It is not the place for grandiose specialisation, no matter what department you represent. Fahour says shared metrics ensure everyone on the board is focused on a common goal.
"My team have shared KPIs [key performance indicators]. On certain outcomes the CIO shares the same reward because shared metrics aligns everyone's behaviour and actions for desirable outcomes for the company," Fahour says.
In order to ensure all his executives' behaviour and actions are united, Fahour holds monthly executive committee meetings as well as risk committees and quarterly meetings solely for adjusting and aligning projects on a short-term basis, such as the change program now under way.
In terms of structure, Tredenick believes it is unnecessary for IT to sit beneath the chief financial officer. She says the role of CIO brings with it a responsibility to spend money appropriately on technology - a trust that she says is inherent to her position.
Fahour questions the logic of the CIO reporting into the finance department in a forward-looking business. He says that while it can depend on the definition of a CFO's role, he doubts such an arrangement could form the basis of a trustful working relationship. The general reporting structure is less important to him than how his executives work together. Both he and Tredenick agree that "executive alignment" is essential when developing a coherent strategy, and Fahour demands a professional, trusting working relationship across his team.
"I believe for an effective team the CFO and CIO need to be arm in arm, but still able to challenge each other. I am lucky Ewen Stafford [CFO, also hired from MLC] and Michelle respect each other enough to listen and work with each other," Fahour says. "If we are relying on a strict reporting relationship then things have failed even before they begin. What is relevant is that all executives understand the economics of the company, the money involved and the business objectives. Once that is understood you have mature adults going about what they do in line with overall business strategy."
Pushing the envelope
With 70 per cent of orders now coming from e-commerce, Corporate Express boss Grant Harrod knows his CIO is pivotal to the group's profits, Paul Smith reports.
If an ambitious chief information officer could design their ideal chief executive officer from scratch - one who would understand the needs and concerns of an information technology executive and appreciate their importance at the most senior level of the business - then Grant Harrod's likeness may well appear on the drawing board.
The CEO of business services and office products supplier Corporate Express Australia is immediately comfortable when quizzed about the role of technology in his organisation's performance. A background of 11 years in the IT industry has obviously helped grease the wheels in this regard, and he doesn't hesitate in saying that an effective CIO must be his close confidant.
It has been an interesting year for Corporate Express. There is speculation that a strategic review by its Dutch parent could lead to either a buy-out or break-up of operations. Harrod, however, has ploughed ahead with developing the local operations.
It is centralising its six Sydney logistics operations into a new $55 million facility in a bid to pursue technology and operations improvements to drive business efficiencies. Even though the project costs $19 million, it is expected to reap benefits in excess of $70 million over the 12-year lease.
To demonstrate his belief that technology chief Garry Whatley is central to the overarching business plan, Harrod installed him on the company's board as an alternate director and ensures that all the business stakeholders receive his counsel.
"I see technology as an absolutely key enabler, both to the growth and the profitable growth of the business, as well as the capacity of the company to maintain a competitive point of difference," Harrod says. "I wanted him to have a seat at the table so the board has the chance to have a relationship directly with him."
He says his concern is to ensure that IT is not seen as periphery to strategy but part of the business strategy. As well as Whatley being on the board, Harrod has also hired Christina Gillies, the former Bank of Melbourne CIO, as an independent non-executive director.
Corporate Express can be seen as an example of a business that, like many others, has increased its reliance on technology in recent years and also significantly raised the standing of its executives in technology.
Harrod says more than 70 per cent of customer orders come via e-commerce, and he believes this invokes a high level of technology appreciation throughout the company. "I have discussed repeatedly with Garry that I don't just see his role as that of a guardian of technology. I see his role as being the guardian of better business practices, with technology as an enabler to achieve that," Harrod says.
The oft discussed topic of who a CIO should report to is given short shrift by the boss. Predictably he is against the CEOs who require their IT leaders to report to the finance department and says IT should always report to the CEO.
Harrod says that because the majority of capital expenditure in the business goes on technology in various forms, the main opportunity to grow profitability will come in the environment of good technology decision making and implementation. He admits to relying on his CIO's closeness to all facets of the business to give him a rounder view of issues across departments, and says Whatley acts as a conduit to help him in seeing issues that may arise down the track.
"He almost holds all the various business functions together," Harrod says. "He can see where there may be a dysfunctional element within the organisation, and this role as another set of eyes and ears around the business is very important for a CEO."
However, Harrod isn't blind to negative aspects of the trade. He admits to having worked in organisations that have placed too much faith in technology being a panacea to any problem.
Harrod says he has developed a realistic view of where and how technology can be applied to a challenge, in what he calls a hierarchy of sequences. Top of the chain are people, followed by process and then technology. He says often business will erroneously elevate process over people, when real business leadership is about having the right people in a role and backing them with robust processes with a good technology platform underpinning it all.
Even worse, he says people often believe they can elevate technology above both people and process - and then learn the hard way when heavy investment isn't rewarded with the results they expected.
"Garry plays quite a big part in our board meetings, articulating strategy and ideas, reminding the others that IT is not always going to be the solution and that there are other things we should be looking at," Harrod says. "I am very respectful that he doesn't easily fall into the trap of encouraging more spending on IT - which would actually be good for him personally - when he thinks we really need a reorganisation or a restructure."
Harrod says it is also important for IT executives to be able to talk confidently and clearly with the other key members of the business. He says there is a place for purely technical experts within the CIO's team, but that the technology leader has to play a big part in articulating strategy and ideas to the board.
Stand and deliver
IAG Personal Insurance's chief, David Issa, believes a CIO's ability to drive technology innovation is more important than being an IT expert, Michael Crawford writes.
In the business world, blaming a disconnect between business and IT for a failed project is an old chestnut, and about as outdated as whiling away the hours roasting nuts by an open fire.
But the problem undoubtedly exists, chief executive officers say. And when all is said and done, they are responsible for the unwieldy IT systems and misspent dollars on sci-fi projects that either never worked or, if they did, were so out of scope that they were a complete waste of time.
Chief information officers have more than a few tales of woe from the IT trenches: scope changes, deadline shifts, budget constraints and poorly designed or confusing project outlines. But increasingly tech-savvy CEOs, such as David Issa from Insurance Australia Group's (IAG) personal insurance group, are more capable than their forebears of outlining what they want from IT and their CIO. For today's CIO, it is a given that they know the business. Technology, while still a prerequisite, comes a distant second.
Issa believes the mystique of technology and what it can and cannot bring to the business has long since evaporated.
"If you are a CIO working in banking, insurance or anywhere [else], you need to be a technical specialist and professional, but more importantly, you need to understand the business and unless there is that linkage, technology cannot be a business enabler."
In typical straight-talking mode, Issa says that if IT people are not interested in working in insurance, they should go and work somewhere else.
Issa knows what he is talking about from experience. He will be familiar to regular MIS readers as one of the few former CIOs to have moved into a CEO role in recent times. He was IT chief at IAG until his promotion last year and is now responsible for one of the group's main divisions.
Issa joined the company in 2002 following a stint as CEO of a financial supply chain software company, after leaving a 13-year career at Westpac Banking Corporation.
He is a firm believer in focusing on the customer through technology. He expects his CIO to deliver systems that his customers need and can use.
"A lot of companies may look like they drive IT innovation but this is all happening because of a slick website," Issa says. "Some of these companies don't throw a lot of money at IT, but do understand it is going to be hard work behind the scenes to deliver true innovation or a specific outcome. Many organisations think to be innovative to the customer means being innovative with technology, but some are driving it through sticky tape and glue, which comes with risks."
Issa says many companies mistakenly rush their technology and IT executives in a bid to get products ready before the rest of the market, using a patchwork of interconnected, ageing business systems to provide what they think is an innovative service. He says it often leaves call centres dealing with confused and frustrated customers.
He believes a CIO should be strong enough to say when a platform needs to be properly upgraded, rather than simply tacking together a quick and dirty solution, and this requires the CIO to be able to articulate a convincing business case.
Issa believes in his CIO outlining the outcomes to be delivered through any IT project. He says plans grind to a halt or get stuck in an infinite loop because too often the responsibility for such outlining lies with the business sponsors, who provided poor or ill-defined expected results in the first place.
He says the onus is on the technology executives to achieve a genuine understanding of what the business is and what their executive peers want. It is a challenge he believes IT chiefs have been facing with mixed success for the past 25 years, and one that will always be an issue. The business must drive projects and give a healthy degree of respect to the IT skills that make them happen, he says.
"All projects are successful and easy to manage given a infinite delivery time, but the critical element in getting the business to understand why projects fail is in showing how technology can fundamentally change business process," Issa says.
He talks of the synergy required between IT and business, yet easily separates the two. It is clear he approaches IAG's operations with a tactical view and an honest grounding in responsibility. He says the CIO should take responsibility for completing projects and work across all levels of management, so accountability doesn't get passed on. The key to this is the CEO sometimes stepping away from a project and letting the CIO deal with issues from a position of command and control.
"It comes down to driving accountability down to them, setting clear objectives and helping the CIO through them and making sure they own it across all levels of management. But when you do that, you have to keep your hands off," he says.
"Many CIOs have been burnt by poorly planned or implemented projects and as a result are reluctant to approach bleeding-edge technology with innovative applications. [CEOs need] to know whether their CIO has been burnt by such projects and help ensure they aren't completely risk-averse as a result."
Connecting the dots
A wiki-based system will enable Minter Ellison's lawyers to tap into each other's minds and drill down to the information they need, Michael Crawford reports.
Like David Issa at IAG, Guy Templeton demands his chief information officer knows the business, the direction in which the specific industry is heading and how technology will help.
Templeton, chief executive officer of law firm Minter Ellison, considers information technology innovation and the business of running a law firm as symbiotic. From offering encrypted and secure channels for lawyers to consult with clients to keeping an online library of case notes, running an international law firm without using sophisticated IT is almost unthinkable.
Minter Ellison is implementing an internal wiki-based precedents system for its 280 partners and 900-plus legal staff.
Using a wiki-style process to maximise the coverage of internal legal nous is critical to competitive advantage. Or as Templeton says, "making sure we take as much as possible out of the minds of those individuals and making it available collectively".
The firm's IT department has to regularly update commonwealth and state legislation, regulations, bills, case law, domestic and international law.
As one would expect of the legal profession, Templeton says IT strategy at Minter Ellison eschews the bleeding edge in favour of a tactical intelligence. He believes a successful CIO should be able to see where technology can provide the business with a competitive advantage.
"You don't want to be too far out there. I look to the CIO to select the right technologies," Templeton says. "You need the technology to match the right business process in order to get a major impact."
Templeton joined Minter Ellison as CEO in February 2005. Before that he was a managing partner of business consulting firm PA Consulting Group and also ran its telecommunications and media practice.
He is a firm believer in standardised systems and services, but relies on his CIO and IT department to provide the extra insights critical to case, client or context. He says that it is no longer enough for a lawyer to have a good understanding of the law, and a wiki-based approach is the perfect vehicle for a greater depth of knowledge.
The ability of a CIO to make strategic investments is critical, especially when dealing with an organisation that, in Templeton's case, has invested heavily in an extensive database of legal and case information.
Combining this information with mobile technology is increasingly critical and can be a minefield if it is not approached correctly. Templeton says he believes technology is little more than a distraction if it fails to work, or doesn't solve a client's problems without adding to administrative loads.
For his firm, which has clients all over the country, technology must provide insight regardless of location. Templeton says this is where the CIO should understand the business of a legal firm and set out options as to how new technology will achieve business goals.
"There is a real need to make information easy to access, and from a lawyer's point of view, once you find the information you need to be able to drill into the level of detail required," he says.
Using the example of legal precedents, Templeton says that once a lawyer has found the one related to their case, they need to have as much detail as possible, and this means intelligently structured data.
Minter Ellison has had to tackle thorny issues such as converting face-to-face interviews into actionable data. This relies on technology to connect the dots inside the organisation, so when an employee speaks on behalf of a client the organisation is tapped in.
The firm also offers major clients access to secure e-rooms, encrypted lawyer/client channels and other forms of online communication. The general website, according to Templeton, is accessed just as much by potential recruits as by existing clients.
In an effort to provide repeat services to clients, the firm is looking to tackle internal documentation, keeping with the wiki theme, and also using workflow automation. Templeton says they are interested in offering an internal "template of approach" to standardise the way high-cost and complex information is given to clients.
Security is also an issue. Templeton says over the past three years the industry has shifted to using secure methods of electronic collaboration with clients on legal transactions, but is yet to fully realise the benefits of tracking electronic documents on online transactions. Hence the e-room.
In terms of reporting structure, Templeton does not believe, in his firm at least, that a CIO needs a seat on the board. He says it is not intended as a slight against IT or a sign of a "disconnect" between the business and IT, but a practical approach to making the job of CIO more efficient.
Templeton says the job of understanding the business strategy cannot be achieved by attending every management or board meeting. It is better to regularly present to the board and give updates on where technology is heading to help them understand what is relevant to the business.
"I want a CIO to be out in the business, close to our lawyers, making improvements and reporting by exception. I don't want them to sit next to the mainframe, they have to engage," he says.
© Fairfax Business Media
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