The CIO revolution

The CIO revolution

The new wave of chief information officers will have to pay more attention to leadership style and play to their strengths to position themselves as key players in the business. Derek Parker looks at a new study on the difficult choices facing chief information officers, and what the future holds for them.

The emerging themes are innovation, integration and imagination. The challenge for CIOs is to expand their expertise beyond the IT field, equipping themselves with a broad and deep understanding of the company and its business environment. They have to know their fellow executives as people. In this view, if CIOs want to be part of the C-level, they benefit from a mixed background, gained through exposure to a range of projects and responsibilities in the company, and often complemented by formal study or training.

Dr Broadbent realises trying to become an expert in everything is not the way to go. Instead, CIOs need good leadership teams to support them.

The CIO has the unique responsibility of providing clarity of vision of how information and IT can be used to achieve the next level of performance and an ability to express that vision in a concise 'pitch' that will strike a chord in others - whether peers, direct reports, or those higher up the ladder. In this view, communication skills are likely to be more valuable than specialist IT expertise.

Yortis notes he came to the position with the support of the CEO and other senior managers, although there was still a need to communicate his ideas across the company.

"You need a clear plan and you have to understand your critical success factors," he says. "You have to communicate, and you need to be able to notch up some quick wins. We started with a study of where we were, compared to where we wanted to be. Once we had established our guiding principles, we could embark on what I call a 'values journey'. The human element is often neglected in business change programs, but I believe you have to touch the hearts of your people."

Yortis moved quickly to establish a series of major programs to remake Coates' IT system, replacing back-office mainframe systems and harmonising processes across business units. A data warehouse was also developed to get better information for 'sweating the assets' of the company.

For CIOs wanting to introduce change, a problem is they are not directly responsible for a product line or service, and they do not have clout simply from their number of direct reports. But even if they must operate away from their base of formal power, they have - potentially, at least - the influence that comes with a role that extends across the organisation.

"Leading through influence takes a great deal of self-knowledge, as well as an awareness of others' personality traits," Broadbent tells MIS. "You can think of it as a double-sided equation, the demand and supply sides of the new CIO role. On the demand side, leadership by the CIO requires an understanding of the environment, creation of a vision, an ability to shape and inform expectations, the development of clear IT governance processes, and a capacity to weave business and IT strategy together.

"On the supply side, you have to be able to build a good IS team and a high-performance IS team, manage enterprise and IT risks, and communicate your performance."

Another key leadership attribute is developing strong relationships with the CEO and other major players, says Broadbent. Personal credibility is key. The CIO must be able to show the value of IT to executives - by putting it in their pockets and on their desktops, if possible. She says executives should be led to draw the link between improved personal productivity and the benefits to the wider organisation.

Broadbent emphasises the importance of looking forward and suggests using a set of maxims to express where IT can take the firm. She points to the example of the RACV (Royal Automobile Club of Victoria) when it began to face stiff competition from a larger interstate rival.

The RACV needed to expand its business focus beyond roadside services. The organisation emphasised cross-selling; this led to IT maxims indicating the need to leverage the customer base into other product and service areas. This in turn lent urgency to the development of shared customer databases and transaction-processing systems across business units, which did much to consolidate the RACV's position in the marketplace.

"Much depends on business design," she says, "but it is fair to say that the CIO role becomes more significant when an enterprise is seeking synergies across divisions, or when it is wanting to present a single face to its customers. This is where the CIO's capacity to move across divisional boundaries really adds value."

She sees the future role of the CIO as highly active, willing to move around the organisation to gather information about technology needs and give information about what the IT system can provide. The information collected, while practical, doubles as intelligence for the CIO's input to the policy-making process.

Yortis agrees: "You have to be willing to get out from behind the desk," he says. "It's essential to be able to speak and understand the language of the people responsible for day-to-day operations. You have to be able to take them with you, and that means investing in change management.

As part of the development plan, we have gone through extensive training and communication programs. All this helps build capability in your people, and allows everyone to understand why we need to improve the way we run the business. We have already seen benefits in personal productivity, and that will feed through to the bottom line."

Yortis underlines the point that the process of innovation is ongoing. For Coates, the next year will be devoted to stabilising the new systems, with the focus eventually moving towards implementing e-commerce and enterprise methods and using IT for better customer relationship management. He looks to the example of the airline industry as a way to use internet-based technology to improve ordering processes and supply chain management. "We have been very successful to date, we have a very exciting and challenging strategy for further growth," he says. "It's a long-term effort."

Broadbent agrees strategic thinking is the key. "Competitive advantage is not gained from the technology itself, but how it is integrated into business processes, and how it is applied to risk-managed innovation," she says. "It's not the machine, it's the vision and the ability to articulate it. The CIO must bring to the table new IT-enabled ideas which can improve how the enterprise does what it does, and which can take it into the future."

The New CIO Leader: Setting the Agenda and Delivering Results by Dr Marianne Broadbent and Ellen Kitzis, Harvard Business School Press, 2004.

Banking on the future

With the CEO of the National Australia Bank, John Stewart, recently declaring the bank's performance and costs "unacceptable", a major restructure has begun. NAB's new chief information officer, Michelle Tredinick, has highlighted the key role her team will be playing in the reorganisation.

"There has been CIO representation in the bank's strategy-making processes for quite a few years," she tells MIS. "Our goal now is to break down the 'silo' structure, rebuilding around a regional model and aligning technology with the needs of business units. We want to maximise the value the IT systems adds to the bank's operations."

NAB recently wrote off over A$400 million (NZ$436.8 million) of "impaired" software assets, the result of a detailed financial review. Another issue has been the spiralling costs of compliance with international reporting rules. For the future, Tredinick has established a set of guiding principles, built around responsiveness to business needs and clear lines of accountability.

"I see my role, now the strategy has been set, as providing a link between the business units and the IT system," she says. "We want to be able to constantly review operations and costs as the new structure is implemented, and that means a high level of integration across the organisation. It might mean a long haul, but that's where we have to go.

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