The latest systems failures at RBS highlight yet again the importance of why CEOs and other senior leaders must become more aware of their corporate IT. It seems that many are only too happy to remain overly reliant on IT staff and external consultants who risk baffling them with jargon.
“So what?” says the CEO. “I don’t run an IT company so why should I worry?” This is where a strong forward thinking CIO can make a step change in the engagement of top leaders in the strategy, execution and implementation of IT for business benefit.
The positive news is that unfortunate, but frankly preventable, situations such as the RBS example can present the perfect opportunity for responsible CIOs to step forward and help the top brass out. After all, having CEOs hold up their hands and apologise profusely after an IT crash they claim to know nothing about is hardly a good showcase for the business. More so than ever in the case of banks given their recent PR record.
There is a board responsibility here. It is all too easy for a board to focus on its traditional, legacy responsibilities. The genuinely disruptive power of IT can be a threat to many boards which frequently lack directors with deep understanding of using IT for commercial benefit. Boards that feel comfortable with their company’s IT staffing and performance should ask themselves why, what is the quantified data which gives us comfort in what we use IT to do and how.
The board needs to hold the CEO to account to ensure that the top leadership recognise the growing impact and role of in-house or outsourced IT on their commercial service delivery. Those that fail must ultimately be held responsible for the resultant chaos, customer dissatisfaction and damaged corporate reputation when things stop working as well as the inevitable implications for bottom line performance and shareholder value.
Even though in RBS’ case the root cause for this and previous crashes appears to be with an aged patchwork of in-house legacy systems creaking at the seams, CEOs need to ensure that all system investments, old or new, will require an annual maintenance budget: an engine needs regular service! The annual cost is needed to manage, maintain and upgrade systems including those fully or partially delivered via third party data centre hosting and cloud providers.
This complex cocktail of in-house and outsourced IT can seem one level too much of complexity for an otherwise highly competent CEO, making it increasingly difficult to see the wood for the trees.
How CIOs can help address CEO IT illiteracy:
- Hold regular IT operations and strategy reviews with your CEO to ensure they can hold lead in the boardroom. A strong CIO should mentor and encourage his or her CEO to take a keener interest and keep a closer eye on the latest IT developments. This encourages all top leadership to be engaged, and is essential context for signing off on major IT purchases and decisions. By instilling greater IT confidence and equipping them with a higher knowledge base, top leaders can be made more effective in their strategic decision making and apportioning the level of IT investment necessary for acquiring the most appropriate, secure, and resilient applications and services.
- Educate top leaders in the strategic use of IT rather than the mere automation of the status quo. Remember that it is not just books and music which are near death for their historic business models with little time to adapt. Demonstrate how these days just about every company is an IT company whether in retail, finance, manufacturing or whatever. Show how IT underpins the systems and processes and more importantly will usually offer the key competitive edge; manages and pays the personnel; controls suppliers and their costs; manages prospects and analyses customers; measures and monitors sales and powers your web presence – your shop window. Look for the scary step out changes… before someone else does.
- Ensure top leaders sponsor personally all major IT investments right through to implementation. This in my experience is the single greatest discriminator for successful implementation of massive scale IT-enabled business change.
- Plan in all M&A that IT systems are rapidly consolidated into a single set of systems before an acquisition is considered complete. One of the industry giants, Cisco, is a case study: they acquire companies at a high rate to get good people and new products, and within weeks force the new company on to the standard Cisco systems for every business process. It prevents the cost of managing multiple business processes and systems from injuring the long term cost base of the company.
- Teach the top leaders to manage IT by outputs rather than inputs; organisations that manage IT mainly by controlling the budget are at greatest risk of IT disasters.
- The bottom line: CEOs must understand, at least at a high level, the applications being used, who provides them, where they reside and what happens in the event of failure. Get them to know what data the company produces, how it is processed and stored and understand the risks and rewards of the “cloud” and why a public cloud is so different from a private cloud.
- Explain the critical role of their data centres in ensuring IT resilience, security, whether they have enough space for meeting future growth plans, how much they cost to run and how location can impact, and the growing importance of power supply. Long gone are the days where it makes sense for most companies to own their own data centres.
Above all, remember that non-stop systems are no longer rocket science and are core to all industries: the cost of outages in lost business opportunities, reputational impact and customer frustration are enormous and should never occur.
Prior to more than seven years as CIO of BP Supply & Trading, Dr Simon Orebi Gann was Managing Director of Technology and Business Strategy at the London International Financial Futures and Options Exchange (LIFFE) having previously held senior IT positions at Marks & Spencer. He has also served on two British government advisory committees recommending priorities for funding IT research. He currently serves as a non executive director of Aspen Technology Inc, and of Next Generation Data ltd. and acts in an advisory capacity to other boards.