“A seat at the table.” This overused phrase comes up in almost every conversation about the role of the CIO in an organization’s leadership. IT leaders have been saying for years that they need to be included in strategic planning, and in high-level C-suite meetings, and to have a direct line of communication with the CEO.
The opportunity to do just that is finally here for CIOs smart enough to take it. That’s because CEOs and other top executives are more focused on technology than at any time in the past. The concept of digital transformation has taken hold in the boardroom just as it has in IT, and CEOs are counting on new technology to boost the bottom line and save their organizations from being disrupted out of existence. That means they need experts to guide them through the new digital landscape and help them create new offerings that keep them ahead of the competition.
This sentiment came through loud and clear in recent executive surveys. In our State of the CIO survey, when asked to characterize IT leadership’s role within their organizations, 59 percent of respondents said IT leaders act as strategic advisors who proactively identify business needs and recommend appropriate technology.
In a February Grant Thornton survey, 79 percent of CIOs said IT has a voice in business strategy decisions. And a recent Gartner research report found that most CEOs see growth as their top priority, and they expect that growth to come from “new digital products and services, not just from an improved customer experience.”
This desire for a more digital future can mean a fundamental shift in how IT organizations fit into a business as a whole. Traditionally, IT had been seen as a support function whose objective was to enable the real business of the organization while costing as little as possible. But as digital products, digital services, and digitally enabled customer interfaces are increasingly seen as game-changing, IT organizations can take their place on the revenue-generating side of the divide — if they have the know-how and the courage to do it.
Most don’t, according to Janelle Hill, vice president and distinguished analyst at Gartner, and co-author of the report. “We are at an opportunity in the history of information and technology,” she says. IT can make a paradigm shift from supporting the business to having IT assets seen as strategic business assets that are recorded above the line as revenue-generating or profit-enabling, she adds. “Many CIOs are not recognizing that they have this opportunity.”
That’s changing, but too slowly, she says. “CIOs are certainly aware that they’ve always been a support function that was looked at as a cost center. I think a number are increasingly aware that digital technologies and information could in fact become a profit center. But it’s a pretty small number, perhaps 25 percent of CIOs. And only 10 to 15 percent are actually doing anything about it.”
What should the other 85 or 90 percent do if they want to take their place as strategic advisors to the CEO and other organizational leaders? We put this question to industry experts and CIOs who’ve made the leap. Their answers amount to a step-by-step guide.
Step 1: Upgrade your KPIs
Uptime and mean time to resolve are perfectly good measurements of IT-as-a-support function. But metrics like these have no direct relationship to the bottom line. So, while IT still must deliver on these and other keep-the-lights-on KPIs, CIOs who want to become strategic advisors must also measure IT’s success by business metrics that may seem outside IT’s purview.
“CIOs either have evolved or are starting to evolve past measuring uptime and SLAs to getting the whole IT organization to measure its worth based on business metrics,” says Atticus Tysen, CIO of Intuit. For instance, one KPI Tysen and his team follow closely is gross new subscribers to Intuit software. “The argument I got at first from IT employees was, ‘We can’t control that,’” he recalls. “And I said, ‘We kind of can, because if gross new subscribers are down, we should know why. Is it because the offer’s not right or because there’s friction in the signup process, which, by the way, we do run?’”
With IT managing the company’s marketing website and its shopping cart, and with a software-as-a-service offering, “Where did you go from IT to product?” he asks. “The line between what is the product team and what is the IT team is getting blurry. So IT has to measure itself that way.”
“Every company has KPIs that are either about increasing profitability or growing the business,” says Rasmus Holst, chief revenue officer for secure messaging app Wire. And, he says, these are KPIs CIOs should learn to address. He has no patience for IT leaders who are reluctant to be held accountable for business results they can’t control. “There will always be factors that change things,” he says. “If you run away when things go wrong, how trustworthy are you? The chief revenue officer can’t ever say, ‘We couldn’t meet the profitability numbers we were supposed to because the CIO didn’t deliver.’ This is where the leadership team needs to work in interlock. If you and I were on a sporting team and we agreed to win the championship and every one of my passes was crap, you can’t say, ‘It’s Rasmus’ fault we didn’t win.’ Because we as a team did not win. We win together and we lose together.”
Step 2: Foster relationships across the enterprise — and beyond
If you aren’t a customer-facing CIO already, you should become one now, experts agreed. “It’s getting close to the external customer and being their advocate, putting yourself in their shoes, putting that customer journey front and center, and carrying that message into the IT organization and the business so you can serve the customer better,” says Cynthia Stoddard, CIO of Adobe.
That sounds like a good approach for the CIO of a software company. But would Stoddard give the same advice to CIOs of non-technology organizations? “Absolutely,” she says. “When I was in transportation logistics, I had a program I called ‘Ride with a Driver.’ Everyone in IT that touched different systems had to go out and ride and they would come back with their eyes wide open. They’d say, ‘I don’t know how they do it; the systems are not customer-friendly at all.’”
When she worked in retail, Stoddard adds, she would send IT employees out to watch how people shopped and how they used the self-service checkout kiosks. “You don’t know how things are going to be used,” she says. “In retail, we would throw something out to a test market and watch how people used different features and we would say, ‘Wow, we never imagined this!’”
And it’s just as important to get to know people within your organization, in LOB departments — and at all levels of seniority, she says. In fact, though it’s counter-intuitive, experts agree that the best way to gain the CEO’s ear is to build relationships with just about everyone else.
“As an IT leader, you have to be curious about other functions,” Tysen says. “They’re not going to come to you; they’re busy running their functions. It is incumbent upon the IT person to get of their shell, get out of the office and meet people and be visible. I think it’s important to have a point of view and be willing to state that, but also learn.”
Building those relationships is especially important if you want to propose a new technology to the C-suite. “We need to balance HR and all the other needs,” Holst says. “And here comes this IT leader who says we need another tool.” The challenge is to quantify a business benefit that makes the expense worthwhile. For instance, if a collaboration tool is supposed to increase efficiency, will it allow the company to reduce headcount? If not, he asks, “How are we going to see the bottom line?”
This is where partnering with other business leaders can be a powerful help, he says. “You can come as a CIO and say, ‘I’ll implement this new sales technology and it will make us more efficient — and I’ve already determined with the chief sales officer that we will be able to sell 20 percent more.”
Step 3: Become a resource
IT can and should become a valuable resource to the business, not only supplying technology the business needs, but also educating them about what technology can do. But it’s a role IT leaders can take on only after they’ve established good relationships with other executives.
One common mistake IT leaders make is “just jumping in and saying, ‘Hey, you need to do this and we’re going to change this technology. I’m the technology advisor so take my word for it,’” Stoddard says. “They haven’t built relationships as strongly as they should, so other executives may feel that this advice is infringing on their area. If you haven’t built that trust and credibility, it’s hard to implement new technology.”
Once you’ve established that trust, how can you best help educate your business colleagues? One great way is to set up an innovation center where LOB executives and employees can interact with and learn about new technology. “It should be totally new as opposed to incremental improvement,” Hill says. “You can set up a kind of sandbox and populate that space with cool new technology. I recommend consumer-grade technologies.”
Invite business contacts to a regular lunch-and-learn session, she advises. Have them meet with members of your IT team who also are unfamiliar with the technology, to create a level playing field where everyone can explore it together. “Create an environment where people can learn and touch and play.”
It’s especially vital to make sure top executives know what they need to about new technology, Tysen says. “It’s important for the CIO to make sure everyone’s getting technical in a reasonable way, rather than just reading the airline magazines. So you have to be a little bit of a teacher, not in a pedantic way, but in a way that raises the bar on the whole C-suite.”
Another purpose of an innovation center is to experiment with technologies the company may soon need, he says. “As companies go through shifts, as we’ve done, it’s important for the CIO to have antenna up. How do I keep the technology just ahead of where the business needs to be? You don’t want to be behind because then everyone’s waiting for IT. And you don’t want to be so far ahead that it’s wasted money and people don’t see the relevance. So I think the trick is to read those trends and figure out where we need to be.”
Step 4: Launch a digital product
Is every company now a technology company? Maybe not. But nearly every company should be thinking about how to launch digital products or services that will enhance or secure its place in the market. “It could be a digital product or predictive analytics that you charge money to use,” Hill says. “It could be a physical product that is digitally enabled.” She points to Babalot, which created the first smart tennis racket and changed the sport forever. “There are all kinds of new digitized capabilities and products that can either generate revenue or contribute to much higher profit margins.” And products like these can confer competitive advantage for a long time to come, she adds. “It’s very difficult to copy what someone else is doing with data analytics.”
There’s a reason, though, that this is the final item in the process. It requires a great deal of trust and understanding between CEO and CIO. “Launching a new digital product is a pretty bold step,” Hill says. “If you don’t have the CEO’s ear and aren’t seen as a trusted advisor, you won’t have the opportunity to have that discussion.”
That’s why, she says, smart CIOs will take advantage of the current interest in all things digital to permanently alter their relationship with the C-suite. The big shift is output vs. input. IT leaders can shift from having technology be the output of strategic decisions made at top levels to having their viewpoint become input to those decisions. “How can the CIO bring ideas as inputs to decision making, rather than reacting after decisions are made?” she says. “That’s the big light bulb that has to go on for a lot of CIOs.”