How Evolving Business Strategies Are Changing the Nasdaq CIO’s Role

At Nasdaq OMX, changing business strategies means the CIO is responsible not only for operational efficiency, but also for turning a profit. This makes the company an ideal laboratory in which to observe the evolution of the CIO role.

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Changing the status quo means that Ewing shares responsibility for appealing to new customers. After launching a free iPhone application, QFolio, last October, Nasdaq OMX added new features in January. The app now lets consumers set up watch lists to get real-time stock quotes and performance charts for both U.S. and Nordic companies, and to calculate conversions in five currencies. Although no firm plans have been announced, Ewing says that QFolio may eventually bring in revenue, perhaps via subscriptions to market data. Ewing has also expanded Nasdaq OMX’s collocation business to more than 100 customers.

Such IT-enabled products and services mean that “the traditional view of what an exchange is has been thrown out the window,” says Lee of Aite Group.

Tomorrow’s IT Department

Ewing knew that to fulfill her business mandate, she needed to instill a new profit-minded view in the IT group. But she didn’t want to mess too much with the structure of a team that worked so well operationally. Nasdaq CIOs have always assigned some IT staff to support specific business units, and Ewing continued that practice. But she also began to tie the performance goals of her people not just to IT-related results but also to sales, operations and compliance. For example, IT people are now held accountable for sales and profit goals for certain financial products used by customers they support, Ewing says.

It was uncomfortable at first, Ewing admits, for people in the IT group to have their paychecks depend on the performance of another department. However, she says, doing so forces both sides to address, rather than ignore, problems with a given project in order to achieve its goals. “When you’re so closely aligning those goals together, between technology and business teams, you’re relying on one another to see it through,” she says. “You don’t do this unless you have mutual trust.”

Other staff rotate through different lines of business so they can learn about various ways the company generates revenue. Under Bailar, more of the IT staff stayed put, specializing in specific financial products or IT realms to make each the most efficient that it could be. “They were scientists of particular areas,” Bailar says. That structure, which continued under Randich, produced reliable expertise in proprietary, specialized systems that had to handle trading volumes that doubled every 14 months, Bailar adds.

Under Ewing, the IT staff retains expertise in Nasdaq’s trading systems. But rotations give team members broader knowledge that, she hopes, helps them make connections they wouldn’t otherwise make, which could lead to ideas for new products. Ewing says technologists are more valuable to her when they not only understand their business unit but also can come up with new concepts. Technology staff who deal directly with customers—say, to solve technical issues with Nasdaq OMX systems—also pick up tidbits about new services customers wish for, she says. “We bring that to the sales team.”

At the same time, Ewing, like Bailar and Randich before her, must give appropriate attention to the mainstays of IT. To cut costs, she is experimenting with cloud computing. For example, Nasdaq OMX data that is used for a service that lets customers replay a day’s trades now runs on Amazon’s S3 storage cloud, at a savings she declines to specify.

What’s Next

Crucial to making it all work, Ewing says, is earning respect. Ewing quickly dispenses with the argument that CIOs need a seat at the table. That’s old news. Rather, she views herself and her top managers as consultants, she says—like doctors, not peers or hired hands. “We provide technology, yes, but we are full partners” with business units, she says. Friedman relies on Ewing to help vet potential acquisitions, for example. “She is a part of the strategy group, as we look at how to carry our business forward,” Friedman says.

Ewing is able to assume this role partly because of her proven technical prowess and her cool head; she has earned “immense” respect from her colleagues and staff, according to Bailar. During her years at Nasdaq, she was in charge of key systems development efforts and helped the exchange recover from 9/11, he adds.

“She has worked across many constituencies and is always raising her capabilities to match the growing needs of the company,” Bailar says. “But more critically, she made sure that her team was adapting their capabilities to keep in step or ahead of company needs.”

The transformation at Nasdaq OMX isn’t done. Nor is that of the CIO role there. The Market Technology group cleared its first profit last year, making proceeds of $14 million from $145 million in revenue, according to the company’s latest annual report. But Ewing will have to turn a profit consistently to prove that a CIO can be just as market-driven as any CEO.

The Nasdaq OMX model won’t work at every company—a manufacturer or a retailer, say, doesn’t have the same opportunities to sell its IT. But the CIO at any company can influence the top line by thinking in a customer-oriented way. In this way, Ewing’s work may blaze a path for the CIO profession, Bailar adds.

“An innovative CIO like Anna can impact what goes on from here,” he says. “She can demonstrate what’s possible.”


Copyright © 2010 IDG Communications, Inc.

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