What It Takes to Succeed Now as a CIO

Making business processes more efficient and end users more productive isn't enough to succeed as a CIO in today's economy, according to our 2009 State of the CIO survey.

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Young likes to tell a story about the role IT can play in winning new deals, in part because of the company's information security technology and processes. Bright Horizons was up against a rival for a deal with a large potential client. Young sent a member of his staff with the salesperson who was making the presentation to share the company's views on privacy and risk.

"We were the only ones with a security expert right there on the ground. It blew them away," he says.

Do security software, procedures and audits cost money? Of course. But not having those items, along with someone from IT to talk knowledgeably about them, would likely have cost Bright Horizons a client.

That's the kind of great story about IT that a CIO needs to tell when the finance chief asks smart questions about expenses, Sutter says. "Shift the discussion from figures on a page to real life."

No one advocates vapid spin. Rather, you collect facts and know your material well enough to fit the pieces together to show something new about your topic, whether it's your project, your staff or yourself.

Trait 3: Strength in Numbers

you must support your command of words with an equally firm grasp of numbers. Like doctors tracking a patient's heart rate and white blood cell count, CIOs should know their own vital statistics. Items such as IT's current cost structure, including fixed and variable expenses, and the consumption factors that affect costs show how IT is performing. CIOs should know their own current and past performance metrics, as well as projections for the next three years, says Albert Eng, a former IT executive and senior advisor at Cerberus, the private equity firm that bought Chrysler in 2007. These figures are especially handy should your company become an acquisition target as the economy forces acquisitions and divestitures, Eng says. Having a good assessment of your team, understanding the capacity of your systems, maintaining forensic analysis of past projects and being able to present all of that in a compelling way to an acquirer amounts to "the best chance of survival for the acquired CIO," he says.

Even on a daily basis with no M&A scenario at hand, Barry Vandevier, CIO at Sabre, knows how compelling numbers can be. The $3 billion travel marketing and distribution company has been "on a mission," he says, to tamp IT costs for several years, having been dealing with the pressures on the air travel industry for that long.

Labor has been one area of steely focus. Sabre studied the economics of staffing in the U.S. and other countries and concluded that domestic work is more expensive. But Sabre didn't outsource on a mass scale. Instead, the company started hiring in different geographies, such as Poland, South America and India. Decisions about where to staff were tied to the company's focus on broadening its customer base and the possible advantage of having technology and its delivery teams close to their customers. In 2003, 85 percent of Sabre's technology workforce was in the U.S. By 2006, it was 45 percent, about where it stands today, Vandevier says. In part, that's because of a European acquisition, he says. "But also, we had a big move in workforce, pushing for more efficiency. This is nothing new with us."

Trait 4: Nerve

you know that leadership table everyone talks about? Create your own. Several CIOs we talked with about the survey note that they have designated their own IT steering committees in order to match business goals to actual technology projects. They then invited the CEO to join.

It's empowering, says Ian Patterson, CIO at online brokerage Scottrade. "I sit at [founder, president and CEO] Rodger Riney's table, but Rodger sits at my table, too."

That touch-point recently helped streamline application development work, Patterson says. At a meeting in October, he and Riney, along with various IT managers, were talking about the process of incorporating customer wishes into Scottrade products or services. Traditionally, a product development group outside IT meets with customers and filters requests to IT. "There's a lot of back and forth, like a game of telephone," Patterson says.

Riney there and then suggested sending some of his key architects to attend customer conferences, to see and hear the wish lists firsthand.

A CIO and CEO on each other's strategy committees means "it's not just me listening and Roger telling. It's not just one-way," Patterson says.

At Bright Horizons, Young created an information risk committee that he cochaired with a senior attorney in the company, and he asked the chief financial officer, CEO and other senior executives to join. He did it partly to show IT's ability to innovate in the areas of privacy and information risk.

"When are IT leaders going to stand up and define frameworks on their own rather than rely on 'the business' to do it for them?" he asks, emphasizing that "the business" and IT are really one and the same.

By the way, it must be noted that cultivating nerve would also allow CIOs to seek out assignments needed to become multidisciplinary and tell their IT success stories.

Endgame: Customers

The best CIOs tend to two goals: making employees, also known as internal customers, more efficient. And directly helping bring in more paying customers for the company's products or services.

But right now, most CIOs are doing only one of these tasks well, and they and their bosses know it. Asked in our "State of the CIO" survey to rank a list of 10 areas where IT had the greatest impact in the past year, CIOs put improving workforce productivity as number one. Managing customer relationships and acquiring and retaining customers took the two bottom spots out of 10. CEOs and business executives in Forrester's poll agreed that IT is far better at improving workforce productivity than getting and keeping money-paying customers. Yet acquiring and retaining customers will be the most important factor driving IT decisions this year, the CEO group says.

For some companies, such as Fandango, the online movie ticket seller, and Sabre, the airline reservation system, IT is the business. Elsewhere, some old-line companies have remade themselves around technology. Geico, for example, has seen its business soar online in the past three years as it built a new Web infrastructure.

If CIOs think understanding the customer is someone else's job, they will soon be out of a job, says Geico's Reed. In addition to internal IT, Reed also oversees the company's online division, which is key to the company's future. Most of Geico's insurance quotes are produced online, as is most of the company's new business.

"I can't get away from growing the business and retaining customers," he says. "I live it every day. It is part of my accountability."

He's not kidding. Reed urges even casual business contacts (such as a reporter interviewing him for an article) to visit Geico.com for a free insurance quote, supplying a special code to type in for data mining purposes.

But in nearly all industries, technology will touch nearly every customer, says Shane O'Neill, chief technology officer at Fandango. "Even if it's company-to-company self-service on the Web, with people just looking for information about you, that's a customer transaction that IT touches directly."

A traditional focus on serving internal users holds some CIOs back from interacting with customers or even researching information about customer trends, says Michael Rapken, CIO of YRC Worldwide, a $9.6 billion transportation company. "As much as we all want to do that, most CIOs are going to think about supporting sales and marketing, not thinking about how can I go generate revenue."

It's not clear from our survey whether CEOs have given a clear customer mandate to CIOs. But it is clear that CEOs think technology is key to acquiring and keeping customers. That's an opportunity CIOs would be wise to grab, to show some innovative chops at a time when new revenue-generating customers would be most welcome, says Sabre's Vandevier.

But don't wait to be invited (read: told). Use your nerve. It'll impress the CEO, Sutter says. Let the CFO stay inside, working his spreadsheets, while you venture to branches, facilities, retail stores, wherever customers gather. "Get out there. The news will get back sooner or later. It wouldn't hurt if you took some risks."

Robert Fort, CIO at Virgin Entertainment Group, chats up customers when he drops in at Virgin Megastores, to see how they're using the in-store kiosks and listening stations. Vandevier goes on Sabre sales calls.

Tap your most promising staff to come along. This adds more and varied perspective to the knowledge you're gathering. Plus, a special assignment like this also injects some zing into your staff's work lives, especially effective as training and travel budgets disappear.

Indeed, the time will come this year to shrink expenses, if it hasn't already. When it does, cut, yes. Defer, yes. But don't go into a holding pattern, Rapken says. Enrich existing applications to, you guessed it, please the customer.

Rapken still sends managers from the IT department to visit other departments to listen to their ideas for new features for YRC's new online customer billing system. "You have to be creative and innovative, even if the overall goal is to hunker down and cut costs," he says.

Don't Repeat History

Look at what happened the last time the economy tanked. After the dotcom bust in 2001, the view of IT, and CIOs by extension, wasn't exactly favorable. The genesis of that bust was largely IT overspending and overpromising, and the rest of the world over-believing.

The better part of a decade later, CIOs are wiser about defining new frameworks for generating revenue. That is, for collecting, parsing and interpreting the terabytes of data customers create and then giving salespeople the tools they want on virtually any computing device. But CIOs today must know more about translating business goals into IT projects, measuring the results and translating them back into a business success story.

What happens to CIOs on the other side of this economic bust will be different from 2001 only if you assert yourself, don't wait for an invitation, certainly don't wait to be told, says Young of Bright Horizons. "When we don't rise up and deal with adversity, we will have to adopt someone else's perspective," he says. "It comes down to leadership and aggressive passion. If you don't have those, the world around you is going to define who you are."

Who you are, or should be, is a partner to the CEO in maneuvering the company through these tough times. If some CIOs misunderstand the goals of their CEOs or the nuances of company operations, they can cut the wrong expenses and sack the wrong people, says Patterson, Scottrade's CIO.

Know your business and assert and explain how IT makes a difference. Be an equal.

"You're going to see CIOs who are just spending time down in the guts and looking at cost cutting and not working with their CEOs to talk about value," Patterson says. "They're not going to be long-term in their roles." In other words, don't let yourself fail the needs test.

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Copyright © 2008 IDG Communications, Inc.

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