Paths to Alignment

If we’ve heard it once, we’ve heard it a thousand times: For an IT organization truly to align with the business, a team of technologists will no longer suffice. You must staff your organization with business professionals—people who bestow upon your company that most delightful and elusive of qualities: business experience and a knowledge of IT.

Obviously, locating these people, convincing them that IT is a good place to be and then actually paying them what they feel they deserve all present their own odyssey of challenges. But once you’ve succeeded in this regard—that is, once you’ve got them—where do you put them? (And where do you put yourself?)

Anyone who has decentralized an organization, centralized it, and then decentralized it again knows how painful a major restructuring can be. Does this new era of building business into IT demand a new organizational chart? How do you build a new set of skills into a traditional organization while keeping some degree of structural consistency? How do you keep your apps and your ops intact while integrating professionals who are brand new to IT? The answer, like the answer to any good question, is: “It depends.” With the advent of the business/IT worker, some CIOs envision a thorough overhaul; others make modest adjustments.

Recently, I spoke to seven CIOs about the organizational changes—both major and modest—that they have made to bring business skills into IT, make their IT organizations more strategic, and move one step closer to corporate nirvana: the aligned organization. Their experiences may help you.

1. Hire a VP of quality. Three years ago, Hank Zupnick, CIO of GE Commercial Finance Real Estate, hired a vice president of business requirements and functional specifications. The title may be a long one, but the function is clear: assurance that the quality and efficiency of IT systems meet the needs of the business. “Seven years ago, you would have seen someone in this role with more of an IT background,” says Zupnick. “But our VP was a Six Sigma Master Black Belt on GE’s business side before coming over to IT.”

Just as important as hiring a senior business person dedicated to quality, says Zupnick, is allowing her to evolve her role as she sees fit, not painting her into a pre-existing Quality framework. “Quality is not just a set of tools,” he says, “Quality is listening to the user, taking the time to build the right systems and then leveraging tools like Six Sigma and Lean as a means to that higher end.”

2. Appoint divisional CIOs. Several years ago, Barbra Cooper, Group VP and CIO of Toyota Motor Sales USA, decided that with market dynamics undergoing a steady rate of change, and business skills more important to IT than ever, she could no longer maintain the structure of traditional IT shops: an applications group and an operations group both serving the entire business. “One person could no longer handle the job of straddling every division and every business as well as managing customer relationships,” says Cooper. “The responsibility was a mile wide and an inch deep.”

So Cooper created business verticals for the company’s major divisions and appointed divisional information officers to each. “The key was giving them end-to-end responsibilities: cost management, sourcing, customer relationships and user value proposition,” she says.

This new structure, says Cooper, has become a boot camp for up-and-coming CIOs, a proving ground for learning the fundamentals of leading an IT organization. “I am trying to take IT professionals who have come from traditional routes and transform them into what I think the skills profile of the next generation IT executive will be,” says Cooper. “My objective is to push these people up the maturity curve of financial management where they can have a deeper understanding of the economics of IT business,” she says. “The transition from cost management to IT economics is a subtle one, but it’s critical.”

(You can read more about Cooper’s work in CIO’s story The Big Fix.)

3. Get yourself out of operations. Two years ago, the IT organization at A&E Television Networks was flat. Directors of application development for four lines of business as well as directors of engineering, production systems support and Internet technology all reported directly to CTO Marty Gomberg. “I ran my department more or less as a holding company,” says Gomberg, “The directors managed their segment of the business independently and issued recommendations. I provided all approvals, coordinated strategy and direction, budget control and staffing. We described it as the Knights of the Round Table.”

The upside of the model, says Gomberg, was agility and fluidity. The downside was the amount of time it demanded from Gomberg, who with a growing media company in the digital age, needed to focus on business strategy. “The model worked well in giving focus to key projects, but because I was the only approver, it kept me very much involved in day-to-day operations,” he says.

So, Gomberg restructured. “I created VPs for application development, technical operations, engineering and Internet technologies, and Web hosting,” says Gomberg. “The hierarchical structure has given me the freedom to focus more on strategic issues, industry directions and my business peers with the knowledge that the day-to-day issues are under control.”

4. Hire a CTO. Like Marty Gomberg, Al Barea, VP and CIO of Baptist Healthcare System, realized about two years ago that he and the rest of the organization were far too involved in technology. “We have introduced so much technology into the world of business that people who have traditionally been able to manage the volume and variety can no longer keep up,” says Barea. “How does my team stay on top of the growing volume and how do I divide my time between business strategy, process reengineering, board members and technology?”

So, Barea hired a CTO, someone to live in the world of technology, while he shifted his focus to business strategy and let the rest of the organization focus on their users. “I can dream up some wild ideas, but I need someone to make them happen and to push my agenda with our technology vendors,” says Barea. The concept may be a simple one, but it is often overlooked in midsized organizations. A senior manager with a purely technology focus—and no operational responsibilities—can be a very strategic move.

5. Separate business analysis from technology. Gene Elias, VP and CIO of Quiksilver, has typically organized the various IT organizations he has run into the traditional model of operations and application development. But since around 2000, when IT evolved into its commodity status and truly permeated the corporation, Elias has made some subtle but effective changes. First, he brought some business analysts into his application development group, with a responsibility for customer relationship management and articulating the technology needs of the business. Soon after, he removed the programmers from the group, leaving a purely business analysis group in place, while he started an advanced technology group focused on programming and emerging technologies. “The advanced technology group has evolved into our business’s technical resource,” says Elias. “There is good synergy between that group and the business analysts, which has moved us forward at a good rate. Also, it helps with Sarbanes-Oxley since it creates a segregation of duties within the system development life cycle.”

6. Build a special projects group. Over the past two years, Steve Agnoli, CIO of Kirkpatrick & Lockhart Nicholson Graham, has found that ideas for technology innovation are springing up all over his firm. While he welcomes new ideas (particularly the good ones), Agnoli saw that his organization’s ability to focus on day-to-day tasks was often interrupted by the need to analyze and implement new growth initiatives. So, in the last year, he has formed a special projects group focused on the analysis of potential growth opportunities and the completion of special initiatives (like disaster recovery) as defined by IT and the firm’s management. The group has six people in it, half with a technology background and half with business experience; Steve looks to boost the numbers in the near future. “The group gives us a laboratory environment to try out emerging technologies,” says Agnoli. “And it lets our operations people stay focused on operations.”

7. Build a variety of backgrounds into your senior team. If you have neither the budget nor the inclination to form a special projects group or hire a CTO, let alone overhaul your entire organization, there are some subtle changes you can build into your staff over time to allow for better alignment and customer focus. Steve Strout, VP and CIO of Morris Communications, pays careful attention to the backgrounds of people he hires into his existing organizational structure. “My senior management should be diverse,” says Strout. “While I want some people with programming backgrounds and others with operations experience, I always like to have some people with English, history or music degrees. By having a more diverse field of players, we better relate to our customers, and communicate more effectively.”

These CIOs found promising approaches to organizational change. What changes have you made over the last few years to build business into your IT organization? You can “weigh in” below.

Martha Heller is the Managing Director of the IT Leadership Practice at the Z Resource Group, an executive recruiting firm based in Boston. She can be reached at 508-366-5800 x. 222 or mheller@zrgroup.com.