How to Be a Turnaround CIO and Bring Your Ailing Co. Back Into the Black

Some years ago, I was hired to turn around a failing IT department at a midsize retailer in the Midwest. The company had an IT budget of $10 million and more than 50 IT associates, but there was no CIO or IT director; the most senior IT person was a homegrown senior programmer with no professional technical training or experience. So the company hired me as a temporary CIO, which was a pretty radical concept back then.

Unfortunately, as is common among growth companies, this organization had charged its controller with making the critical IT decisions and setting strategic direction. I say unfortunately because, while sometimes necessary in a pinch and occasionally effective, that strategy usually doesn’t work for long. Sure enough, the enormity of the responsibility soon overwhelmed this controller. IT problems abounded. Senior management blamed everyone from “prima donna programmers” to vendors who could not be trusted. Finally the company recognized that it needed some outside help. My original agreement was for six months, but it ended up being a year?at the client’s request.

It was an interesting assignment, to say the least. Let me share what I learned about being a turnaround CIO.

Survey the Beast

Upon joining, I found morale to be horrid and turnover in excess of 50 percent. Spending was out of control because of several false starts on some large systems, and no one in IT was accountable for managing the budget. Users had no confidence in the department’s ability to bring a project in on time, and 30 percent of the IT organization (about half the IT budget) consisted of consultants who basically ran the show. Hardware would crash daily, and users had no confidence in the validity of information they got from the system. Programmers spent their day fixing data corrupted by aborting programs.

Last, I found that the technical infrastructure was essentially undocumented. The processes to perform backups and restores were tucked away in someone’s head or on Post-it notes on the tape cabinet. I still get chills when I think about it.

Draw Your Sword

My first real task was to meet with the IT staffers. I was certain their rŽsumŽs were on the street, and I could not afford for any of them to leave?at least not yet. I asked them to take their rŽsumŽs off the street: Give us six months, I said, and if you don’t see the changes you want, then all bets are off.

The second task was to get my arms around the backlog of projects. I needed to know how that mapped to the resources we had available; I also needed to identify the projects’ champions and determine their priority. What I found was that the bulk of the more than 250 projects were dying an agonizing death due to neglect. In about 150 cases the project was a duplicate, the sponsor had left the company or there were no defined requirements. Of the remaining 100, 40 or so were not IT projects at all?they were reported as IT requests but were in fact business process changes, FAQs or training issues.

Next I evaluated the staff and the org chart. I performed a skills inventory with the help of HR by getting into every IT associate’s personnel file. I had 30-minute one-on-one meetings with everyone. Organizationally, programmers were divided into two groups?support and new development?and whereas the new development staff was considered the best talent, I found quite the opposite.

Dig In

It was a good thing I had the support of the CEO, to whom I reported, because some big changes were in order. First, the existing org chart did not work well. The best people were currently in support, but I wanted them on the forefront of developing new systems. I also wanted more business specialization so that when a buyer wanted to talk replenishment, someone in IT could understand the business from his perspective. Last, I wanted the developers to have more ownership in their creations. So I reorganized the IT department to match the corporate org chart. For example, we created functional IT experts who supported finance, sales and operations, and they were essentially charged with keeping the vice president of their business unit happy with the IT services the unit was receiving.

To create ownership of IT’s strategic direction, I then created a cross-functional IT steering committee. The people I included were the movers and shakers, such as the head buyers. I tried to find the players who disliked IT the most, because that same negative passion could turn them into raving fans once we turned the corner. This committee became one of the most powerful in the company. Debates over the merits of individual projects became tempestuous as IT started to be valued and viewed as a precious corporate resource. It is amazing what ownership will do for you.

I made documentation a requirement for all development, and then I finally turned my attention to the budget. I realized that I had to get the IT steering committee to kick the consulting habit, so we all took the oath together.

Bask in Glory

The turnaround took six months, and it did involve some pain. Several IT staffers resigned (although two ultimately returned), and we suffered some initial degradation in service as we performed root-cause analyses of problems. But in three months we had several key successes. Sales reports were on time and reliable. Help-desk calls were reduced from 150 per day to 60. After six months, IS employee turnover had all but been eliminated, we had a working list of projects with real progress against delivery dates, and we had experienced less than one hour of downtime in the past three months. Finances were quickly brought under control, and we saved more than $4 million in the first year (annualized) by rolling off the contract labor.

I believe it takes several key ingredients to be a successful turnaround CIO. First, just listen. If the same problem comes up in several conversations, most likely it is truly a problem. Next, communicate your plan and your successes. Each small success will breed another. For me, getting sales reports out every day before 7 a.m. was considered to be a major accomplishment, but it was simply a matter of assigning that task to someone. Finally, the CEO’s support is imperative.

I have had several turnaround opportunities since this one. Each has had its own twists and turns, but the same basic formula has worked each time. I bet it will for you too.