by Susan Cramm

Why You Should Follow the Fiduciary Model of IT Management

Mar 15, 20017 mins
IT GovernanceIT Leadership

Try to avoid the CIO as valet model.

In most organizations, the CIO job is not a lot of fun. The job is hard—harder than it should be. I’ve been a CIO, and I’ve been a CFO and a general manager, and the other executive positions were easier every day of the week. Sure, it’s an honorable job that pays well and ensures employability. But believe me, there are easier ways to earn a living. In fact, many of my next-up-for-the-CIO-position clients aren’t even sure they want the job.

If you want insights into the CIO reality, listen to the language. Last week I learned a new term from one of my clients, the CIO of a major transportation company. She talked about “valet IT.” Valet IT happens when business executives drop off their technology wish, go do their “real job” and expect the solution to be waiting at the curb when they are ready. As a general manager, I tried to drop off my IT wish when I asked my CIO to implement a labor scheduling system for my restaurants. When he asked me to ante up and devote the resources necessary to manage the program and ensure its success, I backed off. He wasn’t running a valet service; he knew (and I was reminded) that I would need to manage the IT-enabled business change embedded in my request. My goals for improved customer service and labor efficiency couldn’t be achieved by IS alone. These shifts required significant process and behavior change on the part of my managers and their teams.

The reason the CIO job isn’t a lot of fun (some would say impossible) is that it’s too big. CIOs and their teams are operating not only as technologists but also as surrogate users. They are trying to do a lot of the work their business counterparts should be doing, such as identifying where IT should be invested, outlining the investment justification, managing the change program, arbitrating among conflicting interests, redesigning the business processes and retraining the frontline performers. At the same time, they are supposed to be designing IT architectures, building infrastructures, assembling and motivating a pool of technologists, providing excellent customer service and delivering high-quality, secure, low-cost operations. My non-IS positions were easier than my CIO role because I did not have to bear the lion’s share of responsibility when I partnered with other executives. Each of us understood our respective roles and accountabilities.

Companies need to stop viewing IT as a custodial function. CIOs can no longer operate as surrogate IT users because the job has grown beyond their expertise. IT transformation is largely made up of non-IT work—as much as 80 percent of the total work, according to DMR Consulting. In addition, your executive counterparts are much more technology-savvy than they used to be. You need to get out of their way. CIOs need to go far beyond the typical solutions for aligning IT with business strategy—methods such as senior-level sponsorship, full-time project participation, colocation and project incentives. These solutions look a little anemic when you understand how big a problem valet IT is. It’s time to be bold. In the words of Roger Enrico, chairman of PepsiCo, “When the execution has to be perfect, the idea isn’t big enough.” The big idea here is to transition from the custodial model of IT—that is, doing IT on behalf of the company—to the fiduciary model, in which you ensure that the company does IT right.

In doing this, you are not blazing a new path. Most financial and HR departments have been operating in this mode for years. The CFO’s office doesn’t manage every financial decision but instead ensures that the company’s financial goals are well understood. The finance office then delegates the responsibility for achieving results to those who can influence the outcomes. Similarly, HR doesn’t oversee each employee but instead defines the plans, policies and procedures necessary to ensure that the entire staff is managed well.

It makes good sense that technology should follow a similar evolution. After all, there are only three classes of resources that can be leveraged for success in organizations: capital, human resources and technology. Why should technology be managed differently than the other two? You can see the disparity by again listening to the language. People don’t blame poor P&L results on the finance office or complain that HR manages employees badly, but in most companies you hear general managers complaining that IS has not developed good systems.

In fiduciary IT management (a.k.a. federated IT and IT democracy), business units are responsible for the “what” of IT, while IS is responsible for the “how.” The business units execute their IT investment plan, and the CIO defines the rules on how the investment is managed. One large manufacturing company that sells via the Internet implemented this fiduciary IT approach by decentralizing its IS group and making the divisional CIOs report directly to the division presidents as well as the enterprise CIO. The head CIO could then focus on how the organization invested and implemented technology. He also boosted IT investment by helping the division heads gain appropriate funding based on well-articulated business plans.

His technological role was one of high-level leadership, first leading the development of the architectural standards, designs and infrastructure necessary to ensure enterprisewide integration and security, and second, monitoring project status and benefits realization. He saw an opportunity to become the company’s preferred provider for services that benefit from economies of scale, such as operations, call center, procurement and education. Finally, he defined HR standards for IT staff, including professional development and succession planning.

If you are interested in moving toward a fiduciary IT organization, take the following actions:

  • Get comfortable with the concepts. Study your finance and HR departments to see how they have delegated responsibility yet still maintain the authority necessary to ensure that resources are managed to achieve their goals.
  • Convince yourself. Spend some time pondering why it’s necessary for the business units to assume responsibility for IT. Not until you’re convinced can you convince others.
  • Sketch out the solution. Further develop these ideas with the CFO and head of HR. If you draw the parallels, they will understand where you are going and can help you make this new organizational strategy a reality.
  • Write your elevator speech. Test your ideas with other CIOs, your peers, your IT staff and your CEO.
  • Conduct a pilot test. Make sure you put your best foot forward by collaborating with a division head who sees the future. Use the results to refine the design and build momentum.
  • Get out of the way. If your sales efforts have been successful, the other division heads will be pitching the idea back to you. Now your challenge is to mobilize your organization and ensure that the division heads are ready to assume responsibility for day-to-day IT management.

Your real job is to help your business partners learn how to provide for their own IT needs. You need to apply your technology skills to designing and developing the IT architecture necessary for this self-provisioning. In essence, you are disintermediating IT to accelerate its delivery to the business. Along the way, you’ll get back your “real job” of technologist and give up the less-than-satisfying, impossible-to-deliver role of parking attendant.