In my opinion, many CIOs fall short of filling the requirements for the position. There is a misconception shared?unfortunately, not only by businesspeople but by many CIOs as well?that this is a job for a techie. That’s simply not true. A successful CIO is a businessperson with a good understanding of technology. Without an intimate understanding of both the business and technological sides of the equation, a CIO cannot be effective. Most IT executives don’t start with this broad portfolio of skills, but they can be learned. I did.
I was the founder and executive vice president of a startup online food-delivery marketplace (that was going nowhere fast) when I saw an enormous opportunity in the nascent field of electronic futures trading. With electronic trading, stock markets were doubling their volumes every week. But in 1999, financial and commodity futures exchanges, along with their associated brokerage and clearing firms, were way behind the times. I pitched the CEO of the Gelber Group, a futures brokerage and clearing firm, on an idea to create a powerful electronic trading division. I suggested he hire me as CIO and head of electronic trading. The CEO agreed.
I joined knowing that the Gelber Group had a reputation for talented brokers, good service and complete lack of technology. E-mail at the Gelber Group consisted of a handful of AOL accounts for various employees. Everything external was accessed via a dial-up connection. Management was proud of a corporate network that consisted of a handful of computers linked together that had no purpose beyond being there to say, Hey look, we have a network.
I arrived knowing as little about the futures industry as the executives knew about technology.
My first challenge was to change my fellow managers’ perception of technology. I also needed to gain the respect of a group of executives who had known and worked with each other for years. It’s not surprising that there was skepticism about the new division and about me.
I started out lean. I treated the new division as I did my cash-strapped startup. I designed and implemented a businesswide information system, and I didn’t sleep very much. To make matters worse, Gelber was very fragmented, and many employees had no idea what the company’s overall focus was. To break down those silos, I began writing weekly e-mails to the entire firm explaining what was going on in my division (with an optimistic spin, of course). My CEO was fired up from the first e-mail and encouraged me to keep going. So, I continued to document our struggles, transforming what could have been an embarrassing failure into a soap opera that was enjoyed by many staff members as well as the management team. It finally got to the point where even the skeptics were cheering me on. This excitement and team unity was a powerful counterweight to the morale-crippling long hours, occasional dead ends and inevitable growing pains.
When I was done, the firm had e-mail, massive Internet bandwidth and top-notch trading systems with access to all the major global exchanges. We went live in the second quarter of 2000. Business was slow for the first eight months or so, but I had convinced my vendors into touting Gelber as a technologically gifted customer. I reasoned that if the vendors were broadcasting respect for Gelber, our customer base would listen and take note. It worked. In 2001, during the course of six months, we went from having 10 customers in Chicago to more than 75 in three different countries.
Learning the Biz
Even more important was my crash course in the futures industry. During strategy sessions in the first year, I spent 75 percent of my time listening. I also sat with customers while they were trading to get a feel for what they were looking for in a service provider. The time I spent in front of a trading terminal to understand how the markets moved and why traders did what they did was priceless. Not only did I get a feel for what the traders saw and how I could make it more intuitive, but some of them were more than willing to let me spend time in their offices and truly see what issues they dealt with every day. I just sat and absorbed their problems and started creating managerial solutions based on their complaints. Our customers are demanding, high-volume traders. Execution has to be delay-free; response time from the support desk has to be instant; system reliability has to be perfect; and setup time for a customer has to be nonexistent. Those may be unrealistic metrics to live up to, but my goal was to come as close to perfection as possible. My staff and I also had to be able to speak the traders’ lingo. Once I learned it just from being around them, I was able to teach the support staff how to communicate with traders over the phone as if they were brokers taking orders. Today, about two and a half years after the new division was launched, the electronic futures trading business at Gelber has increased more than 300 percent.
Our new reputation for being cutting edge in technology got me thinking about how to leverage this to increase revenue. I knew there would be other trading firms that would love to use our model. And that’s how our ASP product was born. Our customers don’t have to hire IT professionals; they don’t have to invest in any infrastructure, and they don’t have to worry about the cost of maintaining the technology. Their only cost would be variable and transaction-based. The ASP product, which launched in mid-2002, is already profitable, although still in the beginning stages.
As CIO, I am in the middle of it all. In such a technology-heavy business, where downtime can cost the firm and our customers millions of dollars, the CIO needs to be a business leader, a good manager, a talented technologist and an above-average salesperson. The CIO needs to have a strong say about sales strategy, since he understands the capabilities of the technology better than anyone else in the firm. I used this understanding to push through the ASP opportunity, which might have gone unnoticed by the rest of the management team. If a CIO does not have the ability to handle all those areas, then he should be called an IT manager?not a CIO.
So how do you get there? You probably already have the technological skills. The hard part is mastering the business skills, and that demands an understanding of human nature. Business is about only one thing, and that is money. A CIO who understands how money is made is ahead of the game. As is an executive who listens to everyone’s point of view. All of this takes practice. I still have a lot to learn. Like everything, business skills are gleaned from experience, from observing wiser heads and making your own mistakes. But if I can do it, so can you.