A decade ago, most CIOs had to beg or negotiate their way into the organization’s strategic planning process. Things are different now. Few CIOs today find it necessary to plead for a place at the table, says Michael Earl, director of the London Business School’s Centre for the Network Economy. His research indicates that more than half of CIOs are being invited to take a seat. “The expectations have changed. In most sophisticated corporations, it is simply assumed that CIOs will be involved in strategic planning,” he says.
Near-constant reassessment might be the defining characteristic of contemporary strategic planning. “The cycle these days is very, very short,” notes Earl. “In many corporations, the strategic plan is reviewed monthly, even weekly.” Frequent?some might say frantic?reassessment is also the coin of the realm in IT, and CIOs are therefore accustomed to making quick judgments about new technologies. As a result, CIOs are uniquely suited among their colleagues to take a leading position in the ongoing development of the strategic plan.
Once CIOs are seated in the boardroom, however, precisely what role do they play in strategic planning? For answers, look to technological change?which is, after all, why CIOs were invited to the strategic planning process in the first place. “The Internet has changed forever the notion of business and IT stratification,” says Ryan Nelson, director of the Center for the Management of Information Technology at the University of Virginia’s McIntire School of Commerce. “Along with applications like ERP and CRM, e-commerce has brought IT front and center to the executive table.”
The Technology Scout
One challenge CIOs face is synchronizing the company’s vision with the pace of technological change. Once, organizations could fashion mid- and long-range plans, confident in the relative stability of their underlying assumptions. Today, that same five-, three- or even one-year window may represent an entire generation in business-critical technologies. Which begs a question: Is it even possible to plan strategically?that is, with a view to the long term?in such an environment?
“Yes, it is possible to [develop a] vision and plan out three years in advance,” declares Carl Wilson, executive vice president and CIO of Marriott International in Washington, D.C. “Although when technology was more static, one did have a clearer view of a few years out.” The trick is gauging how soon new technologies will be assimilated by society at large, he says. This is where the CIO’s role as technology scout is most valuable to his partners in the executive suite.
“For instance, over the last two years we’ve seen a lot of push by the vendors of wireless technology,” says Wilson, who has been a part of Marriott’s strategy process for five years. “Now there is no doubt that wireless is going to be a major factor in delivery capability to individuals and within companies. The question for us is whether we make a major investment in the bleeding edge of wireless when we know that only 1 percent of the population is currently using it at that level. Or do we say, ’Let’s stay open here, move carefully, wait until the consumer starts to pull, and then adopt quickly.’”
The 16th-century Japanese military strategist Miyamoto Musashi once wrote, “Perception is strong and sight weak. In strategy it is important to see distant things as if they were close and to take a distanced view of close things.” This is the role of a scout, to go beyond the immediate problem, seeing its true implications and identifying other, perhaps more important challenges on the horizon.
“Smart CIOs know not to jump on any bandwagons,” says the University of Virginia’s Nelson. “On the other hand, they also know when to pioneer in the application of proven technologies. That’s a vital skill”?albeit a difficult one.
Sometimes a CIO’s technology reconnaissance can lead to new external business lines and service offerings. That was the experience Preston B. Bradford had with EAI. “Not long ago we decided to deploy EAI in-house as a means of improving our own organization,” says Bradford, senior vice president and, until recently, CIO for Sapient, a Cambridge, Mass.-based technology consultancy. “Very soon, however, we discovered that we were able to leverage our newfound expertise into solutions for some of our clients. Now we’re considering developing a practice in that area.”
The Technology Interpreter
Being an authoritative technology interpreter is a requirement for CIOs who want to be effective in strategic planning. For Wilson, this means being fully conversant in two, often distinct vocabularies. “The common language of business is still accounting and finance,” he says. “You need someone who understands technology and can interpret it in business terms for others.”
But interpreting technology for your business colleagues means more than explaining what acronyms like ERP and ASP stand for. CIOs must be able to bridge the gap between IT and operations. “I had better understand how information technology is evolving and how it enables our operations to be more effective,” says Richard Ricks, CIO of Brampton, Ontario-based Nortel Networks. “There is tremendous value when a CIO understands?and articulates?how decisions impact the technology direction as well as the business process in a holistic way.”
London Business School’s Earl agrees: “The CIO has to be a good technologist, but first he has to show that he understands the business. That’s the entry ticket. Then the CIO’s role is to understand new technologies and interpret how they might be applied to the advantage of the business.”
The process discipline that is so vital to IT work can add another dimension to the CIO’s role in strategic planning. “One of the most difficult and important things I do is shine a light on process,” says Charles Wodehouse, president of Jacksonville, Fla.-based CSX Technology, the IT service unit of transportation giant CSX Corp., headquartered in Richmond, Va. “I have to keep pushing on the company’s process view of itself. My strength is looking at how we can apply technology to make our company easier to do business with, more efficient internally, a better utilizer of capital assets.”
Wodehouse, who worked his way up through the CSX financial ranks before becoming CIO, notes that IT and finance share a deep cultural commitment to process, making them complementary teammates in strategic planning. While CFOs could take tips from CIOs on the importance of technological innovation, he says, CIOs also have a lot to learn from their colleagues on the money side of the house: “IT has to be driven by a basic understanding of business and fundamental appreciation of economics.”
Perks of Planning
Effective CIO involvement in the strategic planning process is not only good for the company, it also yields great benefits for IT departments and executives themselves. “For me to have the broad context, to know where the company is going, makes IT deployment so much easier,” says Wodehouse. “It helps with funding, with prioritizing projects, even in designing systems themselves.”
Ricks sounds a similar note: “I gain a clear understanding of where the business is going, the impact to business processes and infrastructure, what services may be leveraged more extensively, and what activities are needed.”
Marriott’s Wilson views his role in strategic planning as insurance against poor decision making. “For instance, if I hadn’t been involved in strategic planning for CRM, I might have been inclined to go out and implement something without knowing how our heads of marketing, finance and operations were looking at it. And I might have messed it up,” he says.
Of course, the most basic business knowledge is the desire of the customer. As marketing guru Al Ries puts it, “Strategy should evolve out of the mud of the marketplace, not in the antiseptic environment of an ivory tower.” It is no less important for the CIO to be an interpreter of consumer desire than it is for a marketing executive or product development manager. Catching up on the customer perspective is the first thing Sapient’s Bradford always does when starting the strategic planning process. “You can miss the mark if you’re not close to your customers,” he says. “I spend about 20 percent of my time out talking to clients, working with account teams, understanding what the problems are, and I find that to be extremely valuable in strategic planning.”
In the end, strategic planning is about success in the marketplace. Since IT is an essential component in the recipe for success in most organizations today, it’s imperative that CIOs perform their role well. Nortel Networks’ Ricks, with 23 years of IT experience, including 12 years of strategic planning practice, offers this advice to fellow CIOs: “Don’t be a wallflower. The nature of a CIO is to see the total business process end-to-end…. CIOs can bring tremendous value to the strategic planning table?so insist upon it.”