Whether you are the CIO of an entire corporation or the CIO of a company division, the perception of technology and your role as a provider of technology services has changed dramatically since the spring of 2001. Gone are the days when the technologist was viewed as the transformer of the business model, when the question was not whether one should spend on innovation (of course!), but whether one was spending enough to ensure timely delivery. Current questions about return on investment and value have changed not only the approach toward technology investment decisions but also the formula for a CIO\u2019s career success.As CFO for the Global Technology & Services Group at Merrill Lynch, which includes technology, operations, real estate and general services, I have a unique perspective as both a provider and user of technology services. In fact, I was given the role of CFO for Global Technology in 1999 because I had been one of the most vocal critics of technology as the CFO of fixed income trading. I have observed the role of the division CTO evolve from manager of an overhead cost organization in the mid-1990s, to a business initiator between 1998 and mid-2001, and eventually into the current role?in this period of austerity?as an efficient enabler of business capabilities. (At Merrill Lynch, CTOs function as both CIOs and CTOs.)Those role changes were a direct result of the misconceptions regarding technology during the period of exuberance from 1998 to spring 2001. During that time, decisions to increase distributed computing and broadband capacity, and events such as Y2K, the appearance of the Euro and the dotcom craze fueled the massive increases in technology investments across all industries. Those increases, however, were not always driven by sound business decisions. They were driven by fear in business executives: fear of noncompliance, fear of social meltdown that seemed to surround Y2K, fear of loss of market share, fear of lower revenue growth. At that time, investors rewarded companies spending on new technology with higher market capitalization values even if the bottom-line returns on the investments were not clear. "Don\u2019t be left behind" became the mantra around most investment decisions. That all changed when the dotcom bubble burst, resulting in a new focus around efficiency and alignment with business profitability and objectives.These days, I seldom hear the business and technology sides debating over the need for a wireless strategy based on the latest technology capability or marathon sessions evaluating what vendor\u2019s B2B solution must be immediately implemented. Discussions are now concentrated on meeting client service needs and improving earnings while managing risks. I must say, however, that in no way diminishes the importance of continued innovation and new functionalities. The question to answer now is whether the new innovations and functionalities fit into a company\u2019s business strategy with an acceptable rate of return.Establishing the Common GroundThe formula for technology success is the development of common strategic goals for both business and technology that center around increasing competitiveness, growing revenue, lowering costs, and maintaining speed to market and quality service?while managing the business and technology risks. The keys to this formula are:Business ownership of technology investments to ensure consistency with the business unit\u2019s objectives. Technology has lost its mystique?in a good way?so that now business managers can see it as one of many ingredients that is available to them to create the right processes and structures to maximize profitability.Clear communication of the common strategic goals through all levels of the business and technology organizations. Unless the objectives reach all levels of your organization and become part of the daily decision-making process, delivery will fall short of expectations.Ability to react in a timely manner to changing market conditions that affect anticipated returns from technology projects. Technology decisions and expectations must be periodically reviewed to ensure that returns are acceptable.The Tools of the Common GroundAt Merrill Lynch, we have developed a number of tools during the past few years to help drive the establishment of and timely adjustments to our common business and technology goals. Those tools include:IT portfolio management. Each business owns and manages its portfolio of technology investments and constantly rebalances the portfolio to meet its business goals and anticipated impact on the business\u2019s bottom line. For example, at Merrill Lynch, we were seeing significant volume growth on the Nasdaq during the dotcom era and were progressing with IT initiatives to meet that demand. When the bubble burst, the business quickly shifted that technology investment to the fixed income business where the technology ROI was much higher. IT portfolio management comprises:\n\n Infrastructure\n "Lights on" application maintenance\n Regulatory and mandated initiatives\n Existing application enhancements\n Strategic investments\nThe overall goal is to lower the total size of the portfolio over time while maximizing the strategic investment of the portfolio. We use a Web-based application called Business Engine Network (BEN), from San Francisco-based Business Engine, for technology portfolio management. This tool integrates financial and portfolio planning as well as project and resource management with delivery and financial performance. BEN can be thought of as the ERP solution for the IT factory.\nCost transparency. We have closely aligned technology organizations with the businesses they support. For instance, the business unit\u2019s technologists are included in the unit\u2019s headcount, and those technologists have a dual-reporting relationship: both to the global CTO and to business management. Additionally, core infrastructure service charges have been established based on actual drivers of costs and service levels?we charge our data center back to the business units that obtain actual benefits from it. For example, we charge back long-distance usage to the individuals who make the telephone calls. Those changes have created an understanding by business managers of the impact of their decisions on business profitability. The knowledge of which IT costs are controllable has forged partnerships between business and technology to reduce lower value services and fund strategic initiatives.IT performance measurement. Each business\u2019s ability to balance efficiency, flexibility and control determines its success. Merrill Lynch\u2019s technology metrics program measures service delivery and cost efficiency, evaluates vendor and staffing flexibility, and controls project delivery and costs. For example, all our technologists and CTOs compile a scorecard on strategic vendor relationships. Semiannually, we evaluate each vendor\u2019s performance based on service delivery, price and procurement process, technology forefront, and willingness to form strategic alliances. The vendor is then issued a grade from A to F in each of these quadrants, and the scores are used to make an assessment of continued alliances. The process ensures that each technologist knows the priorities of business and IT management, and delivers them in an efficient manner. Daily integrated IT governance. While the Merrill Lynch budget process establishes overall investment targets, the daily governance model ensures efficient and effective utilization of resources. Each IT project, with the exception of those mandated by regulators and companywide infrastructure initiatives, is sponsored by the business. Each project requires the approval of both the business management and appropriate technology groups after completion of technical feasibility analysis, risk and benefits evaluation, and a complete financial total cost of ownership review, including ongoing maintenance costs over five years. Projects are evaluated quarterly, again by the business managers and technologists, for ongoing business value and may be stopped or deferred through a business priority review process. Merrill Lynch also permits nontechnology budgets to be reassigned to technology initiatives.CIOs must proactively ensure that business sponsors own their technology portfolios. They must advise those sponsors and deliver results that enable the business to meet its objectives. By performing the role of an efficient enabler, not only will CIOs avoid reverting to the 1990s perception of technology as an overhead expense, but they will create the trust necessary to become the business initiator when the opportunity arises and the returns are evident.