It was the best of times. And then, all of a sudden, it wasn\u2019t.\n\n\u201cWe had just gotten over Y2K. And the dotcom boom and bust. And then came...the disillusionment,\u201d recalls John Doucette, CIO of United Technologies. \u201cIt was a depressing couple of years to be in IT,\u201d says Doucette, who took over the high-tech and aerospace conglomerate\u2019s IT helm in 2000. \u201cThere wasn\u2019t that much innovation in software and hardware. Security wasn\u2019t there. People weren\u2019t focused on the business.\u201d\nAnd CIOs, who had surfed so high on the frothy Internet-driven economic waves of the late 1990s, had come crashing back to earth.\n \tMORE ON CIO.com\n \t\n \tFrom CIO to CEO: One Executive's Lessons\n \t\n \tKey IT Developments, 1987-2007\n \t\n \tWhat's Ahead in IT: 2007-2027\n \t\n \tThe CIO Hall of Fame\n \tHard.In boardrooms across the country, the CIO\u2019s budget, technology investments and basic worth were being questioned. The value of IT had become a topic for debate. Every system, every application, every IT project once labeled mission-critical was put under the microscope and, in many cases, found wanting. And too expensive. Business\u2019s guiding principle\u2014\u201cWe can\u2019t do anything without IT\u201d\u2014quickly became \u201cHow much can we do without IT?\u201d\n\nIt was the end of 2001, and CIOs were facing a backlash.\n\n\u201cAt times, it was a very frustrating job,\u201d admits Doucette, who this month was inducted into the CIO Hall of Fame. \u201cYou had to be good just to survive.\u201d\n\nMany CIOs did not. The oft-cited (and now outdated) 18- to 24-month \u201caverage\u201d tenure for CIOs gained currency during this period and was taken as gospel within the business ranks and in the halls of academia.\nAccording to Laurie Orlov, a VP and principal analyst at Forrester Research who\u2019s followed the IT industry for decades, the deep and widespread dissatisfaction with enterprise IT in the early part of this century was the product of a perfect storm. Y2K turned out to be a nonevent; the dotcom bust and financial recession hit IT hard, and the emergence of outsourcing, and then offshoring, undercut IT\u2019s organizational ability to take advantage of new Web-enabled technologies because it had thinned out the ranks of its programming and application development staffs. If Doucette calls it a time of disillusionment, Orlov refers to it as the \u201cdisappointing era.\u201d\n\nFor those CIOs and companies who chased IT opportunities that had no clear relation to business value during the dotcom era of irrational IT optimism, says HP CIO Randy Mott, \u201cthere was credibility lost.\u201d\n\nCIOs were down but not out. The survivors knew that IT\u2019s promise, the potential for delivering value using new technologies, Web-based applications and services, and faster and cheaper hardware, was not just wishful thinking and baseless enthusiasm. It could and eventually would be a reality.\n\nIt just was going to take a little more time to come to fruition.\n\u201cThe hype and expectations of 1999,\u201d Doucette concludes, \u201cis reality today.\u201d\n\n\nThe Long, Hard Road to Value\nDoucette is not alone in his enthusiasm for today\u2019s reality. Sure, CIOs suffered plenty of battle scars, but they\u2019ve also accumulated a wealth of experience, discipline and the maturity that comes from living through times both good and bad. In a sense, IT has done a lot of growing up.Readings\nA brief bibliography of CIO\u2019s coverage of key issues Running IT Like a Business\n\u201cWhat It Means\u201d\nAnd how you can do it.\n\nValue Metrics\n\u201cThe Metrics Trap\u201d\nAnd how to avoid it.\n\nERP\n\u201cAn Introduction to ERP\u201d\nGetting started.\n\nThe Strategic CIO\n\u201cFulfilling the new CIO mandate.\u201d\n\nStaffing\n\u201cTraining for Entry-Level Staff\u201d\nThree CIOs set up training programs for absolute beginners.\n\nIT and the Business\n\u201cToyota\u2019s Big Fix\u201d\nHow Toyota\u2019s CIO regained the trust of the business.\n\nIntegration\n\u201cStrategic Alignment\u201d\nAttacking integration as an end-to-end process, from supplier to customer.\n\nThe CIO Career\n\u201cHow to Succeed in Business\u201d\nThe knowledge and leadership skills.\n\nThe State of the CIO 2007\nAll that data.\n\n\n\n\nFor Barbra Cooper, Toyota Motor Sales\u2019 Hall of Fame CIO, a dose of turn-of-the-century self-examination proved critical. Years of IT spending at Toyota that seemed to have no ceiling, enterprisewide projects that were out of control and a fractured relationship with the business forced Cooper to do what many CIOs historically have been unable to do. \u201cI like to call it \u2018calling the police on yourself,\u2019\u201d she says.\n\nCooper not only solicited the uncensored opinions of her business colleagues but she actually listened and acted on their often negative perception of IT. She changed. And ultimately she was able to change IT into what it was always supposed to be: a trusted, responsive, fiscally smart and business-first department. \u201cIt was one of the more breakthrough things in my career,\u201d says Cooper.\n\n\nThe CIO Story\nOver the last 20 years, CIO magazine has been able to profile the journeys of executives such as Cooper and Doucette as they\u2019ve traveled the long, hard road to delivering on IT\u2019s essential value. For Hall of Famer Mott, who has headed up IT at Wal-Mart and Dell, and now at HP, that journey has encompassed the evolution of the CIO role. \u201cThe CIO and IT organization have become an integrated part of every process of every company and every industry,\u201d Mott says.\nWe\u2019ve also reported the meteoric rise of Kevin Turner\u2014from cashier at Wal-Mart to CIO, to CEO of Sam\u2019s Club and now COO of Microsoft\u2014who embodies everything that being a strategic, business-driven executive has to offer. \u201cI have always prided myself on being a business leader and customer advocate first, and being a technologist second,\u201d says Turner, who also this year joined the CIO Hall of Fame.\nBut no matter the individual story of how they have risen to the challenges of being a CIO, what\u2019s noteworthy is that they all know there\u2019s much more work to be done because they now have the ability\u2014the know-how, the resources, the credibility\u2014to provide so much more.\n\n\u201cWe\u2019re able to deliver applications and new tools at much lower cost,\u201d Doucette says. \u201cServers that are faster, better and cheaper. Storage\u2014who would ever have thought that we would be able to store 20 gigabytes on a chip the size of a fingernail? We\u2019re able to show IT as a percent of revenue. We have the ability to drive revenue growth or productivity into the business.\n\n\u201cWhat better role to be in than the CIO?\u201d Doucette asks rhetorically. \u201cI\u2019m the only one in the company that impacts all employee productivity.\u201d\n\nThe Early Daze\nThe lofty and all-inclusive role that Doucette describes traces an arc that could not have been imagined, given the CIO\u2019s humble beginnings as \u201cthe computer guy.\u201d \u201cThere\u2019s no comparison to the way technologies are used today: wikis and blogs and instant messaging and paying bills on a cell phone,\u201d says Forrester\u2019s Orlov. \u201cThere\u2019s just such a mind-boggling difference.\u201d\n\nCIOs now boast about finally having the proverbial \u201cseat at the table.\u201d But back in the 1970s and into the \u201980s, most were lucky to even get a glimpse of the \u201ctable\u201d from their backroom fiefdoms. Data processing was the moniker for early IT shops, and their task and main value to the organization was their ability to automate transactions. \u201cThe smart companies that were successful understood that information about transactions would be as valuable as the physical good itself,\u201d Orlov says. Big Iron and IBM ruled the day.\n\nData processing soon evolved to MIS, as companies realized that someone actually needed to manage their burgeoning computerized underbellies. And with that came the command-and-control mind-set that still lingers today. \u201cThat generation of MIS was oriented around control,\u201d recalls Cooper, who, interestingly, didn\u2019t get her start inside data processing or MIS but on the business side of Miller & Paine, a department store chain. Because of that, she was an early devotee of best-of-breed solutions.\n\n\u201cI didn\u2019t grow up with the mainframe and IBM as the only provider. I often picked the most competitive technology that fit the purpose for the time, and that was often not IBM,\u201d says Cooper, who eventually landed at American Express. \u201cI didn\u2019t really know anything about the unwritten rule: To maintain career, you do IBM. It didn\u2019t make sense to me.\u201d\n\nCooper\u2019s na\u00efvet\u00e9, as she terms it, seems prescient today. But to shake the damaging \u201ccost center\u201d label in the early 1990s, CIOs would have to start innovating while keeping the lights on. There seemed to be no shortage of commentary or advice directed at the nascent CIO function, including from business executives who knew just enough about IT to be dangerous. IT consultants and new business mantras (re-engineering and Six Sigma) were ever-present.\nMIS eventually shrunk to just IS (although the dual meaning\u2014information services and information systems\u2014remained). Big believers in technology\u2014companies that didn\u2019t mind a little risk\u2014began opening their coffers for their IS functions.\n\nWal-Mart was one such company. The retailer realized early on that, correctly harnessed and deployed, technology could be a competitive differentiator and advantage. \u201cEven 20 years ago at Wal-Mart, that message was very clear at the executive management and board level. There was no confusion,\u201d says Mott. \u201cIT was something you changed the game with\u2014not something you just reduced cost with.\u201d\n\nExpectations for IT rocketed in the mid- to late 1990s as large enterprises opened the vaults to spend millions on massive ERP implementations. \u201cThe expectations were that IT investments in large amounts could provide competitive advantage,\u201d Orlov says. \u201cThat\u2019s not right, though. They could provide the foundational work that allowed you to grow your company. ERP systems were not about competitive advantage but competitive similarity.\n\n\u201cIt was an era where the expectations of IT began to separate from the benefits of IT,\u201d she says.\n\nBut that perception was not widespread, and it didn\u2019t slow anything or anyone down. Suddenly, CIOs were being quoted on Page 1 of The Wall Street Journal. The explosion, success and popularity of the Internet had changed everything. \u201cIt goes back to the adage: There are times when we think we create technology, but technology really creates us,\u201d says Turner.\n\nAnd then the tide that had raised all boats rushed back out, and CIOs were left to struggle against the suck of the undertow.\n\nDoes IT Matter?\nAfter the bust, after 9\/11, after the recession, after everything had turned the CIO\u2019s world upside down, an article appeared in the May 2003 Harvard Business Review titled \u201cIT Doesn\u2019t Matter.\u201d The article, written by Nicholas Carr, caused a stir among CIOs and IT vendors, but that was nothing compared to the storm that broke when Carr\u2019s book Does IT Matter? came out the following year. The book built on themes from the article\u2014that while companies were spending more than $2 trillion on IT every year, \u201cIT\u2019s strategic importance is not growing, as many have claimed or assumed, but diminishing.... Information technology has increasingly become, in other words, a simple factor of production\u2014a commodity input that is necessary for competitiveness but insufficient for advantage,\u201d Carr wrote.\n\nAs an author trying to sell books, his timing was perfect. It was a brutal period for CIOs\u2014cost-cutting, disappointment and lots of CEOs wondering where all that money they\u2019d spent had gone. To many, the book was another indictment, in a long line of indictments, that harked back to when IT was nothing more than a transaction-processing cost center.\n\n\u201cI was conscious I was saying controversial things,\u201d Carr recalls, \u201cbut I had no idea it was going to explode into this debate.\u201d\n\nHe says there was a fair amount of hostility from CIOs, but \u201cmainly it was from the IT industry.\u201d Reviews included \u201cHogwash!\u201d from Microsoft CEO Steve Ballmer, and \u201cDead wrong,\u201d from then-HP CEO Carly Fiorina. Obviously, the book had touched a nerve.\n\n\u201cEven if they disagreed with me, I provided a context and language where IT could be discussed in strategic terms,\u201d Carr says. \u201cI provided a way for companies to have important and often instructive conversations about the role of IT, where it was just a cost and where it might have some force as a differentiating asset.\u201d\n\nTo this day, many CIOs, such as Mott, take passionate exception to the premise of Carr\u2019s book. \u201cAll the examples Nick used in the article and subsequent discussion were really about the playing field being leveled in infrastructure,\u201d Mott says. \u201cWhat he totally missed was the competitive advantage in the development of applications. It\u2019s really about what applications you develop to beat all comers in your industry.\u201d\n\nAsked if he still believes that IT doesn\u2019t matter, Carr responds, \u201cIs IT going to give a company a competitive advantage? In most cases, no, though I would admit that there are exceptions.\u201d\n\nTo which Mott retorts, \u201cAnd it\u2019s those exceptions that are the ones that take market share and win.\u201d\n\nAs for those companies that think IT still doesn\u2019t matter, Mott says, \u201cThose are the guys that lose.\u201d\n\n\nThe Business of IT Is Business\nIn the last couple of years, a new CIO prototype has emerged\u2014a stronger, more versatile, innovative and business-focused IT leader who delivers what CEOs have been yearning for from their IT function: proven value. To many CIOs and industry watchers, it\u2019s about time. \u201cNow there are methodologies and standards, and it\u2019s possible to run IT as a business,\u201d Orlov says. \u201cObviously, there ought to be financial metrics [to measure IT\u2019s success]. It ought to be a given that CIOs can deliver a 100 percent stable infrastructure. Change ought to be managed; benefits need to be quantifiable.\u201d\n\nFiscal discipline has become an imperative for CIOs. But that doesn\u2019t mean simply slashing costs at budget time. It means demonstrating how IT affects revenues, profits, costs, customer service, sales, manufacturing and everything else under the business\u2019s umbrella. \u201cYou\u2019re talking about IT entirely in business terms, which was not the way it was discussed 20 years ago,\u201d Orlov says.\n\nAccording to a recently completed five-year study of Global 2000 companies by the nonprofit think tank BTM Institute, companies that have what the institute calls \u201cconverged business technology management\u201d have markedly increased financial performance and exhibit superior revenue growth and net margins than others in their respective industries.\n\n\u201cThis is not about a project or ROI, but it\u2019s about the overall performance of the company,\u201d says Faisal Hoque, founder and chair of the BTM Institute. For example, those companies with converged business technology management had 12 percent average annual revenue growth, compared with 4 percent for their industry groups. They also achieved 36 percent average annual earnings per share growth versus 7 percent for the industry groups. In addition, the converged business technology companies grew at a faster pace and had greater returns than did their peers. \u201cIf you cannot link the things you are doing back to the overall corporate performance,\u201d Hoque says, \u201cthen what\u2019s the point of having not only the CIO role, but even the function itself?\u201d\n\nDoucette, who\u2019s been able to demonstrate what IT costs as a percentage of UTC\u2019s overall revenues and how IT propels revenue growth, concurs. \u201cIf you can\u2019t show what you\u2019re driving for the business,\u201d he says, \u201cthen what good are you doing?\u201d\n\nIn 2005, CIO profiled Cooper\u2019s courageous and ambitious turnaround of Toyota Motor Sales\u2019 IT department that, among other strategies, employed four key IT metrics: for new investments, operational performance, financial performance and workforce management. She called her mission a \u201cvalue quest\u201d for IT. But, she realized after starting, \u201cyou can\u2019t do that until you rise to the notion of the economics of IT.\u201d\n\nEventually, she tied each of those metrics to the processes of the business units IT worked with and continually interpreted them to her colleagues in business terms, not IT terms. Cooper was also able to show her business peers a metric they could relate to easily: how much IT cost per vehicle. \u201cIt always struck me that we, as managers, were never really good at getting [the financial value of IT]. We always worked off one dimension\u2014the annual budget plan,\u201d Cooper says. \u201cBut that\u2019s just a tool. You had to get beyond that to drive transparency.\u201d\n\nShe says it was a combination of her years of experience and elements of Toyota\u2019s culture (cost-consciousness and persistence) that allowed her to change the value of IT. \u201cNo detail is too small, and no aspect is overlooked in how you look at cost per vehicle,\u201d she says.\n\nCooper pulled it off\u2014without layoffs. Toyota\u2019s market dominance speaks, in part, to the success of her turnaround.\n\n\nBecoming Leaders\nWhile it\u2019s now widely accepted that IT does matter (a lot), IT and the CIO role have lots of room to grow. \u201cThis is a very young profession,\u201d says Forrester\u2019s Orlov. \u201cIt\u2019s not as evolved as finance, marketing or sales.\u201d\n\nEven with their comeback from the era of disappointment established (a CIO\u2019s average tenure has grown from four and a half years in 2004 to five years in 2007, according to CIO\u2019s \u201cState of the CIO\u201d survey), CIOs are now preparing for their next challenge: an ever-changing, partner- and consumer-driven Web 2.0 world of Web-based applications, converged mediums, telecommuters and security vulnerabilities, all at their digital doorstep. Which means CIOs must adapt\u2014again.\n\nA recent IBM survey of 170 global CIOs found that \u201ctheir business leadership is calling upon them not simply to be efficient, but to help their companies change the entire game.\u201d Research from IBM\u2019s Institute for Business Value found that 80 percent of CEOs believe very strongly that the integration between business and IT will be a critical enabler of running businesses. \u201cBut only 45 percent thought that integration was taking place at an acceptable level in that business today,\u201d says George Pohle, VP and global leader of the institute. If, in some companies, the CIO role isn\u2019t as defined as it should be, Pohle says that CIOs need to assert themselves. \u201cThis isn\u2019t about waiting for the business to ask you what role to play,\u201d he says. \u201cYou should be telling the business the role that you should be playing.\u201d\n\nCIOs interviewed for this article all stress the importance of developing the next generation of CIOs, who will need to possess the skills not just to keep pace with the business and its technology desires but also to drive the business forward. \u201cThe game is going to be very different over the next 10 to 20 years,\u201d Cooper says, and the next generation of CIOs have to think beyond a partnership role with the business to a leadership role.\n\nTurner sees it as an ability to anticipate challenges and \u201cembrace disruption.\u201d\n\n\u201cCIOs need to think of their role as change agents in the rest of the company\u2014for process improvement, to find excess labor and inefficiencies, for identifying technologies that make employees more productive, or technologies that can change the rules of the game,\u201d Orlov says.\n\nNo one should expect CIOs to shy away from these challenges. They never have.\n\nSenior Writer Thomas Wailgum can be reached at firstname.lastname@example.org.