What’s Next for the CIO Role

Lori Beer can talk technology as well as any IT staffer. While rising through the ranks to executive vice president and CIO at insurance giant WellPoint, she could dive into any discussion about software development or hardware standards. But her job demands more than technical savvy. Accordingly, she has molded her skills and those of her top team to help WellPoint achieve its business strategy—redefining how the company interacts with hospitals, doctors and patients in the new era of healthcare.

“We are accountable for making our products and services real,” says Beer, who in October was promoted to executive vice president of ­WellPoint’s new Enterprise Business Services organization (the group includes IT and the CIO now reports to her). Under the terms of the recent healthcare reform, individuals will be more involved in decisions about their care than ever before, Beer believes. The CIO’s job is to “connect all those dots to determine how we effectively balance managing risk as a company with bringing new consumer-facing capabilities to the table.” (For more on how to change how the C suite perceives the CIO role, see “Three Opportunities for CIOs to Prove Their Business Smarts.”)

For advice about how to develop the leadership expertise you need to advance your role, visit the CIO Executive Council’s Future-State CIO site.

Like Beer, most CIOs want to fulfill this business-strategist role. Eighty percent say that’s their goal, according to a recent survey that asked more than 200 CIOs about the future of the role, conducted by the CIO Executive Council (a global peer-advisory community founded by CIO’s publisher). Rather than spend their days in the details of IT operations and cost management, or implementing systems to support redesigned business processes, they want to work on business strategy and identify ways to incorporate IT into products, services and even new business models. Getting there, however, is hard work.

Being recognized as an agent of corporate growth and change requires CIOs to develop and apply leadership skills that many didn’t automatically acquire as they moved from project manager to IT executive. Strategic leadership involves more than knowing how to deliver systems or design more-effective processes. Rather, strategic IT leaders must be able to foster collaboration across business functions, exert influence on internal stakeholders and understand how IT can be used to meet the expectations of external customers.

That doesn’t mean CIOs leave their functional or process-transformation responsibilities behind, however. The IT department has to keep the company’s technology infrastructure operating while it keeps an eye on how it could improve business operations. For CIOs to be able to let go of day-to-day IT decisions, they have to cultivate a team of managers capable of keeping the lights on and executing projects.

In fact, having an effective team is essential to positioning IT as a group that can increase a company’s competitive advantage through technology and process innovation. Many CIOs establish trust with business stakeholders only when they demonstrate their team is competent at delivering basic IT services. Strategic CIOs build on that trust to become valued for their contributions to C-suite discussions about how to increase revenue and market share.

To find out how CIOs prepare for and manage this role, we interviewed Council members from companies where they and their IT departments are linchpins in the development and execution of business strategy. CIOs have to earn the right to participate in this way, Beer says, by adopting the strategic perspective held by every other executive. “It’s about having the skills to go from aligning with the business to helping accelerate the business.”

A Different Kind of Technology Leader

No two CIO jobs are exactly alike, but at top-performing companies, CEOs want their CIOs’ strategy—and its execution—to reflect their own plans, says Chris Potts, corporate strategist with consultancy Dominic Barrow. Often, CEOs are looking for the CIO to provide leadership for improving the company’s standing in the market. (For more about what CEOs want, see “What CEOs Expect from CIOs.”)

To think like a CEO, IT leaders must be able to understand the products their companies provide and how people use them. Ian Patterson, CIO at online brokerage Scottrade, has an office at the company’s headquarters in St. Louis, but he’s rarely in it. Instead, he walks around and spends as much time as possible discussing strategy with his C-level peers and keeping tabs on what makes the company tick. “You’ll never be the expert” in another function, he says, “but you can be the one to fill the gaps and connect the people” with the knowledge to solve a particular business problem.

One aspect of Scottrade’s business that Patterson has learned to focus on is the speed with which his company must adapt to keep up with legal requirements and customer needs. Often, these external forces push Scottrade to change faster than even technology would dictate.

For example, Scottrade used to make an annual business plan. But the pace of change in the financial services industry has made it necessary to refresh the company’s objectives quarterly. So Patterson revamped the governance process for IT projects. While he still has a five-year IT strategic plan for long-term investments and innovation, current projects and proposals are now prioritized quarterly, he says.

At WellPoint, CEO and Chairman of the Board Angela Braly sees potential for IT to lower costs while raising healthcare quality. But to do it, she needs Beer to understand how the company interacts with its many constituencies, including individuals, employers, and state and federal governments. “It is critical that she understand all of our internal issues, but also that she [be] a really externally aware and engaged CIO,” Braly says.

Before her promotion, Beer demonstrated her approach largely through her role as head of the company’s internal operations council and as CIO, Braly says. Beer led the company­wide “Building a Better WellPoint” initiative, which began by tackling improvements to internal processes. To succeed, Beer had to shore up her change-management skills. She also had to look at the enterprise in a cross-functional way, in order to see how data could create new corporate value.

Now Beer is using the same skills to lead her colleagues as they examine external influences on the business. A top priority: adapting to the federal government’s new claims-processing requirements, which are essential to implementing healthcare reform.

The pull of day-to-day operations can distract CIOs from external business influences. During the recession, many companies focused more on efficiencies, with IT playing a big role. Similarly, following a merger or acquisition, integrating systems and infrastructure and reducing duplication are usually top IT priorities, even for CIOs with strategic roles. Once the tactical work is accomplished, CIOs need leadership expertise to re-establish IT’s strategic focus, observes Kelli Crane, senior vice president and CIO with Thomson Reuters.

During Thomson’s acquisition of Reuters in 2007, IT was faced with completing a large number of projects in a short time: the staff was so overworked that they had to be satisfied with “being an order taker, just getting the job done,” Crane says. Once the integration with Reuters was under control, Crane launched several projects aimed at increasing market share and revenue. One was a new intranet, designed to establish a more collaborative environment within the company. The project also demonstrated how Thomson Reuters could enhance communication with customers and external partners using social media technologies.

As she moved through the Thomson and then Thomson Reuters technology-department hierarchy over the past seven years, Crane spent a lot of time helping the company build its experience with customer-contact programs, which taught her about all the ways people want to communicate. “When I think about where I add the most value, it’s in change leadership and in thinking about where we can do things differently,” Crane says. “How do we think outwardly about the customer experience, self service, different channels?”

Fill Up the Bench

Yet the CIO doesn’t stand alone. The most common challenge to being a strategic leader is a lack of management depth in IT staff. While CIOs often have lieutenants who can lead process-improvement initiatives, they say they’re missing managers who can partner with business stakeholders in daily operations instead of waiting for directives or requests. (For a list of the top barriers to advancing the CIO role, see “Strategic CIOs Struggle to Achieve Ambitions.”) Without these managers, CIOs can’t find the time to work with their executive peers, oversee enterprise initiatives or keep up with market changes and customer needs.

Kevin Murray, group COO and CIO with AXA UK, part of financial services company AXA Group, has addressed the problem by building a team that can handle the functional aspects of IT. He still stays informed about what is going on day to day, but he decided there was no way he could directly oversee IT operations and be an active player focused on company strategy.

“I couldn’t do that until the other side of the wall was self-sufficient in running IT,” he says. “I always had my fires, we all do. But at least this isolated me so that I could focus on strategy, as well as become part of the business and become a trusted partner.”

To insulate himself from daily decision making, Murray installed six systems information officers (SIOs), who provide the leadership link between high-level business strategy and its execution. The SIOs, who report to Murray, have a mix of technology knowledge and insurance-industry expertise.

The SIOs each have two vice presidents reporting to them: one is responsible for tactical decisions and the other is responsible for new projects. Through this structure, the SIOs and the vice presidents communicate business leaders’ input on corporate IT strategy and incorporate it into daily operations.

Murray hired the SIOs from across the insurance industry, choosing managers who had positions near the top of their previous organizations. Thomson Reuters’ Crane, on the other hand, looked to fill such roles from within. She needed IT leaders with a blend of project-management and business-analyst skills who could work alongside business managers. These leaders serve as liaisons, explaining the technical perspective of developers to business users and relaying business and customer needs to IT.

Crane doesn’t care whether the people with this hybrid set of skills come from IT or another business function. “Either way, you’re providing some amount of training,” she says. But the ideal candidates are individuals who want to learn how the other side works. She’ll rotate them around the company, making sure they get involved with the cross-functional Enterprise Solutions Design team. By working on enterprise projects, these managers get experience using the business-analyst, communications and project-management skills that make for a well-rounded IT leader.

Crane’s team of liaisons has only been in place since the beginning of 2009, but already “it’s a place where people want to be,” she says. “It’s been seen by our staff as a good way to do things and a great learning opportunity to work with their business peers.”

Making the Best Impression

Even when you have a management structure in place that gives you time for the big picture, company leaders who have long-simmering resentments of IT may block a CIO’s escape from a tactical role. Particularly in companies where IT has performed poorly, CIOs need to establish their credibility by maintaining core systems before they can expect to be trusted to take on broader responsibilities, much less hope to be welcomed with open arms into business-strategy meetings.

“I got kicked out of the room a couple of times,” AXA’s Murray admits. Business leaders who weren’t happy with their IT systems were still willing to put up with them rather than risk the upgrades or replacements that Murray proposed. Before Murray arrived, they had been conditioned to expect the worst from years of ad hoc—and frequently unsuccessful—technology implementations. “It look a lot [to convince them] that those legacy systems might get them through the year, but they weren’t going to get them through the next five years,” Murray says.

Having support from the company’s CEO kept Murray in the room for the right conversations, but it was demonstrations of value—such as a solution for automatically applying business rules to product releases—that lowered the barriers to business leaders accepting IT as a strategic contributor to the company’s growth.

At first, Murray says, “no one really understood what [the system] could do or why we needed it.” But when other executives saw that it decreased the amount of time it took to bring products to market, “it started to win a little confidence that maybe there is something to this technology stuff, and maybe this is going to make us more competitive.” AXA used to launch one or two products a year; now it launches eight to 10.

Crane, meanwhile, found that her executive colleagues at Thomson Reuters welcomed her in a strategic role despite the amount of time she had spent on tactical projects during the merger. “I think our key stakeholders realize that you need very diverse backgrounds and skills to make the best decision,” she says. CIOs shouldn’t be afraid to reclaim the strategic ground that will allow them to deliver the most value.

The key to doing so, according to consultant Potts, is for each CIO to determine what strategic role they play that is different from other leaders at the executive table. Whether that role is to focus on customer value or internal productivity (or both), CIOs must establish their expertise and be recognized for it, he says.

Crane has been able to establish her influence with Thomson Reuters’s leadership team because she demonstrates that she knows how the business operates, says Michael Moore, the company’s global head of internal and online communications.

Moore believes that you can describe the expertise of many good business leaders as “T-shaped.” He envisions a vertical line representing a leader’s specialty (such as IT) and a horizontal line representing his or her knowledge of how different parts of their company work. Crane’s knowledge and experience fits this model, he says. “In our business, the platform, the technology, the ability to target, it’s just as important as the message you’re getting out,” he says. “So we constantly work together—her team, my team, and both of us personally—to figure out how to address our users’ needs.”

What the Future Holds

As more companies realize the benefits of having a strategic, externally focused CIO—and more CIOs are able to step into that role—the CIO’s career path is likely to change.

Some CIOs who master the strategic role will be able to use that experience to reinvent the IT function at other companies. A strategic focus also opens up new opportunities for IT executives who want to run a business or serve in another C-suite role.

At VocaLink, which processes United Kingdom and international payment transactions, former director of IT Nick Masterson-Jones is now the managing director of transaction services and has P&L accountability for the business unit. He hasn’t left IT behind, however. If anything, he says, he’s using technology in the most strategic manner possible: to completely rework VocaLink’s business processes. As the executive in charge of providing a core service, he is better positioned to use technology to advance corporate strategy, he believes, than he was when he was just working with the executive in charge.

Bill McCreary, vice president at specialty glass manufacturer Pilkington North America, is also taking on the directive of creating new business opportunities. While still accountable for the technology group at Pilkington, he is now also chairman of a new joint venture, called DyeTec Solar, between his company and Dyesol, which provides materials used in solar energy cells. He oversees the venture’s efforts to capitalize on science and technology breakthroughs to create solar-energy products. Investors gave him this opportunity in large part because of his experience, he says, including his work as an IT executive addressing external customer needs and his work on the boards of venture capital firms.

At WellPoint, Beer’s new role as head of Enterprise Business Services gives her the opportunity to integrate the strategic capabilities of several core business-support functions, including service operations, sourcing and supplier management, with IT. Now that the CIO reports to Beer, her role is entirely focused on improving how the company operates.

But even for CIOs who plan to stay in the IT executive role for the foreseeable future, the road is clear, Beer says. “We have to focus beyond doing the basics well, beyond streamlining and driving efficiency internally. To me, the next level is about how you help the company grow.”

For advice about how to develop the leadership expertise you need to advance your role, visit the CIO Executive Council’s Future-State CIO site at council.cio.com/programs/future_state.html

Follow CIO Executive Council Editorial Manager Diane Frank on Twitter: @dtwfrank.