Alan Hughes became CIO of Blue Cross Blue Shield of North Carolina in 2009; three years later, when the company consolidated IT and operations, Hughes was named COO.\n\tThe CIO to COO path is an attractive one that not every CIO will travel in his or her career.\u00a0 How did Hughes do it?\n\t\u201cI have been always viewed as a business leader who has expertise in technology,\u201d he says.\u00a0 \u201cNot as a technologist who happens to be in a business.\u201d\n\tMost CIOs know that their priorities should be business first, technology second, but many struggle with positioning themselves in that way. \u00a0Hughes\u2019 experience at BCBS of NC provides some insights:\n\tGive more control over the IT budget to the business\n\tWhen Hughes stepped in as CIO, he found that there was a less than perfect relationship between the IT organization and business operations. \u201cThere was a lot friction because of a lack of accountability in each group,\u201d he says. \u201cI was able to cut through that friction and built a better partnership by establishing an equal amount of accountability.\u201d\n\tIn order to evenly distribute accountability, Hughes focused on costs. \u201cI used an approach that I\u2019ve used many times in the past,\u201d he says. \u201cBusiness leaders are always looking at their cost structure and at what they can control versus what is allocated to them. I worked hard to understand our cost drivers, and I communicated to the businesses which IT costs were fixed and which were variable.\u201d\u00a0\n\tBy educating the business about the kind of decisions they could make to control their own IT costs, Hughes was able to take some accountability for IT investments out of IT and give it to the business. \u201cThis was very empowering to the business,\u201d says Hughes. \u201cNow, they could look at the budget and rather than having to accept huge fixed costs, they could say, \u2018Next year I won\u2019t have the revenues to cover these costs, so I choose not to invest in IT in these areas.\u2019\u201d\u00a0 There were certainly some \u201ckeep the lights on\u201d costs that the business could not defer, but now they had control over areas where they had not in the past.\n\tTurn fixed costs into variable costs\n\tAfter giving ownership over variable costs to the business, Hughes went deeper.\u00a0 \u201cWe looked at what had always been defined as fixed and asked, \u2018Where are the variable costs in this category? Can we let the business make decisions about levels of service that will give them more control over their IT budget?\u2019\n\tFor example, BCBS of NC had a business continuity plan that dictated that all applications would be available within two hours of going down. \u201cReally?\u201d asked Hughes. \u00a0\u201cThat\u2019s a major cost to the business. Let\u2019s let them make the decision about which applications require that level of service.\u201d Hughes showed his business partners the difference between what it would cost to have their systems up and running within two hours versus other operational timeframes and asked them to make the decision. \u201cWe turned systems uptime from a fixed cost to a variable cost and made it a business decision, not an IT decision,\u201d he says.\n\tWith the business enjoying a new level of control over their own IT investments, the relationship between operations and IT improved. This change was not lost on the CEO. \u201cThis was an inflection point for the company,\u201d says Hughes. \u201cThe better relationship allowed us to be more effective and productive.\u201d BCBS of NC\u2019s CEO saw the power of the new relationship, so when he decided to name a COO over operations and IT, Hughes was an easy choice.\n\tKeep \u201ccost of talent\u201d front and center on your IT roadmap\n\tHughes has a rolling three year plan that addresses IT investments in a number of areas, but he is sure the keep talent at the top of the list. \u201cAs we look down the road of emerging technologies, we identify the skills that were once strategic but are now becoming commodities,\u201d he says, \u201cAnd we keep an eye on which skills are becoming differentiators.\u201d\u00a0 Hughes\u2019 rolling three year plan identifies sourcing strategies that will keep commodity costs down and free up resources for differentiating talent.\n\tFor example, Hughes had staffed the internal help desk with people who were being paid above market, which kept him from paying for talent in other areas. \u201cWe moved to alternative sourcing and freed up dollars for data analytics people who are expensive and tough-to-find,\u201d he says.\n\tBe keeping talent top of mind on his rolling three year plan, Hughes was able to show his CEO that he could look around the corner to see what\u2019 was coming, and execute on new technology trends quickly. \u201cThis went over well with the CEO and the board,\u201d he says.\u00a0 \u201cThey appreciate that I\u2019m trying to anticipate the future and keep us proactive.\u201d\n\tAdd to your skillset or move on\n\tHughes is a big fan of the \u201ccollege major and minor\u201d concept. \u201cWhen I started out, my major was IT, so I needed a series of minors,\u201d he says. \u201cI took on additional roles in operations and different parts of the business that allowed me to leverage my technical aptitude and apply it in that new area.\u201d In order to make the move from CIO to COO, Hughes believes that you need to have skillsets beyond IT.\u00a0 \u201cIf you are in a company that is providing you with opportunities to learn new skills like Lean and Six Sigma, you are on the right path,\u201d he says. \u201cBut if your organization cannot provide you with the tools to broaden your horizons, be bold enough to find those experiences elsewhere.\u201d\n\tAbout Alan Hughes and BCBS of NC\n\tAlan Hughes has more than 25 years of senior leadership experience in information technology, including serving at some of the nation's leading companies. He holds the role of Executive Vice President and Chief Operating Officer at Blue Cross and Blue Shield of North Carolina and is responsible for leading Customer Governance Operations, Information Services, Business Transformation and Business Process Excellence. Prior to that, he served as Senior Vice President and Chief Information Officer.\n\tHughes has demonstrated success in linking his organizations' IT strategy to business success. He has a strong record of helping global organizations make the most of information to meet financial, competitive and regulatory needs. His accomplishments have included integration of complex systems, improvement of customer Web capabilities and reduction of operating costs without sacrificing service.\n\tBefore coming to BCBSNC, Hughes served at GE Commercial Finance as Chief Information Officer of Global Risk Management and as CIO of Distribution Finance. He was also President of Business Services and CIO for Deutsche Financial Services, which was acquired by GE Commercial Finance in 2003.\n\tAlan has an MBA from New York University and a bachelor's degree in biological sciences from the State University of New York - Old Westbury.\n\tBlue Cross and Blue Shield of North Carolina is a leader in delivering innovative health care products, services and information to more than 3.7 million members, including approximately 900,000 served on behalf of other Blue Plans. For 77 years, the company has served its customers by offering health insurance at a competitive price and has served the people of North Carolina through support of community organizations, programs and events that promote good health. Blue Cross and Blue Shield of North Carolina is an independent licensee of the Blue Cross and Blue Shield Association.