CIO transformation to COO and beyond?

Polish-born and Australia-bred, Cathay Pacific‘s CIO Tomasz Smaczny has a clear sense of where IT is heading –having written papers on IT’s changing relationship with the business plus over 25 years of experience in retail and finance. He talks to Computerworld Hong Kong on the CIO’s path to transformation and possibly the COO role.

Computerworld Hong Kong (CWHK): So how is the CIO role changing in your view?

Tomasz Smaczny (TS): I believe strongly that the traditional “head of technology” role is dead. You see the most progressive CIOs are fast becoming “chief transformation officers” but you cannot play that function fully unless you move into the COO role in the company.

I come from the view that CIOs today are in a great position to see the whole business and understand how the company truly works. IT has a view of and a hand in every key business process and system, which gives IT a truly unique view of how the whole business architecture and operations work.

And in reality we are the only ones in the company that have such a view as the other departments and functions are much more focused on their own verticals.

CWHK: So what type of CIO do we expect to see take on this role?

TS: CIOs really are the only folks that work horizontally and vertically across the whole company operation. Over the years I’ve built a hypothesis that the CIO entails a fusion of responsibilities, and is driving a fusion of business, process and technology strategies. The leading CIOs in companies today realize they have this unique view of the company and are moving towards a new role where they are driving change and transformation. CIOs are far more commercially-minded than before and while they still have a clear understanding and view of technology they are much more mindful of the commercial, cost and revenue-profit side of the business.

CWHK: So how do CIOs get to this position? Do CIOs push for this to happen?

TS: CIOs are naturally not seen by the business as executives who fit into in such a role. The whole field of computer science and technology is a relatively young discipline and although we have seen great progress in technological advances we are still growing the business acumen of our IT staff. And while this varies across industries, over the years IT has become viewed in a different light within industries like finance/banking where it holds a position of greater value. Statements like “a bank is a technology company with a banking license” are used frequently to underline IT’s importance in delivery of value to customers.

Industry factors can affect the role, while geography can also be a factor given the cultural differences. As for the individual, much depends on the commercial acumen, business orientation and change management skills of the individual. If they have a lot of commercial sense then they will naturally tend towards issues of the business rather than only technology and frame their challenges in terms of cost, revenue, profit, and customer satisfaction.

In my view, the CIO can’t simply go to the CEO and recommend a change. It must come from a position of credibility. The question CIOs must ask themselves is: “What can I do to help improve the business?”. That’s what I’m focused on day-in-day-out.

CWHK: So how do CIOs take the next step?

TS: There’s genuine potential for CIOs to become the COO in the organization. Traditional COOs have come from a background of being in charge of a key process — say check processing, managing transaction systems or call centers, which are very specific to a process or a certain business unit. This actually isn’t as broad as the view that today’s CIOs have.

CIOs today are in a better position to play the role of a transformation agent.

A good example of this happening is Ralph Norris, who is the very successful CEO at Commonwealth Bank of Australia (CBA). He started as a CIO at Auckland Savings Bank (ASB) and eventually became COO and then was appointed into the role of the CEO of ASB, and subsequently CBA. He is a great example of what is possible.

That’s a massive progression for someone with a technology background. That would not be common within many industries and within banking it was unheard of at the time. Today, I believe, that progression is more possible in industries outside of technology companies. Many more ex-CIOs take seats at the board level as IT becomes an important contributor to the profitability of businesses.

And if you look at the Norris example, again he is not a pure technologist, he’s very much a commercially-minded person with a technology background. This is what I advocate and talk a lot about in many forums. Moving the CIO role to be more like the COO, not so much moving towards becoming a CEO but becoming a “chief transformation officer” to support and work with the CEO.

CWHK: So what happens with IT? The tech guys move to managing operations?

TS: If one accepts the CIO undertaking the role of a COO, then you need to view IT in a completely different manner. You still have a center of excellence that looks after the traditional functions like IT Operations but in all likelihood you have someone else manage that for you. Instead you move your team up the value chain and create teams to look after specific end-to-end operations like supply chain, or core transaction banking or customer service operations etc.

IT staff can look at applications and how these interact around processes and therefore produce value. From there you can think about incentivizing them around process performance in terms of time, cost and revenue generation.

This gives IT a lever to make a direct impact on the business. Right now it’s usually the folks that oversee the business process that have this control lever but they may not understand the systems or processes in the context of the entire company.

CWHK: So IT is clearly moving beyond just business alignment?

TS: I have always argued against the traditional notion of “alignment”. Alignment simply doesn’t work because it implies a master/slave relationship between IT and the rest of the organisation. It’s always sequential–one part of the organisationdevises the business strategy, then the IT strategy follows.

This is what universities tend to teach in their computer science curriculum, but this only works if there is no change in the business landscape and if everything stays more or less constant. My argument against alignment is that today nothing is constant and change is continuous and ever present. Such an environment demands agility and responsiveness. The old concept of alignment does not allow for that. For me it’s all about fusion — strategic decisions must be taken while considering all aspects. For example, the launch of the new Cathay premium economy class required all the elements of this strategy to be considered and decided on before launching. All elements needed to be considered at the same time.

This transformation is occurring even within our industry — though the shift within IT is happening with greater pace maybe within finance and banking. But even here within the airline industry, current developments are leading us into this ongoing discussion around the changing role of CIOs and of IT as a whole.

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