Seven years ago when B. Lee Jones joined Stratex Networks Inc., a developer of wireless transport systems, as its IT director, he stepped into an IT organization that had zero credibility. The help desk was unresponsive, and systems “were down more than they were up.”
Chuck Kissner, Stratex’s CEO, says he viewed Jones’s role at the time as a tactical one; the job was to stabilize a network prone to frequent crashes and to build a robust IT infrastructure. But Kissner hoped Jones would quickly move beyond the role of firefighter and add more strategic value to the company.
Jones succeeded. And today he is the CIO, reporting to the company CFO. His executive-level promotion reflects his accomplishment in bringing credibility to the IT organization, as well as in managing additional responsibilities beyond IT that integrate him more closely with the business and the executive management team.
Jones now also participates in all capital projects for the company, including building construction, and he negotiates outsourcing contracts with manufacturers. When Stratex was struggling to match supply of its wireless transmission systems with demand, Jones’s IT department stepped forward with a solution — integrating the company’s siloed systems to manage inventory more effectively.
Because of Jones’s ability to conceive of and execute IT projects that support the corporate vision and to oversee business-focused decisions, he is viewed more as a strategic partner than he or any IT executive at the 20-year-old company has ever been, says Kissner.
While plenty of CEOs share Kissner’s view that IT and CIOs should be strategic, a significant number still look at the CIO role as largely a support function. According to CIO’s “The State of the CIO 2004” survey, 44 per cent of CEOs surveyed said that the role of the IT department and the CIO is to use technology to support and enable predefined business initiatives, compared to 31 per cent of CIOs. Among CIOs, 69 per cent take the more strategic view — that their role is to proactively envision business opportunities and apply technology to achieve them.
The disconnect becomes problematic when it leads CEOs to conclude that IT is a service function that doesn’t need to be involved in the creation of long-term business plans. When CIOs aren’t part of those discussions, they lack a forum for showcasing their capacity for creativity and innovation, making it even more difficult for them to prove their strategic worth.
The survey also shows a reason for the disconnect. Although CIOs say they are strategic, they behave tactically. And that’s what CEOs see. Both CIOs and CEOs reported in the survey that reducing costs is the most important impact IT had on the business in 2003 and will continue to be in 2004 and 2005. Enabling growth, enabling or driving business innovation, and creating or enabling competitive advantage — functions that often as not involve executing some other department’s initiatives — ranked in the top five for both groups.
More strategic results, such as growing existing revenue streams or generating new ones, ranked near the bottom. “Most CIOs I know would like to be strategic, but they’re tactical,” says Kissner.
Several factors explain this discrepancy. In interviews, both CIOs and CEOs say there’s a lot of wishful thinking among CIOs who imagine they’re strategic but aren’t. Many CIOs lack credibility as strategic decision-makers, and they tend to focus on their tactical responsibilities.
To ensure that their CEOs view them as strategic, CIOs need to prove themselves, which ironically can involve taking care of tactical matters well. “It’s very difficult to be seen as Mr. or Ms. Strategy if the trains aren’t running on time,” says Steve Agnoli, CIO with the Kirkpatrick & Lockhart LLP law firm. It also helps to make sound decisions about the technology priorities that further the company’s strategic goals, and to conceive of innovative ways to use technology to leapfrog the competition.
Self image vs. reality
Chris Feola, CIO and executive vice-president of AskSam Systems Inc., says he thinks the percentage of CIOs who view their role as strategic outweighs that of CEOs because so much of CIOs’ professional well-being (including the size of their budgets) depends on whether they’re perceived that way. It’s a take on the old Rene Descartes postulate: cogito ergo sum (I think I’m strategic, therefore I am). CIOs also may perceive themselves as strategic because they are responsible for the vision within their departments.
But even though they’re at the top of the IT food chain, they’re still functional executives. CIOs may find themselves being viewed as having a tactical role because they’re the ones who are accountable when a virus hits or a project derails. “There’s a certain amount of the CIO’s job that is related to implementation (and) maintenance regardless of what business you’re in, your strategic goals or who’s sitting in the CEO’s chair,” says Agnoli. By contrast, if a company’s infrastructure is running smoothly, a CIO will have more time to focus on strategic matters. Agnoli says he divides his time down the middle.
Finally, CEOs don’t see CIOs as strategic because many have failed to make many substantial technology investments pay off. Observes Feola: “If you’re a CEO and you’ve been through four or five CIOs who have left chaos in their wake, your reaction to a new CIO coming in and saying, ‘I’ve got a piano, you’ve got a barn, let’s put on a show,’ is ‘No, the last time we did that we were rounding up livestock for six months.'”
The problem with all this is familiar: When CEOs don’t view IT as strategic, they don’t invite CIOs to the planning table. CIOs end up behind the eight ball when, for instance, a merger is botched because no one examined potential systems integration problems.
But when the CIO is included in strategic discussions, good things happen. Agnoli says that the idea for Kirkpatrick & Lockhart’s online performance review system came about because he knows that the firm’s strength “is based on the quality of its lawyers and the services they provide over time.” Kirkpatrick & Lockhart CEO Peter Kalis, to whom Agnoli reports, says the system, which provides a comprehensive view of associates’ skills and experience, was a product of Agnoli attending monthly board meetings.
Three steps to image adjustment
Because Kirkpatrick & Lockhart’s performance system plays a strategic role in helping the firm develop its employees and also saves money, it enhanced Agnoli’s already high level of credibility as a strategist. If on the other hand, you have yet to live down a bad investment, here are three ways to raise your profile.
1. Make strategic choices. Making strategic decisions about projects and communicating them to the CEO will help bridge the rift between you, whether you or a previous CIO created it.
Recently, Feola approached his boss, CEO Phil Schnyder, with bad news. Feola said he had to shift some staff that was working on a CRM upgrade over to a development project for AskSam’s core database technology product so that the company could make the product release deadline.
Problem was, shifting resources was going to cause him to miss a milestone in the CRM upgrade. Feola explained that he thought it was more important to make the product deadline than to upgrade an internal system on time. Schnyder says Feola made the right call.
“What he felt was important was very aligned with what I felt was the right thing to do,” says Schnyder. Feola made the strategic choice to devote his resources to a revenue-generating project — and made sure his boss knew about it. The incident gave Schnyder confidence in Feola’s ability to decide what’s best for the company.
Schnyder, in turn, was able to take remedial action. He assembled his sales team to find out which parts of the CRM system they couldn’t live without and talked with the tech staffers to find out how quickly they could finish the implementation.
2. Propose new business opportunities. Finding opportunities to expand the business also helps CIOs position themselves in a strategic light. Jim Krause, managing director and CIO of the Chicago Mercantile Exchange Holdings Inc. (CME), decided to adopt the Financial Industry Exchange (FIX) protocol, a standard that is common in the securities industry. He thought adapting FIX for futures trading would make connecting to the CME easier for customers.
As a result, the CME has improved its ability to attract traders because it can bring them online more quickly than competing exchanges. Because more people are trading on the CME, the exchange has increased its liquidity — one key to remaining competitive as a marketplace. Krause (who reports to the company’s COO) says his CEO, Craig Donohue, now views him as more strategic because he saw and acted on an opportunity to help the CME’s business grow.
3. Promote your agenda. Agnoli advises CIOs who don’t participate in regular board or senior management team meetings to lobby for 10 minutes during those meetings to articulate their agendas and their business impact. During his 10 minutes, Agnoli talks about the projects his department is working on and their strategic value, what he is spending money on, and his ideas for achieving business goals.
Jones keeps his Stratex colleagues informed about how his IT projects support the company’s six high-level corporate objectives. (He uses a diagram as a visual aid.) For example, he conceived of the IT infrastructure that Stratex needed to roll out a new product line and track software licenses — a project that supports corporate growth.
Once CIOs have established themselves as bona fide strategic contributors, CEO support follows. When Krause suggests ways to make the CME operate more efficiently, Donohue promotes those ideas inside the organization and helps explain how they will make a particular product more profitable. When AskSam’s marketing department complained to Schnyder about a decision Feola made to shut off software used for tracking prospective customers, he went to bat for Feola and explained that the CRM upgrade Feola was working on would address their needs in a better way.
The fact of the matter is, CIOs have to be both strategic and tactical. That’s what their CEOs say when pressed. But for CIOs to be perceived as strategists first and enablers second, they have to demonstrate that they can come up with ideas to make their companies more competitive while at the same time fulfilling their tactical responsibilities. No amount of blustering about the contribution of IT will change the way others perceive you.
Concludes Kalis, Kirkpatrick & Lockhart’s CEO: “Whoever wishes to occupy a seat at the strategic table, whether the CFO or CIO or COO, he or she will have to earn it.”