The CIO's Role in Reaching External Customers

As a CIO, you have the unique ability, and therefore the responsibility, to ensure that marketplace discussions are focused on the customer at a very granular level. Most organizations have not restructured to reflect market changes and shifting customer requirements and power. Industrial Age organizational structures still dominate many companies. They were designed to implement mass production and vertical integration strategies, rather than the highly selective customer management strategies that companies need now.

For example, a large computer manufacturing company in the early 1980s was organized by relative size of computer systems: a small systems division (including PCs), a mini-computer division and a mainframe systems division. For many years, this product focus had provided significant efficiency in the development and delivery of the company's products and related services. As long as customer buying power was low and there was minimal overlap of customers across the business unit boundaries, the product-focused organizational structure was appropriate.

But by the mid-80s, customers wanted to implement MRP-II solutions that required highly integrated applications, which used systems from all three divisions. Customers were required to navigate through the company's organizational structure and cross the business unit borders. It took the company six years to understand and respond to these emerging customer needs, since the internal organization (which was initially designed with customer needs in mind) was blind to this evolution. Until executives recognized that the market was requesting integrated solutions, the company continued to be product-focused and to build systems for each siloed business unit.

An organizational structure that isn't aligned with marketplace requirements causes misinterpretation of important data. When customer requests are viewed through a product lens, a company might respond in a way that actually conflicts with customer needs, as the computer maker did. CIOs must look to the marketplace and customers to ensure that information systems are responding to their requirements, regardless of how the company is internally organized.

The CIO's role is to ensure the data that matches marketplace and customer requirements is brought to light and brought to the attention of the rest of the company. Doing this requires a horizontal view of the business, and the CIO is one of the best C-level executives to have this view. He or she has allies in the organization, such as the supply chain owner and the quality management owner. But the CIO is often the senior-most executive with this view. CIOs are best-positioned on the executive committee to present this horizontal view.

CIOs must keep their executive colleagues apprised of several important areas:

• Changes in customer and marketplace activity that could affect the company's goods or services

• Internal organizational structures that potentially could be at odds with customer needs

• Information systems that target only the present, or are based on an outdated past perspective, and thereby obscure future views of the business.

These responsibilities hold significant ramifications for CIOs. First, you must make sure that your company is fully committed to the shift to customer management. Second, you have to ensure that the information your corporation collects is parsed and granular enough, down to the customer level, to enable customer management.

This may mean driving a set of activities aimed at changing the sales-force data-collection activities - something the CIO doesn't typically lead. It may mean driving a change in the marketing and sales processes to ensure availability of customer-level data. It may mean crafting a vision to make sure the company is positioned to appropriately respond to a shift from market segments to customer management. For some business leaders, that is a hard pill to swallow.

It's essential that you navigate these political hurdles, however. If your company can't stay close to individual customers and change in the ways that they require, then you will find - as many executives have in the swiftly changing economy of recent years - that your company has lost the ability to sustain itself.

James Cash is the emeritus James E Robison Professor of Business Administration at Harvard Business School, where he was also senior associate dean and chairman of HBS Publishing. Keri Pearlson is a research director with The Concours Group and co-author of Managing and Using Information Systems