The market for CIOs just keeps getting hotter, as companies seek competitive advantage from electronic commerce and other new technologies. But companies also expect more from CIOs than ever before. CIOs are responsible for increasing the business' value and setting a company's strategic technology direction. That means helping increase sales, reduce costs or develop products and services.
John Handby, former CIO of Glaxo Wellcome, National Power and the UK post office, has authored Ahead of the Game Real-life experience winning competitive advantage with information technology. Currently, a "strategic IT adviser", he spoke with CIO editor Linda Kennedy about the evolving role of the CIO.
CIO: Not that long ago few senior executives knew what a CIO was, let alone what they did. You've been there, what's the definition of a CIO?HANDBY: That's not easy, because I think the role of somebody in that position is changing quite a lot. The CIO's role today is all about change and bridge building. Of course, a CIO must be able to understand and look after technology, but that's not the main focus of the job anymore. Instead, the main focus of the job is working with business colleagues to determine the best ways of exploiting technology.
We live in a time in which the pace of change is dramatically fast, but also one in which much of business is technologically enabled. I'm not just talking about obvious things, like the way we use the Internet, but things like the way we handle customers. These things are now totally dependent on technology.
Therefore, I think the major responsibility of a CIO is to be able to work with business colleagues and draw out, explain and discuss the opportunities this presents.
The role is obviously technology based, but it's much wider than that.
Traditionally IT people are by nature somewhat introverted, somewhat focused on technology. And that's fine - you need people willing to wind the wheels, as it were. But it takes a different kind of person to be a CIO. The challenges require strategic leadership and communications skills.
CIO: Traditionally, CIOs have tended to come up through the IS department.
However, in countries like the US, where the CIO position has been around a while, aren't more than a few CIOs coming from disciplines totally outside of IS?HANDBY: Yes, but that can be a mistake too. You need people who have a mixed background. You really need a hybrid manager: someone who understands the technology but who also understands the world of business as well.
It can be a real danger for some companies to hire an IT person as CIO, because IT people often talk a kind of gobbledygook which other business people can't understand. If that IT person isn't a good communicator, the other executives are going to be very uncomfortable.
But it can be a problem hiring someone from outside the IT department as well.
Executives are usually pretty comfortable with someone like a marketing director. Say the CEO knows Joe the marketing director, and knows he can always have an easy chat with him over lunch, so he names Joe the marketing director as CIO. That's great, he can now have a really great conversation with the new CIO. The problem, of course, is that the CIO isn't connected to the technology.
And an understanding of technology is crucially important.
You want people who have multiple experiences. My own background is a good example. When I was working for the UK Government a lot of my experience was in general management roles.
As a CIO you need to be able to bring that experience of the real world - or in my case, as close to the real world as politicians get - and mix that with an understanding of the IT world.
CIO: There are three areas a CIO needs to have experience in: business, technology and the organisation - the human side of the business. In a perfect world, how would you rank each area in importance, and what would be the ideal percentage break up? HANDBY: I would say that understanding the business and the business drivers is most important. Not the business sector - I'm not saying that somebody has to have worked in a specific sector, like insurance, to be effective. In fact, I think there are tremendous advantages to be had by bringing in people who are not from your particular business sector. I've done it myself and it often gives you someone who can offer a fresh, objective look at your business.
However, an understanding and familiarity with overall business directions and being able to relate them to a specific area - rather like a management consultant - is really half the job.
People issues are about how you handle relationships, how you handle communications, and also how you drive a group of people from multifarious backgrounds. Some of these people may work directly for you, some might be outsourced and some may be on contract. Your job as CIO is to bring them together rather like a conductor with an orchestra and unite them behind a single mission. All those sort of psychometric issues probably total about 30 per cent.
That leaves us 20 per cent for the technology, and the reason for that low number is that an awareness and knowledge of technology should be a given in this area. There have been recently, and will continue to be in the years to come, tremendously important technology divides. In other words, there will always be a battle or development going on in the marketplace that you have to bet your company's millions on - and get it right.
CIO: The CIO title is fairly prevalent in the US and Canada, but it's not truly established in Australia yet even though the function exists. What about the UK?HANDBY: It's not a term that's used very much in the UK. I always talk about being a CIO, but my job title in those companies was IT director. That might be what they call people, but the job content is CIO job content. I think this points to another issue that's underlying your question, which is: "How many people in that situation are what you might call true CIOs?"Exactly.
It's growing, but I think there are a lot of people who in their hearts and minds aren't quite there yet. There is still a very heavy reliance in corporate America on doing things traditionally through mainframes. All the other layers of sediment are on top, but there's still a bedrock of Big Blue. I think there are a lot of CIOs who were born into that cultural paradigm and are stuck there.
CIO: So how does a CIO break from that mindset?HANDBY: I think it's all about the CIO understanding change. A CIO's career is built on change. All the time they are trying to make tomorrow different from today. They must take the long-term view - the kind of view that people who are engrossed in today's bottom line can't see.
I feel very strongly that the day I stop being interested in change or wanting to learn how things can be different is the day I'll stop doing this kind of work. I've seen some quite glaring examples in my career of people who are responsible for change and technology who've become ossified in the technology.
They switch their minds off to change and only do about as much as they have to keep going. Once you get to that point you're of no use to anybody.
Since I left Glaxo Wellcome I've spent a couple of years working on various portfolios. All the time I'm finding out new things and struggling to learn where the market is going. I think all that is an essential part of the job. If you're not somebody who has that mindset, you're never going to make it as a CIO.
CIO: Given your experience, where do you believe the CIO fits best in an organisation's power hierarchy? HANDBY: I'm not sure it matters very much to companies structurally whether or not the CIO is a member of the board and so forth. The real question is: "Is this person part of the power map?" By that I mean are they respected and are their opinions seen as being important to the organisation?I think there is a very important role the CIO can play at the centre of things, but I think it has been slow to be recognised. Yet I see some organisations where this has happened.
I can think of one very good financial institution in the UK where the former CIO happens to be a friend of mine. He went there as CIO, then became resources director and now he's CEO. He now runs this organisation. And the thing that's apparent is that this is one of the most progressive - if not the most progressive - organisations in terms of taking advantage of technology and finding new ways of doing business in the financial services field.
I think the paradigm of the finance director or CFO who turns CIO is bust. It's fine when times are settled but not when things get rough. It's like going down a river. It's nice to have someone who can steer the boat and make sure the bottom line is all right, but when you get to the rapids, is that the person you want guiding you? Often, the IT function is closely aligned to the financial function, and it's not an easy alignment. There are many companies that are too conservative because they are dominated by their financial function. Watching your bottom line is crucial. That's obvious, but it's very easy to be so focused on the finances that you can't see what developments are coming around the corner.
It's very easy to concentrate on what you're doing today and not realise that your market is slipping away from you.
CIO: Do you believe there are a lot of near-sighted organisations around today?HANDBY: Well, I have a pretty cynical view of corporate growth and decline.
Essentially, companies begin because they identify a business paradigm that works. They grow and they make money and everything is fine for a while. But when the business paradigm is overtaken by another one, the number of companies that can move out of the old paradigm and into a new one is very small. Most companies, because they focus on the bottom line, are going to decline.
CIO: CEOs today are pretty IT savvy - they have PCs on their desks, and use them. What impact does an IT savvy CEO have on an organisation?HANDBY: I think it's overwhelmingly positive when you get CEOs who understand what you're trying to do. But we still have too few executives like that. As you pointed out, it is more common to see CEOs with a PC on their desktop, but it's not as common as it should be.
One of the challenges I have had for many years when conversing with business colleagues is reducing everything I say into terms they can understand. I'm speaking in terms of the technology here. Something like the Internet is universally visible now. So you can talk about that. But you still can't talk about the technology that supports it; you can only talk about the concepts. If you actually have a CEO who is technologically literate it makes a tremendous difference.
CIO: Outsourcing is the prevailing trend currently. How do you think this affects the internal CIO position?HANDBY: I think companies do that at their peril, particularly in IT. Outsourcing all of your IS to one company is just like putting foxes in a hen coop. This isn't cleaning [the offices] or the running of a truck fleet we're talking about - those areas are fine to outsource because they are only functional things. It's also fine to outsource the functional stuff in your IT department. But it is absolutely crucial to have somebody who minds that contract and knows what the guys you bring in are doing and what your company is paying for. You need someone who can manage that relationship, and on another level having a strategic interface with the board is absolutely essential.
I don't think the need for CIOs diminishes with outsourcing. Quite the reverse, in fact. My experience in the last 10 years or so tells me you have to learn to take and combine skills from everywhere - in-house, contractors, outsource, major contracts, things like that. The CIO's role is to take all that and create a sense of mission. Outsourcing can take some of the clutter away and enable the job to be less about running function elements and more about strategy and leadership.
CIO: A strategic IT plan is almost a given in larger organisations, but in small-to-medium sized companies they are less common. How important is a long-term IT strategy to a company - big or small?HANDBY: I think knowing where you're going is fairly important. However, remember the old corporate planning department? When you would look five or 10 ahead and then work out some schedules and corporate planning would issue them? I think that whole idea has fallen into disrepute. It simply won't work in IT.
The pace of change is too fast.
I think it's tremendously important to have an IT strategy, but it's even more important that the IT strategy be flexible. Of course, part of that is having a consistent technology infrastructure that supports it. Remember, you can have a long-term aim, but within that you'll have different interpretations of what it means - in terms of the technology you use, the people you use, outsourcing and those kinds of things. Those factors are all things that can change along the way, and you've got to be wary of them.
I'm not in his fan club, but one of the things I admire about Bill Gates is that he and his company are prepared to change and move all the time. Look at their recent clash with Netscape. The Internet wasn't going to be anything, and then suddenly it was everything. If they see somebody stealing a march on them, they'll change their view about things. And they can get a product out in the marketplace in a matter of months based on their changed view of the world.
CIO: We use the word "change" an awful lot in this industry, but I think people as a whole resist change. How does a CIO help his or her company to manage change?HANDBY: Yes, but remember, a CIO's role isn't always about managing change. It may be facilitating change - which is slightly different. The role as I see it isn't solely about getting your company to change, but to get them to change the way they think.
Also, change doesn't always mean going into a different business. It may be helping a company do business more effectively, or to relate to customers in a better way or to open up new customer channels. You can have changes that make you more effective in the way you do business, but also enable you to move away from your traditional business.
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