What to Say to the CEO
- 23 April, 2007 15:52
If you read IT magazine columns, you've probably been offered a lot of advice about how to operate as the CIO. Certainly, such advice is easy to give, but it's often hard to implement. So I thought that I would try to get down to the conversation level and recommend some actual dialogue that you, as the CIO, could have with the boss.
First of all, I'm assuming that, as CIO, you report to the CEO. That's the ideal model. Of course, if it's the COO, that's OK. If you report to another C-level executive or someone even lower in the organization, however, you have much more difficult problems to overcome. But that's another topic.
So in our scenario, you have been called into the boss's office, and the CEO starts the meeting with these memorable words: "Paul, IT costs have been increasing too fast. We have to rein in your expenses just like all of the other departments. This is going to be a tough year for our company, our officers and our stockholders. We must all be team players."
Ah, the moment of truth! As a C-level executive, you have been cutting expenses for years. You now have two choices. The first is to click your heels, salute the flag and say that you are a team player and that IT is a team player and supports the needs of the company. Finish the meeting with the boss, call a staff meeting, and start the red-pencil process.
But that's the easy answer. Remember that you are an officer of the company. In addition to the salary and the status of such a position, your job includes the responsibility of arguing for IT despite resistance by other officers, including the CEO. So in response to the CEO's statement, you can try to explain the nature of IT expenses and use the meeting as an opportunity to make your case. Here's a possible response:
"I agree. Our expenses have been increasing over the past several years. However, I would say that our increases have been a direct result of the many systems we have been developing for the other departments. At the IT steering committee's annual project selection meeting last November, the officers chose systems that provide the best ROI for the user departments. The ROI for these systems indicates that the user departments realize a significant return despite the increased IT costs. In fact, this may be how the other departments are able to reduce their costs without cutting programs. For example, I was talking to Sharon yesterday, and she said that the new budgeting system that we implemented last year is saving her three heads this year."
Now the die is cast. Several things could happen at this point. The worst would be that the boss decides that you're not a team player and fires you on the spot. Less dramatic, the CEO could decide that you're not a team player and your status internally would be diminished.
I think these outcomes are rather unlikely, however. Instead, the CEO should really appreciate your argument and the fact that someone has the passion and self-confidence to fight for his department. Perhaps this time, you may still have to go back and initiate the red-pencil process, but you may notice a different CEO at the next steering committee meeting - one who is more questioning of the user managers who are promoting the development of new systems. The CEO may now understand that IT costs are a reflection of the user department requests.
The best result would be for the CEO to finally understand that IT is not really a cost centre but rather a department that enables the other parts of the company to do things more efficiently or to do things in a different way. IT is an investment rather than a cost. Such understanding would be the real win.
As I said, it's easier to give advice than it is to implement it. But IT must continue to push its claim that it is the change agent within companies. That's hard to do if budgets are continually cut. But if modern corporations are going to become more innovative and more efficient, IT must continue to implement bold, cutting-edge systems. The CIOs at these corporations must be willing to make the case for continued investment in IT. That's the biggest challenge for today's CIO. Have a good conversation!