A 10-Step Playbook for CIO SuccessBy Don Desiderato | Posted 06-24-2010
A 10-Step Playbook for CIO Success
CIOs and other it executives have a very complicated job. Systems need to run, hardware needs to be up to date, longer-term architecture strategy needs to be developed and executed upon, transformation programs need to be rolled out, capabilities need to be delivered, and proper governance around information security and risk needs to be ensured.
At the same time, CIOs must innovate with the business and continually demonstrate the competence, strength and value of the IT organization. All of this is going on while budgets are being challenged, e-mail is piling up, and the leadership team is tending to the careers and morale of a complex mix of highly intelligent programmers, analysts and IT support staff.
As a result, CIOs can become distracted and focus on one (usually the most urgent) of the many key ingredients that are essential to their success. Why do they do this? Because many times the IT leadership team, the IT organization and business partners expect them to become very involved when an urgent matter arises. And let's face it: CIOs enjoy digging into the latest urgent issue--especially if it is technical in nature--because many of them grew up as technologists.
As with any typical IT organization, urgent matters perpetually arise, and the CIO loses track of the most important elements of running the organization. This scenario happens over and over, most of the time to the detriment of the CIO.
CIOs try many things to avoid this trap. They hire a chief of staff. They ask their executive assistant to incorporate "think time" into their calendars. They go to leadership training. They start lists. They work late. They have staff meetings to "catch up" on what is going on. They cancel town hall meetings. And the list goes on.
However, for IT leaders, the real key to success is balance. CIOs must have a balanced list of key responsibilities and focus on all of them every day. To do that, they need to delegate more, trust their leadership, read current research on industry trends and communicate more effectively. Otherwise, business leadership will lose faith, dramatically shortening the CIO's life span at the company.
When running the IT organization, CIOs and other IT leaders must focus on the broader picture. Their mission is clear: The CIO is foremost a business leader--one who relentlessly delivers IT in support of business objectives, while continually seeking to drive down overall costs.
The recipe for success--for the CIO and the business--includes the following 10 ingredients:
1. Run the shop effectively. It seems basic and unglamorous, but this is the most fundamental principle of running IT. Nothing will undermine the credibility of IT leadership more than instability and a broken platform. Without predictable, reliable, and stable systems and infrastructure, permanent progress is not possible. Transformation goals cannot be achieved, building new software (on a broken platform) becomes more difficult, and multisourcing grows immensely more complicated and risky.
The CIO must have a seasoned leader running the operational platform, and that individual must also understand the business. Putting a very technical leader in charge of operations won't work. Rather, the leader must understand and be able to explain the business ramifications of operational issues, in addition to understanding the systems and technology. The operations leader must be able to articulate an operational vision for the organization.
The CIO, IT leadership and the IT organization as a whole must develop a culture that values operational competency. The CIO should be briefed on operational matters (running the shop) every morning. He or she should know the status of overnight processing, review the key value metrics, and understand the main operational risks and issues (including audit findings, key risk indicators and information security matters).
2. Reduce expenses. Cutting costs is more than simply satisfying the latest mandate of the CFO. CIOs must demonstrate a commitment to reducing expenses perpetually, even in a climate in which budgets increase. A CIO who earns a reputation for financial prudence will quickly earn the respect of executive leadership. Ironically, CIOs who constantly find ways to reduce expenses are given more consideration when they request additional funding or an investment in IT.
So, how can the CIO reduce expenses with tight budgets? It starts with culture. IT professionals at all levels know where the waste is. Incorporate cost-cutting goals into performance objectives. Most important, make it someone's job to find ways to reduce expenses. At the same time, ensure that the organization understands that reducing expenses does not automatically mean eliminating jobs.
The CIO should always be looking at the basics, such as the consulting rate structure, existing software contracts and licenses, multisourcing (Step 3), obsolete systems, server consolidation, virtualization, workforce optimization, data center chargebacks and storage use.
3. Multisourcing reduces costs and adds value.
3. Multisourcing reduces costs and adds value. A strategic partnership with a global partner helps reduce overall expenses, if done properly (without introducing risk into the organization). The key thing to understand about focusing solely on cost savings is that once the advantages of the cost-benefit analysis are achieved, the CIO receives a pat on the back and a new financial baseline is established, which will certainly be challenged later. Therefore, the strategic value benefit of the relationship is as important as the cost savings.
For the CIO, a key strategic value in multisourcing is agility--the ability to quickly ramp up and ramp down. This capability allows the CIO to run as lean as possible, while still being able to react quickly to new initiatives.
Additionally, offshore partners provide expert global advice, which should be regularly leveraged. In addition, it is important to tap the sourcing partner for ideas on cost reduction and for its expertise when evaluating new projects or initiatives.
When introducing multisourcing to the IT environment, it is prudent to focus on both the cost savings and the strategic value benefits. Business executives expect IT organizations to employ responsible multisourcing strategies, certainly for cost-saving measures. However, CIOs should ensure that they are also deriving value from the relationship.
4. Relentlessly deliver as promised. Nothing helps the reputation of the CIO and the IT organization as a whole more than delivering what they've promised. Therefore, it's important for the leader to understand how to set realistic expectations for the business, then deliver on time and on budget, and, finally, demonstrate that the promised benefits have actually been achieved.
Here's the tricky part: Business leaders tend to be unrealistic about what the IT organization can deliver--and when. So it's up to the CIO and delivery leader either to set the proper expectations or to continuously deliver meaningful pieces of the project so businesspeople get value sooner, instead of at the end.
Metrics are needed to demonstrate the organization's success to executive leadership. Be honest about the successes--and transparent during failures. This will bolster the reputation of the IT organization to the executive leadership and provide an openness that will give confidence to the enterprise as a whole.
5. Move at the speed of business. As a CIO, the last thing you want to hear is that a slow-moving IT organization is preventing a new product from coming to market or enabling your competitors to gain a leg up. This is problematic because the software development life cycle or the complexity of what is being built often takes longer than the appetite of business executives.
To combat this problem, the CIO must implement a culture of inclusion. The earlier an IT organization is involved with innovation (Step 7), the faster it can figure out how to deliver business value. Bringing IT professionals to the table during the incubation stage of innovation can help them better understand requirements and give the architects a chance to figure out how best to build a design strategy that can move at the speed of business.
Of course, business partners must be comfortable with having IT at the table earlier in the process. However, if the IT organization has a good reputation and relationship with the business side of the house, partners are more likely to be open to the idea.
6. Make demand management transparent. Effective demand management is crucial to an IT organization, but many CIOs do not focus on it. The basic premise is that all work the IT organization does should be known, approved and prioritized. There should not be many "gates" into the IT organization through which work is introduced. Instead, there should be a formalized, transparent process. A CIO should never hear the words, "What are your folks working on?" And, to the dismay of businesspeople, there should be no back-door way to get things done.
Effective demand management is essential for the following reasons:
â¢ The only way you will know the true productivity of the organization is to know precisely what is being worked on.
â¢ Work that distracts from priorities is eliminated.
â¢ Transparency breeds business confidence in the IT organization.
â¢ By working on only the highest-priority initiatives, the CIO will see an improvement in satisfaction from the business side of the house.
â¢ Contrary to what the IT organization or business may think, a solid structure around demand management will not make the IT department more bureaucratic; rather, it will make IT more transparent to business management.
7. Don't align with the business.
7. Don't align with the business. Be in the business. The CIO and IT organization should not strive to align with the business, serve the business or design a strategy for the business. Those approaches sound like the IT organization is a separate entity that is coincidentally working with a particular business entity. The truth is, the IT organization is a crucial component of the business.
The CIO is an executive like all other contributing executives, including sales, marketing and product development. By being in the business, IT has a better chance of effectively supporting the mission of the organization.
CIOs who discuss only technical matters will quickly become pigeonholed. However, when CIOs actively contribute ideas, the perception of them broadens. Additionally, if the whole IT organization thinks of itself this way, the team's job satisfaction will skyrocket.
8. Measure success through business-value metrics. The CIO must measure organizational success through a well-thought-out suite of business-value metrics. These are more than metrics that show 99.XX percent availability of all systems. Metrics should be comprehensive and cover the entire organization, including planning and strategy, architecture, delivery, operations and quality assurance. In addition, these metrics should be known throughout the organization and be used as a basis for performance objectives.
A typical one-on-one meeting between a CIO and each business leader should include a discussion of the key metrics. What's working well? Where are the danger signs? How are they managing their organizations with these metrics?
The CIO also should make sure that business-value metrics are transparent. They should be reviewed with other business leaders regularly, and key issues and trends should be discussed. Nothing contributes to the confidence of the CIO more than a review of the organization through metrics. Using business-value metrics will help inspire confidence.
9. Ensure transformation (continuous improvement). The CIO should consider implementing a culture that values the continuous improvement of the IT organization. This is crucial in helping the CIO and IT staff avoid complacency. IT teams are complex, technology is constantly evolving, and good businesses are also evolving. If IT organizations are not continually raising their game, their performance will be mediocre.
Although developing a transformation program is an effective approach, this may imply that the project may eventually come to an end. It must be made clear to the organization that continuous improvement is the true goal. Like many of the other success ingredients, transformation, or continuous improvement, must be inculcated into the culture of the IT organization.
10. Have an architecture strategy--and advance the architecture. So many IT organizations have no stated architecture strategy and no stated evolutionary plan or process to ensure that software is being built with sound architectural guidelines. The CIO must have an architectural strategy (as well as an infrastructure upgrade strategy) based on the mission of the business. It is then OK for the CIO to acknowledge that it is acceptable to evolve over time to the desired state, as opposed to trying to sell an architecture project.
The CIO must ensure that the architecture blueprint is widely known across IT and the business, adopted within IT and built into the system development life cycle. There will be a natural tension between the chief architect and individuals responsible for delivering new software, generally because there are competing interests. The architect will advocate for the purest architectural approach, while programmers will sometimes try to take shortcuts because of timeline pressures. This tension is normal and should be embraced.
Don Desiderato is a principal at Novarica and a former CIO of Prudential Annuities. This article is adapted from his recent report "Ten Essential Elements for Insurer CIOs."