CIO Success: A 10-Step PlaybookBy Don Desiderato | Posted 03-03-2010
CIO Success: A 10-Step Playbook
CIOs and IT executives have a complicated job.
Systems need to run, hardware needs to be up to date, longer-term architecture strategy needs to be developed and executed on, transformation programs need to be rolled out, capabilities need to be delivered, and proper governance around information security and risk need 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-mails are piling up, and the leadership team is focusing on tending to the careers and morale of a complicated mix of highly intelligent programmers, analysts and IT support staff.
What happens over and over again? The CIO becomes distracted and focuses on just one (usually the most urgent) of the many key ingredients they know 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 highly involved when an urgent matter arises. And let's face it: the CIO enjoys digging into the latest urgent issue--especially if it is technical in nature--since many of us grew up as technologists.
As with any typical IT organization, there are steady streams of urgent matters that perpetually arise, and the CIO loses track of the most important elements of running the organization. This scenario happens over and over again, most times to the detriment of the CIO.
To mitigate this, CIOs will 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 stay late in the office. 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 key to success is balance. CIOs must have a very balanced attack of key responsibilities and focus on all of them, every single day. This means that they need to delegate more, trust their leadership, read current research on industry trends and communicate more thoroughly. Otherwise, business leadership will lose faith--and the life span of the CIO can be dramatically cut short.
In the simplest terms, the CIO and IT leadership must be relentlessly focused. Focus on the broader picture when running the IT organization. The mission is clear: the CIO is foremost a business leader--one who relentlessly delivers IT in support of business objectives, all while continuously seeking to drive down overall costs.
The full recipe for success--for themselves and the business--includes these 10 ingredients.
1. Run the Shop Effectively
Seems pretty 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 multi-sourcing grows immensely more complicated and risky.
The CIO must have a seasoned leader running the operational platform. And that individual must also deeply understand the business he/she supports. Putting a highly technical leader in charge of operations won't do the trick. Rather, it's crucial that the leader understand and be able to explain the business ramifications of operational issues in addition to understanding the systems and technology they support. It is also essential that the operations leader is able to articulate an operational vision for their organization.
The CIO, IT leadership, and the whole IT organization must develop a culture where operational competency is valued. The CIO should be briefed on operational matters (running the shop) every morning. The CIO should know the status of overnight processing, should review the key value metrics, and should understand the key operational risks and issues (including audit findings, key risk indicators and information security matters).
2. Reduce Expenses
Reducing expenses is more than simply satisfying the latest mandate of the CFO. CIOs must demonstrate a commitment to reducing expenses perpetually, even in a climate where budgets increase. A CIO who earns a reputation for financial prudence will quickly earn the respect of executive leadership. Ironically, those CIOs who are constantly finding ways to reduce expenses are given more consideration when they are requesting additional funding or an investment in IT.
So, how can the CIO reduce expenses with such tight budgets? It starts with culture.
IT leadership and IT professionals down to the lowest level in the organization know where the waste is. Ask for it. Pursue it. Incorporate it into performance objectives.
And 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 job eliminations.
Generally speaking, the CIO should always be looking at the basics:
- Evaluate consulting rate structure
- Look at existing software contracts and licenses
- Multi-sourcing (see below)
- Obsolete systems
- Server consolidation
- Workforce optimization
- Data center charge backs, storage usage
3. Multi-Sourcing as a Mechanism to Reduce Cost and Add Strategic Value
Multi-sourcing provides a dual benefit: cost savings and strategic value. Certainly, a strategic partnership with a global partner will reduce overall expenses, and if done properly, done without introducing risk into the organization. The key thing to understand about focusing solely on cost savings is that once the financial benefit of the cost-benefit analysis is achieved, the CIO receives a pat on the back and a new financial baseline is established (which will certainly be challenged again). Therefore, the strategic value benefit of the relationship is equally important to the cost savings.
For the CIO, a key strategic value in multi-sourcing is agility, or the ability to quickly ramp up and ramp down. This allows the CIO to run as lean as possible while being able to react quickly to new initiatives. Another important value of the offshore partner is that they bring to the organization expert (global) advice, which should be regularly leveraged. The sourcing partner must be regularly challenged to bring ideas for cost reduction and solicited for their expertise when evaluating new projects or initiatives.
When introducing multi-sourcing to the IT environment, it is most prudent to focus on both the cost savings and the strategic value benefits. Business executives expect IT organizations to employ responsible multi-sourcing, certainly for cost-saving measures. However, the CIO should ensure that they are also deriving value from the strategic relationship.
4. Relentlessly Deliver as Promised
Deliver. Deliver. Deliver. Nothing helps the reputation of the CIO and IT organization more than delivering as promised. Similar to running the shop, the delivery organization requires a strong leader. The leader must understand how to set realistic expectations for the business, deliver on time and on budget, and demonstrate that the benefits are actually achieved.
The tricky part: Business leaders tend to be very unrealistic about what can be delivered and when. It is up to the CIO and delivery leader either to set the proper expectations or to iterate delivery in ways to bring value as quickly as possible.
Metrics are the essential tool that demonstrates to executive leadership just how successful the organization is. Be honest about the successes--and transparent during failures. This will bolster the reputation of the organization to the Executive
Leadership and provide an openness that will give confidence to the organization as a whole.
5. IT 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 to market or enabling your competitors to beat you. This is a complex issue, because often times the software development life-cycle or the complexity of what is being built simply takes longer than the appetite of the business.
The CIO must implement a culture of inclusion to combat this problem. The earlier the IT organization is involved with innovation (See #7 below), the earlier the IT organization can figure out how to deliver. Bringing IT professionals to the table during the incubation stage of innovation can help them better understand requirements and also 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, the business partners must be comfortable with IT being at the table earlier. The better the reputation of the IT organization, the more open they will be to the idea.
6. Transparent Demand Management
Sound demand management is a crucial competency of an IT organization. But believe it or not, many CIOs do not even focus on it. The basic premise is that all work being done by the IT organization should be known, approved and prioritized. There should not be many "gates" into the IT organization where work is introduced; instead, there should be a formalized and transparent process. A CIO should never hear the words, "What are your folks working on?" Much to the dismay of business people, there should be no "back-door" way to get things done.
Sound demand management is very important for the following reasons:
1. The only way you will know the true productivity of the organization is to know precisely what is being worked on.
2. Distraction work is eliminated.
3. Transparency to the business breeds confidence of the business.
4. By working on only the highest priority initiatives, the CIO will see an improvement in satisfaction by the business (by getting more of the higher impact work done for the business)
5. Contrary to what the IT organization or business may think, a solid structure around demand management does not make IT more bureaucratic--rather, it'll make IT more transparent.
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. These words sound like the IT organization is some separate entity 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 (sales, marketing, product development, etc.). By having a mindset of being in the business, the IT organization has a better chance of effectively supporting the mission of the organization. If a CIO only discussed technical matters, he/she will quickly become pigeon-holed. However, if the CIO is an active contributor of ideas, the perception of them will broaden. Additionally, if the whole IT organization thinks of themselves this way, their 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% 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 even used as a basis for performance objectives.
A typical one-on-one meeting between a CIO and each leader should include a discussion of the key metrics. What's working well? Where are the danger signs? How are they managing their respective organizations with these metrics?
The CIO should be very transparent with the business value metrics. They should be reviewed with other business executive leaders regularly, and key issues and trends should be discussed. Nothing contributes more to the confidence of the CIO more than a review of the organization through metrics. Business value metrics will certainly serve to inspire confidence.
9. Transformation, or Continuous Improvement
The CIO should consider implementing a culture that values a continuous improvement of the IT organization. This is crucial in helping the CIO and IT staff avoid complacency. IT organizations are complex, technology is constantly evolving, and good businesses are also evolving. If IT organizations are not continually raising its game, their collective performance will be mediocre.
While developing a transformation program is always 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 organization.
10. Have an Architecture Strategy--and Advance the Architecture
So many IT organizations have no stated architecture strategy, no stated evolutionary plan, or processes 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) in place 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 make sure 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 who are responsible for delivering new software, generally because there are competing interests. The architect will advocate for the most pure architectural approach, while programmers will sometimes try to shortcut because of timeline pressures. This tension is normal and should be embraced.