Follow the MoneyBy Anne Field | Posted 06-01-2001
For Kamalesh Dwivedi, being a successful CIO in these days of tightening budgets and recession jitters is part technology and part chemistry. Dwivedi, the CIO of $3.3 billion equipment maker ADC Telecommunications Inc., was able to convince execs at the Minnetonka, Minn.-based company to give him a 40 percent increase in his technology budget this yeareven though corporate beancounters practically everywhere else are giving CIOs less for new projects. How did he do it?
Dwivedi knows how to build cloutand wield itinside the corporation. It's a skill that's more important than ever for CIOs faced with economic uncertainty and increased in-house rivalry for new resources. The funding squeeze is real: Corporations are expected to increase tech spending by just 5 percent to 6 percent this yearnearly half the previously projected 9 percent, according to a recent Merrill Lynch survey of 50 top U.S. and 20 European companies. "We see a growing need to better justify technology investments in pretty much every company we work with," says software consultant Barry Johnson of Plymouth, Minn.-based Dynamic Information Systems.
Trouble is, even when CIOs can make a solid case for the business payoff of their bids, they often fall short in the political skills needed to sell their ideas to those who count most inside the company.
At the same time that resources are becoming scarce, CIOs also have to contend with a Net-wired environment in which their technology initiatives, by their very nature as information networks, are ever-more intertwined with the interests of other managers. The implications are huge: CIOs must simultaneously gain favor with mid-level managers and underlings who matter, and do a better job educating top managers about the business payoff of new technologies. "Geekspeak doesn't cut it anymore," says management guru Gary Hamel, author of Leading the Revolution, in which he promotes the need for people to lead change inside their companies on all levels. "CIOs need to know the technology and possess the vision for how it will impact the companyand then be able to sell it to those holding the pursestrings. It's a tall order, and many CIOs aren't up to it."
For those who are, the payoffs can be sweet. Dwivedi, for his part, has mastered the art of the hard and soft sell: He's won the green light on four successive years of five-star IT projects, including a massive, three-year effort to install a corporatewide intranet that ties together everything from human resources to manufacturing, part of an effort to support ADC's ambitious acquisition strategy. Dwivedi cites a relentless sales campaign to push every new technology initiative under his purview. "We are constantly selling, marketing and lobbying," he says. "It never stops, especially now."
The message: CIOs need to be able to manage up, down and sideways in order to get the money and influence they need and to avoid getting sidelined in the networked corporation. For many CIOs, that means learning whole new relationship skills to becomeand remaineffective. Says Andrew Rudin, a partner with Eisner Information Solutions in New York City: "The CIO has moved from a technical to a political position. It's a whole new ball game."
Follow the Money
Follow the Money
Managing up, though, requires more than high-level schmoozing. Harvey Enns, assistant professor of business at the University of Dayton School of Business Administration, recently asked 69 CIOs how they became skilled at wielding influence in their companies. Enns found that one of the most effective tactics they used was what Enns calls rational persuasionpresenting a logical case for the bottom-line payoff of a project. "Otherwise, executives argue that the initiative will take the company in the wrong direction and dismiss it," Enns says.
Six months ago, for example, Steve Brown, CIO of Santa Barbara, Calif.-based Tenet Healthcare Corp., an $11.4 billion healthcare provider, embarked on an effort to win senior management approval for an ambitious Web-based distance-learning program for the company's more than 25,000 nurses. To sell the plan to top managers at a time when they were examining new IT projects more rigorously than ever, Brown made the case that the system would dramatically reduce turnover among nurses and increase patient satisfactionand he provided numbers demonstrating what those improvements would mean to the bottom line. It worked, despite management's tougher attitude. "Without quantifiable objectives, your proposals won't survive," says Tom Mangan, global managing partner of enterprise technology solutions for Andersen Consulting in Atlanta.
It also doesn't hurt to tell a few stories to demonstrate the potential impact of a new technology initiative. When Tenet Healthcare's Brown sought to convince management to build a Web site to give consumers access to information and resources about the company and medical issues, he didn't have many hard numbers at his fingertips to justify the projectjust a good hunch. So he borrowed a page from the marketing department's focus group methodology and set up interviews and workshops with customers. From those, he was able to gather real-life anecdotes and insights about what customers would want to see from such a systemand why it would matter to them. Later, when pitching his proposal to corporate beancounters, Brown was able to help them see how the proposed system could help real-life customers.
To strengthen his case, Brown also researched what the company's top rivals were already doing for customers with CRM technology, and the extra effort won the day. "You have to do whatever it takes to get people to understand what you're trying to accomplish," Brown says.
But just relying on a formal presentation, no matter how air-tight, is still no guarantee of success. What happens behind the scenes is also something that needs to be choreographed. Approval requires not only building ownership across many functions but also getting a buy-in from key players before anyone even walks through the door of the conference room.
Last spring, Mark Zahorik, CIO of Dallas-based Rapp Collins, a direct-marketing company, became convinced the firm's key Dallas unit had to embark on an ambitious effort to rewrite the marketing databases used by clients. The idea was to create a modular design so that certain components could be re-used for many clients, instead of designing a different database for each project. It was a $750,000 proposition, just when it seemed that new business was starting to dwindle. Zahorik, however, felt he could make the case for the improvements: They would reduce cost and the time it took to get information to clients.
Zahorik didn't wait until the formal meeting to make his move. Instead, he immediately targeted sub-managers who would be most likely to influence the project and met informally with each of them. Then, when he was sure he had won them to his side, Zahorik arranged for a real presentation to the higher-upsthe CEO, CFO and COO. He knew he was ready for prime time because in his trial runs, each sub-manager had become so engaged in Zahorik's proposal that they tried to take the discussion to the next step.
"I wanted to be positive that all those heads would nod yes when the time came," Zahorik says. Sure enough, the committee approved the project. Says Andersen's Mangan: "Failure to win a buy-in from other top managers can be fatal, even with a clear mandate from the CEO."
Consider the new CIO of a major publishing firm, hired last fall by the CEO to build a system tying 26 business units, most of them recent acquisitions, into one centralized unit. It was a $150 million project that would take five years to complete. Convinced he had a clear go-ahead from the top, however, the CIO never bothered to make his case to anyone else in the executive suite. Then, when ad revenues started drying up, the company was forced to announce layoffsand the board began looking with a more critical eye at the initiative. The result: With few allies to back him up, the project was put on hold indefinitely. Now, "all he can do is manage the status quo, which is a mess," says Mangan. "And eventually the board will hold him responsible for failing to address the problem."
For CIOs, Knapp says, the opportunity and need exists to educate top management about how such systems can cut costs and boost revenues. But to do that well, CIOs need to know how to identify the business people inside the company who can make a differenceand then learn how to speak their language. At the board level, "they want to hear, short and sweet, what an idea will do for the business, what it will mean for opening up new markets and what the competition is doing," says Rudin of Eisner Information Solutions. "They don't want a lot of technical detail."
Imagination and creativity are also required, along with the metrics. When Dwivedi first tried to win approval for his e-commerce initiative, for example, he was turned down. So he directed his team to place clear plastic piggy banks in strategic locations throughout the company's headquarters, with notes attached asking passersby to donate money to pay for e-commerce. A month later, ADC's executive committee reexamined the project and approved it, noting Dwivedi's collection campaign. Says Dwivedi: "I launched a campaign to display my faith and passion in the vision of e-commerce, and it succeeded. You have to have a clear vision of where you want to take a system over the next three to five years. Then, you need to engage in selling that vision in a way that captures the imagination of the CEO, CFO and COO."
Initiatives also have to be in sync with what business units need, and that means it's also important to manage down: to use those who work below you as your scouts on in-house trends that may influence or alter your initiatives.
Andrew Bartles of Giga Information Group, an IT advisory firm in Cambridge, Mass., says it's a good idea to meet regularly with mid-level managers and to institute a system whereby members of the IT staff "act as the eyes and ears of the CIO," he says. Ulrich Seif, CIO of Sunnyvale, Calif.-based National Semiconductor Corp., for example, has his direct reports sit in on weekly staff meetings for finance, human resources, marketing and sales, and manufacturing "so they can spot trends early on," he says. Last fall, his sales and marketing representatives reported an interesting find to Seif's weekly IT staff meeting: Marketing felt that the distribution of semiconductors had become more global and that the company lacked the internal processes needed to keep pace with industry trends. So Seif and his team linked up with marketing to develop a "globalization of distribution" initiative.
The goal: By linking up everyone in the company's supply chain, the system would allow users to see everything from the status of orders to sales levels of specific products across facilities in 120 countriesand then decide, for example, whether or not to speed up or slow down production. Ultimately, the proposal was championed by the senior vice president of marketing, who made the final presentation to the executive staff in October. It was approved.
Others take a more informal approach. ADC's Dwivedi directs a team of 30 IT managers to mingle constantly with their counterparts in other departments, talking up certain projects and looking for input. It's an easy task, since each IT manager works in the same location as the tasks he or she is assigned to perform. The program manager for e-commerce, for example, sits alongside customer service representatives. Whenever they discover anything that could affect a particular effort, Dwivedi's people report that information back to their boss.
Enlisting Eyes and Ears
Enlisting Eyes and Ears
Two years ago, thanks to such input, Dwivedi modified an e-commerce proposal to focus it more on marketing, communications and customer servicedesigning a system to help customers get information on the status of an order, for example. With such an emphasis, Dwivedi was able to make a case that the initiative would help boost customer satisfaction and lead to repeat sales.
It also helps to think smaller. Focus IT efforts on a few critical projects at a time. Otherwise, "you're fighting the war on too many fronts," says Bob DeRodes, CIO of Atlanta-based Delta Air Lines and CEO of subsidiary Delta Technology. This is especially true during a time of uncertain resources. Says Johnson of Dynamic Information Systems: "We were seeing a trend toward 'anything goes' and almost a mystique surrounding IT investments. But now the economy has forced IT to get on their game and become more efficient."
DeRodes ought to know. Last summer, he met with virtually every senior vice president and vice president throughout the company to discuss what role IT could play in their strategies. From that, his team distilled what DeRodes calls important "big ideas"maximizing revenues, for example. Then, instead of deploying his programmers to spend most of their time modifying existing systems or making incremental improvements, he focused their efforts on those ideas, one at a time. Last fall, he won approval from Delta Technology's board of directors for the first initiative, to rework the company's ticket pricing and distribution channel, increasing revenues and lowering distribution costs as a result. Now he's trying to get the go-ahead for the next move, a system to overhaul maintenance operations. If approved, that projecta $100 million effort likely to take at least two yearswill unfold in several phases.
Developing Metricsand Trust
It also doesn't hurt to develop a set of metrics for measuring progress and keeping peers regularly updated about results. "Good CIOs spend maybe 40 percent of their time communicating upward about technology and how it's impacting the business," says Rod Hall, vice president of consulting for Compass America, an IT consulting firm in Oakbrook, Ill. He points to a CIO who, six months ago, put together a two-page list of projects, including an overview of cost reductions that have resulted from implementations. The CIO goes over it once a month at an hour-long meeting with senior management. So far, he hasn't pushed for any major new initiatives but, according to Hall, he has won the confidence of top management.
Still, no matter how great a CIO's influence on others' opinions, sometimes the best tactic is to step backand to do so before someone else forces the issue. If the economy continues to flatten, Delta's DeRodes, for one, plans to hold a meeting with his board to invite suggestions on what to slow down or stop.
In fact, such a move might even prove a worthwhile strategyand a reliefto some CIOs. "I've heard many CIOs say they're glad to have the chance to slow down and digest what they've done so far," says Hall. "They've been operating at such a frantic pace until now."
Anne Field is a Pelham, N.Y.-based writer who covers management and business trends. Her work has appeared in a variety of business magazines and Web publications, including Business Week, Fast Company, Fsb.com and iSource. Comments on this story can be sent to email@example.com.
How should you sell your project to key decision makers?
Cite the project's potential bottom-line payoff
Communicate your progress to higher-ups
Don't talk details, talk strategy
Get buy-in from other managers
How do you get the rest of your company behind you?
Meet one-on-one and listen
Weave suggestions and criticisms into your proposals
Seek out technology innovators
Involve IT staff in business unit meetings