CIO Straight Talk - Issue 9 - 72
Which of the 10 competencies described
in your book comes as the biggest surprise to
CIOs when they see the list?
Let me answer the question a little differently.
I'll tell you what annoys them-and maybe that
comes as a surprise to them, as well. It is the
ability to "turn IT consumers into co-investors."
What do I mean by that? Successful CIOs are
able to educate their business partners about
the true costs of IT, so that executives will stop
thinking of IT as either "free" or "a tax" and
instead start looking at and helping to manage
the company's IT investments as a portfolio.
When I talk to CIOs about creating a business
community where their business partners are as
knowledgeable about the costs of IT as they are,
and where they take an IT investment portfolio
management mindset, CIOs tend to get their
backs up a little bit.
Why does that seem to irk them?
Budget ownership can mean power. And
because we are used to having control over
our own budget, the thought of creating an
investment management culture and a pool of
resources that the business has some control
over and accountability for makes CIOs nervous.
There's a fear that business partners will run
amok and buy technology that the company
doesn't need, that isn't secure, that goes against
the concept of enterprise cost and scale.
What's your advice to CIOs who
feel this way?
Purchasing decisions have to happen very close
to where the value from those investments will
be realized. So if the investment is for a new
supply chain system, then the decision about
investing has to made not solely by IT but at
least in part by the people who are managing the
supply chain. And in order to make those people
informed investors, you've got to educate them
about what they're really spending.
So I think part of the reason CIOs push back is
a question of control. But it's also a lot of work.
How do you decide how much of data center
capacity this part of the business is using versus
that part of the business? Getting everybody on
the same page about costs is very difficult. The
companies that have been able to get a handle
on their costs and communicate them in a way
that everybody in the company understands are
the ones changing the conversation in IT from
one of cost to one of value.
Can you explain the mechanics of getting IT and
the business to "co-invest" in technology?
You know, it's different in every instance. The
mechanics has a lot to do with whether the
company is centralized or decentralized. One
way of co-investing is actually to set up an IT
investment committee in which all the major
stakeholders of IT come together and present
business cases for their own investment requests
but, in the end, make decisions as a group about
what's best for the company.
Steve Gold, the CIO of CVS Health, talks
about something he calls the CIO "theory of
reciprocity." Say that the Head of Sales comes
to you and says, "Hey, if you build or buy for me
this new inventory management system for $50
million, then I will be able to increase revenue
by $500 million." What Steve wants to see in
this investment management culture is that the
Head of Sales will go ahead and bake that $500
million right into his forecast. That's investment
management accountability rather than a "spend
now and worry about returns later" attitude.
In your book you say that the CIO not only has
to share responsibility for investment decisions
but also share, or distribute, responsibility
for technology innovation, development,
management, and adoption.
Let me give you an example of that. Kathy
McElligott, the former CIO of Emerson Electric,
who is now CIO and CTO at McKesson, knew
that her IT strategy was aligned and integrated
with Emerson's business strategy. But then she
thought, "You know, we've got sensors that are
collecting data in all our electronics products,
but we don't have a business model or a business