CIOs Getting a Say on the Business Side

Many IT execs have moved beyond aligning IT with business operations. Now they're involved in setting business strategies and leading internal transformation efforts.

Forget about mere IT-business alignment. At many companies, the new name of the game is melding technology and business operations, with CIOs getting a say in setting not only IT plans but business strategies as well.

For example, when Anthony Hill was asked to lead an e-business initiative at Golden Gate University in San Francisco several years ago, what the administration actually wanted him to do was transform the way the school operated, he said at Computerworld's Premier 100 IT Leaders Conference in Orlando last week.

Instead of the IT department simply supporting business operations, "we now talk about how IT gets in front of the business," said Hill, Golden Gate's CIO. "IT should no longer be viewed as just an enabler of somebody else's business strategy. We need to change the dialogue to really eliminate the lines between IT and the business."

Peter Walton, CIO at Hess Corp., has literally altered the dialogue at the New York-based petroleum products company by banning IT staffers from referring to its business units as "customers" or even "users." Instead, Walton said he wants his team to treat fellow employees simply as "company mates and peers." He even tries to avoid using the word alignment internally. It goes deeper than that now, he said: "We're trying to fuse with the business."

That's all part of an effort to stop business executives from "just seeing us as technology service providers," Walton said. "I just absolutely hate being treated like that when we can provide so much to the company." His goal is to have employees view IT no differently than they do the finance and human resources departments.

And the strategy is getting results, according to Walton, who plans to retire from Hess next month. He said that as part of a new organizational structure, the CIO's office is scheduled to begin managing some core business functions.

In addition, Hess is creating a joint IT and business group that will work outside of its day-to-day operations to develop new operating processes and advanced technologies. That unit will combine IT workers with geologists, scientists and other employees and report to the senior vice president of oil exploration and production, Walton said.

Hill and Walton are part of a growing class of IT leaders who are positioning themselves as activist CIOs within their organizations and working directly with other top executives to influence strategic directions and suggest changes in internal business processes.

Richard Fox, vice president of IT at PHH Mortgage in Mount Laurel, N.J., has spent the past seven years working side by side with the sales managers at the PHH Corp. subsidiary. Fox said that has helped him to build a rapport with sales executives and gain the credibility he needed to take the lead on business improvement opportunities.

For example, he pointed to discussions that he and the sales team are having about potential changes to some of PHH's mortgage application processes. "It's absolutely about being proactive," Fox said, "and saying to your business peers, 'I know what your pain points are. Have you ever considered trying this approach?'"

Enzo Micali, CIO at TNS North America in New York, has a similar outlook on working with business units. "I think we really need to challenge the way things have always been done and ask why they're being done that way, and is there a more efficient way," he said. That approach has worked well for Micali from a professional standpoint: Last month, he was put in charge of all operations at the U.S. subsidiary of market research firm Taylor Nelson Sofres PLC.

Integrating IT and business management activities made sense for TNS, according to Micali. "We need people that are comfortable with a level of change, with taking risks and with being nimble on their feet -- and those are traits of IT people," he said. In addition, he noted that IT managers are "very process-driven," making them logical candidates to lead business process transformation efforts.

Conference attendees said that CIOs often also have a unique horizontal view of how their organizations operate and how changes in one unit could affect others.

Managers of business units may know the most about their own fiefdoms, "but they never see what [another department] over there is doing," said Richard Gius, CIO at Atmos Energy Corp. in Dallas.

Cardinal Health Inc. in Dublin, Ohio, recently set up a corporate shared-services organization, giving its CIO responsibility for some aspects of finance and HR, said Dave Hammond, vice president of enterprise IT at the maker of health care software and medical instruments and supplies.

That deeper business involvement extends beyond the CIO level, Hammond added. He said that an IT project manager is running an entire office-building construction project, not just the technology infrastructure piece of it. And Hammond himself plans to shift into a product development job at Cardinal Health.

There are some prerequisites for IT executives, though. Micali said that CIOs need to learn the business at their companies, otherwise "no one will respect any ideas that you bring to the table." They also have to make sure that their own IT houses are in order, he added, noting that he had to fix some IT infrastructure issues at TNS North America before looking to influence changes in other units.

It also pays for CIOs to be politically astute. Jeffrey Steinhorn, who currently is CIO for the marketing and refining operations at Hess, said that shortly after joining the company, he started developing a new IT strategic plan by meeting one on one with several business executives to float ideas for internal changes.

That grass-roots effort was more effective than "coming out kind of with my guns blazing," said Steinhorn, who has been tapped to replace Walton as corporate CIO at Hess. "It became their strategy, not mine."

Knowing when to push and when to back off is crucial as well, said Golden Gate's Hill. "The organization has to want to change," he noted. "You can influence; you can cajole" -- but if business executives strongly resist your ideas, it might be time to retreat.

With increased influence comes added responsibility -- and bigger risks.

In the past, when reducing internal costs was IT's primary purpose, "the optimal CIO job was invisible," said Douglas Merrill, CIO and vice president of engineering at Google Inc. But now, Merrill added, "the distinction between technology and business is antediluvian -- it's gone. The good thing is it gives us more power [within companies]. The bad thing is that if we screw up, we take our companies with us."

Gius said, though, that he and other CIOs are learning to live with the risks. For example, when large ERP installations went awry in the past, many IT executives "ran for the hills," saying they were business projects, not IT initiatives, Gius said. "But now you're seeing CIOs become a little more emboldened," he added. "I think we're stepping up."

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Copyright © 2008 IDG Communications, Inc.

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