Change Agents

CIOs have always been about change, and nowhere is that clearer than in the evolution of their own roles.

"I can remember when CIOs wore short-sleeved shirts and pocket protectors and didn’t have any status in the company,” says Cathy Hotka, who was vice president of IT at the National Retail Federation from 1995 to 2002.

Those days are long gone. “Now, the CIO truly is part of the business,” says Hotka. CIOs are “well regarded as senior influencers and are often the primary change agent for the company,” she adds.

From data processing manager to CIO, from order-taker to strategic adviser, from cost-center spender to enterprise change agent, the role of the IT chief certainly has changed since the CIO title first came into vogue about 20 years ago.

As CIOs have delivered more value to their organizations, they’ve earned their place in the executive suite. But getting there is only half the challenge. It’s what happens next that matters, as Tellabs Inc.’s Jean Holley can attest.

When Holley joined the Naperville, Ill.-based communications equipment provider as CIO nearly three years ago, she reported to the executive vice president of corporate services. She was not part of the company’s executive committee, though sometimes she would be asked to attend those meetings if there was a specific topic where her input might be required. After she gave a report, she’d promptly be excused.

All of that began to change in February 2005. The company had announced plans to acquire Advanced Fiber Communications in Petaluma, Calif., and Tellabs CEO Krish Prabhu decided to re-evaluate the senior management structure. Since Tellabs’ IT organization was driving the integration of the two organizations, Holley began reporting to him and joined the company’s executive committee.

But just getting a seat at the table wasn’t enough, Holley says. Membership on the executive committee gave her an opportunity to strengthen her relationships with other business leaders. Business leaders “won’t work those relationships with IT,” she explains. “You’ve got to work those relationships.”

For instance, when Holley was making plans to visit one of Tellabs’ design centers in Dallas in December, she discovered that the company’s sales chief was also Dallas-bound. She made sure that she was on the same flight so that she could talk to him en route about a variety of business issues. “The CEO-CIO relationship is only one alignment point,” says Holley. “You have to do this with each and every executive.”

Business View

Because many CEOs have finally recognized the value of aligning IT with the business, they are increasingly recruiting CIOs from areas other than IT in order to find candidates with strong business acumen.

Accenture Ltd.’s Frank Modruson is one of them. Five years ago, he was working in Accenture’s go-to-market business when the company’s chief administrative officer asked him if he’d like to replace the retiring CIO. He jumped at the chance.

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Having spent 14 years with the company, Modruson already knew 70% of its senior managers when he stepped into the role. “By already knowing them and having walked in their shoes, you’re in a very good position to listen to them and understand their needs,” he says.

Because CIOs have a unique horizontal view of an organization’s businesses and departments, even IT leaders who have more of a traditional technology background have been able to lead major business process improvement efforts.

For instance, in late 2003, Bryan Sastokas, director of information services, strategy and architecture at Universal Services Administrative Co., spearheaded a corporate initiative aimed at controlling the rampant growth in data storage at the Washington-based nonprofit, which administers a fund providing affordable telecommunications services to communities across the U.S.

Although it sounds like an IT project on the surface, the effort, which included the adoption of a document management system to replace a hodgepodge of storage systems, resulted in improved business processes among departments and with external partners.

“We’re privileged to be similar to a CEO, with the same view across the enterprise,” Sastokas says. “By looking not only across our business but up and down within the various departments as well as externally, I was able to strategically position IT to leverage a technology that became an underpinning component to better business practices.”

Despite the CIO’s rise to strategic heights, two things haven’t changed: IT spending is still typically the largest portion of a company’s capital expenditures, and the CIO remains focused on cost control. “Cost management will never, ever go away,” says Karl Wachs, CIO at Celanese Corp. in Dallas. “If you can’t manage your costs, you can’t qualify for the other stuff. Just being strategic isn’t sufficient.”

New Challenges

If the evolution — and elevation — of the CIO role has brought IT executives opportunities for increased clout, it has also brought bigger challenges. After years of cost cutting, many CIOs are now facing a bottleneck of projects to prioritize and orchestrate. “There are so many projects out there that CIOs are only limited by the number of people available to [implement] them,” says Hotka, who is the principal at Retail Insiders, a consulting firm in Washington.

This is particularly true for CIOs who have been successful with the strategic use of technology. For example, Dennis L’Heureux, CIO and senior vice president for planning at Rockford Health System in Rockford, Ill., recalls a lively board of directors meeting he recently attended. “In just about every workgroup we had, everyone who gave a report talked about the need for IT at some capacity,” says L’Heureux. “I laid my head down on the table and [jokingly] asked, ‘How are we gonna do this?’”

Meeting customer demands often requires a balancing act. For example, Merv Tarde, CIO at Dallas-based Interstate Batteries, does a lot of custom development for business customers who like doing things their own way. But he has to be mindful of architecture and integration requirements “so you don’t have all of these islands out there” that can impede business and drive up infrastructure costs, he says.

As change agents, CIOs are also under pressure to ensure that business units can handle the changes associated with new systems. “The ability to deliver technology sometimes precedes the readiness for it,” says Carl Wilson, executive vice president and CIO at Marriott Corp. in Bethesda, Md.

He recalls difficulties with a sales system installed a few years ago that introduced a process much different than what the sales force had been using. “We threw too much at them at once,” Wilson says. Now, Marriott’s IT group pays more attention to phasing in new technology in stages and providing adequate training, he says.

The business savvy that IT leaders have developed and the trust they’ve built through execution is even leading some companies to tap their CIOs to take on additional responsibilities outside their normal roles. But even for the more typical CIO, the pocket protector is no longer the accessory of choice. The CIO, says Tarde, “is definitely going to be focused around the business end of things.”

Copyright © 2007 IDG Communications, Inc.

  
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