Robert Brown recently took a step that many IT executives haven't taken in years: He added staffers. Brown, senior vice president of operations at Fremont, Calif.-based Tiburon Inc., hired two workers, including someone for the newly created position of IT manager.
A sign of better times ahead? Yes. But Brown's modest hiring spree also signals a shift in thinking for him, his IT department and his company.
"It sends a real clear message that there are changes that need to take place, that this IT group has a real spot on the front end," Brown says, explaining that his staff and the business units must work together to reach common company goals.
Industry studies and IT leaders alike report that after several years of cutting costs, CIOs now need to focus on supporting business growth. But IT execs must contend with a number of challenges as they make the leap. And while industry leaders say some CIOs won't have the skills needed to make it, they also point out that many are already rethinking and restructuring IT's role within organizations.
"There's no way to keep things [at the] status quo," says Karenann Terrell, vice president and CIO of Chrysler Group and Mercedes-Benz North America at DaimlerChrysler Corp. in Auburn Hills, Mich. "If you're going to make the transition to business value, IT can't just learn the vernacular, the vocabulary of the business. They have to do things with and for the business that are different."
That's a tall order for many IT executives. According to Stamford, Conn.-based Gartner Inc., the intense focus on cost-cutting has weakened IT leadership, fostered silo behavior, created competing agendas and dampened the creative spark in IT. As a result, IT has become risk-averse.
Gartner concluded in a July 2004 report that few IT management teams are well positioned, in terms of the breadth and depth of their capabilities as leadership teams, to deal with the challenges of growth, change and innovation.
But CIOs know they need to change, says Gartner analyst Mark P. McDonald. "Many CIOs will be focused on building up their business and leadership skills," he says.
In an environment where CIOs aren't going to get a lot of seed money -- a January Gartner report says IT budgets will grow by only 2.5% this year -- CIOs need to build their reputations as leaders by "being much more explicit about what their contributions are," McDonald says. He points to one CIO who, in summarizing progress following a corporate merger, reported the actual dollar value of the IT department's work rather than more traditional measurements such as the number of customer records moved to the new merged systems.
Realignment
CIOs need to realign themselves and their staffs with their companies' overall mission. "We used to say that in IT, you enable the business. Now you have to contribute," says Jean K. Holley, senior vice president and CIO of Tellabs Inc. in Naperville, Ill.
Holley has taken steps to change the culture of her IT department. First, its name was changed from the IT group to Global Information Services. Then, in December, she created the Business Relationship Management Group, which she describes as a collection of tech workers who sit in business meetings and "help figure out how we can contribute." And now Holley expects programmers to analyze costs and returns on investment instead of leaving it to business units.
This shift in thinking won't happen overnight for most CIOs, says Pamela Taylor, marketing director at Share, a Chicago-based nonprofit organization of IBM users. "There really is a training element involved," says Taylor, whose day job is in standards and strategic technologies at a subsidiary of a Fortune 50 company. "It is a matter of education for the staff in the technologies that are going to support the changes [brought about by growth]. It's a matter of introducing a new vocabulary -- both technical and business -- within the organization and having that permeate everything they do."
For example, Share's symposium in Boston this August will concentrate on helping IT managers respond effectively to the ever-changing business environment, align IT to the business needs to create a competitive advantage for their companies, manage complex corporate IT infrastructures with limited resources, make business integration work across information silos and conform to evolving rules and regulations.
"The savvy people understand what they need to learn," says Janet Cohen, executive director of the CIO Institute and chief operating officer of the H. John Heinz III School of Public Policy and Management, both at Carnegie Mellon University.
CIOs today need to understand finance, strategy, business process re-engineering and organizational behavior. They need to be able to communicate with a variety of audiences and to measure the value of IT, according to Cohen. Some CIOs are getting MBAs, taking courses or learning on the job to gain the necessary skills, Cohen adds.
Terrell also sees CIOs focusing on these topics through formal and informal networks. She recently attended a CIO summit where the 200 or so attendees listened to keynote speakers talk about the new posture of IT in corporate America. "The entire buzz of the conference was, 'You have a seat at the table. Now what do you do with it?' " she says.
Business Advice
IT needs to help the business understand how technology can support growth, Terrell says. And it must measure progress like other business units. For example, instead of looking at system availability and hours on projects, she now reports on customer satisfaction and whether projects achieve business goals.
On-the-job training often beats classroom education, Terrell says. She cites her IT group's experience implementing compliance policies for the Sarbanes-Oxley Act. Terrell put IT and business people together to get the job done, something she found much more effective than classroom lectures. "The understanding is going to come in the new responsibilities we have to take on," she explains.
Andy Roach, CIO at Ketchum Inc. in Pittsburgh, has restructured his IT group to reflect that philosophy. Several years ago, he created four disciplines for his department: financial/procurement, technology, applications and internal customer service. This has helped Roach control costs while responding to business needs. "I'm not making decisions that aren't bringing efficiencies and creating revenue," he says. Case in point: The IT group, responding to needs articulated by the business side, drove an investment in handhelds for the staff.
CIOs now have the overriding challenge of meeting the following competing demands: supporting business growth, adopting new measurements of success, developing vocabularies, educating staffers on business needs and keeping costs down.
"It puts additional responsibility on the CIO to communicate effectively and be able to explain in simple terms what is happening," says John R. Dick, executive vice president and CIO at Regions Financial Corp. in Birmingham, Ala.
Dick, who oversees IT workers in about a half-dozen locations, must help his bank drive sales while supporting mergers with other banks -- all with a budget that's nearly flat.
To do that, he established the Regions Technology Priority Map, a spreadsheet outlining priorities related to mergers, operations, system enhancements and the like. He holds quarterly virtual meetings that include all 1,000 IT workers. And staffers attend classes focused on the business of banking.
Dick also created business information officers, who are technologists aligned with specific business divisions. "They help us navigate priorities with ongoing daily communications," he explains. "They keep in lock step with the business, making sure IT resources are being brought to bear on the right issues."
And, as they move ahead, that's really the goal all CIOs need to reach.
Pratt is a Computerworld contributing writer in Waltham, Mass. Contact her at marykpratt@verizon.net.