The CIO/CTO Balancing Act

As CIOs become more immersed in business management, some are handing off technical oversight to CTOs. But splitting responsibilities between the two roles can be tricky.

New York Life Insurance Co. went through four CIOs in eight years. Then, it found Judith Campbell, who had something the others didn't - a business background.


The CTO's Role

Although internal definitions and perceptions of the CTO's role may vary, Robert Frances Group Inc. in Westport, Conn., suggests these responsibilities for enterprisewide CTOs:

  • Define, develop and deploy an IT architecture that maximizes revenue, minimizes costs, helps get and keep IT aligned with business goals and provides a firm, flexible foundation for the future.
  • Ensure that all IT deployments are properly implemented, integrated and supported.
  • Become the corporate subject-matter expert on all trends and developments in IT that are relevant to business.
  • Oversee compliance of the corporate IT resource with relevant standards and appropriate best practices.
  • Develop ground rules, performance criteria and enforcement mechanisms for service-level agreements with relevant IT service providers.
  • Keep other IT team members and senior managers aware of the value of the IT architecture and implications of proposed changes or additions.
  • Help educate end users on the value of the IT architecture to the business and their roles within it.
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    "The others were technologists," says Campbell, who arrived at New York Life in 1997 with 17 years of retail banking experience, including a stint at The PNC Financial Services Group Inc. in Pittsburgh, where she worked on projects to develop a call center and automated teller machine and home banking services. "Their lack of knowledge of what to do on the business side was part of their downfall."

    Nevertheless, Campbell recognized that New York Life needed a strong technical leader, created the position of chief technology officer (CTO) and hired Mike Mazzariello to fill it. Mazzariello, whom Campbell lured from PNC, has three responsibilities at the insurance company, Campbell says: "building the IT infrastructure, managing Internet development and chief strategist for emerging technologies."

    The Handoff

    As CIOs increasingly take a seat at the business management table, some are handing off oversight of technical areas to a CTO. Sometimes the CTO is hired at the same level as the CIO. Other times he is hired by and reports to the CIO. In either case, the CTO is expected to tend to long-term development of the information technology infrastructure and often to oversee computer and network operations.

    "The trend is definitely toward adding CTOs," says Robert Zawacki, president of IT management consultancy Zawacki and Associates in Colorado Springs and professor emeritus of management and international business at the University of Colorado, also in Colorado Springs. Technology is changing so fast, he says, that companies need a senior person who can focus on it full time and free up the CIO to focus on business-related issues. "The way I think of it is that the CTO's job is passion for the product, and the CIO's job is passion for the customer," says Zawacki.

    "At many of the smartest companies we know, the CIO represents efforts to keep IT aligned with the business goals, while the CTO is the point person for making sure the IT infrastructure is sound and able to keep pace with the demands of the business," says Michael Dortch, an analyst at Robert Frances Group Inc., an IT consultancy in Westport, Conn. A company that can't afford to establish a new, senior position for a CTO "should look to grow a current team member into CTO status," he says.

    Ed Hourihan is CIO at Phoenix Home Life Mutual Insurance Co. in Hartford, Conn., where he has worked for nearly 30 years. In the early 1970s, he recalls, "I had a couple of mainframe systems programmers working for me. That was the chief technology function at the time." It wasn't until the late '80s, when distributed processing came on the scene, that IT became complex and fast-changing enough to justify establishing a full-time CTO position, he says.

    Like many CIOs who have come up through the technical ranks, Hourihan has shifted his focus to the business side - including cementing relationships with external customers. For technological strategy and building the insurer's long-term IT infrastructure, he relies on his CTO, Satish Bangalore, who stepped into that position in 1990.

    Bangalore has a colleague at his level whom he likens to a "mini-CIO," the person who manages application development. Splitting responsibilities is not always easy, Bangalore says. "It's kind of a continuing negotiation. It's sometimes hard to draw the line where long-term architecture takes precedence over application or business needs."

    For example, he and his colleague have debated selection of hardware and software for the company's Internet offerings, Bangalore says. "From a technology perspective, you might want to pick best-of-breed from start-up companies, but if you layer a management perspective or an application perspective on top of it, you'd worry about the long-term viability of the solutions you are picking."

    In the debate, Bangalore ended up overriding his own people to side with the more conservative views of his application development colleague. "I take more of a management perspective than a technology perspective, even though the technologists who work for me would like to pick best of breed," he says. That philosophy may owe something to Bangalore's background: He has a law degree and an MBA.

    But Bangalore is an exception among CTOs, Zawacki says. Most CTOs rise through the ranks of systems programmers and other technicians, he says. "Everyone in the company knows who they are. They are the technical gurus. The cream rises to the top."

    But management skills don't hurt, Zawacki adds. He says CTOs should spend half their time on long-term strategy and half on short-term oversight of key projects. He cites a Midwestern bank where the CTO devoted much of his time to ensuring that a crucial electronic banking project stayed on track. "There was a project manager for the project, but the CTO was joined with him at the hip," Zawacki says. The project was pulled off successfully, says Zawacki, because the CTO had "such respect in the organization that he was able, through leadership, to just drive it harder."

    Hourihan says Bangalore played a decisive role in one mission-critical project: combining the IT operations of Phoenix Home Life and another insurance company when they merged in 1992. Bangalore effectively combined six incompatible policyholder systems into one in just five months "by screen-scraping" data from each and funneling the information into a common front end. Without that, the customer call center would have been in chaos, Hourihan says. "It was very clever, and he did it very quickly."

    New York Life's Campbell has formed a troika of senior IT managers immediately below her. In addition to the CTO, there is a manager of applications development and a manager of administration and operations. The three make for "a plan, build and run environment," she explains.

    Yes, There Are Conflicts

    Campbell acknowledges that her CTO's high-tech mission sometimes pits Mazzariello against the more conservative applications and operations chiefs. "Some of the decisions I have to make can be unpopular and the CTO might not like them," she says. "On the other hand, I may be pushing the operations people beyond what they think are their capabilities, but then we go outside and get some help."

    Recently, Campbell says, such a dispute arose over selection of middleware, with the CTO recommending state-of-the-art products but operations staff arguing they were too risky. Campbell steered the factions toward a middle-of-the-road alternative, then got some outside help installing the software. "It was a good compromise, but the two camps were not going to get there without some mediation," she says.

    "Any disagreements we may have involve the speed of change that is desired," explains Mazzariello. "It is Judy's role to look at the big picture and how to implement technology strategy while considering budget, cultural readiness and so forth. I look at things primarily from a technology standpoint."

    When BankBoston Corp. and Fleet Financial Group merged last year to form FleetBoston Financial Corp. in Boston, neither company had a CTO. But the merger introduced so much business diversity and technical complexity that a CTO position was created, with both the CTO and CIO reporting to the vice chairman. "There was the realization that there were two very major and complementary jobs that needed to be performed in a large and complex organization," says FleetBoston CIO Dennis Rygwalski.

    Each position includes short-term operational duties as well as responsibilities for long-term strategy formulation, Rygwalski says. "Mine are more applications systems-oriented and business-oriented, and his are more infrastructure-oriented."

    Conflicts that arise between short-term and long-term goals - and between business objectives and infrastructure needs - are generally resolved through a methodology called the New Business Initiative (NBI) process, says FleetBoston CTO Richard Taliani, executive vice president of global technology services at the $191 billion bank. When the bank is considering any significant change in its use of IT, it uses a cross-functional team to evaluate it and make recommendations to senior IT management. The

    12- to 15-person team includes representatives from Rygwalski's and Taliani's staffs and from the information security organization. "The team gathers requirements, does costing, does configurations, looks at the underlying technology," Taliani says. "It filters out potential ambiguities and conflicts."

    But when it can't resolve a conflict, or when the team wants to deviate from Fleet Boston's IT standards, the question is put to a six-person group of IT executives called the Strategic Architecture Committee, chaired by Rygwalski and Taliani. "The SAC is kind of like the Supreme Court, and we go through a voting process if it comes to that," Taliani says.

    "The NBI process is both our blessing and our downfall," Taliani says. "It's a very cleansing process and it drives people to closure and consensus. But it's also a little bit lengthy and cumbersome. We are trying to streamline it so we can get product to market faster."

    Rygwalski says he and Taliani worked well together to combine the CIO's 900-person group and the CTO's 850-person group. "We took the time, when we built the organization, to understand the roles and responsibilities of each of us," he says.

    Copyright © 2000 IDG Communications, Inc.

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