By Kim S. Nash, CIO
1 May 2012
Five years from now, the CIO will be a better, faster, stronger version of today’s top IT leader, practically running the company single-handedly. Or maybe other business executives will become more educated about IT and decide to hire cloud companies to do it all, leaving the poor CIO to wither, enforcing service-level agreements for a living. For almost as long as there have been CIOs, we’ve heard breathless speculation about whether the position will last, and if so, in what form.
Such nonsense ends now. Technology touches some part of nearly every product or service pulsing through the economy, weaving the industrialized and developing worlds together as never before. Without IT, business dies. CIOs are not going away. But what will the job become?
To sort through the many technological, economic, societal and political factors shaping the CIO role, we called on this year’s CIO Hall of Fame inductees, IT leaders who were judged by their peers to have profoundly influenced the business landscape. We also canvassed the honorees of our annual Ones to Watch program, which selects rising stars who are likely to become the next generation of CIOs and business leaders.
Their predictions are smart and may surprise you.
There’s little support for the facile idea that the CIO job will split into a CTO and CIO pair working as peers on the org chart. CIOs often have CTOs reporting to them, but the positions aren’t likely to become equal, says Dave Weick, the CIO of McDonald’s and a CIO Hall of Fame honoree. The break would create unnecessary disconnect between technology and information strategies, probably slowing decision making and possibly generating discord, Weick says.
And today’s big technologies–cloud and mobile computing, social media, consumerization, and big data–won’t themselves alter the CIO’s fundamental role. At least not for top CIOs who already know that their job is to manage change, not technology; to set strategy, not server thresholds. But certainly these “big five” technologies will continue to let companies create new products and interact with customers in important new ways, just as prior technologies did.
It is the ability to handle, and spark, major business shifts that determines a CIO’s effectiveness, says Steve Rubinow, former CIO of NYSE Euronext and current CIO of FX Alliance, a foreign exchange technology provider. “CIOs have always and should always understand the pace of technology change, decide what’s ready for prime time and use what’s right for business,” says Rubinow, who also enters the CIO Hall of Fame this year. “Now, it’s just smaller and smaller time frames.”
What the CIO will be in five years is an entrepreneur who can inspire a global staff and persuade IT suppliers to collaborate. The new CIO will be an in-house futurist, measured by the same financial metrics as any other C-level executive, plus one better: innovation.
We already see signals from the future.
Tim Theriault, CIO of Walgreens, is a sharp prototype of the changed position. Theriault is helping transform the $72.2 billion pharmacy chain into a health and daily living destination where customers can access personal health information to make choices about what medicines to take and foods to eat, for example. He is creating a new line of revenue for Walgreens in a project called HealthCloud, which uses big data analytics tools to combine customer information in new ways, and he’s offering customers access via cloud computing.
Before Walgreens, Theriault ran Northern Trust’s corporate and institutional services group, the largest business unit and global operation at the financial firm. He now joins the CIO Hall of Fame. “You have to be multifaceted and your political instincts have to be aligned with [those of the] business leaders so they will accept your input,” Theriault says.
What drives many CIOs, and those who aspire to the job, is the chance to exercise influence. But what will determine longevity is the ability to choose the right things to influence in the right way. The dual forces of a turbulent economy and the impatience of techno-smart senior executives will winnow tactical, reactionary CIOs out of existence by 2017. By then, CIOs will need to play these five key roles. Are you ready?
CEOs will require CIOs to have experience starting a company, running a line of business or devising a new product line. No exceptions. Familiarity with marketing a product or service, even creating a launch campaign, will be part of the job, says Anna Frazzetto, senior vice president of international technology solutions at Harvey Nash USA, an executive recruiter. (To read about reporting lines, see “Is It So Bad for the CIO to Report to the CFO?”)
Even if the marketing was to internal employees, not outside customers, the experience matters. CIOs already know how to get funding for projects, but will have to learn how to build realistic revenue models and do the slick marketing that people–your customers and colleagues–increasingly expect from technology-based products. “The CEO is going to look for a CIO who understands how products work in a market,” Frazzetto says. “That was unheard of in 2010.”
To learn to conceive new business models built on technology and data, start practicing now, says Srini Surapaneni, senior vice president of business systems and information at Western Union and a Ones to Watch winner. “Alignment is not enough. Think like consumers,” he says.
Surapaneni uses the cloud to test new customer services quickly with a few small development vendors; he expects most CIOs to do this in the next few years. “You experiment with different business models in different markets faster.”
Rubinow prototyped new features constantly at the $4.6 billion NYSE Euronext exchange, incorporating predictions about how people and companies want to interact with the exchange. CIOs will need to set aside their fascination with technology and imagine business outcomes, he says. “If you ask people what they want, you are too late.”
The CIO of 2017 must link people and ideas across the company and between companies.
As buying IT infrastructure services from third parties becomes the norm, CIOs will be freed from a lot of the cost-justifying they do today to prove the worth of each new deal, says Dawn Costello, senior vice president of global IT strategy and portfolio management at Wyndham Vacation Ownership, a vacation club that is part of the $4.3 billion Wyndham Worldwide hospitality company. Instead, CIOs can better use that time to create more beneficial relationships with those providers, says Costello, a Ones to Watch honoree.
This role goes beyond that of today’s connectors, who coordinate outsourcers and cloud suppliers. The CIO of the future will connect vendors–startups and established players–to each other, to work for his company’s benefit, says Dana Deasy, CIO at BP Global, a $386.5 billion oil company.
To beat competitors, CIOs will have to create ecosystems of IT suppliers that work together to win business from, and for, the company, says Deasy, a CIO Hall of Fame inductee. “We have to be smarter about articulating how collaboration, while helping us, brings them benefits too, in new sources of revenue.” BP’s competitor Royal Dutch Shell has created just such a vendor collective. Alan Matula, CIO and Hall of Fame inductee, says he has gotten his vendors to collaborate on Shell’s business problems and, over time, convinced them to open up their research and development work to him.
Home Box Office, the cable company owned by the $29 billion Time Warner, likes to work with tiny, new IT vendors, often funded by venture capitalists, that have intimate knowledge of the media industry. Greg Fittinghoff, senior vice president of application development at HBO and a Ones to Watch winner, capitalizes on the expertise of small vendors while teaching them about enterprise needs. Sometimes he will suggest a product for them to build, perhaps in partnership with another niche startup, to solve an HBO problem. That opens up sales for the vendors, he says. He expects that a key part of the CIO role will be the ability to connect ideas about where an industry is going with burgeoning IT suppliers. “You mutually map out a future,” he says, “for defensive and strategic reasons.”
CIOs will also be expected to connect consumers to the company. That means literally–allowing them to communicate using social media and mobile technologies, for example–but also conceptually, says Bill Oates, CIO of the City of Boston and a CIO Hall of Fame honoree.
Getting customers or constituents of any kind to think highly of an organization and include it in their routines can lead to conversations that benefit both parties, Oates says. For a company, that might prompt ideas for new products that people actually want. For a city, that means collaboration to improve the quality of life.
“It’s not the CIO’s role to predict everything an organization should do. But the CIO can connect people on the outside to the brilliant folks we have in our organization,” Oates says. “That’s where you can do really great things.”
Global Talent Scout
Five years from now, CIOs will spend a large percentage of their time traveling worldwide, talking to staff about how to use technology to improve business, says Weick at McDonald’s. He already does.
The $27 billion chain has 33,510 outlets worldwide, and it’s crucial that Weick hires well in local offices, he says. Otherwise, projects like testing software for mobile food orders in Australia and expanding restaurants in China could fall apart. “Who you attract, how you motivate them, when you move them into different jobs, how they get their experience in organizational and functional areas–it’s the most critical thing in a CIO role.”
Understanding global talent management requires CIOs to erase perceptions that headquarters is the office where the most important IT decisions are made, Deasy warns. First, CIOs must recognize where, geographically, their industries are moving and set up IT staff there, he says. A growing segment of BP’s core business and many of its suppliers are centered in Asia, and Deasy knows that eventually key functions will move there from the United Kingdom. He doesn’t know when, but says it’s silly to believe that historic headquarters will always be the company’s epicenter. IT has to stay strong in all key regions. Fifty-two percent of BP’s IT staff lives outside the U.K.
“We have to get over thinking that the center of the universe is where our headquarters currently is,” he says. “We can’t wake up one day and find our companies have moved east but somehow we didn’t move east with [them].”
CIOs are used to projecting technology trends. But being an in-house futurist will require CIOs to envision the implications of bigger changes: how workers work, how consumers consume and how suppliers supply. Then they will have to shape those developments for competitive advantage.
CIOs who are fretting about their loss of control as consumerization swamps the IT organization are revealing their weakness: a too-tight focus on technology. But CIOs who infuse their thinking with ideas from experts in economics, social sciences, psychology and other disciplines will generate deeper, more lasting business strategies, says Nasir Khan, executive director of informatics at Blue Cross and Blue Shield Association, the administrator of 38 BlueCross BlueShield healthcare providers covering 99 million people. “Tactical reactionaries will be obsolete.”
One area wide open for future CIOs to influence is how work will get done. Simply handing out iPads won’t do much for a company’s competitive position, Fittinghoff says. He expects that more than 30 percent of a typical company’s staff will work permanently from home in five years, which will cut hefty real estate costs and perhaps boost employee morale. (No Los Angeles traffic! No New York commuter rail!) CIOs will have to figure out how to support that remote structure, to make an employee’s location a moot point, he says.
At Western Union, Surapaneni figures that in five years, half the IT footprint at his company will be mobile technology. In 10, the whole thing. Why? Customers of the $5.5 billion money-transfer company will demand it. Western Union is expanding in Asia and Africa, which are areas that he says lead the world in use of mobile technology. “It will be a different ball game, and you have to play ahead,” he says.
Predicting risk will be a vital skill for the CIO prognosticator. CIOs commonly plan out how to recover IT systems and keep the business open after a disaster. But, says Deasy at BP, future CIOs will have to–and present-day CIOs should–expand their thinking to include other dimensions of volatility, such as government regulations, political upset, economic disasters, social unrest, war.
The future CIO will assume more responsibility for correctly assessing the risks at hand and the relative strength of the company to bear them, says Rubinow. Evaluating the burden is a “primary function” of a CIO, he says.
CIOs must also prepare for low-probability, high-impact events. An incident similar to the 2010 oil spill in the Gulf of Mexico could happen to any company, Deasy says. “IT touched every aspect of the spill: how to stop the oil, recovery operations, working with communities, deployment of vessels and people, cleanup. Even today,” he says.
“CEOs won’t tolerate a CIO saying, ‘We have never thought about this before.'”
Master of Business Metrics
When the CIO takes responsibility for helping create new products, attract new customers and bring in new revenue, the CEO will hold her accountable in new ways. Common IT metrics, such as on-time, on-budget projects and reduction in operational expenses, will remain part of the performance review. But in five years, the compensation of many IT leaders will depend on meeting the same business goals as the CEO and CFO, says Helen Cousins, CIO of Lincoln Trust and a CIO Hall of Fame inductee.
That already happens among elite IT executives today, but it will be a fact of life for most in the future, she says. At Lincoln Trust, a retirement investment firm with $8 billion in assets, Cousins, like her C-level peers, shows numbers to demonstrate that the technology her team built made the company more valuable: increases in new products, lower error rates among workers and higher customer satisfaction, as well as traditional financial objectives for revenue growth and earnings per share.
Stephanie Reel, CIO of Johns Hopkins University and its medical center, says future CIOs will be graded only partly on quantifiable items. Just as important will be qualitative measures such as whether better decisions are made faster, says Reel, also a 2012 CIO Hall of Fame honoree. “My colleagues want to know if the business is performing differently based on the use of information–not IT, but information,” she says.
Innovation will become a critical measure of a CIO’s worth but can be hard to assess, Surapaneni says. He suggests metrics such as the number of ideas brought to business units and then put into pilot. “You can’t just measure by how much revenue was achieved. There may be no funding available or politics holding back development, but it doesn’t mean the CIO didn’t innovate.”
Wildcard: The Economy
No one knows what the world economic situation will be in five days, never mind five years. Generally, a good economy is a free ride for mediocre executives. A bad economy can expose problems. But prolonged recession can also increase a company’s collective will to change. And in those times, a brave and astute CIO can make a mark.
The precise wrong way to do it is to hitch expensive IT equipment upgrades to business projects, says Khan at Blue Cross and Blue Shield. Executive peers may talk to a CIO about a project proposal, which some CIOs view as a chance to get funding for software and hardware. “IT politely blackmails the business,” he says.
This erodes any progress the CIO had made in being viewed as a strategic partner, Khan says.
However, a down economy can make a handy proving ground for new ideas, says Cousins at Lincoln Trust. As the recession took hold after 2008, the problems in inefficient business processes became glaring when the workload increased and staffing was reduced. For example, more customers started to withdraw cash from their retirement accounts, she says. “When things are running smoothly, there is often a low appetite for change. A weak economy forces everyone in the organization to think creatively about every part of the workflow process,” she says. “It was also a lot easier to sell such massive change to the board, as it was obvious that we could not continue doing things the way we had in the past.”
Cousins built a new technology infrastructure based on process improvement that was so successful and efficient that a competitor bought the IRA business side of the company for its IT platform, she says. Future CIOs who can capitalize on bad times demonstrate a business maturity appealing to CEOs, Khan adds.
Theriault at Walgreens recommends CIOs study their CEOs carefully. “The role of CIO is a lot of times dictated by the CEO’s strengths and weaknesses,” he says. Knowing what your CEO wants, perhaps even before he or she identifies it, will carry any CIO far into the future.