The CIO role discussion is on fire, and conferences all over the world dedicate considerable time to the ongoing dialog. To add more meat to the discussion, the Corporate Executive Board (CEB) recently positioned Business-Led IT as a model for the future. Chris Mixter, senior director of advisory services for CEB distinguishes it from Shadow IT in this quote from a Forbes Article by Nikki Goth Itoi:
“This is not about the willful or ignorant duplication of core IT services. Your internal business customers are bypassing IT and investing in activities that are driving a critical business outcome.”
This emerging Business-led IT is therefore not what we have historically called shadow IT. The CEB recently found that 78% of business leaders’ priorities for 2014 were dependent on technology. This drives a keen interest in business-led IT, which shares three primary characteristics:
- Funding comes directly from departmental budgets
- The ideas do not require IT approval
- Capabilities are delivered using business resources, external providers, and/or the cloud
Where speed takes priority over efficiency or cost, IT could be shut out of critical business initiatives. According to the CEB, the business spends three times as much on innovation as the corporate IT function does. It is said that you can’t be a CIO these days if you are not versed in the business. Considering the previous statistic on the dependence of business priorities on technology, the same may be true about business executives that are not versed in technology. As business leaders become more technology savvy, the business-led IT phenomenon broadens. The above article also positions an interesting twist on the war for talent. Here’s Chris Mixter again:
“Let’s face it, the best technology graduates in the world aren’t terribly stoked about working in corporate IT. They want to go work in marketing, R&D, or supply chain. And none of those functions are held accountable to the strict pay scales in the HR hierarchies that we are.”
I recently moderated a panel discussion at an Evanta CIO Executive Summit in Dallas focused on re-envisioning the role of the CIO. Three IT Leaders participated on the panel. They were:
- Scott Shadle: SVP & CIO Aviall
- Patty Watson: CIO, The Brink’s Company
- Relle Howard: Vice President, IT Flowserve Corporation
The session attendance is a good indicator of IT executive interest in the topic. These leaders shared their insights on a number of topics ranging from short term tactics to the long term role of the CIO. Here is a synopsis of this very engaging discussion:
Setting the stage: Coming into your company, how did the business envision IT? What was your vision?
Patty Watson – Patty described how IT was viewed as a money pit when she arrived – they spent a lot of money, but the business was not seeing value. They received a cost allocation with little to no return. IT was highly decentralized, with very little communication occurring across the decentralized environment. Patty’s vision was a centralized organization where IT delivered services and financial transparency based on business need – everything had to serve a business need: efficiency, growing revenue, etc.
Relle Howard – Relle described how IT was viewed when he arrived: IT was pursued for IT sake and considered a liability by the business. The organization was siloed, there was a lack of transparency on project work, and the feeling within the business community was that IT needed to stop breaking things and stay out of the way. Questions swirled regarding the money being spent and the reasons for that spend. It was clear to Relle that IT needed to care about the business and the P&L statement as much as the business did. There needed to be more flexibility in the use of technology, and much work was needed to establish trust. Relle set out to make IT a card-carrying member of the business community.
Scott Shadle – Scott described how technology is a big piece of their value proposition and has always been a part of what Aviall is. The business operates with tight margins, and he had a mandate to implement an ERP system. He has found that changing the language of IT has made a major difference in how they are perceived by the business.
Practical examples: What are you doing to purposefully insert technology into the business? How have you empowered your companies to do what they do through technology? What are some examples of ways that you’ve garnered business support for technology?
Relle Howard – Relle developed a three-tiered visual that helped the business connect to how IT-projects were driving business outcomes. The goal was to eliminate the science project perspective held by the business and answer the “why” behind IT projects. He found that the IT organization was internally focused and attached to rules, processes, and tools – the business became the enemy and a threat to their process. Relle realized that attitude was the biggest obstacle to an IT-Business partnership and he needed to consider replacing people and re-organizing.
Scott Shadle – Scott pulled three senior directors out of the business (marketing, finance, and operations) to lead SAP driven business transformation. He reorganized IT with a heavy front office, back office mind set, and created new business focused titles for IT people that were embedded in the business. Scott emphasized again that he changed their language and talked the language of the business: “we don’t serve the business, we are the business”. Phrases like “internal customer” and “seat at the table” are no longer in the vocabulary. The eCommerce function was moved to IT, and rather than putting someone in charge of BI, a new role was formed titled Director of information delivery. They worked towards business self-empowerment to move IT out of the middle, and Information delivery and eCommerce were the impetus for IT to work with its business partners. Scott stressed the importance of connecting IT efforts to impacts on the business and industry.
Patty Watson – Patty spent the first three months with the company out in the field. She described herself as a business owner, not a technology leader. She focused on learning the business and related challenges by riding on Brinks trucks and sitting in money rooms – versus spending her time on data centers and applications. Patty offered unique solutions to the business and created a trust relationship by shifting from order-taker to advisor. She demonstrated an understanding of what their customers needed, and created early value that actually led to a shift of technology from the business into IT.
Outlook and advice: What’s the next step for IT and business alignment? What advice do you have for your peers who are trying to become a trusted business partner within the organization?
Relle Howard – In the “IT as a liability days”, people would giggle when it was my turn to do a brief – because they knew it was about to get emotional. Although Relle sees the commoditization of infrastructure services, he does not believe the CIO role will split into an infrastructure role and a strategic role – but he acknowledged that poor performance opens the door to that possibility. He said: “The days of having your smartest technology person be the CIO are over – or will soon be over”.
I couldn’t agree more. Relle added that IT has to have a business focus, with a keen understanding of the importance of accelerating time to market. He noted that if your focus is still on the data center, change requests and server up-time – you need to start looking to the business. Relle believes that if you can show a business focus, with an ability to lead the end-to-end technology organization, he doesn’t see the CIO role changing. I asked Relle if the “keep the lights on” focus gets in the way of a strategic business focus. He responded that having someone in charge of the infrastructure while the CIO focuses on the business was a viable tactic.
Scott Shadle – Infrastructure enables a business to work, and that is too important to just hand off to someone and not have it an integral part of the CIO focus. Scott believes viewing the CIO role through the lens of enabling work puts the IT-Business alignment question into perspective.
Patty Watson – Patty said: “If you want someone who is going to redesign your network – I am not your gal, but if you want a business person that can improve efficiency and help the business grow – I’m it”. She believes that business knowledge differentiates a technologist, and an understanding of how technology drives the business is a critical success factor for CIOs. She said: “without it, you can’t be successful anymore”. Developing trust is absolutely critical, and the way she has always developed trust is through the relationship. She invested time in building relationships with every executive – operations leaders, CFOs, GMs, as well as IT leaders. Patty focused on helping them run their business and showing improvements they wouldn’t have seen before. Rather than selling something they didn’t need, she focused early on cost, which she believes is the best way to build trust.
This conversation with CIOs is fascinating. They either say the phenomenon doesn’t exist, or they acknowledge that it does exist, but differ on how to deal with it. One school of thought is to crush any non-IT sanctioned activity. The other is to find and address the reasons the business needs to go around IT. I asked our panel for their thoughts.
Patty Watson – The decentralized model in the past made shadow IT a non-issue because everyone in effect had shadow IT. The move towards centralization drove a behavior to hide IT, but word quickly got out that you shouldn’t try to hide it, because Patty is going to find it. The IT portfolio is growing, as the business looks to Patty to support more – driven by performance and a trust relationship.
Scott Shadle – Scott looks at shadow IT as something is not working right. Analysis and reporting was a big area of Shadow IT, but relationship and trust was critical to addressing it. Tight margins is another factor in dissuading the business to pursue IT on their own.
Relle Howard – Relle acknowledges that Shadow IT exists. As he put it, the business had needs that we were not able to provide for. He partnered with the Shadow IT folks to understand what they built and helped them understand that architecturally, it would not scale. He then shifted the paradigm from the business needed to do it because it was the only way to get it done – to IT is a trusted partner that can get it done and avoid future pitfalls. One of the ring leaders of shadow IT eventually asked to join the IT organization. He stressed: I would not try to snuff out shadow IT – I would try to learn from it.
Maybe the question I should have asked is the business-led IT question. What insights did the previously referenced article provide regarding dealing with business-led IT? Although there are risks, Mixter says that “the best CIOs know that the risks do not mean corporate IT should take over – IT will stall them out and lose the advantages they bring to the table.” He believes that corporate IT should evolve from service managers to consultants, advisors, and coaches. In the article, Mixter introduces a model that depicts two types of IT:
- Shallow IT: Areas where business groups can experiment using rapid test and learn cycles
- Deep IT: Areas where corporate IT sorts out architecture and managing risk and scale
The article suggests that technology projects move through a life-cycle where ideas are rolled out and tested quickly via Shallow IT, and as they mature, they move into Deep IT where they can scale for the entire organization. This creates a model where IT allows the business to innovate quickly and fail fast -and then add value by introducing efficiency, cost, scale, and risk governance for these new capabilities.
The models introduced by the CEB make great sense to me, and I see a number of areas converging to address this ongoing discussion. Lean start-up, DevOps, Agile, ideation, innovation management, experimentation, the IT-Business dynamic, and others, eventually converge to address the challenges that lie ahead. It will be interesting to see how the CIO role discussion evolves in 2015.