PWC put out a study in 2014 to say that the top 5 things that keep CEO’s awake at night are: Security, Mobility, Analytics, Cloud and IoT (Internet of Things). They are all technology related, and yet if you look at Boards, you find few CIO’s. What’s going on?
Don’t get me wrong – there are CIO’s on Boards. Our firm has been involved in a number of searches where forward thinking CEO’s and Nominating Committees have taken action. Hats off to them. But why isn’t everyone doing it? Security is a key topic in the Boardroom, and every CIO I know is spending more and more time with their Boards, talking about what the company is doing. Hiring a great CIO is definitely part of the solution, but having a CIO on the Board is the next logical step.
Companies increasingly acknowledge that they are technology businesses. Early on FedEx realized this – the data about the package are as important as the package. A CIO I know said – “we are a technology company with wings”; an insurance CIO said “we are a database and software company operating in the insurance space”. Technology is increasingly at the core of the purpose of organizations. I have a simple definition of the universal company purpose – “to find and keep customers”. CIO’s used to be “leverage” – harmonization, standardization, cost reduction, but now they are “top line”. And if they are thinking top line, then my contention is that any major corporation needs to have a top caliber CIO on its Board.
In one organization where we placed a CIO on the Board, the CIO of that organization said to me “I am nervous about having someone who really knows IT at the Board level. My life may become miserable!” but a year later she said “it is the best thing that has happened to our company. I now have someone on the Board who understands how technology can enable, and helps me explain the technology journey, but with the credibility of an insider on the Board team”.
This blog is a summary of thought from a CIO group that I have the privilege of moderating. They are the top CIOs in the Bay Area – so this is relevant. Not sure I agree with everything, but it is thought provoking.
Why Reboot IT? There are many reasons – here are a few:
- Outsourcing is broken. It doesn’t reduce cost much, but does reduce flexibility, innovation and accountability.
- Integration and customization = huge complexity, and you can’t introduce cool new stuff to meet the business needs because you are in the land of Lilliput.
- Waterfall methodologies are arcane. Slow, costly, etc.
- It’s really hard to measure value. Conversations around IT are often directed toward cost-saving, whereas they should include deep discussions around revenue generation as well – see my IT Benchmarking blog (published 9/13/13).
So – what’s a CIO to do?
The simple answer is that the IT department must be just like a technology company with products. The head of development is like the VP Engineering, and should be supported by Product Managers who are responsible for the various offerings (Think as if you are Workday, Salesforce, etc., building commercial products – for internal use).
Build with the Cloud in mind, Web scale resilient apps, open source, embrace mobility (the form factor of a PDA screen requires a different development approach to apps delivered on PC and Mac/iPad), build everything scalable, and embrace choice.
How should you run IT?
- Agile, self-directed project teams of 6 – 12 including product, technical and iteration management and developers.
- Create product and service lines.
- E.g., a product could be a CRM platform that would be charged to the business and handled like any other product.
- Help desk would be a service – measured by cost and value (customer satisfaction).
- Follow agile and/or scrum-based software development methodology for both custom and off- the-shelf development.
- Follow product lifecycle – eliminate less used products.
IT Department – Principals
- Flat hierarchy: 8 – 15 directs with teams being self-directed.
- Hire engineers capable of building products for commercial use.
- Managers should have a combination of skills: leadership, business, and Technical.
What should an IT organization look like?
- Shared services group comprising IT: infrastructure, security.
- Office of the CIO: focus on metrics, portfolio management, communication, finance.
- IT Operations: Problem, Change, Incident and Release management. First and second level support, NOC, Help Desk.
- Product Management. Strong business relationships, understand customer demand and translate into features/initiatives.
- IT Development. Services-based platform development of the products tied to capabilities, continuous delivery and deployment, modern tools, develop in-house capability (muscle memory).
What should you measure?
- In a word – everything, with the objective of tying business capability enabled, to the benefits realized.
- Build a big data store and capture logs, telemetry, capacity data, metrics, adoption data, incident management data, financials, etc.
- Build BI on top so decisions are increasingly based on data, e.g., – products should have telemetry and adoption logging so you can see which features are being used and how.
- Business pays for products and services delivered by IT on a usage/consumption based model. If product is not used, reduce support and then scrap. This forces IT to be cost and value conscious so it can compete with SaaS products.