Reference no: EM131053021

CASE

CIOs thought they knew what business-IT alignment was. But fighting the dark forces of recession has really taught the lesson-to some of them, anyway. At a truly aligned company with all cylinders firing, every executive, every manager, every employee works on one goal: winning customers. In the past, CIOs saw their role as, say, installing business intelligence tools so that the marketing group could analyze customer data, or upgrading enterprise resource planning software for the supply chain guys to improve order fulfillment. Vital work, of course, but inwardly focused and a few steps removed from living, breathing, money-spending customers. But now, as shown in the 2010 State of the CIO survey by CIO Magazine, top technology executives increasingly see bringing home the bacon as their job, too. Nearly one third-30 percent-of the IT leaders polled say meeting or beating business goals is a personal leadership competency critically needed by their organizations, up significantly from the 18 percent who said so one year ago. Eighteen percent also named "external customer focus" as a critical skill, double 2009's 9 percent. Double. Meanwhile, 22 percent cited "identifying and seizing on commercial opportunities"-up more than triple from the year before. Yes, triple. It's clear that the recession has deepened CIOs' understanding of and commitment to business beyond IT. CIOs are interacting with customers directly and working side by side with product engineers to build IT into new goods and services. "In so many of the products offered now, the differentiating component is the IT capability," says Drew Martin, CIO of Sony Electronics. Certain Sony televisions, for example, can stream movies wirelessly, one of several products and features that Sony's IT group itself helped make possible. CIOs should get their IT departments involved in product development-if IT can truly step up. "You have to have an awareness of where your business is trying to go," he says. "Then you have to make sure you have the capability to support that." "At Konica Minolta USA, the IT group also influences what the company sells," says Nelson Lin, CIO of the U.S. unit that is part of the $9.7 billion Konica Minolta Holdings in Japan. For example, Konica Minolta printers, measurement devices, and medical tools contain enough computer technology that when they break or get replaced, customers must dispose of them carefully to avoid environmental hazards. Lin saw end-of-life equipment disposal as a service that customers would pay for. Lin and other senior executives view Konica Minolta as an advanced technology company and through that prism, he says, the CIO's input becomes even more valuable. He stepped up to lead discussion of equipment disposal as a money-maker. "I'm doing it for our own e-waste already. It's now a matter of doing this large scale," he says. "It's the right thing to do, everyone knows. But it could be revenue for us, too." Denise Coyne, CIO of Chevron's corporate departments and services companies, was previously CIO of the oil and gas giant's marketing group as well as manager of 200 Chevron gas stations. She would go to conventions to talk up the company's point-of-sale system with gas station operators. "I found out what they wanted," she says. Her MBA and nine years in marketing have shaped how she approaches IT, she says, assessing projects from finance and business perspectives, for example. Patti Reilly White has been with Darden Restaurants for 20 years, 10 of them as CIO. IT has "always" been customer focused at Darden, she insists, but the past two years have been particularly intense. Projects in development include a system to text customers when their tables are ready, doing away with the flashing-light buzzers that restaurant greeters now hand out to waiting diners. "What our guests want is for us to value their time and personalize the experience for them. We in IT try to find ways to do that," Reilly White says. Some CIOs even run businesses themselves. In addition to overseeing internal IT for the $3.6 billion Nasdaq OMX Group, executive vice president and CIO Anna Ewing runs Market Technology, a division that sells Nasdaq's technology to financial exchanges around the world. The unit brought in $359 million in contracts in 2008, for everything from advisory services (helping customers set up various kinds of exchanges) to trading, clearing, and post-trade systems. Before coming to Nasdaq in 2000, Ewing didn't have profit-and-loss responsibility in her previous positions at CIBC World Markets or at Merrill Lynch. But at those companies, she chose a commercial direction as much as she could: At CIBC, she was a founding member of the financial services company's e-commerce site. Among several positions at Merrill, she led client technology. She was named Nasdaq's CIO in 2005. At Nasdaq, Ewing and her team recently launched a free iPhone application for checking stock quotes as a way to experiment with hot new consumer technology and seed the ground for some revenue-generating app in the future. The app debuted on a Friday. By Tuesday, without advertising, the stock-checker was the fifth most downloaded free financial app at Apple's site. "We wanted to see if the appetite was there," Ewing says. "It is." A CIO's ability to spot new business opportunities comes from thinking like a CEO, she says. "Product development and technology go hand-in-hand." Still, most CIOs have no P&L duties. That's a mistake, says Bill Deam, CIO of Quintiles Transnational, a $2.7 billion medical research company. Starting in 2007, most of Quintiles' top executives, including the COO, the head of corporate development and Deam himself, were assigned one key customer account. Deam says he tries to cultivate good relations with senior managers at his assignment, a $15 billion biotech and pharmaceuticals firm. Quintiles helps the biotech firm conduct clinical trials for medicines in development. Deam reviews the account with an executive at the customer company every Friday and visits every six months. He hopes his efforts not only produce closer ties but also more business between the two companies. But that takes time. "They want to make sure that all the work we do for them is performed excellently, without issues," Deam says. "Then we can go to the next phase of the relationship; this is very much about the business side," he says. For example, Quintiles would like to sell customers on the idea of outsourcing their technology infrastructures, Deam says, and he sees a pivotal role for himself in that strategic sales process. "My job is to make sure senior executives feel comfortable enough to talk to each other." Doing sales calls is a relatively simple way for a CIO to learn about customers. The CIO's presence also adds weight to what the salesmen claim. Having a CIO on a sales call isn't uncommon, but it's especially important now when so many products and services rely on IT, says Hilton Sturisky, senior vice president for information and communication technology with the $14 billion BCD Travel. BCD manages travel for big companies whose employees use BCD's web technologies to, for instance, book flights and hotels. Special services, such as tools for analyzing your company's travel data for ways to cut costs, are also available. When Sturisky went out with BCD's sales team recently, it wasn't so much to contribute but to listen, he says. BCD hasn't yet won the contract; sales cycles are 9 to 12 months in the travel services industry, he says. But he thinks that being there made a difference. "There was appreciation that we take a collective approach to serving customers and that added credibility to what the sales professionals were saying," he says. As a result of those conversations, Sturisky is considering how to provide such new services as sending notifications of canceled flights to travelers' smart phones, along with alternative itineraries. CIOs who want to focus on external customers may have to deal with internal resistance. The way to overcome that, says Coyne of Chevron, is to be visible. When she is trying to change how people work, for example, she meets in person as much as possible with colleagues above and below her. At "Dining with Denise" lunches, she talks with lower-level employees about corporate change. At meetings once or twice a year with Chevron's senior-most executives, she explains the value of IT. In between there are monthly meetings with departments and governance boards. All the while, it's her voice, her face out there. "Blogs, e-mail, town halls, dining. The objective for me is to continuously remind everyone of the bigger picture." Reilly White, too, is aware of her visibility at Darden and tries to use it as a tool. When restaurant operations crews see IT managers and staff in kitchens and dining rooms, they know Reilly White takes their partnership seriously. If you're not "out there" she says, you risk not understanding what your business needs.

CASE STUDY QUESTIONS

1. How does the job of the CIO change with the assumption of customer responsibilities? Do you agree with this new development. Why or why not?

2. Why would there be internal resistance to CIOs becoming more externally customer-focused than they were before? Does this present a threat to executives in other areas of a company?

3. How do companies benefit from having their CIO meet customers and generally become more involved with product development? What can companies do now that was not possible before? Provide a few examples.