You’re now CIO – welcome to the hot seat!
The CIO is probably the hottest seat on the “C” suite in terms of pressure and demands and that gets reflected in terms of a short tenure in the job. As individuals, they are typically bright, intelligent, hard-working and committed – and yet when you visit the offices of their colleagues frequently they are demanding that their CIO needs to go and go soon.
How long does a CIO last?
In the bad old days around the turn of the millenium – in the times of the dot-com crazy years of explosion growth and sudden collapse the accepted wisdom (or should I say urban myth) a typical CIO could expect to last 18-24 months in the job. These days, they get a while longer at the helm some say around 3-4 years (Forrester poll) and others 4-5 years (Gartner poll).
You’ve got to keep the lights on!
The most obvious requirement for any CIO is to keep the core IT systems and basic infrastructure working. If they stop and the organisation ceases to function properly, then they are not going to stay around long. I guess in over 25 years of business experience, I’ve only seen these catastrophic failures happen 2 or 3 times and the CIO incumbent pay the price of failure.
Business users and customers expect IT to work and by and large it does. I suspect expectations of reliability increase year-on-year and most CIOs are on top of this fundemental part of their game. Perhaps the big downside, is that the substantial time & efforts typical CIOs and their staffs spend “keeping the lights on” puts them under pressure in othe key strategic areas that can ultimately cost them their jobs.
So why do senior executive colleagues want to fire their CIOs so much?
I often reflect on a number of the CIOs I know well personally. I often struggle with the paradox that despite they are great people, dedicated to their jobs and achieve great things for their organisation with the frequent situation that many of their colleagues want to see them fired? How can such an uncomfortable situation arise?
Perhaps at the heart of it is the relentless increase in the demand for IT to help a modern large-scale organisation function successfully with the constraints of time, resources and most of all money to fulfill these expectations. We all know that the units costs of technology is falling year-on-year, the problem is that the demand is increasing even faster. This means that left unchecked, the costs for IT would explode year-on-year – and if this happens every CIO knows that they will be out-the-door before the kickoff budget planning round has even finished.
So every decent CIO attempts to control this ballooning budget overspend monster and it’s here that is perhaps the root cause of the difficulties they experience. In the case of large organisations (particularly financial institutions) one endures a long drawn out and intensive budget setting process. At the end of which the overall budget for IT is determined and then the costs allocated (with different degrees of science depending on the organisation) to the individual business units and functions. The spending is based on a whole series of assumptions – which in practice turn out to be over optimistic. Business demand nearly always exceeds the assumptions in the budget (whether for infrastructure, desktop & communications or applications & projects – or all of them together) – the CIO is then sucked into a policing issue trying to enforce standardise solutions (to keep unit costs down), seek out and destroy skunkwork initiatives or suppress & defer and demand.
You can’t keep the spending tide back
Despite your best efforts in putting in place control systems to control spending, many CIOs ultimately fail to keep the overall IT costs under control. You might be able to keep those costs you have direct control over, but user departments find a way to fund the spending you try to suppress regardless. Eventually the CIO and Finance catch you out when they get around to aggregating all of the IT related spend going on in the organisation, that can be 50% to 100% higher than you think it is. You may have not been responsible, but you are judged to be accountable for this overspend 🙁
Business users hate the words NO & WAIT!
All to frequently, the CIO and their teams are involved in saying no or never to business demands for more IT (from Blackberries to new CRM systems). Much of the demand can be simply status driven (I must have a Blackberry too as all the other senior managers have one).
The CIO may try and put in prioritisation and approved processes in place – but to the business user these can seem to be bureaucratic roadblocks deliberately put in place to stop them getting what they want.
Nobody loves you anymore 🙁
If you are not careful, as CIO you end up with a personal reputation as obstructive (insisting on standards), a conehead (asking colleagues to invest in major infrastructure investments they don’t understand), ineffective (as new projects never get delivered fast enough) and pretty isolated. Setting aside the business & technology challenges, long tenured CIOs make a big effort to build their personal relationships with key colleagues outside of Technology.
The service sucks
Sometimes the service just sucks. The root cause can be over aggressive negotiation and bidding of an outsourcing contract that forces the other party into dysfunctional behaviour in order to try and recoup their losses on the contract they signed with you. Sometimes it’s down to an offshoring exercise (internal or external party) that doesn’t work out to well. The cost savings turn out to be less than expected – but worst of all the delivered service is appalling. If poor service screws up the revenue numbers and increases customer churn for a key division of the company – then you are toast.
The silver bullet doesn’t work
Many organisations end up signing up for a huge “Transformation Programme” and these of course can take years (3-5 years to see through). You may of course have signed up a very convincing multi-billion partner organisation to help you through this journey. At the outset, you can enjoy a lot of support from your CEO and the whole IT organisation (and much of the business community too) can become heavily involved. The seasons come & go and slowly but surely the doubts begin to grow whether the Transformation programme will ever be completed – or that the benefits so confidently predicted will ever be realised. I guess you should start to worry if you get to see the leaves falling from the trees a couple of times and the Transformation programme is still running. The CFO and their team start to show ever closer interest in your budget spend and forecast – your outside partner tells you to have courage and keep going.
The business senior executives start to jump ship and stop attending the key governance meetings, you know when your sponsor tells you that they feel someone else is better suited to take the helm that your time is up!
So what do long tenured CIOs do differently to be successful?
Keep the lights on with a strong team combined with a disciplined approach
One should begin with the obvious of keeping the lights on. This is glaringly obvious and few CIOs ever get caught out here. The difference comes in managing the amount of time and attention that you end up spending in this area at the detriment of all the other areas. The simplest and in my experience the most effective approach here is to get a really solid deputy here who excels at delivering reliable IT operations and put a strong service delivery framework in place (ITIL is now proving popular) to guide you in implementing the right systems & processes for IT service delivery.
Implement the principle of “User Pays” for as much IT spend as possible
IT spending is a simply an arithmetic function of usage x unit cost. Responsibility & accountability for the usage part of the equation most properly belongs to you business users.
Smart organisations (and their smarter CIOs) such as AMP in Australia have thought through how they can put in place strong financial systems & processes to put in place “user pays” systems for as much IT related spend as possible.
In a “User Pays” environment, the business users are in complete control and responsible for determining their spend and how much IT service to consume. If they want 10 new Blackberries for next month, they can have them. However this is only made possible by being able to give them an accurate bill each month (which has the true fully loaded cost) and ideally supported by a smart “pooling arrangement” where unused assets can go back into a pool to be reused. The CIO can then influence demand by pricing assets that are standard (your bog standard low spec PC) at a significant discount to those special super duper “one-of-a-kind” special orders. If you combine the pool pricing concept with the idea that you pay for an asset for its lifetime untiol someone else picks it upo – you give your business users a tremendous incentive to go with the low-cost standard rather than trying to enforce a mandatory regime that no-one buys into.
Once demand for IT is being managed directly by the users – they can decide to buy as much or as little as they want. This makes your users a lot happier – in fact they will love you. Even better for your CFO, once the true costs become transparent your users will drive down the costs with a passion and vigour that will astonish you. That just leaves you to work on the unit costs of IT – and you’ll find with this focus thay you (with your colleagues in Finance & Procurement can achieve astounding cost reduction opportunities that you’ve not had the time & energy to uncover and pursue in the past.
[I know the principle of “User Pays” sounds difficult to implement, however it’s a lot easier in practice especially if you start off in an areas such as Desktop and Projects – these are two of the most straightforward areas to start with and major cost drivers in your overall budget. When this goes successfully you can move onto more complex areas such as Infrastructure & Networks – the principles are the same – you just need more sophisticated finance systems to help you make it work.
Deliver great service and make sure you can objectively track it
One of the simplest mechanisms I’ve seen in place is based on Friedrich Reichheld’s “Net Promoter Index” concept used by companies such as Enterprise-Rent-A-Car. Basically, you track customer reaction after every service experience and increase the proportion who loved it and work to eliminate those who consider the experience sucked! Reichheld has written some great HBR articles and the best seller “The Loyalty Effect” which explains how it all works in more detail 😉 I’ve seen it work brilliantly when used with customers and by IT departments to track their own performance with their “internal customers”. If you ever want to see and determine the added value of internal functions vs outsourced functions it’s a really great approach for gauging the true “value add” in service delivery against cost differences.
[I’ve even seen it used as a great cost reduction tool by a technology company who worked to eliminate the key root causes that were the ultimate root cause of why they were upsetting their customers – they were able to eliminate nearly 30% of their costs in a rapid implementation project in their call centre operations and have happier customers!].
Avoid “silver bullet” projects!
Silver bullets are only useful for killing werewolves and they don’t exist 😉 If some one mentions the “T” word – Transformation – be on your guard. The simplest advice would be:
– If you are looking for productivity uplifts, then don’t start with IT. The simplest and most powerful approach (and the most overlooked in my experience) is implementing the management disciplines of “Lean” (sorry to use a buzzword) – you can get productivity lifts of 1% per week (delivering 15% to 40% over 90 to 180 days). Michael George’s book on deploying “Lean Six Sigma” in service businesses covers a number of great tools & approaches you can put in place in 30 days.
– Load the Dice in Your Favour. If you read “The Hard Side of Change Management” by Harold L. Sirkin, Perry Keenan, and Alan Jackson (HBR: October 20005) – their argument can be sumed up in their introductory section “At one extreme, a short project led by a skilled, motivated, and cohesive team, championed by top management and implemented in a department that is receptive to the change and has to put in very little additional effort, is bound to succeed. At the other extreme, a long, drawn-out project executed by an inexpert, unenthusiastic, and disjointed team, without any top-level sponsors and targeted at a function that dislikes the change and has to do a lot of extra work, will fail”. They have a simple but powerful tool in this article where you can determine your project’s likelihood of success within 5 to 10 minutes analysis based on appraising just 4 key factors (based on their extensive database of project results around the world in different industries).
– Watch out for snake oil! If your consultants are using words not found in a standard school dictionary – then you can suspect them of being flim flam artists.
– Think twice about outsourcing and offshoring. You can always get someone to offer you a ridiculously low bid – you just then have to live with the consequences. If you implement some of the Lean Productivity & Service Experience concepts mentioned above – you may find you’ve eliminated much of the business case for sending work offshore or being outsourced.
[For my friends & colleagues in India and great outsourcing firms – I know you do a great job. It’s just I would recommend clients in a difficult situation to sort out their service & cost issues first before calling you in as a last resort.
Why can’t we be friends?
If you’ve implemented all of the best practices above, then you are truely one of the great CIOs destined to enjoy a long & fruitful tenure with the respect and admiration of your colleagues. With all the time & energy freed up from removing your biggest problems, you can look forward to helping your colleagues in the organisation solve their difficult issues – perhaps over a round of drinks on the 19th hole of your favourite golf club 😉
Best wishes for your future success & happiness and remember “being CIO is the greatest job in the world”