InformationWeek
Defining The Business Value Of Technology
September 27, 1999
CIOs Focus On Business
Survey shows that responsibility matters most to top IT executives
By Laura Chabrow
Most CIOs relish the challenge. According to the yearlong InformationWeek National IT Salary Survey, 91% of CIOs responding say challenge and responsibility matter most to them about their jobs. Next most important is seeing how their jobs help achieve company goals (86%). However, only 78% of CIOs see understanding their company's business strategy as important.
Business executives are increasingly frustrated by this difference in priorities. Companies hiring a CIO look for someone who can work seamlessly with the business side to develop a unified business-IT strategy, someone with a proven record of delivering results. An outside search for a CIO typically takes three to six months, and CIOs must be able to hit the ground running. "The pace of change lessens the honeymoon period," says recruiter Mike DeBruhl, chief operating officer of Dinte Resources Inc., an executive search firm. "The expectations are getting higher, and the ramp-up period is getting shorter."
Proven experience in a similar business environment can hasten the transition. When Insurance Services Office Inc. became a for-profit company in 1997, the New York provider of insurance-industry information placed a greater emphasis on profitability and responsiveness to customers. CEO Fred Marcon wanted a CIO with a demonstrated ability to develop products for a demanding market. Last year, he hired Roy Nicolosi.
Marcon is pleased with the business-focused influence exerted by Nicolosi. "Roy makes sure business-case proposals are accurate, and revenue projections are conservative but solid, and he has influenced others in IT to do the same," Marcon says.
Royal Caribbean Cruises Ltd. is embarking on a transition of a different kind--rapid expansion--and needed a CIO who could navigate through the growth without sacrificing customer satisfaction. The $2.6 billion Miami company, which operates the Royal Caribbean International and Celebrity Cruises brands, employs 23,000 people worldwide and plans to increase its berth capacity by 50% during the next four years.
In its search for a CIO, Royal Caribbean targeted industries such as aviation, fast food, and other hospitality businesses whose success depends on providing an enhanced customer experience. In March, the company named Thomas Murphy as VP and CIO. Murphy came from Bristol Hotels and Resorts, which underwent a similar period of explosive growth--to 122 hotels from 35 in less than two years. Thomas Murrill, Royal Caribbean's VP of human resources, says he and company president Jack Williams were impressed that Murphy was customer-driven rather than technology-driven. "He was very focused on using IT to gain a strategic business advantage," says Murrill.
Sometimes, the fastest way to refocus IT on business strategies is to bring in a CIO with a different background to bridge the divide between IT and business.
Mount Sinai-NYU Medical Center/Health System, formed in 1998 by the merger of Mount Sinai and NYU medical centers, targeted the financial-services industry in its search for a CIO. In July, the New York health group hired Stuart Sugarman from investment bank Credit Suisse First Boston, where he was director of IT for finance, administration, and operations. "We have plenty of people here who understand health care and research," says Richard Donoghue, senior VP of institutional integration, who directed the CIO search and the integration of the medical centers. "Financial services have harnessed information technology in a way that's 10 years or more ahead of what health care has done."
Another Approach
Foley's reception by IT employees at Westvaco was not adversely affected by her marketing background. The general feeling was that her business experience complemented the IT unit's technical skills. More of an issue was that she came from outside the company. However, this was mitigated by the fact that IT is now represented at the executive level for the first time--Foley reports to John Luke Jr., Westvaco's chairman and CEO.
At Mount Sinai-NYU, Sugarman was hired explicitly to overhaul the company's culture, making it more action-oriented and responsive. This would be extremely difficult to accomplish without strong support from the CEO and other top managers. All of the more than two dozen people Sugarman met during his job interviews shared a frustration with the reliability and functionality of the company's technology. "Interoperability and the sharing of data are critical for the organization to be competitive," he says.
Sugarman is improving IT's responsiveness to the rest of the company, upgrading the help desk, and forming a customer-integration group for business issues, while working with business managers to develop a long-term strategy that will increase market share and improve patient care. He's also reorganizing the IT department's VPs and midlevel managers, many of whom have been there for a long time. Those who can't fit into the new culture will probably leave, Sugarman says. "It's exciting to build an organization and a new culture. It gave me the opportunity to use the culmination of all my skills over the years," he says.
For CIOs such as Sugarman, eager to focus their years of IT experience on the business strategies of their companies, challenges and responsibilities abound--and they're exactly what businesses need.
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sk any CEO to identify the most important quality in a CIO and the answer will invariably be the same: a strong business focus. CEOs want someone with the vision and creativity to meld IT strategy with business strategy. They also want someone who can make it happen quickly--to keep up with the rapid pace of change in business and technology.
Previously, as a senior VP at lottery systems vendor GTech Holdings Corp., Nicolosi created high-speed hardware and software for the gaming industry. He's now applying his product-development experience to Insurance Services Office, expanding the use of cross-functional business-IT product development teams and instituting requirements for regular communication with senior management during product development.
Murphy is restructuring Royal Caribbean's IT department to accommodate the rapid growth and align the department with the company's strategy of using technology to enhance the customer's vacation experience. He's expanding use of the Internet to deal with suppliers and customers. Customers can preview cruises online, make and amend reservations, and relive the cruise experience online afterward. "Everything is wrapped into technology," Murphy says.
Rather than look to a different industry, Westvaco Corp. hired its CIO from outside IT. Rita Foley came from a marketing background and never ran an IT shop before June, when she became CIO and senior VP of the $2.9 billion New York manufacturer of paper, packaging, and specialty chemicals. Having held the position of executive VP of sales and marketing for enterprise software maker QAD Inc., Foley had extensive experience working with IT departments in implementing extended supply-chain and enterprise resource planning systems. She also held senior management positions at Digital Equipment Corp. "They really wanted a business person so that I could empathize with the business folks," says Foley, who had worked with Westvaco as an independent consultant before being hired as CIO.
The ability to fit in with the existing company culture--and influence its change--can significantly affect the success of a new CIO. Not surprisingly, 70% of CIOs responding to the InformationWeek survey identified corporate culture as a factor that mattered most to them. Also, when the new CIO is an outsider, strong, visible support from the company's top executives can make the difference, as it did for Foley. "You want to avoid organ rejection because the transition wasn't smooth," says Phil Schneidermeyer, CIO practice leader at executive search firm Korn/Ferry International.
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