InformationWeek
Defining The Business Value Of Technology
November 1, 1999
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IT chiefs who don't make business goals their top priority are sure to fail
By Paul McDougall and Marianne Kolbasuk McGee
hen Frank Barriero joined Kendall-Jackson Winery Ltd., a $320 million, family-owned company, in 1998, he was shocked by what he found. The IT department had started building a bulk inventory-management system using an IBM DB2 database running on an AS/400. But the two-year project had ground to a halt, and numerous attempts to restart the effort had foundered.The problem, Barriero says, was the project never got support from the people who would benefit from it: sales and inventory managers. There wasn't even a training plan in place. "The sense at Kendall-Jackson," Barriero says, "was, 'Oh, that's an IT project.' So one of the things I had to do was convince people it was their project, and IT was just helping them implement it."
Barriero set out to salvage the situation. "We set up meetings between departments, and training sessions where attendance was mandatory. I explained to people's bosses why they had to be there," he says. "One of the agreements I got from [Kendall-Jackson CEO] Jeff Jackson was I would have the authority to do this." Barriero got the project on track, but he left this year to become CIO at Tavolo Inc., which runs a gourmet-food site.
The inability to get the support of users has long been a reason that IT projects fail. But now that technology is less about cutting costs and increasing efficiencies than about adding value to the business, the inability to get the troops to support a major IT initiative can spell doom for the CIO--and maybe even the company. Analysts, IT recruiters, CEOs, and CIOs agree that for IT to be able to help boost sales, reach new customers, satisfy existing customers, and create new sales channels, the CIO must be able to get the users on board. He or she must also get the support of upper management, develop IT strategies that support the company's business priorities, and grow along with the demands of fast-paced Internet commerce.
"Technology now isn't just measured by how well it cuts costs, but also by how well it can help build the business and new services," says Paul Daversa, president and CEO of Resource Systems Group, a technology executive search firm in Stamford, Conn. "This is a great time to be a CIO, but be careful what you wish for. Because CIOs are in the limelight, their flaws show more, too."
One important issue CIOs often overlook is the need to develop relationships with midlevel managers on the business side who may operate on a less-strategic level but who are often in a position either to support or sabotage a project. "The biggest challenge for a CIO is being able to add value to multiple levels," says Tom Simmons, former CIO at manufacturing conglomerate Tenneco Inc. "CIOs who have trouble often have problems aligning at the midlevel." Simmons left Tenneco about four years ago to head Digital Equipment Corp.'s advanced IT group and became VP of services at Compaq when it bought Digital in 1998. He says CIOs sometimes fail because they undertake projects that won't be completed for three to five years. Line managers lose patience. "Line or business managers need to have a shorter-term focus," he says, adding that that often translates into a "What are you doing for me now?" mentality.
Failure to understand the jobs, objectives, and motivation of people throughout the company can lead to failure. Margaret Bouline found that out as CIO of Aviall Inc., a $400 million Dallas aviation parts supplier. When Bouline joined Aviall in 1995, she drew up plans for an online parts-ordering system, but sales executives opposed the project because they would lose out on commissions. She finally got their support by developing a commission plan that would give sales reps an incentive to steer customers to the site. "That's getting pretty far outside the traditional CIO role," Bouline says. "But it was the only way I could ensure buy-in from the field force."
But CIOs need more than the support of line managers--they need backing from the CEO and the board of directors. After Bouline launched Aviall's E-business initiative, the company became the target of a takeover attempt. Sales were flat, senior colleagues with whom she had spent months forging alliances were being let go, and she was ordered to put the brakes on the project, which she knew would ultimately define her success or failure at the company. "It was tumultuous," says Bouline, a 14-year IT veteran whose management career includes stops at Zale Corp. and Sunbelt Nursery Group.
Bouline had built relationships with enough members of the senior management team to avoid becoming a casualty. But she was unable to get backing to get the E-business project back on track and left Aviall in September to become CIO of Bearcom Inc., the nation's largest distributor of wireless telecom equipment. Her task from top management, she says, is to move Bearcom to a direct distribution model "along the lines of Dell Computer."
CIOs often stumble when they can't win the support of senior management. In 1996, Honorio Padron, now CIO at CompUSA Inc., joined Pepsico Inc. as CIO of its restaurant division, which was spun off as Tricon Global Restaurants Inc. a year later. He developed a plan to standardize and integrate the company's diverse computer platforms, but ran into problems almost immediately. "There's more to introducing a new software package than the software itself," he says. "You also have to integrate the processes and the people. The company still didn't understand the importance of linking the people, the processes, and the technology."
A high-profile failure can easily damage a CIO's career. But working to enlist the support of the CEO and board can salvage the situation even when a CIO makes a mistake, says M. Victor Janulaitis, CEO of Positive Support Review, an IT management consulting firm in Santa Monica, Calif. Janulaitis relates the story of two CIOs who bet on IBM's OS/2 operating system. The first CIO developed a solid workplace friendship with his CEO and survived. The other, who ran the IT development of a large discount store chain, wasn't so lucky when he attempted to move the company's main servers to the fading operating system. "He went out the door with the technology," says Janulaitis, who adds that the CIO's big mistake, career-wise, wasn't in selecting OS/2--rather, it was that he didn't focus on the bigger picture and his relationship with senior management.
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Illustration by David Peters
Photo by Steve McAlister
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