November 1, 1999

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How To Survive As A CIO
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CIOs For Rent CIOs Focus On Business

...CIOs:

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It's a lesson CIOs are finally learning. Because IT chiefs are pulled in so many directions, those who've been in the trenches say that, to be effective, CIOs must be masters of delegation. They need to have their departmental managers act as their ears and eyes to help them understand user needs, says Wendell Jones, a former CIO at Nasdaq and McDonnell Douglas Corp. who's now VP of services delivery for Compaq. "It's important to visit the engine room, but don't spend time there shoveling coal," he says. "The CIO needs to be on the bridge with the CEO and other executives helping to stake out where the ship should be going."

IT has always had to serve the company's aims, but its role now is much more important--and CIOs who aren't focused on the business goals will inevitably fail, according to the experts. "CIOs never get fired for meeting their company's business needs," says Janulaitis. "But they will get fired for meeting the technology needs instead of the business needs."

E-business is forcing CIOs to focus on how to "apply technology for the benefit of the business," says Mike Gerrard, an analyst at Gartner Group who was CIO at Afco Financial Services Co. "E-business is also creating conflicts with traditional business channels, so CIOs need to deal with that as well," says Gerrard. "The Web is a huge delivery channel for products and services. The CIO has an important role in helping the company understand the changing business in an IT world."

Some companies have introduced new ways of measuring the CIO's performance. At Bearcom, Bouline will be measured by how much revenue flows through the E-commerce channels she is in charge of constructing. "I'm very comfortable with it," she says. "I like having those targets to shoot for, and, from a CIO's perspective, it's nice because it puts you on the same page as other executives."

The advent of online commerce has increased the demands on CIOs dramatically both at Internet startups and brick-and-mortar companies looking to sell online. At startups, there's a great deal of pressure to move quickly and deliver on a business model in a matter of months. "We move about four times as fast as traditional companies, and it's a strain," says Tavolo's Barriero. "The CEO has a vision, he has raised investment capital based on that vision, and there's a lot of pressure to make those promises a reality."

Most CIOs have spent their entire careers at conventional companies, so the jump to an Internet startup can be a shock. Tanya Dins left a secure executive position at Sun Microsystems in mid-1998 to become CIO of Food.com, a San Francisco company that lets customers use the Internet to order meal deliveries. She says she's happy with her situation, but she was amazed when her first inspections of the company's IT department revealed almost nothing. "When I took the job, I didn't know enough about startups," she says. "I didn't fully understand the extent to which there was no user infrastructure. This was a Web company, but employees could connect to the Internet only by using a modem."

CIOs at brick-and-mortar companies moving into E-commerce face many of the same challenges relating to developing an infrastructure and moving quickly--plus additional challenges. When Barnes & Noble Inc. launched Barnesandnoble.com in March 1997, the site was criticized for having an unfriendly design, but the problems went deeper. John Kristie, VP of information technology at Barnesandnoble.com until March, says he was caught between departments with differing priorities. During the site's rollout, marketing was focused on tie-ins with Barnes & Noble stores. Then the decision was made to separate the two entirely, so that online purchasers would not have to pay sales tax. That meant a lot of wasted effort.

"The one thing I would do differently is to focus more on process," says Kristie, who in April joined Online Retail Partners LLC, which helps brick-and-mortar companies launch E-commerce sites. "You need to get communication across all disciplines going so that you can effectively execute. Taking an active role in facilitating that communication is an important role for the CIO of a dot-com business."

Barnesandnoble.com has also had to cope with success. "We had a certain amount of volatility because of the newness of the business and the rapid growth," Kristie says. "We grew from 80 people to 400 in about a year. Getting all the disciplines to focus on what's best for the business is a big challenge for the executive team."

The site struggled, and the executive team was ousted during a shake-up that occurred after Barnesandnoble.com was spun off as a joint venture with Bertelsmann AG. The site still hasn't achieved the popularity of Amazon.com. "I don't necessarily think they don't get the model," Kristie says. "Barnesandnoble.com has incredible purchasing power and a great supply chain. What they've had to learn is direct marketing and other aspects of online business."

As the year 2000 passes and the date-field problem is resolved, companies will be looking to gear up new IT initiatives. But some analysts say there will be a shakeout among CIOs. "Year 2000 has forced a lot of boards of directors to become more involved with their company's technology and infrastructure because of the possible legal implications," says Duwayne Peterson, a former CIO at Merrill Lynch and at Security Pacific who's president of Duwayne Peterson Associates, an IT management consulting firm in Pasadena, Calif. "But now that a lot of them have gotten the closer look, they're horrified by what they see. Many boards will come down really hard on CIOs after year 2000."

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Illustration by David Peters

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