January 10, 2000

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Reinventing The CIO
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"The person who will take over my job will have a technology background," says Steve McDermott, CEO of Garban-Intercapital's operation in the Americas, a 950-person institutional money and securities brokerage with more than $250 million in annual revenue. "During the '80s and into the '90s, it was the finance and MBA types. In the future, it will be the E-commerce and technology types."

As CIO of Farmers Insurance Group Co. in Los Angeles, Cecilia Claudio spends about 60% of her time on general business issues during projects such as an IT-driven reengineering of claims handling. During the past year, the company has been planning its move from a largely paper-based system to an Internet platform that will let agents, claims representatives, and customer-service personnel check a claim's status online. "It's going to change the culture of the people in our claims department," she says. "We find ourselves dealing with change management."

For the aspiring professional a few steps down from CIO, there have never been so many career tracks: leading the technical side of an Internet startup, joining the E-commerce team at a large company, changing the culture within a large, traditional IT department. Avnet's Vallee predicts IT people will find it easier to move into nontechnology management positions as companies increasingly fill senior management jobs with IT executives. "It's conceivable that a warehouse system management developer might become the site logistics manager," Vallee says.

So what experience makes sense for tomorrow's E-leader? Two skill sets are clear: people skills, to explain an idea and inspire support for it; and business knowledge, to know a company's place in the market and how it needs to change. A more pressing issue concerns what technical skills an E-leader needs.

Maureen Osborne, CIO of IT consulting firm Whittman-Hart, leans toward a broad range of skills over a specific technical expertise. The person has to have led complex projects, especially assessing the risks for the business and allocating resources, and also must have managed senior staff, not just fresh-from-school IT grads. But profit-and-loss financial understanding also is very important, something IT managers can sometimes be insulated from at larger companies. "Running a profit-and-loss is a great experience for a CIO, when you have to really know the financials of the business," Osborne says. "Maybe even if it's at a smaller company."

Others put heavier emphasis on technical experience. Keast cautions against jumping too quickly to an Internet startup, where an IT person will be forced to be a generalist. He recommends approaching a CIO position by rounding out technical experience--for example, a person who has mostly designed network architectures should get experience managing them.

Charlie Feld, who had been interim CIO of Delta Air Lines Inc. until December and is now guiding the company's E-business efforts, compares the emerging leadership role with that of a maestro. Feld is leading a small team of IT and business-side employees charged with integrating new, fast-changing technologies into legacy IT systems used by a traditional 70,000-person workforce. The complexity of that process is why he says E-leaders will continue to need an intensive, hands-on IT background. "It's like making a tuba and a violin play together," Feld says. "Someone has to be the maestro, and in order to do that you have to have some technical experience."

So far, there's no standard educational pedigree for tomorrow's E-leaders. But business schools are rapidly adding E-commerce to their curriculum. Carnegie Mellon and Columbia universities last year launched programs specifically designed to teach technology-business management, using business school and computer sciences faculty. Students learn the finer points of marketing, along with the relative strengths of different programming languages. "To answer whether a sales channel conflict is real, you have to be able to discuss whether the technology is in place to let the competition actually happen," says Douglas Dunn, dean of Carnegie Mellon's Graduate School of Industrial Administration.

Even junior IT people should build their professional and interpersonal skills while on the job, says Scott Dinsdale, chief technology officer of entertainment Web site FirstLook.com Inc. and former CIO of BMG Entertainment. Dinsdale recommends IT people spend at least 10% of their time developing broader professional skills, whether by taking a communications class, reading about business, or just spending time with marketing people. "Most junior IT folks spend a lot of time reading about IT, but they should read more business," he says. "IT people need to think of themselves as business people with an IT specialty, just like business people who have a finance or marketing specialty do."

To bring all this together, the biggest test of E-leaders will come in their ability to inspire people. E-business by its nature must become dispersed through an enterprise. Leading that effort requires motivating and managing people with widely different interests to rally behind common goals--from business-unit executives with their eyes on next quarter's results to IT employees looking for a cutting-edge project.

E-business further complicates that because companies' implementation of it is somewhat ad hoc and dispersed. E-business "may add up to a lot, but they're doing it in small bites," says Hofman of Benchmarking Partners. "It's harder to have a long-term vision for it."

At the same time, in order to put IT closer in touch with the rest of a business, many CIOs are moving their staffs out of central offices and into departments so they can better understand and respond to business-unit needs. Companies such as PG&E and Schwab have IT employees report to a business manager and an IT manager. Carla von Bernewitz, CIO of the U.S. government's Defense Logistics Agency, recently moved 600 of 1,000 centralized IT staffers so they would be closer to users.

Given the scarcity of high-tech workers, keeping a dispersed team motivated and pointed toward the same goals will be many E-leaders' pivotal challenge. "It's not the perks that keep people--as long as you pay competitively. What makes people stay is inspiration," says Dinsdale of FirstLook.com. "People want to feel like they're part of a winning team. They want to work with a General Patton."

All these forces demand that the E-leaders of tomorrow work more and more like a CEO: Paint a vision, set goals and standards, provide resources, inspire talented people, and then let those people who know their specialties come up with great ideas. It's a role that demands a high level of visibility and great deal of behind-the-scenes maneuvering. The same could be said of the future role of IT. "If I do my job right, the business managers will be espousing the benefits of the Internet," says Textron's Bohlen. "And IT will just be in the background."

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Illustration by David Guidera
Photo of Claudio by Tom Keller

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