InformationWeek

Dear Secret CIO:
It seems to me that a shift in trends is taking place regarding the roles and prospects of CIOs to advance in a company. In the past, CIOs, for the most part, wouldn't be considered for the top spot because of the perception of "disconnect" between technology and the rest of the business. But this attitude seems to be changing, thanks in part to the advent of the Internet. Would you agree that the roles of the CEO and the CIO of the future have more and more areas of overlap?

The reason I ask is because I've constructed my career strategy based on the view that the CIO path is now, more than ever, a valid one if the final destination is landing in the CEO spot. Back in 1995, when I went back to graduate school to get my MBA, I was convinced, and continue to be, that whereas in the past the route to the top had been operations or finance, the future path would be that of IS/IT (especially in information-intensive industries such as health care).

I guess I'm looking for validation.

Albert

Dear Albert:
In many companies, there is indeed a communications void between the CIO and the rest of the executive team. The CIO is viewed as running an expensive necessary evil (the systems organization) that has little understanding of the business or its needs. It's unfortunate, but sometimes that attitude is an accurate assessment of the state of affairs in the company.

Regardless of this so-called disconnect, I do agree with your thesis that in the future the CIO spot is a position that will provide a pathway to the CEO's chair--but not because the roles of the CEO and CIO will have more areas of overlap in the future. After all, the head of human resources probably spends a lot of time with the CEO, yet is rarely thought of as a potential CEO candidate.

My rationale for saying that the CIO is a likely CEO candidate comes from a different line of reasoning. My basic premise is that business leaders come most frequently from the parts of the enterprise that manage the critical resource necessary for growth and prosperity of the company.

If you go back to the beginning of the modern corporation, let's say the latter part of the 19th century and the early years of the 20th century, you'll find that the leaders were the organizational geniuses who could put together and grow major corporations from small entities. The names that come to mind are Theodore Vale of AT&T and Alfred P. Sloan of General Motors. Next was the era of manufacturing efficiency--we have this company and now we must make products efficiently--and logically, the CEO-in-waiting was a person who came out of the manufacturing camp.

After World War II, capital was king because of the need to build factories and expand markets, so the CFO grew in ascendancy as a logical choice for the CEO job. As marketing became important, the financial people had to share the limelight with the heads of business units who knew how to move products and services.

We're now entering--indeed, have initial experience with--an era where technology may well be the differentiator between the great businesses and those that are second-class. It's only reasonable to expect that the CIO will begin to be seen as a person with the skills and knowledge necessary to successfully run the company. Evidence of this new era is emerging. I've cited as examples before: Michael Capellas, who first joined Compaq as its CIO, is now its CEO; and Kathy Hudson, former CIO of Kodak and the person who signed the first significant outsourcing agreement in the United States, is CEO of Brady Corporation, a $400 million company. These two aren't alone in talent. I know many CIOs whom I have no doubt would make excellent CEOs. Before long, I suspect the ascension of a CIO to the CEO position will be a relatively common occurrence.

Your choice of a career path to reach your ultimate job goal seems to be one that's well founded, in light of historical perspective.

Dear Herbert:
I'm seeking assistance in developing a 3- to 5-year technology plan for a financial institution. Are you familiar with any templates available or know of anyone that has undertaken this exercise and is willing to share?

David

Dear David:
Yes, I'm familiar with templates available for use and know of people who have undertaken this exercise and are willing to share. If you go to your local Society for Information Management Chapter, or call your favorite university, you'll find folks who probably would be more than happy to give you the information you'd like for free. If you want templates and are willing to pay for them, open your window, whisper the words, and walk briskly to your office door to begin interviewing the consultants who have appeared in the interval.

On the other hand, I don't think there's much value in using standard templates for strategy development, beyond being a checklist to make sure that you don't miss anything obvious in your evaluation. Of course, many consulting firms live by their methodologies and templates. It ensures that the product is consistent and uniform.

Taking that thought a step further, if you use a template to develop a technology plan that's consistent and uniform with most other people, I suppose you're assuming that you're quite similar to the average financial institution. I would imagine that the plan that's developed from that standard template wouldn't be that much different from any other plan, and rightfully so. Naturally, without any differentiation, it's hard to see how your technology will be any different or superior to your competitors'. If, indeed, your technology is an undifferentiated commodity, and with technology being so important in banking, then maybe your best plan is to pack it in and sell out the institution to those who developed their plan themselves, or at least the IT portion of your financial institution.

If, however, the above scenario isn't particularly appealing, we could drop back to an alternate approach. First, let's assume that you and your IT staff become reasonably familiar with the latest and greatest technical ideas in the banking world. Next, suppose you sit down with your executives and identify the institution's strengths and weaknesses. Then, with those strengths and weaknesses, your executive team could decide what goals make sense for the company. It is, in effect, answering the question, "What do we want to be when we grow up?"

With these objectives on paper, the next step would be get the IT people together to determine where, when, and how information technology can help implement this vision of the future. And since crystal balls get very cloudy well before five years, you can lay out the specific tasks that need to be done, their costs, and interdependencies for the next 36 months. Mix in some decision points and the results to be accomplished by those milestone dates, and you could entitle it "Three-Year Strategic Systems Plan" and no one would be the wiser. In fact, some of your executives may even claim to find it relevant.

Dear Herb:
I'm interested in investing in an IT system for my business and I'm curious about how other businesses have fared after investing in such systems? We're a supplier for the printing industry and want to be able to stay on par with the current pace of the industry. I wonder if you might have any information regarding the return on investment of these companies?

Anthony

Dear Anthony:
You ask a very important question and I'm sad to relate that I cannot provide you with a meaningful answer.

There have been lots of papers, citing specific industries, written on the subject of return on investment in publications that range from the scholarly journals to the popular press. Some show conclusively that those companies that invest heavily in information technology have tremendously improved their ROI. Other authors have proven that the opposite is true and that there is no correlation between IT spending and ROI of the company.

The real problem lies in the fact that no one can really ever show convincing statistics to prove that their success or failure is due to the IT component of the business. Certainly, some systems have been the basis for significant competitive advantage, but these systems would have been worthless without the business sense by the executives--and, yes, at times, the luck--that made the company succeed. Other people have spent fortunes on information technology and have accomplished nothing other than to pour their money down a bottomless pit.

The only way to have favorable odds, regardless of the industry, is to figure out what your strengths and weaknesses are, evaluate what you would like to see being done differently in your business, and then take a very hard-nosed approach to believing what people tell you that an IT system can do for your company.

Dear Herb:
Your column is always the first thing I read when my latest issue of Information Week arrives in the mail. I find it intelligent, insightful, and almost always amusing. Needless to say, I enjoy it immensely. I look forward to reading your book when it's published.

Do you plan to reveal your secret identity when the day comes that your (obvious) need for secrecy is no longer necessary?

Thanks.

Douglas

Dear Douglas:
Thank you for your kind words. One reason that I write the column is that I think it may be helpful to others to share what I've learned (or think I've learned) over the years. If it's useful and fun reading for people, then I'm very satisfied.

I'm eager to get the book published, but it's taking me longer to put together than I anticipated, due to other priorities that call on my time. The book is very much on my mind.

I do intend to drop the secrecy around my identity at the appropriate point. I would like to have the opportunity to talk to people about what prompted me to write the columns and provide, face-to-face, a little more of the background surrounding them.