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Posted by Chris Murphy on Mar 5, 2009 06:23 PM
For anyone wrestling with deciding what IT projects to keep and which to kill in this recession, here's a quick test from a CIO I just listened to: If an IT project doesn't map to a specific CEO priority, you shouldn't be doing it.
This comment comes in a presentation today by Cuna Mutual Group CEO Jeff Post and CIO Rick Roy, at WTN Media’s Fusion CEO-CIO Symposium in Madison, Wis. Cuna Mutual Group provides financial services to credit unions and had $15.2 billion in assets at the end of 2007, and nearly 4,700 employees.
First, Post (the CEO) laid out his priorities, followed by Roy (the CIO) mapping out his. The punch line was Roy's PowerPoint slide that said "It's all about the CEO's priorities, stupid." Great gag, but Roy followed with deep insight on how his team maps specific IT initiatives and projects -- for example, business intelligence efforts -- to CEO priorities, and how doing so affects which projects go ahead and which don't. "If you can't translate these initiatives to the CEO's, you better stop spending time and money on them," Roy says bluntly. If not, "you're mowing the front lawn, but the house behind you is burning."
Post's priorities look like this:
• Capital and operating results/expense management
• Financial forecasting
• Customer retention
• Opportunistic expansion
• Communication
And here's how Roy mapped some of those CEO initiatives to a CIO agenda:
Operating expenses: "That's table stakes. You have to be attacking that," he says. CIOs need to be meeting with vendors looking to renegotiate. He's working with vendor partners to cut costs. In particular, he has segmented partners and is working with the larger and more strategic partners for ways to restructure deals to cut costs. But the company's trying not to be draconian. He's not sending masses of contractors home or pushing for 30% price cuts. "You might get the cost down, ... but you're not going to get the business results you may still need to deliver," he says.
Financial forecasting and customer retention: This involved hard choices for the company. Cuna had 20 solid business intelligence projects. It shelved 18 of them and put all its focus on two priorities: Customer profitability, and customer segmentation. Putting 18 projects on hold -- ones that were approved before the economic picture changed -- didn't make Roy popular. Business intelligence "has never been more important," he says, but it needs to "be focused."
Opportunistic expansion: Roy urges IT not to wait for the CFO to say what the IT budget should be. Instead, he urges CIOs to think in terms of "dry power" to adjust to changing business conditions: to plan project portfolios under different budget scenarios, including one that is worse than anyone expects to face. That way, if a new opportunity arises -- like an acquisition -- the IT team has the agility to react quickly. His team also is looking at its IT project portfolio for opportunities to break projects up to get return -- measured in ROI and cash flow -- sooner. "We put in place a six-month rule," he says. "You have a project more than six months? You've got a lot of explaining as to do why."
Communication: Cuna went through a three-year business transformation effort before the downturn, so the company's already been through a lot of change. With that came a lot of effort on communication. Now Roy says the IT team needs to figure out how to take advantage of emerging collaboration and social networking tools to connect colleagues, and also business partners and customers. Says Roy, "But we need to do that in a way that has business value, not just social value."
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