The CIO Dilemma 2The CIO Dilemma 2
CIOs, burdened with cost cutting, risk losing their clout.
March 23, 2007
OUT OF THE WOODS, INTO THE BREACH
The cost slashing that many CIOs have had to endure--and manage--over the last few years can be an avenue to renewed innovation, says Dan Wagner, CIO for Global Crossing. Wagner speaks from experience: The telecom company filed for Chapter 11 bankruptcy protection in January 2002 with debt of $12.4 billion, and IT costs were slashed by 75% during the three or four years after the restructuring. The company's IT staff went from 1,300 to around 350 today. "But once we were out of those woods, I began to evolve into more of a strategic role, trying to figure out what products and services we could be offering and how we could differentiate ourselves in terms of how we operate the company," Wagner says.
Among his main initiatives today: deploying a set of "CRM-like" applications, along with collaboration tools that, Wagner says, "radically improve how our sales community communicates with each other." Not content just to hand out the tools and wish the users good luck, Wagner and his top managers have gone out on 500 customer sales calls, acting as evangelists for the technology and helping sell at the same time.
The result: Wagner has taken on a new position, running Global Crossing's $1 billion enterprise sales channel, in addition to his CIO role. Something's working right for the provider of wholesale network services: Global Crossing reported on March 15 that revenue would climb to between $2.17 billion and $2.25 billion for the year, up from $1.87 billion in 2006, sending its stock up by 11% on the Nasdaq.
Going on sales calls may not be appropriate for every CIO, but from our interviews for this story a clear sequence emerged for IT leaders trying to navigate beyond diminished resources and expectations and toward innovation and business impact. It's a four-stage journey that involves streamlining operations, off-loading routine work, reinvesting money saved in new initiatives, and using technology to innovate (see story, p. 41). "We all have to deliver a lot more bang for the buck," says Wagner. "That had to happen first. We couldn't have discussions about more strategic goals before that was delivered."
Mike Huffar, IT director at Edward Kraemer & Sons, would like nothing more than to get back to that strategic discussion. During a couple of years of business contraction, Huffar's role shifted from expanding the company's technological capabilities to helping keep the business afloat. "Right now we're just focused on the day-in and day-out mundane job of keeping the servers and the ERP systems running," he says. An ERP project undertaken a few years ago stands two-thirds completed.
But Huffar still gets excited when he talks about applying new business intelligence tools and getting valuable information out to employees in more usable and timely formats. "There's a lot of need for that, and I can see us doing more of it in the next year or so," he says. "We're coming out of a down cycle. We've had to sit on our hands a little bit, but we'll get back to it."
Edward Kraemer & Sons is in the bridge-building business, an appropriate metaphor for the job ahead. It requires connecting the tactical needs of the present with the strategic possibilities of the future, and there are thousands of CIOs just like Huffar. They're 250 feet above ground with blowtorches in hand. Just don't look down.
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