Who Will Be Your Next CIO: An Insider Or An Outsider?

INSIDERS' DISADVANTAGE
Insular corporate cultures can present their own problems. CIO-turned-consultant David Scott, author of I.T. Wars: Managing The Business-Technology Weave In The New Millennium (BookSurge, 2006), says a Washington, D.C., company where he was consulting put a well-regarded executive director, a 27-year veteran of the company, in charge of IT. It was "a desperation move" on the part of upper management, Scott says: The executive director was a trusted performer but had little experience with technology. A bigger problem, as it turned out, was that he was a "people person," well liked by colleagues and company personnel and proud of that reputation.

The company was struggling with a $1.5 million software application implementation, and a big part of that struggle related to resistance to change on the part of programmers. Scott, as consultant on the project, figured out that the programmers weren't learning the system fast enough, and their productivity wasn't improving as a result. But the executive in charge of IT was hesitant to act because he "had a vested interest in showing he was everybody's buddy," Scott says. That forced Scott to create productivity metrics to make it obvious that the programmers weren't meeting their requirements. Finally, they were replaced, and the executive director was relieved of his IT management responsibilities.

Even when there's a formal strategy for developing IT management talent, it doesn't mean it will result in a linear progression to CIO. Gail Farnsley, former CIO at Cummins, spent considerable time and effort developing a Six Sigma-based process for spotting and nurturing technology management candidates. "We weren't pushing our people to have those skills," she told me in an interview last year while she was still tech chief at the multibillion-dollar engine manufacturer.

However, when Farnsley left last spring for a position at Purdue University, Cummins hired an outside CIO--Bruce Carver from auto parts manufacturer Dana--to fill the spot. "Bruce brings a great deal of IT leadership experience, much of it in automotive-related businesses, which will be invaluable to Cummins as we pursue our ambitious growth goals over the next several years," said Tom Linebarger, Cummins' executive VP, to whom Carver will report, in a statement when Carver was hired.

A big disadvantage to internal candidates is that they can get in over their heads. James Tarala says he's seen the "deer in the headlights" look of a CIO promoted from within who isn't up to the challenges. Tarala has the title CIO/CTO at Schenck Business Solutions, an accounting and business services firm. Before taking on that dual role, Tarala was a consultant and a value-added reseller, so he's been on both sides of the CIO desk.

One of Tarala's "bigger challenges" as a VAR was getting freshly minted CIOs "to open their eyes to what was really out there, and shift directions and platforms," he says. The problem is that CIOs from within can be tied to their tried-and-true systems and resistant to change. It's a variation of "that old mentality, 'I can't get fired for buying IBM,'" he says.

Still, expectations are higher for CIOs brought in from the outside than for internal candidates, says Chris Patrick, who runs the global CIO practice for executive recruiter Egon Zehnder. So they better be prepared to make an impact quickly. "I'm seeing a lack of patience for individuals who can't deliver results quickly," Patrick says. "They hired you to have impact. You can't go in and lay out the five-year program that kicks in in year four."

That's why, at the same time they're developing their architecture plans, newly ensconced CIOs must look for easy victories, Patrick says. "Find the squeakiest wheel and fix that right away," he says. "Buy yourself time."

CIO SUCCESSION
Who's better--an insider or an outsider? Weigh in at our CIOs Uncensored blog. TOMORROW'S CIO
Network with a world-class lineup of speakers and attendees at the . It's not an IT project, but Minto's Chu says he's rushing to finish writing a primer on business process engineering, what his CFO refers to as his "Strategic Planning For Dummies" book. This will impress the three brothers and give him a lot of business cred in the organization, he says.

Juniper's Goins is taking the long view. She's "partnered at the hip" with executive VP Smith, who runs the company's business process reengineering effort, known as Project Orion. Together, they're working on the requirements for scaling the company to meet its global aspirations. "The IT team is driving the question of how," she says. As for a quick hit, Goins says she's in the process of "significant vendor consolidation."

When it comes time to replace the CIO, there are two alternatives, both with advantages and disadvantages. An internal candidate brings deep knowledge of a company's systems and processes, and a familiarity with how things get done, but can be limited in experience and insular in his or her thinking. An external candidate brings top management experience and the potential for radical, rather than incremental, improvement, but expectations can be unrealistically high.

Companies must select their CIOs carefully, considering all potential sources. And it helps to have an idea of where you're going before you start.

-- with Marianne Kolbasuk McGee

Photo by Getty Images

This story was updated Aug. 20 to add information about an IT leadership training class sponsored by nGenera.