More CIOs are gaining stature as business strategists

The measure of a CIO is in how everyone else in the company views the IT organization. Many CIOs strive to create an IT group that is the department people call first when a new business idea strikes. Even better: They strive to be there at the idea's birth. Building such a strategic IT group takes time and tactical smarts--and it's a journey of increasing importance, according to our 12th annual State of the CIO survey.

For more about our State of the CIO research, check out a breakdown of the Future-State CIO, or view a slideshow showcasing our findings.

Sixty-four percent of the 563 IT leaders we surveyed plan to focus on marketing the IT department in 2013, to show the business more of IT's capabilities. That's up from 55% in 2012. Results from the past three years of surveys suggest that CIOs are increasingly taking steps to solidify or elevate their team's relationship with business stakeholders by delegating more, developing leadership and cross-functional skills among their IT staff, and turning their attention to customers. One-third of CIOs now visit customers, up from 18% two years ago.

"With credibility," says Warren Kudman, CIO at the $8.1 billion Sealed Air, "you can then have conversations with business partners about opportunities to differentiate [your company] through technology or even new lines of revenue that are IT-enabled."

But not everyone is there yet. It's heartening that 20% of CIOs say their IT groups are seen as business peers who develop, not just enable, business strategy. However, the majority remain in the muddled middle: 32% as influential collaborator on IT, 26% as service provider and 15% as cost center. Still, we're seeing a shift to the advanced end of the spectrum. The business strategist tally of 20%, for example, is up from 15% in last year's survey, while the 15% cost center assessment is down from 21%.

Many of the mobile and analytics projects CIOs plan for 2013 may enhance perceptions, conceived as they were in cooperation with business partners and aimed at high-visibility targets such as customer-experience improvements. Tom Farrah, CIO at Dr Pepper Snapple Group, has begun mobility and visual analytics work after sending IT people to the field to understand how sales agents and truck drivers work. "Our job is to help our sellers sell and drivers deliver," he says.

Clean, clear thinking from the CIO about basic corporate goals helps keep IT from drifting into nonessential areas. But, our survey shows, CIOs are learning they must also employ a variety of management tools to support the mission--and enhance their own value.

Delegation and Mixed Meetings

To generate goodwill quickly, it's always effective to use some time-tested methods, such as completing quick-win IT projects for business colleagues. But any self-respecting C-suite expects a lot more than just quick wins, which means CIOs have to use more sophisticated and nuanced tactics to elevate IT.

For example, it makes sense that by delegating more IT operations to high-performing direct reports, a CIO can gain time to focus on strategic issues. But there's no single formula for deciding what to delegate and to whom.

Kudman at Sealed Air created the position of VP of IT business management to monitor technology spending and manage IT vendors. He also created a "value-management team" of 20 to 25 people responsible for making sure the company gets the maximum possible value from already-installed software and hardware. The team also educates business units and even IT staff about the capabilities and capacities of existing systems, Kudman says. "If I didn't have people I could rely on, how I spend my time would be very different."

By delegating, he frees up time to brainstorm with non-IT peers about ways to push Sealed Air ahead of rivals in the food and medical materials packaging business. The company recently started to deploy machines that monitor whether healthcare workers wash their hands between patient visits. The devices gather data, collect compliance reports and send alerts to supervisors. The IT group discussed the business case for this new technology-based revenue stream and suggested methods of data storage and security to the business unit. That's the kind of advanced strategy-shaping CIOs should strive for, he says.

Not only do CIOs worry about business units or departments going around IT to contract with cloud vendors to provide IT services, but also they worry that colleagues will ignore internal IT when devising new technology-enabled business models, Kudman observes. "The most important thing is to be the trusted adviser."

At Potlatch, a $500 million timber and wood products company, delegation looks different. Having assigned infrastructure operations, including phone systems and networking, to a couple of IT staffers, IT Director Brent Gregory is now redistributing applications work. He encourages several of his trusted staff to learn more about specific business areas, such as running mills and cutting and replenishing timber. The goal is to have these IT people take ownership of the applications that most matter to those groups, Gregory says.

"I'm really trying to push them to do the same work I'm doing for their particular specialties," he says. "I'm trying to focus more on getting with the moneymakers of the company."

Meeting frequently with key influencers is the number-one way CIOs improve stakeholder relations. Again, the idea of having in-person meetings with those you want to build relationships with sounds simple. Doing it, though, may not be.

When the IT staff at WD-40 Company started to attend other departments' meetings, all parties "were uncomfortable at first," says Bob Hoagland, vice president of IT. Business counterparts may have wondered whether IT was there to check up on their technology decisions, he says. But the aim was for IT people to listen for hidden problems that might be easily solved by technology.

For example, an applications manager heard that a woman in marketing was juggling data from 175 Excel spreadsheets. The IT staffer wrote a Web-based application that dissolved the marketer's stress. "This wasn't even her primary job," Hoagland recalls, "but we [saw] in that conversation a potential solution we [could] provide."

Sending ERP administrators to mingle with colleagues in other areas of the business will help smooth the workflow changes expected from a new quality-management system due to be installed in 2013, he says. Any initial discomfort about mixed meetings was worth it. "The more people are involved with each other, the more ownership they will take for building relationships," he says.

Mobile and Big Data Reality

A CIO creates an effective IT group when he makes sure his technologists understand how employees and external customers behave, says Robert Wollan, global managing director of Accenture's sales and customer service practice.

In particular, the IT group can help marketing, sales and other departments isolate what customers notice and seem to value, he says. That is, IT can provide tools to tease out what promotions, incentives and ways of interaction elicit the most reactions or most lucrative responses. Then IT can help formulate technology plans to do more of what works, he says.

Among IT staff, CIOs should encourage careful watching of employees and customers alike, says Farrah at Dr Pepper, a $5.9 billion manufacturer of 50 brands of beverages.

Farrah didn't plunge into mobile applications early on. Instead, he assigned small teams to study innovation in IT areas, such as mobile technology and analytics, as well as in business functions, such as field sales in the beverage industry. After they researched, they reconnected to pool their new knowledge.

The findings: A Dr Pepper salesman typically has three minutes to greet, sell and possibly sign a deal with a store manager. Knowing that, the IT group set out to design a mobile analytics application that delivers accurate, current data about a specific store or product in a way that will grab the store manager's attention.

The pre-work of studying and planning will serve the company well, Farrah contends. He is piloting a custom application for Apple iPads that allows a salesman to conduct business all on one screen--no jumping to multiple screens or endless scrolling. Reports once rendered in many columns and rows are now graphical and tailored to particular customers or sales goals. "They can use more of the three minutes to sell rather than manipulate the tools," he says.

Similarly, the Evangelical Lutheran Church in America, a nonprofit religious group with 4.3 million members, is taking a measured approach to analytics, says Jon Beyer, head of IT.

After hiring consultants to inventory the church's digital, analog and paper archives in early 2012, Beyer is now developing a data management and analytics strategy. Now that he knows he has 250 terabytes of unstructured data, he wants to turn it into useful information.

For example, IT may catalog the thousands of hours of video shot at various church events, applying metadata tags that identify people in the scenes. From there, constituent outreach managers could find people who attend events frequently, cross-reference them with an existing CRM database and solicit them for donations, Beyer says. First, though, data cleansing has to be completed, eliminating duplicate entries and reconciling questionable entries. "We're Lutherans. People spell 'Andersen' all different ways, and we have thousands of them in our database," he says.

After a false start with CRM and analytics a few years ago, under a different IT leader, Beyer plans to catch up in the next 18 months. Generally, the reality of big data may be catching up with the hype. Survey results suggest IT leaders are more aware of such initiatives now after they failed to make big inroads last year.

Fifty-nine percent of the IT executives we surveyed classify their organization as a late adopter or laggard when it comes to big data projects, and just 13% have completed a major big data initiative in the past year. However, 37% expect to finish at least one within the next year.

Money Mind-Sets and Cross-Training

Smart CIOs understand the financial levers used in different parts of the company to ease or increase pressure. At WD-40, for example, a money mind-set pervades IT. CIO Hoagland says that's partly because it's a small company--$343 million in sales for 2012--but a big brand. He knows, for example, that revenue per employee is about $1 million. He likes the attitude of one of the newer members of his staff who, when looking at the cost of new systems, asks, "How many cans of WD-40 are we going to have to sell to buy that?"

That kind of thinking is especially valuable in tough times, says Bill Haser, CIO of Tenneco. As the global recession erases some investment projects from a CIO's wish list, Haser says, another way to elevate IT is to improve processes. Tenneco isn't suffering; sales have jumped 55% since 2009, from $4.6 billion to $7.2 billion for 2012. The company, which makes emissions-control and ride-control systems for cars and other vehicles, benefits from the stricter and more complex environmental regulations emerging worldwide, Haser says.

But rather than push for an IT spending spree, Haser's big goal right now is to make sure employee productivity rates match company growth. To do that, he will combine new technology with new processes. He wants to use cloud computing and other newer technologies to help employees be more effective. For example, in an effort to improve the productivity of existing employees, Haser set up cloud versions of project-management software and a human resources tool. "We don't want to add headcount at the same level we're adding revenue," he says.

Like other CIOs in our survey, Haser is training his staff to be better partners with peers outside IT, and he's developing their cross-functional know-how. He started "technology councils" in 2010, where IT managers periodically meet with tech-savvy managers in a given business unit to discuss the future. Sometimes a council focuses on one issue, such as new ways to measure emissions. As a result of a council held last year, IT is helping Tenneco engineers on different continents use collaboration software to share product designs more easily.

"We say, 'Here's the strategic intersection between what you want to do with the business and what IT can do,'" Haser explains.

Research Director Carolyn Johnson contributed to this report.

Kim Nash is a senior editor for CIO Magazine. Follow her on Twitter @knash99.

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This story, "More CIOs are gaining stature as business strategists" was originally published by CIO.

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