Can CIOs become business leaders?

How would you define a CIO? Well, the question was enough to stump the CIO.
Not for want of words but the difficulty of where to begin. CIOs or chief
information officers have not had an easy journey so far. Traditionally
considered to be a back-office job not related to business and growth, the two
things that drive careers, CIOs of today are a far cry from their yesteryear
peers who were considered to be techies and not at all business oriented.



Quoting from The Whole New Mind by Daniel Pink, Arun Gupta, group CIO, K Raheja
says, CIOs are left-brained people pushed towards right-brained activities and
they face a constant struggle. CIOs role involves a transformation from being
the glass-houses keeper. He has to mould himself to become worthy of the oak
desk corner office and a seat on the management table. For most CIOs this has
been made possible by successfully traversing the path from being a technology
person to a well-rounded professional. He has to be the person who is equally at
ease with techie stuff, as well as balance sheets and customer engagements. The
CIO is unique in his ability to contribute to all segments of the enterprise.

The Journey So Far

A favorite topic at most CIO events today is the evolution of a CIO from a
pure technologist to one who actively participates in and contributes to
business related decisions, in short being part of the C-Club (others include
CFO and CEO) is interesting as well as amazing. From being regarded as the
technology head who is supposed to manage the IT infrastructure (a glorified EDP
manager so to say), the so-called CIO came into existence almost a decade back.
The CIO is no longer a mere support function to a business enabler; he/she now
is a business stakeholder.

The CIO is no longer a techie, the person responsible for the IT
infrastructure within the organization; the expert who made sure the computers
worked, the software was regularly updated and the network was never down.

As Jai Menon, group CIO, Bharti Enterprises and director, Bharti Airtel aptly
said in a speech at the Nasscom India Leadership Forum earlier this year:
Today, the role of a CIO has become more strategic, in the sense that companies
are powering their businesses with strong technology strategies. The link
between IT and business has become deep and the CIO is now increasingly being
viewed as a business person. The fact is that CIOs, provided they blend good
technology sense with business sense, have the capability to take on the mantle
of leadership within companies. CIO-CEOs may be a possibility in the years ahead
and the future boardroom is sure to feature technology captains who can make an
active contribution to the business and its profitability.

CIOs across the board agree unanimously that once you become a CIO, you
should distance yourself from pure IT related functions; there should be no talk
about technology. IT agreeably is one of the primary responsibilities but it is
not the only responsibility. A CIO should look at business perspective of IT, ie,
the outcome of technology, says Vijay Sethi, VP, IT, Hero Honda.

Most CIOs have handled or are handling multiple responsibilities including
human resource, operations and marketing with ease. For example Dhiren Savla,
director IT, CRISIL was extensively involved in pre-sales and business
development, product definition, branding and media planning. Ajay Dhir, group
CIO, Jindal Stainless too was an entrepreneur in his initial days.

But has the change from being a technologist to a key business stakeholder
come easy? Certainly not. It has involved a dramatic change in the mindset of
both the CIO and the business peers. As Sethi rightly points out, A CIO has to
stop thinking like an IT guy and instead should start thinking like a business
leader.

As IT gets involved with every business process, it will soon be an
impossible task to separate it from other business functions and therefore the
CIO has to understand business strategy and processes.

In his evolved avatar as a business leader, the CIO has to ensure that the
technology needs of the company are in sync with the business objectives. He
should also focus on leveraging IT to bring about business transformation and in
order to facilitate this he ought to have a thorough understanding of his
business, the strategic route ahead and the challenges being faced by its users.
What is crucial is that in his avatar as a business strategist, he is to ensure
that IT is leveraged to improve the processes of the company, the efficiency and
productivity of employees, and leads the organization towards operational
excellence.

As part of the C-Club, the CIO has to be aware of the strengths and
weaknesses of his company and should be updated with the market trends in order
to make decisions based on changing external environments and customer needs.
Sethi for instance works closely with the CEO and the other members (CFO, sales
& marketing head, HR head, operations head) and all decisions are taken by the
team collectively. Each of us, even though has a functional role to play, are
all essaying business roles, says Sethi.

CIO versus CTO

On April 18, 2009, President Barak Obama appointed Aneesh Chopra the first
ever US Federal chief technology officer (CTO). What was unusual wasnt Aneesh
Chopras Indian heritage, or that President Obama needed a CTO but that this was
the second IT chief that he had appointed within a month. In March, 2009, Vivek
Kundra was appointed as the US Federal CIO.

A communique from the White House clearly outlines the role of a CTO and CIO.
While the Federal CIO ensures system interoperability and information sharing,
and ensures information security and privacy across the federal government, the
CTO will promote technological innovation to help the country meet its goals
from job creation to reducing healthcare costs, to protecting the homeland.

Clearly the CTO and CIO are two different entities and never should the two
be mixed. Aniruddha Paul, head, IT change delivery, ING Vyasa points out, The
CIO is responsible for the information systems of the enterprise, with an
internal focus on efficiency, security and cost control. The CTO, on the other
hand, has an external focus in using technology to design products and services
that help enterprises win at the marketplace.

Clearly the roles are combined or distinct, depending upon the size and
culture of the enterprise, the characteristic features of the industry sector
they operate in, and the relative importance of information vis--vis
technology.

Unfortunately, in India, CTO and CIO are terms used interchangeably. Says
Savla of CRISIL, In my previous assignment with Swiss multinational, Kuoni,
each business had a CTO running the IT operations while I essayed the role of a
CIO which was more strategic to business and performed governance function
across businesses.

At Lavasa however it is not the same. The company does not have a separate
CTO, instead experts of the technology partners are used. Vinod Vyas, VP,
information systems, Lavasa says that for businesses where technology is not
just information technology but much beyond, such as telecom, automation and
integration, then having a CTO is important. Else, the technology part can be
managed by the team under the CIO and the technology solution partners.

Most CIOs seem to agree that the CTO is more of a technology oriented role
wherein he is responsible for bringing in the best-in-class technology and to
see where technology can fit in business. The CIO on the other hand sees what
value technology can bring to business.

A CIO will not be able to do justice to the role of a CTO since the latter
would understandably be more concerned about the technology aspect of business.

Anwer Bagdadi, the erstwhile CIO of Bank of America however seems to differ
from his fellow CIO community. He says, Multiple role demarcation in an IT
set-up would continue to exist. What businesses need is strategic input on the
IT side. It is not essential that a person who becomes a CIO has to be a
techie. Pravir Vohra of ICICI Bank for instance is not a techie, instead he is
someone who understands applications for businesses.

Profit Center or Cost Center?

Even though we might go hoarse saying that IT is now an intrinsic part of
any business and no business can be envisioned without IT, with the CIO becoming
a part of the decision making process, the sad truth is that IT departments are
still perceived as cost centers. We currently work as cost center. We envisage
reaching to a level when IT costs can be attributed to a transaction or a
business which would make IT function cost neutral, says Savla.

The scenario however is gradually changing. For instance at Lavasa, IT is
very much considered as a profit center where technology leadership is one of
the brand pillars and the company is looking at IT as a profit center.

Gupta of K Raheja offers an interesting explanation. What is a cost center?
Something that incurs cost and does not deliver value. What is a profit center?
When you offer your services to external customers. So how different are you
from an IT Services company?

For Jindal Stainless, IT is neither working as a cost center nor as a profit
center instead it is a value center wherein we deliver eight to ten times more
value for what we spend, says Dhir.

A profitability mind-set can be a wonderful thing, as long as it considers
profitability for the entire corporation, not the amount of money it can
transfer from one internal account to another. Partnering with other business
units, with the needs of serving external and internal customers, will create
the real monetary value for the organization and free IT from convoluted
arguments used to justify its existence.

A focus on true profitability for the organization as a whole will generate
far different results, both in terms of the projects it focuses on and its
execution, than mindlessly worshipping the internal customer.

Most IT value comes indirectly through improving processes, integration and
relationships with customers as well as suppliers. In turn, that leads to better
financial results as it has to work through the companys business model, and
not be a standalone investment that could be justified in its own right. Not
every investment or application has to go directly to some financial number,
says KB Singh, CIO, BSES. And thats been so frustrating to some IT leaders that
twenty-five years later IT still hasnt solved the problem of proving the
business value of IT because it doesnt deliver direct benefits. It is only when
it is bundled in with the strategic processes and customer relationships that
tremendous value is created.

CIOs fail to understand why IT has such distaste of being an internal cost,
regardless of the machinations some companies attempt to make it look like a
profit center. Cost centers need not have a negative connotation. R&D,
marketing, real estate and M&A are all beneficial costs at the corporate level.
IT can certainly join their ranks.

A Multitasking Game

That most CIOs seem to be spending time chalking out business strategies
rather than hands-on involvement with the day-to-day functioning of the IT
department, is the general consensus. Typically, IT operations are outsourced
either to a third party vendor or to the tier-2 team. The CIO only essays the
role of a mentor who decides on strategic initiatives.

If there is crisis for instance in the data center, the person who manages
the same will be the first one to know and be responsible for resolving the
issue. If communication lines have been well established then the CIO will
definitely be updated on the same and will be kept in the loop on the
developments on that front, but the CIO would most certainly not be expected to
be hands-on with the problem.

Gupta cites an example. When the HR database management system in his
organization crashed at a critical juncture, the IT team managed to resolve the
issue on its own while Gupta was kept in the loop receiving regular hourly
updates. As a CIO, he even gave his inputs to resolve the issue and also asked
for help from other parties but the issue was resolved within seventy-two hours
by his team while he continued to focus on other business-related issues.

Agrees Sethi that while the IT team is qualified to manage any crisis on its
own, if there is a disaster then irrespective of whether you are a CIO or a CFO,
everyone gets involved.

KB Singh of BSES believes that it is the role of a CIO to chalk out business
strategies with all plans in place to take care of all eventualities. And if
there is an emergency in IT and the same is not being dealt through a
preconceived emergency addressal plan, the CIO is failing in strategy. This
could be a worst case scenario and good leaders would not allow this at all but
if at all this is happening, we must forget benefits of IT to business in this
environment.

CIO as a Business Leader

Gartner Incs 2008 worldwide survey of more than 1,500 CIOs showed that over
50% held responsibilities in their companies outside IT, including strategic
planning, operations, and shared services. Clearly these CIOs have convinced
their peers and superiors that they can lead.

The same survey showed that almost 26% of the CIOs responding were executives
who had never served in IT before becoming CIO. That last fact suggests that the
CIOs office is becoming an attractive destination for executives throughout the
enterprise. Not only are CIOs reaching highersomebody outside IT actually wants
to be CIO.

As a key stakeholder in business decisions responsible for chalking business
strategies, a CIO is expected to have a thorough knowledge of business processes
and understanding of the business. This understanding comes from his
interactions with almost all departments. A CIO therefore has all what it takes
to be a business leader requires.

Says Singh of BSES, enabling technology to drive business excellence is
challenging and it is here that the CEO teams up with the CIO. A CEO, who fails
to recognize the importance of IT in transforming the business, would at a
juncture face obstacles. It would therefore be incorrect to assume that the CIO
works in direct competition to a CEO, rather it its the opposite. The CEO and
CIO align as well as jointly decide on resources. It is a team effort wherein
the CIO contributes his technology expertise which can be applied to business
while the CEO often leads the mobilization of the organization.

IT is one department that adds value to an organization since the CIO has a
holistic view of the organizational processes, dashboards, applications, etc.
But the catch is that a CIO would have to disassociate himself from the IT
department and think as a business leader and not just as an IT head, says
Sethi.

IT should align with the business, set targets and agreeable service levels
agreements (SLA). The CIOs role is related to the complete lifecycle of the
business right from sales, purchase, finance to manufacturing and supply chain.
Therefore the CIO is a true leader including people management, change
management, operations management and even P&L impact. Unlike many other
corporate roles, the CIO is a true solution provider which is another key
aspect any leader should look at. This unique blend of skills and exposure
allows the CIO to be a strong contender for the leadership role, believes Savla.

The desired qualities for becoming a business leader are no different from
that of a CIO. Like CEO, they too need excellent people management skills,
should be able to initiate strategies to retain talent and keep attrition in
check. Should have a sound knowledge of the global business environment
including understanding of market trends, emerging technologies and implications
for business. Like CEO, the CIO too in his/her capacity as a business leader has
to keep an eye on the future, and have a clear strategy for business improvement
and maximizing opportunities.

So then where is the shortcoming? Why are we not seeing more and more CIOs
donning CEO roles?

Dr Neena Pahuja, CIO, Max Healthcare attempts to provide an answer,
Although we have seen instances where CIOs have moved on to become CEOs but
these are few and far between. One of the main reasons why CIOs have not been
successful in occupying CEOs role could be put on the grooming. The day IT
starts functioning as a profit center, the CIO too will start thinking as a
profit center head.

Vyas of Lavasa on the other hand feels that anyone with business acumen can
become a business leader, including CIOs. All that is required is a flair for
marketing and managing business. But if the focus is only on technology
implementations and running servers and PCs then the CIO cannot move towards
business.

Even though Vyas may feel that good business leaders come with natural
leadership ability, the importance of organizational culture in grooming a CIO
too cannot be brushed aside. More often than not, the CIO is seen at best as an
information technology specialist, someone who can advice on which technology to
go for to support business growth. As Dhir of Jindal Stainless succinctly sums
it, If he/she gets involved in business, he/she has to ensure that his/her
domain is strong, in the eventuality of any shortcomings cropping up as the
management doesnt take too kindly to any movement to other business domains.
Besides other business managers too will have to accept him as one among them.

Till the time India Inc puts its house in order and gets out of the
perception that good marketers make for good CEOs, Indian CIOs will perhaps need
to wait a wee bit longer to assume leadership roles.

Stuti Das

stutid@cybermedia.co.in