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The Big Fight

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DQI Bureau
New Update

On April 18, 2009, US President Barak Obama appointed Aneesh Chopra as the

first ever US federal CTO. What was unusual wasnt 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.

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Why does the United States federal government require not one, but two IT

leaders? The answer can be found in the White House communiqu:

The CIO is responsible for the information systems of the enterprise with an

internal focus on efficiency, security and cost control. The CTO has an external

focus in using technology to design products and services that help enterprises

win at the marketplace. The roles are either combined or distinct, depending

upon the size and organization culture, the characteristic features of the

industry sector they operate in, and the relative importance of information

vis--vis technology.

In technology-led entrepreneurial ventures, we find that CTO not only heads

the IT and product functions, but is also the CEO of the firm often.

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The primary objective of these firms is to develop new technologies or

products with a high technology content, and hence, the CTO is best placed to

represent technology issues to the top management. As the firm grows, the

enterprise may hire an information systems (IS) head to manage the firms

information management needs.

However if technology driven firms have several lines of business, the roles

are rarely separated because of the size of the company and the desire to have

not more than one executive responsible for all IT matters.

Any large enterprise that uses technology to differentiate itself in the

market place is technology driven. For example, financial institutions that

pioneered high frequency trading using algorithmic trading engines are

essentially financial services firms with technology offerings. Under such

circumstances it makes sense for the company to hire a CTO as well as a CIO to

steward their IS/IT strategy.

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Large chunks of the enterprise IT architecture are realized through the

purchase of ready-made technology like ERP systems, CRM systems, business

intelligence systems. Requirements like real-time MIS, rich decision support

systems, application agnostic decision engines, complex business process

management require the IT skills of a CTO along with the IS strengths of a CIO.

Also, we see an inexorable trend towards technology being embedded in

products, distribution and analytics, and not just in internal IS. The companies

feel the need to constantly innovate in order to stay relevant. The CTO is a

natural champion of such innovation.

Finally, if the company decides to have a build-over-buy strategy with

respect to its IT systems, and if these systems are large scale, mission

critical and require continuous innovation in terms of adding newer

functionalities, it makes sense to have a separate CTO.

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Companies that choose to focus exclusively on their core competencies may

choose to outsource their entire IS and IT requirements. Small and emerging

firms may not even need anyone more senior than an IT vendor management

executive to manage the outsourcing relationship. However, with growth, the

approach becomes more collaborative and symbiotic, and can test the full skills

of a CIO.

However, as technology becomes a strategic differentiator for organizations,

I predict that the CTO role will gain importance in many organizations. The

forerunners of this will be the mature industries like banking, retail, and

media & entertainment where core offerings are now quite standardized; and the

only way for organizations to stand out is through technology driven innovation.

Aniruddha Paul,



The author is head, IT change delivery, ING Vysya Bank

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