More businesspeople think they know enough technology to bypass the CIO. Tech chiefs must step up their game or get left out.

August 4, 2008

By John Soat, InformationWeek

Lee Shull is the business applications manager for Beiersdorf in North America. Beiersdorf makes grooming products such as the Nivea line of creams and lotions. Shull is also the de facto North American CIO, since the VP of IT resigned last summer. "When people need to get things done, they usually come to me," he says.

Well, not all the time. Shull is irked that his colleagues in supply chain operations have taken it upon themselves to implement a collaborative planning, forecasting, and replenishment system without properly vetting it with IT. Ditto for a business intelligence application in the sales department. "Some of this stuff seems to be going off in its own directions," he says. "I'm trying to rein them in."

Good luck, Lee. Whether through experience, training, or cultural osmosis, more people in business know more about technology than ever before–or at least they think they do. And while many

CIOs consider it a good thing to have tech–savvy colleagues with whom they can talk turkey, for some it's a case of a little knowledge is a dangerous thing. Senior execs, line–of–business managers, and even end users are trying to influence IT policy or, worse yet, attempting end runs around the CIO to get favorite IT projects or products deployed.

Ever since computers moved out of the glass house, there have been rogue programming and shadow IT operations. Then, as now, the problem for the CIO has been accountability, enforcing standards, and making sure IT systems are able to share the data they need to share.

But today the level of technology sophistication in companies is wider and deeper. Gone are the days when top execs were proud of having their e–mails printed out for them; now many have IT experience on their resumés, and almost all wield BlackBerrys with fierce determination. For younger employees, laptops and cell phones are a way of life. New forms of technology like software as a service and Web 2.0 promise the capabilities of enterprise applications without the usual hassles--i.e., the involvement of the IT department.

For CIOs, the implications of this trend aren't trivial, coming at a time of transition: Tech chiefs will either have to step up in the organizational pecking order, or down, many observers predict. Some see a new role emerging for them, based on the ubiquity of technology, one that has more to do with business processes than network and infrastructure arcana. Smart CIOs are embracing their more technically adept colleagues to help them advance their companies' business agendas.

WHAT EVERY MANAGER NEEDS

Businesspeople in almost all roles are aware that IT is an integral part of their jobs, says Jeanne Ross, a researcher at MIT's Center for Information Systems Research. These days, IT is "what every manager needs to be good at," Ross says.

"You can't be in business today without being tech savvy," says John Rough, CIO at DBL Distributing. For Rough, working with a group of technically astute execs, including his CEO, means he spends less time selling the why of a project and is instead able to concentrate on the how. If the company needs to expands its external bandwidth, Rough doesn't need to explain the details to the president or the CEO. "It's the same thing with applications or network hardware," he says. It probably doesn't hurt that Rough works at a technology company: DBL is a consumer electronics wholesaler, recently purchased by Ingram Micro.

Game Tactics

Take Control Make it a corporate policy that all IT contracts must be co-signed by IT Stay Close To Business Build relationships so you can keep track of what's going on IT-wise Remain Open Innovative ideas can come from anyone and are sometimes just what's needed Build A Test Bed Tech-savvy employees can be your best R&D lab Provide Options Employees feel more in control when they have a say in what technology they use Be Direct Set meddlesome bosses straight, but do it tactfully

"Definitely, executives are savvier," says Joseph Santamaria, VP of enterprise business applications at Pitney Bowes. For him, though, it's not necessarily better or worse, just a different environment, one where management is "less willing to accept trade-offs" from IT, he says. A collaboration portal the company recently built came from a request by the business side. In that way, IT projects are "more of a pull, less of a push" these days, Santamaria says.

Question is: Who's pulling and how hard? Tech-savvy senior executives can be sympathetic and "provide the broad support that an IT department needs to be effective," says Aaron Lapat, a tech recruiter with executive search firm J. Robert Scott. They also can be "meddlesome," their expectations "too ambitious" around budgets, timelines, and what IT can deliver, he says.

Ask Bruce Simons, CIO of USAlliance Federal Credit Union. Simons describes his CEO, to whom he reports, as "somewhat tech savvy," having been involved in technology earlier in his career. "He uses some of the terminology--rightly or wrongly at times," says Simons.

On the other hand, the company's CFO isn't technical at all. "He only knows three words: 'Do not spend,'" Simons says.

The CEO, the CFO, Simons, and a couple of other executives make up a committee that determines rate structures for loan and savings products. They all have their roles: It's Simons' job to bring the IT perspective to those meetings, he says, to show what he can do "from a technology standpoint" to help design, implement, and support new products. Unfortunately, it isn't always that straightforward. "Sometimes there are misunderstandings," he says, like when the CEO believes an IT project is "simple to implement" and doesn't grasp "how it will ripple through the organization."

Senior executives who are IT vets can cause other problems. "People who passed through IT, did a little C programming back in the day--they think they know how to design a reporting system," says an IT director at a large consumer goods company who requested anonymity. They don't, and too often she ends up getting handed a design that isn't going to work. And the senior exec who designed the project isn't going to pay for it unless the IT department does it the senior exec's way.

That's when you need to be "appropriately direct," says Russ Edelman, an IT consultant and co-author of the book Nice Guys Can Get The Corner Office (Portfolio, 2008), which will be published this summer. CIOs must learn how to educate top execs who have a tech background or might have picked up tech tips at a conference or from talking with colleagues. "Address their concerns without slamming them," he says.

Dealing with a second-guessing boss is a necessary skill in any occupation. More troublesome for IT, though, are managers who take technology projects into their own hands.

Liam Durbin, CIO at Heinz North America, thinks the tech know-how of today's business execs is mostly skin deep. They're "gadget savvy," he says, but certainly not knowledgeable about how an IT organization is supposed to operate. For example, Heinz has standardized on Siebel's CRM software, yet instead of business managers asking how a particular business function can be accommodated in Siebel, he still gets requests to implement Salesforce.com's online CRM software service as a quick-fix point solution.

Business units going off on their own with tech projects is one of Durbin's recurring nightmares. Just recently, he stumbled over the fact that his marketing department was having something called a "digital age boot camp." He got a heads up about it only the day before, and scrambled to get a couple of his people there. "In the long run it would have been a lot more dangerous if we hadn't had people there," he says. "I'm not saying we're here to say no, but to steer the conversation toward what we can do."

THE 'NO' FACTOR

That reputation for nay-saying is one of the factors that helped create the end-run-around-IT syndrome in the first place. Certain industries, financial services and health care in particular, have embraced a locked-down approach to IT, mainly because of regulatory constraints. At many organizations, security and privacy concerns have made CIOs hypervigilant about imposing standards and keeping users in line.

One ultramodern company, though, has taken the opposite approach. "Google's model is choice," CIO Douglas Merrill said in a Wall Street Journal interview last month. (Merrill left Google last week to run EMI Music's digital business.) Google lets employees pick from several types of PCs and operating systems and download the applications they want. Google's CIO might not have much of a choice: Google employees are, for the most part, the definition of tech savvy.

The company addresses the obvious security issues from the inside out, Merrill said, by battening down the infrastructure instead of locking down the outer edges, like most companies do. The choice model is less cost efficient than standardizing end-user hardware and software, he said, but Google gets "slightly more productivity" out of its technologists because of it.

Jeffrey Neville, CIO of Eastern Mountain Sports, a retailer of outdoor gear, doesn't go to that extreme. But he encourages employees, in particular midlevel directors, to experiment with online marketing tools and techniques, such as social networks and IP video. That approach provides him with what he calls a "distributed R&D effort," similar to the way Procter & Gamble encourages outsiders to approach it with new ideas and inventions. Neville says he views the technical capabilities of his company's employees as an opportunity, "not as an issue or a problem."

Ignorance of technology presents its own problems for IT. "A lot of the people I work with in finance and sales and marketing aren't that tech savvy, and it would be nice if they were," says the IT director at the consumer goods company. That lack of IT sophistication leaves them vulnerable to vendor pitches and more likely to buy something that doesn't fit with the company's infrastructure standards or requirements. "When it doesn't work, and they've paid out a lot of money, that's where we get called in," she says. In fact, she's "retiring" just such a project right now.

RUNNING IT JUST ISN'T ENOUGH

The broader base of tech knowledge, whether skin deep or not, is a factor in a significant shift in the role of the CIO. If CIOs want to achieve--or maintain--senior executive status, they must evolve from technology gurus into business strategists. They can't "just run IT," says MIT's Ross. A big reason is that more executives are taking more responsibility for the IT projects within their domains, such as the CFO implementing a budgeting application or the sales and marketing department using a CRM app. That leaves CIOs with a choice: Stick with the lower-level infrastructure stuff, or step up.

Ross isn't the only one observing that shift in IT responsibilities. "We see it when we do our ROI assessments," says Ian Campbell, president of Nucleus Research, a consulting firm that specializes in examining the return on investment of IT projects. Campbell says he and his researchers end up talking about IT projects and their outcomes "more and more to the line-of-business person and less and less to the CIO."

Another sign of this shift, Campbell says, is that IT projects are moving out of IT budgets and onto departmental ones. That's because, often enough, it's the line-of-business manager who saw the value of the IT project, he says, "and articulated it to the CEO."

Richard Dellinger is co-founder and VP of development at Adaptive Planning, which markets a software-as-a-service app that does budgeting, forecasting, and reporting. Adaptive, which has about 200 customers, sells the service mostly to CFOs, controllers, VPs of finance, and VPs of planning, Dellinger says, and "they propagate the app to business units." When IT does get involved in the sale, it's to check security, "how the application is hosted, how we do backups," he says.

Dellinger knows something about disruptive technology. He was one of the original programmers on VisiCalc, the first PC spreadsheet program. Even as online services grow in popularity and importance, Dellinger allows that companies always will need IT organizations to "focus on legacy stuff, like general ledger, databases, networks."

Ouch! Self-aggrandizing spin or not, Dellinger's point is a salient one for CIOs. As responsibility for tech projects spreads to more parts of a company, what's left for IT is the plumbing. But there's a need for someone to oversee the business processes that are implemented or changed by those new applications, especially from an enterprise-wide, cross-organizational perspective. The CIO is the logical person to fill that role. "The CIO better than anyone else recognizes decisions about IT are decisions about business processes," says MIT's Ross. She has a new title for that function: Strategic Execution Officer.

STAY IN THE GAME

There are steps CIOs can take right now to head off end runs around IT. One blunt instrument is to appeal to the CFO to implement a corporate policy that dictates that all technology contracts must be co-signed by someone in IT. The consumer goods IT director says she was successful in getting such a policy implemented at her previous employer but not at her current one.

Another, more constructive way to ensure that tech projects are properly vetted by IT is to keep that organization in tight with the business, she says. "You deal with it by building your relationships," she says.

For already overextended CIOs, relationship building can be time consuming, and senior execs' increased interest in the benefits of business technology can seem intrusive and intimidating. "The expectations of what can be delivered keep going up," says Frank Modruson, CIO of consulting firm Accenture.

Modruson isn't intimidated, though, as well he shouldn't be: His company is immersed in IT. In an IT steering committee meeting recently, Modruson found that the finance operations chief wanted to talk about "the dimensionality of data." Instead of being exasperated, Modruson was invigorated. "If you can believe it, we were having a data architecture discussion with the business guys!" he says. The advantage for the CIO, he says, is that business execs become allies that can help you "move the business forward better and faster." The downside: "You can't snow 'em."

Done right, having allies throughout the business can elevate an IT organization's standing in the company. Michael Pellegrino, VP of IT at Fujifilm U.S.A., thinks his group has done a good job of engaging with the business. "There's very little IT going on outside the IT organization," he says. "For the most part, they come to us first." For example, one of the sales divisions came to IT recently with a request to implement a "CRM lite" application, actually a tool that sits on top of Outlook. The sales group already had reviewed the tool, though whether someone in the group found it online or had used it at a previous job, Pellegrino isn't sure. "As long as the division is willing to fund the cost, it's a great project," he says. "They know what they want, and we're able to give it to them in a reasonable period of time."

Still, the timeframe Pellegrino describes for that project--"weeks or months"--might test the patience of his tech-savvy managers. Probably better not to try their patience too long, Michael.