Innovative Insights: Battling with the IT
CFOs and business unit managers are angling to seize purchasing
power from IT, but there are ways to fight back.
The following article appeared in Network World in February
2005. Spinosa's in-depth understanding of this topic came partly
from experience gained working with one of VISION's financial
service clients in early 2005.
There is a group of individuals who are starting to gain
significant influence over your future at your company, and it's
not your direct bosses. CFOs might wish to closely control
technology decisions, and CEOs have handed profit and loss
responsibility to business division managers, who look to IT as an
area to reduce spending and grow the business. But there are ways
for IT leaders in these positions to regain the trust and support
of their C-level and business unit colleagues.
"Business unit managers can make or break an IT exec's career,"
says Charles Spinosa, group director of New York consulting firm
VISION. "CEOs increasingly see business units as where they can get
the competitive advantage that they're not getting, by and large,
from IT. Business managers have become more savvy about technology
and often recommend purchases."
Umesh Ramakrishnan, vice chairman at executive search firm
Christian & Timbers, agrees, and adds that some IT
professionals have lost some control of IT to business units over
the past four years. "Profit and loss responsibility sat with
business unit heads, and then the [Internet] bubble burst. Business
managers went to CEOs and said, 'Don't hold it my responsibility
for going over budget; the CIO lost control and put in ERP software
and multiple server farms. From now on, I will tell you what we
need.' The CIO is having to find ways to keep the CIO office
intact", Ramakrishnan says.
Establishing a good working relationship with business units is
key, particularly if they are free to run their own IT operations
day-to-day and you want to retain control of purchases to prevent
unnecessary duplication and expense.
Paul Lanham is senior vice president and CTO at Jones Apparel
Group, which owns brands including Nine West, Jones New York and
Easy Spirit. Each business unit runs its own IT operations and sets
its IT budget. Each unit has a vice president of MIS who reports to
the corporate vice president of MIS, who in turn reports to
"The reason for the central team is compliance", Lanham says.
"We provide leadership on pieces of the corporate strategy, and we
help the businesses maximize spend and reduce cost by not having
three or five different maintenance agreements." The company sets
standards for hardware and software so it doesn't end up with
different ERP or e-mail systems, but business units can enhance
applications that are specific to their work, such as CAD/CAM
software for a particular design function.
Ramakrishnan says in companies in which business units play a
large role in IT, now IT executives employ more non-technical
skills in their jobs as they deal with many different business
managers. Being skilled with managing relationships with different
business units will help IT executives increase their profile among
C-level types who might see a COO in the making.
"CIOs are becoming people who play a role in politics. They have
multiple constituents to keep happy, and a large proportion of
their time is dealing with people issues and egos," Ramakrishnan
One CIO described his role to VISION's Spinosa as being a
dealmaker who manages a balancing act. Some IT executives have to
be adept at dealing with disagreements between the CEO and business
managers, Spinosa says. For example, at worldwide consumer goods
manufacturers, CEOs are likely to want to Webify everything to make
it easier and less expensive for customers to buy online. But
country managers want to localize products and force consumers to
buy from certain channels. "IT is the place where this conflict is
fought out. In these cases, the CIO does the CEO's bidding because
[to Webify] is the CEO's decision", Spinosa says.
When Jan Sibley, vice president at Chicago systems integrator
ThoughtWorks, served as CIO in the finance sector for 11 years, she
would constantly face challenges of dealing with "rogue business
units that do stuff their own way." She recommends addressing the
problem in a number of ways including "leading with fear factor and
playing the scale card." These efforts would educate business units
and CEOs on the security and cost benefits of IT retaining control
of the infrastructure, while giving business units more flexibility
in the selection of business applications.
"You've got to have a clear value proposition that size matters
and that scale reduces business unit costs. If a CIO can't prove
that statement, they're not in the right line of work", says
Sibley, who, up until a year ago, served as CIO at Washington
Mutual Home Loans.
Being transparent with the cost of managing IT centrally vs.
individual business units also would help your cause, Sibley says.
"Benchmark and measure everything, and show these figures to the
business unit. Make sure you're open and willing to compare cost
against external factors", she says. She recommends establishing a
baseline, measuring each year and ensuring that infrastructure cost
is reduced. "When I was CIO, I made sure we reduced cost by 6% year
over year", she says.
Providing cost transparency also will keep you friends with the
CFO. "CFOs are driven by numbers. They love metrics and
comparisons", Sibley says. As CIO, she would always ask the CFO to
install one of his staff inside the IT department to manage IT
finances. "This person would report to the CFO with a dotted line
to me. It's a great way for the CFO to build confidence in you",
Jones Apparel's Lanham concurs: "You've got to earn trust." That
means understanding what the business managers are trying to
achieve and finding ways to help them reach those goals." For
Lanham, he ensures that his staff, which is embedded with the
business units, has experience specific to that business. "You've
got to be able to talk credibly," he says.