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The Strategic CIO: 4 ways CIOs Innovate Value

How do strategic CIOs innovate value for their company? They follow four basic principles. The days of CIOs who only focus all their efforts on infrastructure are gone. Your CEO wants you to innovate value. Of course you need to keep the “lights on” and make sure that services are delivered exceptionally well. But your main focus needs to be on working with your C-level business peers to achieve business outcomes that improve customer value, improve margin through increased sales and reductions in cost, and enhance shareholder wealth.

That’s a big challenge. How do you do it? We all remember one of the basic rules to problem solving. Look at the problem and break it down to its simplest parts. This is exactly what strategic CIOs do. So, if you want to add strategic value for your company, follow four basic principles. It will pay off handsomely.

  • Understand the business and competitive environment
  • View the business processes across the entire value chain
  • Mentor and coach employees to focus on user experiences
  • Leverage Ttechnologies to enable customer value

 

My upcoming book, The Strategic CIO: Changing the Dynamics of the Business Enterprise, includes interviews with over 70 CIOs. Learning takes place through experience and examples, so let’s take a look at how CIOs utilize the four basic principles to innovate value for the enterprise.

1. Understand The Business And Competitive Environment
Every CIO wants to have a seat at the executive table. To achieve this, you must understand the business and the competitive environment. It’s as simple as that. Cindy McKenzie is senior vice president of Information Technology at Fox Entertainment Group. As she explains: “Every time I present to business unit executives I explain how we help them achieve business outcomes. I don’t talk technology. I speak the language the business understands.”

McKenzie is successful because she understands how the business operates. But achieving this is not an easy task. Remember, executives understand the business and you need to speak their language. The Chief Financial Officer (CFO) views company operations through a financial lens. The Sales VP understands the products and services sold to customers, the competitive market, and the additional functionality and features required to gain competitive advantage. The Chief Marketing Officer (CMO) understands how customers think, behave, and use the products and services produced by the company. The Product Development VP understands how existing products are used by customers to improve value.

So, if you are a CIO and want to gain access to the executive table you need to have a thorough understanding of the business if you want to engage in a valid business discussion.

Let’s look at an example of a CIO who took on a new role at an insurance company:

  • AAA Insurance is a regional insurance company with 2.2 life, automotive, and homeowners policies in force in 23 states.  With a rapidly growing customer base the CEO identified the need for a CIO with successful business and technical experience.  This is what the company needed to continue its successful growth.
  • Steve O’Connor was hired as CIO in 2011. He was general manager for IT business management for BMC Software, co-founder of ITM Software, and chief information officer and vice president of information services for Silicon Graphics, Inc.  O’Connor also held various IT leadership and management positions within Sun Microsystems and Cullinet Software. Mr. O’Connor also had a JD degree from Suffolk University in Boston and a BS in computer science from Boston College. With a successful track record in information technology and business, coupled with a law degree, O’Connor was the perfect candidate for the CIO job at AAA insurance.
  • The challenge for O’Connor was to learn how AAA operates as an insurance company as quickly as possible. O’Connor knew from past experience that “…to be successful I needed to thoroughly understand how the business works,  the competitive market, and the challenges that needed to be addressed  for AAA Insurance to successfully grow. Otherwise I would fail.”
  • During the first 90 days O’Connor spend over 50 percent of his time with business executives learning about the insurance industry and well as how AAA Insurance operates its business.
  • As a result he identified the need for a new claims management system. This became the number1 priority. He and his team implemented the new claims management system three months ahead of the 12 month project plan. All this wouldn’t be possible if O’Connor didn’t understand the AAA business and transfer that knowledge to the IT organization.

 

2. View The Business Processes Across The Entire Value Chain

Today’s business environment is very complicated. It used to be a simple four step process: design a product, manufacture the product, store in inventory, andsell and ship to the customer. The steps were simple but the execution was cumbersome. Remember when new car models were introduced every 2-3 years: manual processes, vertically focused organizations, numerous layers of management, inferior technology, poor manufacturing practices, and poor communications all contributed to the lengthy cycle. But times have changed as management has de-layered the organization, improved communications, introduced new technologies, and re-engineered business processes. Although business processes have been dramatically improved and are more efficient, their complexity has increased. Vendors who supply materials for products also provide valuable services and are now called “value added strategic partners.” The same is true for manufacturing partners and companies involved in the logistics supply chain. The enterprise now extends well past the physical wall of the company. They now extend to strategic partners and customers. It’s a lot more complex today than ever before.

Debra Martucci is CIO and Vice President of IT at Synopsys, a global company which provides products and services that accelerate innovation in the global electronics market.  The company, headquartered in Mountain View, California, has approximately 80 offices located throughout North America, Europe, Japan, Asia and India. Martucci is a seasoned business executive with over 20 years at Synopsys and a BS and MS in Physics.  Martucci is not only very analytical but people and process oriented as well. With these skills Martucci is constantly called upon to successfully integrate acquired and merged company business processes within the Synopsys enterprise. Martucci explains:

“I see business process as a key area for improving the operations of the company. As the CIO, I have a view of all business processes regardless of how these processes cross organizational boundaries.  Because of this horizontal view, I’m often able to see opportunities for improvement more quickly than the specific line of business and can drive for quick wins during the integration activities.”

Every CIO recognizes the complexity of business processes. In today’s business environment, processes stretch across the entire value chain and are broader and deeper than ever before. The integration of information technology that enables these processes requires the CIO and the IT organization to understand each process in great detail. Think about it: The head of each organization-product development, sales, manufacturing, distribution, human resources, finance-each have a very good understanding of the how business processes function in their respective organizations. But business processes operate horizontally across the enterprise, not vertically. As a result of the complexity of the value chain organization leaders don’t have the bandwidth to understand the detailed workings of business process operate when they cross organization boundaries. But the CIO and the IT organization do not have the luxury to have limited knowledge. As information technology finds its way into every process across the entire value chain—which supports the products, services, and supporting business processes—the CIO and the IT organization must have a thorough understanding of how each business process operates and a sound understanding of all the information intersect points.

If you have a deep knowledge of how business processes operate across the enterprise coupled with a good understanding of the business you will be able to enable your IT organization to uncover opportunities to improve the effectiveness and efficiency for business processes across the entire value chain.

Let’s look at a good example: Baker Hughes is a $20 billion dollar (2011) provider of products and services for the global oil and gas industry which are designed to lower costs, reduce risk or improve productivity of their customers. Located in 80 different countries Baker Hughes provides a diverse set of products and services which are developed by 58,000 employees from seven plants located around the globe. Their 1,600 products and services across 22 product lines include high-performance drilling, evaluation, completions and production technology and services, integrated operations and reservoir consulting.

If you think this sounds like a complicated operation, you are correct. When Clifton Triplet took on the role of CIO there were seven divisions operating with different processes trying to develop a set of diverse products and services for customers who sometimes viewed Baker Hughes as seven different companies. Each division had their own product development life cycle, data set, communication processes, and sales force. Product development was a critical competency that needed improvement if Baker Hughes wanted to become more competitive in the oil and gas industry. So how does a new CIO tackle this problem?

  • Clifton Triplett was named Vice President and Chief Information Officer at Baker Hughes in 2008. He is responsible for Baker Hughes’ Information Technology strategy and IT service delivery.  Triplett joined Baker Hughes from Motorola where he served as Vice President of Motorola Global Services. Prior to that, he served as Vice President and CIO of Motorola’s Network and Enterprise group. He has held a variety of other IT leadership roles with General Motors, Allied Signal, Entergy Services and the U.S. Army. He has worked both in the United States and internationally. Triplett received a Bachelor’s degree in engineering from the U.S. Military Academy at West Point and holds a master’s degree in computer information systems from Boston University.
  • Triplett, an engineer by education, views business very scientifically. He recognizes that separate divisions working in silos is not how Baker Hughes will succeed at transforming into “One Baker Hughes”I assessed the organization and saw islands of information that created inefficiencies and we needed to correct this.”
  • Triplet views business from a horizontal view. One of the areas that needed fixing was the Product Development Lifecycle process. It needed to be completely reinvented. “We needed a way to manage our intellectual property and communicate efficiently throughout the entire value chain.”
  • After gaining approval from the CEO for this “transformational journey,” Triplett identified a strategic partner to begin the process of developing a unified product development life cycle Process at Baker Hughes
  • In a few short years the new Product Development Process is beginning to show results. Instead of a five year lead time to develop tools to help oil and gas customers Baker Hughes estimates that the process will be reduced by 70% and it could even get shorter as technology advances emerge.

Triplett always focuses on solving the business challenge and then determine how technology can enable a solution. “I never put the cart before the horse, we need to look at the processes horizontally, across the entire value chain, in order to gain the efficiencies that will benefit our customers.” By viewing the product development lifecycle as a set of horizontal process, across the entire value chain, his cross-functional team has transformed Baker Hughes into a leader in the oil and gas industry.

3. Mentor And Coach Employees To Focus On User Experiences

Every day teams of people meet to solve business problems. In the past, these teams never included any personnel from the information technology organization. We all know the drill. The business teams would meet, decide on the solution, and then define the requirements. The team leader would then meet with IT and say, here’s the requirements document. Please develop the code as fast as you can. We need this immediately. Well, this doesn’t happen anymore in companies where the strategic CIO has a good working relationship with C-level peers. In many companies today IT personnel are actively involved as part of the business team.  And if you were a fly on the wall, and listened to the conversation, you could not identify who is from IT or who is from another organization.

Did this happen overnight?Of course not, it took time. The problem is IT organizations were always vertically focused. They didn’t understand the business but they did know how to code very well. So they performed their jobs diligently and with expertise.  The challenge for the CIO is to mentor and coach IT personnel to not only understand the business but to focus on the internal and external customer. The best way to do this is through user experiences. How will you process payables?  Why is it important? What is the value for customer to view their orders on our website? The discussions that result from these questions involve “business speak” and not “technical speak.”

So how does a CIO help IT personnel to really understand how customers use the products and services developed by IT? Here’s a great example:

Kim Hammond is CIO at Boeing. She started her career at Boeing in engineering and quickly rose through the ranks to her current role. Hammond believes “people are our most important asset” and we need to help them understand how Boeing personnel use the services that IT provides. David Jodock is Director of Business Partners for IT, Commercial Airplane Programs, and reports directly to Hammond. He explained to me how she leads by example. To better understand how internal customers used the products developed by IT, Hammond spent an entire day on the 787 program. She sat down with engineers who build the plane. She watched as the engineer entered data into the computer and saw that there was a latency problem where the user had to wait for the data to be processed. It took 10 minutes. Kim took it upon herself to go back to IT and work with IT personnel to reduce the latency to acceptable levels.” As a result of that personal experience Hammond instituted the Day-in-the-Life program where key IT personnel spend a day on the shop floor working alongside of Boeing personnel that use the applications developed by the IT person. “There is no better way to experience what our customers do then by walking in their shoes,” said Jodock. This is a great example of how IT personnel can visualize and experience how internal customers use IT products and services.

Let’s look at another good example. Gary Spears is IT Director at Medtronic, a global leader in medical technology, serving patients, partners, and medical professionals in 120 countries. We send IT teams on “ride alongs” with sales representative. They experience a visual understanding of how their pacemakers and devices work. They also experience how sales representatives use mobile devices to access information. “The objective is for IT personnel to experience how our internal and external users use our products and services,” Spears said. Spears participated in the Day-in-the-Life program at Medtronic:” I’ve been in the field and observed two different surgeries. It was fascinating.  I saw how our products save lives. Seeing the user experience firsthand is a real eye opener.  I would have never really understood the value our products provide our customers if I didn’t experience it  firsthand.”

Building an IT organization that understands and speaks the language of the business is not an easy task. But if you can, it will lead to many rewards. OptionMONSTER is an online investment group founded in 2006 by Jon Najarian, Pete Najarian, and Dirk Mueller.  As successful professional traders and respected investment experts, they realized people needed a “disciplined investment process to manage their money.” With an aggressive business plan, the founders recognized success required an innovative and strategic CIO who could leverage the skills of the IT organization to drive the explosive growth the founders projected. They hired Sanjib Sahoo, a seasoned CTO/CIO, who knows how to quickly build an effective IT organization that is business focused. And that he did. As Sahoo says himself, “I am delighted at what me and my team achieved in such a short span of time and it was only possible because we work as a team and have an environment of collaboration combined with innovation.”

Following are the key areas Sahoo focused on:

  • Hire people who had the business acumen to learn and understand the financial services industry and also has the potential be leaders as the IT organization grew
  • Coach and mentor individuals to visualize the user experience, how customers would trade stocks and options
  • Develop a working culture which embodies personal growth & creativity which in return drove innovation and the ability to retain employees.
  • quality over quantity

 

Did his process work? You bet it did.  In 2008, two years after Sahoo was hired, tradeMONSTER launched tradeMONSTOR, an innovative brokerage featuring slick tools and trade executions, which is now ranked #1 by Barron’s for Technology and best for Options Traders in ranking of online brokers. You can read more about Sahoo’s unique methodology in my AITS article, Building a Successful IT Team.

 

4. Leveraging Technologies to Enable Customer Value

Everyone loves cool technology. We’ve all heard about the latest trends in cloud, mobility, and social networking. Everyone is jumping on the technology bandwagon. But be careful! I’m sure you remember the proverb, when all you have is a hammer, everything looks like a nail. Many companies are doing just that. They want to use these technologies, so they find ways to implement them that may not be appropriate. So the answer is to always ask the question, what business problem am I trying to solve?

Ken Piddington serves as the Chief Information Officer at Global Partners LP, a $14 billion distributor of refined petroleum products and renewable fuels in the Northeast. With an extensive consulting background in the energy industry Piddington is perfectly positioned to leverage technology strategically. Piddington doesn’t view himself as just an IT leader,I see myself as a business executive striving to help Global Partners achieve success in the marketplace.”

Since joining Global he has worked to transform the Information Technology group into a strategic asset positioned to scale and contribute to the company’s growth strategy. He led the development and implementation of an internally developed Energy Trading and Risk Management System in 2009. Code named “Peloton.” This project was a key company initiative which provided the organization with a leading-edge technology solution but also implemented process and operational changes positioning the company for future growth.

Another great example of a CIO leveraging technology strategically is Harry Lukens, CIO at Lehigh Valley Health Network, a thousand-bed three Magnet-designated hospital in Allentown, Pennsylvania. Lukens explains: “I’m always looking at how we can improve patient care. That’s our challenge. And if we can leverage the right technology than we’ll use it.”

One of the many challenges at hospitals is how to improve patient outcomes in the intensive care units (ICU). During the 7pm to 7am shifts the intensive care unit is staffed with nurses and supported by hospital residents and staff. And for critical care patients, this can be devastating. Without an intensive care physician nearby critical needs can be delayed and impact outcomes.

So, how do you leverage technology to provide excellent “bedside” care for a 140 bed intensive care unit during the 7pm-7am shift?  Lukens worked with a team of nurses, doctors, and information technology personnel to leverage the right technology to develop an Advanced ICU capability, using Tele-Medicine.

  • Affectionately known as the “Doc in a Box” the A-ICU is a square room approximately 25 feet wide and 25 feet long.  The facility includes four “computer pods.” Two rows of three computers connected to provide real-time medical information. One nurse manages each of the three pods while the fourth is for the Advanced-ICU Critical Care Physician. In addition an administrator for the A-ICU handles ancillary communications and coordination activities.  This team of 5 performs miracles each and every night.
  • The nurses and Critical Care Physician can monitor each of the 140 ICU patients and display medical records, medications, x-rays and other medical data. They can even communicate via audio and video to each room and speak directly to the patient or the nurse.

Focusing on improving patient outcomes helped the team leverage the right technology to develop the Advanced ICU capability. Did it work? It sure did. The LVHN says that using Tele-medicine enabled by information technology statistically saves 1 life for every 15 patients who require ICU medical care. That amounts to over 1,800 lives saved over the course of a year. You can read more about LVHN’s Tele-medicine A-ICU in my Strategic CIO AITS column, Three Best Practices that CIOs can Learn from Health Care.

SUMMARY

I’ve tried to provide you with a variety of examples of how CIOs innovate value focusing on the following four major areas:

  • Understand the business and competitive environment
  • View the business processes across the entire value chain
  • Mentor and coach employees to focus on user experiences
  • Leverage technologies to enable customer value.

Review how your IT organization innovates value for your business and see if any of the examples are applicable in helping your organization create value, increase revenue, and enhance shareholder wealth.

I hope you found value in this article. Please provide me with any comments or topics you are interested   in reading about.

Phil Weinzimer is president of Strategere Consulting working with clients to develop business and IT strategies that focus on achieving business outcomes. Previously Mr. Weinzimer was Managing Principal-Professional Services for IT Business Management at BMC Software. He has also held Managing Principal positions in the Professional Services organizations for ITM Software, CAI, and Sapient.

Mr. Weinzimer has written a book concerning customer value entitled “Getting IT Right: Creating Customer Value for Market Leadership” and has a forthcoming book, “The Strategic CIO: Creating Customer Value, Increasing Revenue, Enhancing Shareholder Wealth”, will be available in 2013.

Mr. Weinzimer can be contacted at pweinzimer@strategere.com

About Phil Weinzimer

Author and president of Strategere Consulting working with clients to develop business and IT strategies that focus on achieving business outcomes.

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