CIOs increasingly join outside boards of directors

As regulation and security concerns increase, companies are looking to IT execs for expertise.

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Companies are increasingly tapping into the wisdom of business-savvy CIOs by inviting them to join boards of directors and -- in the case of smaller companies -- advisory boards.

And why not, ask career experts and CIOs alike. In a time of strict data retention regulations and ever-mounting IT security concerns, a seasoned CIO's insights can go a long way toward improving the bottom line.

There are also significant plusses for the CIO who gets appointed to a board. Younger CIOs can add it to their resume and get an educational glimpse into problems they may not run into every day. For older CIOs, not terribly concerned about career advancement, boards present an opportunity to give something back, to leave a legacy of helping others succeed.

"CIOs bring a lot of value to boards, especially in the Sarbanes-Oxley era, because they are most likely bringing experience on how to apply technology to business processes and how to apply technology to financial reporting issues," said Scot Melland, CEO of IT careers site Dice.com. "It's also an opportunity for CIOs to broaden themselves and to get exposed to very high level general business issues."

While statistics are hard to come by, Melland and CIOs interviewed said they have seen an increase in the number of CIOs on boards in recent years. They said the two main factors driving the trend are increased regulation and the heightened emphasis on IT security and disaster recovery following the terrorist attacks of September 11.

The last two years have also seen CIOs join the boards of some high-profile companies. To name a few, Denis J. O'Leary, former CIO of J.P. Morgan Chase & Co., joined the board of Network Associates Inc.; Ruth E. Bruch, senior vice president and CIO of Lucent Technologies Inc., joined the board of Mellon Financial Corp.; and Harriet Edelman, senior vice president and CIO of Avon Products Inc., joined the board of Hershey Foods Corp.

Springboards to board rooms

CIOs interested in joining an outside company's board of directors or advisory board should consider striking up a relationship with venture capital and private equity firms.

"These are the investors who typically are working with fledgling companies or investing in medium-sized companies," said Scott Melland, CEO of IT careers site Dice.com. "And they're looking for board members to help the companies grow."

CIOs interested in joining the boards of larger companies may have a tough time if they're not already well established. Melland said this is because the largest companies usually employ the services of top executive search firms to find qualified candidates for board positions.

Asking how to join the board of a Fortune 500 company is "sort of like askng 'how do I get recruited to run General Motors?'" Melland said. "It's all about whom you know and what people know about you."

Membership has its privileges, but be careful

While joining a board can be a highly positive career move, experts said it's important for CIOs to take precautions.

"If you're the CIO and you're being asked to join a board, it's a good idea to make sure that your company is comfortable with you doing that," Melland said. "Clear it in advance and also make sure that you don't have a conflict of interest."

In addition, prospective directors should also perform some due diligence on the company, to be sure they are comfortable with the way it conducts business.

Then, CIOs can begin realizing the many career benefits associated with board membership.

Suzanne Gordon, vice president and CIO of SAS Institute Inc., a business analytics software vendor in Cary, N.C., said her current stint as a board member at neighboring Arsenal Digital Solutions Worldwide Inc., has proven to be a profound learning experience.

"It's been really interesting for me to see [the other board members'] different focus and how familiar they are with financials and how they present things to the venture capitalists," Gordon said. "It's almost like going to conferences, in that it's expanding your view of the world."

Board appointments also give CIOs a chance to increase visibility at their own companies, said Bob Denis, CIO of Trimble Navigation Ltd., a Sunnyvale, Calif.-based vendor of global positioning systems and related equipment.

"If you avoid being the technoid nerd in the crowd, but more so the business contributor in the crowd, [board membership offers] a tremendous opportunity for CIOs to sharpen business skills and, lo and behold, become very available at the senior level," he said.

Rick Chapman, chief administrative officer and CIO of Kindred Healthcare in Louisville, Ky., agreed.

Chapman sits on the board of directors at Sepaton Inc., a Southborough, Mass.--based vendor of virtual tape products and related software. He said the experience of learning about another firm's governance structure has given him a unique perspective on the board of directors he reports to at his own company.

"It's just another part of rounding out the business perspective and peer level status of the chief information officer at the table," Chapman said.

An enterprising move

CIOs also round out the expertise of the board, in that their work involves dealing with questions of how best to apply technology to business processes and reengineering those processes when necessary.

In particular, CIOs are a natural fit for the boards of companies that develop and sell technology because they can offer insights into the customer perspective, Chapman said.

And smaller organizations with few IT resources can benefit greatly from a CIO's core technical knowledge. But, as Trimble Navigation's Denis has found, there is often a mentoring role involved as well.

Denis, who sits on the advisory boards of two venture capital funded startups, said the young executives at those companies are eager to soak up the wisdom he's accumulated -- both technical and otherwise -- during his 28-year career in IT.

"They're just like a sponge. The relationship has gone from a strictly technical interaction to more of a career management dialog," said Denis, who asked that the names of the two companies be withheld. "We've spent as much time talking about career time management as the technical aspects of their product."

And that suits Denis just fine. The CIO said he joined the boards not to advance his already established career, but rather to help the younger generation find success as he did. By joining the advisory boards, Denis said he hopes to do his part to prove that IT does matter.

" I think that companies are recognizing that well-seasoned CIOs have an awful lot to offer and can play a key role in the direction of a company," he said.

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