Mind melding with your CEO

Prescription from a CEO: Know your company's business model and appetite for risk and adhere to them religiously.

MADISON, WIS. -- William Harvey, CEO of Alliant Energy Corp., has some advice for CIOs who have an appetite for taking risks on the latest technology when the company's business model is conservative. Don't indulge.

Sounding a bit like the Simon Cowell of CEOs, Harvey told CIOs at last week's Fusion2006 conference that in some industries, the CIO role is not about implementing the next bleeding-edge technology. It's about staying the course.

That doesn't mean information technology is incidental to the business, explained Harvey, who said IT is as integral to Madison, Wis.-based Alliant as the manufacturing or distribution of electrons. He and his CITO, David Cagigal, in fact, "are joined at the hip," Harvey told the audience, because Cagigal understands the company's business model and appetite for risk and adheres to them dogmatically.

"The CIO's role can be fundamental, but only if the CIO and CEO's minds are melded, like Vulcans, on the business objectives of the organization," Harvey said, adding that CIOs who don't like the business model of their companies or believe they can operate outside those models are in trouble. "It's a recipe for disaster."

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Keeping the lights on  

While Harvey's comments might seem out of touch, his position is not unlike that of many other utility companies. Alliant, an electricity and gas provider with $3 billion in revenue and 3 million customers, is a regulated monopoly that "boils water in a lot of different ways" and moves it around the country, Harvey said. The company's near-monopoly could be a license for the CIO to be on the bleeding edge of IT, but Harvey said Alliant's business model does not jibe with that. Keeping the lights on -- as efficiently and reliably as possible -- is just what IT should be doing at Alliant.

"We are not and should not be a cutting-edge home for IT systems and applications," Harvey said. "In fact, we are late adopters by design."

Pioneers get the arrows

Alliant is conservative, even among its peers. Sending broadband over power lines is a hot topic in the energy industry, but unlike some energy companies in California and the Southeast, Alliant will not be on the forefront. "Our business model says, the pioneers get the arrows, the settlers get the land, and we are a settler," Harvey said, making no apologies.

Alliant, for example, has waited until very recently to deploy automatic meter-reading systems, a technology some of its peers adopted years ago. Since those early adoptions, the technology has changed many times, so the question now driving Alliant's decision is not whether to deploy automatic meters but should they be high-tech or low-tech. "There will be debate. The answer will come from the business model of the company," he said.

In a capital-intensive business like Alliant, which builds expensive power plants and distribution systems, asset utilization is an important component of its business model. (The company invests roughly $500 million a year in capital projects, a substantial portion devoted to IT.) Maximizing the utilization of assets enhances profits and minimizes price to customers.

"The same standard applies to IT," said Harvey, a hard task for a profession that tends to be "more enthralled by the new toy than in utilizing it." The company has consolidated servers and swears by standardization of systems.

A CIO in a company that is a slow follower, Harvey said, will inevitably serve as a "traffic cop," setting IT priorities against the business model of the company. "It takes courage to say no, but it is not as painful if the CIO and the CEO are joined at the hip. I know it causes friction, but that's why they call it work," Harvey said.

"I think Bill was being brutally frank that if the mundane doesn't excite you, that's fine, but that doesn't mean his company doesn't measure its success in a very specific way," said consultant Thomas Koulopoulos, managing director of Delphi Group, a Boston-based consulting firm.

Koulopoulos, who spoke at the conference about innovating in a culture of change, said a CEO from an innovative company would likely have a very different characterization of what IT should be doing for the organization, but the message would be the same.

"In both cases, IT should be supporting the core competency of that organization. That is the point. We're led astray sometimes because we think core competencies should be similar, and they're not. They're very different company to company," Koulopoulos said.

Innovation in the way it's typically thought about -- as new products or new services -- is not a driving factor at Alliant. "What's core to his business is, in fact, the more mundane, more operational aspects of running an organization, and that's a valid core competency," Koulopoulos said.

Let us know what you think about the story; e-mail: Linda Tucci, Senior News Writer

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