Executive interview: Jim Noble on the changing role of the CIO

Veteran CIO Jim Noble talks about the changing role of the CIO in enterprise organizations.

Jim Noble
Jim Noble
Jim Noble trained as a military test pilot and spent a couple of years as a professional race car driver. Where does a thrill-seeking risk taker go from there? He takes IT executive jobs at some of the world's largest companies, including General Motors Corp. and Altria Group Inc., parent company to Philip Morris USA Inc. and a major stakeholder in SABMiller PLC. His most recent stint was managing director of global infrastructure solutions at Merrill Lynch & Co.

A Scot whose IT career took root in the United Kingdom, Noble is headed for a new job in the U.K. In 2007 he served as president of the Society for Information Management, one of the industry's largest groups of senior IT executives. We recently peppered him with questions about the changing role of the CIO.

When did you get your first CIO position?
Noble: In the UK, they call them IT Directors. I was IT Director in the General Electric Co. of the U.K. in 1985 and then went on to run the IT practice in Capgemini.

How has the position changed since your first IT executive position?
Noble: Then it was entirely technical. We were trying to use information technology for computer-aided design, manufacturing and robotics. Today the job is no longer as technical, and the CIO usually has a CTO by his or her side. My boss at General Motors had a nice saying: 'We judge people by output, not by input.' I think that is the difference in the job today. The CIO tends to be judged by output, which tends to be business results, and not by input, which tends to be the introduction of new technology or ERP systems.

I gather you think this change from the technically focused to the business-oriented CIO is a change for the better.
Noble: Absolutely, because it gives you a seat at the table. In the past, we were the guys with the long white coats who had an office in the corner of the data center and nobody else was allowed into the data center. We were out of sight and out of mind. Today, if you're not part of the executive leadership team then there is something very seriously amiss.

You mentioned that many CIOs have a CTO. Do you see the CIO job splitting into two, with someone who takes care of the day-to-day, basal technology needs and someone who focuses strictly on strategic IT?
Yes, and not just strategic IT but really it has become business transformation. So the CIO is now often a step up, helping to drive change agenda. You can't focus on keeping the lights on at the same time you are focusing on change. So, yes, CIOs usually have a CTO by their side. There is not a hierarchy implied there. They are both equally important. But the CTO usually focuses on the more conventional information technology, and the CIO usually focuses on what I call BIS, business information strategy.

How many CIOs at big corporations really get to play that "business output" role, do you think?
Noble: I think it depends on the technology intensity of the company. IT doesn't really matter in the low-end sectors like brewing, one of the industries I've been involved in. If you go to the opposite extreme, IT really, really matters in financial services. The CIO can have a place on the executive leadership team if it is an imperative in the business and if indeed you can use technology to drive business results.

The wonderful thing is these CIOs have driven change in their technology departments. I am thinking of ITIL and business process optimization, and their colleagues in the rest of the business say to them, 'Well, you guys have demonstrably made improvements in your own department, would you like to help us make similar business process improvements in our departments?' That is what really opens the door for the role of the CIO to change.

Can you give an example?
You may have noticed Marv Adams of CitiGroup was recently appointed not just as the CIO of Fidelity [Investments], he was appointed as the head of the shared services organization, and he is going to drive change in real estate of all things. Isn't that fantastic, when a CIO is given a number of other corporate staff functions and the instructions from the top is, 'Please make business process optimization just like you've done in IT.' It is a wonderful signal to the rest of us.

How about in your own career?
Noble: The example I would give is outsourcing and offshoring. That started in the IT function, and now outsourcing in IT is absolutely standard practice. Offshoring is now becoming quite a mature practice in IT. What changed was the other departmental heads said, 'Wow, you know, you've really saved all this money by engaging third parties, many of whom are overseas. I wonder if we could do the same?' It's a me-too type of mentality.

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Do you think that outsourcing is going to continue?
Noble: I think smart outsourcing is going to continue and it will separate the winners from the losers. If you are not smart in outsourcing then the odds are quite high that it will turn out to be a disappointment. My sense is that if somebody did an analysis of outsourcing contracts, they would probably find that more than 50% of them have been a disappointment. So you have to be extremely sophisticated.

Would you define 'extremely sophisticated'?
Noble: Knowing how to negotiate a good deal. Knowing how to manage the third-party provider. Knowing how to measure real, meaningful things, rather than be misled, if you like, by conventional measurements. Knowing how to benchmark and continuously improve, because the seeds of disaster are usually sown in the initial contract. A lot of these initial contracts don't have any continuous improvement backed into them, and if you don't get continuous improvement, after two or three years, you'll be renegotiating the whole contract.

When you say companies can't rely on conventional metrics, what do you mean?
Noble: Just like companies rarely accept the standard terms and conditions of third-party service providers, equally companies should rarely accept the progress report metrics that third-party providers trot out because they are usually self-serving.

Is there a technology out there that you think is going to transform the job of the CIO?
Noble: In a word, virtualization. It has happened already with storage. It is happening with servers, and it is about to happen with desktops. And that will transform the commodity part of information technology and make it far easier to keep the lights on.

With the advent of technologies that will change the "keeping the lights on" function of IT, and as many more functions of IT are outsourced or taken over by other companies, does the position of CIO finally become obsolete?
Noble: No. Going back to my previous answer, virtualization leads to outsourcing, of course, because you might run an in-house solution that has virtual storage, virtual servers and virtual desktops, but why not give it to somebody else? That is real virtualization, relying on a third party to keep the lights on. Does that make the CIO less important? Not at all. It makes him or her a key player at the leadership table because that person has figured out how to deal with the commodity stuff in a cost-effective way. When you can do that, you earn the respect of your colleagues and they start to listen to your suggestions.

OK, we've given away all the boring stuff. Now, let's talk about the exciting stuff. I don't think for an instant it diminishes the role of the CIO. It makes him or her more strategic, rather than just being the person in the white lab coat.

Was there a technology in your own career that caused a paradigm shift in the way your job worked?
Noble: I wish it had been RFID, radio frequency identification, but that is my big disappointment in my career. I hyped that thinking that it would be truly transformational, and it hasn't yet caught on. Cost is generally the reason. So, it is not that technology.

Again, I go back to my kick on virtualization. I would say the most transformational IT arising in my career has been the hypervisor. It has changed how to purchase computing power, how we deploy that computing power to our users, how we hand over responsibility for deploying that to third parties. IBM's On-Demand computing is based on this sort of technology.

Several of the analyst houses have revised their forecasts for IT spending growth for 2008, given the troubling trends in the U.S. economy. CIOs are being advised, in some cases, to prepare two budgets, one for the status quo and one in the event of a full-blown recession. What are the challenges ahead for CIOs in 2008?
Noble: If there is a bear market or maybe even heading toward recession, then the CIO has the challenge of selling a concept to the business leaders. And to me that concept I would call the zero sum game: Allow me to work away diligently at reducing the cost of the nondiscretionary stuff, the boring stuff, which is usually 60% of a total IT budget. If I can demonstrably save money in that, allow me to invest that money in innovative discretionary stuff.

In my most recent job, we had an initiative called 70/30. It was to try and shift that ratio completely to 70% discretionary, 30% nondiscretionary. That's the agenda I think CIOs have to have for 2008.

Let us know what you think about the story; email: Linda Tucci, Senior News Writer.

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