Tactical decisions outweighed IT strategic planning for CIOs in 2009

CIOs spent more time on tactical decisions over IT strategic planning in 2009, which ended up being a good strategy to drive business value during the Great Recession.

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Did the Great Recession put a crimp on how much time CIOs devoted to long-range IT strategic planning as opposed to short-range tactical decisions? For half of all IT executive respondents in SearchCIO.com's annual salary and career survey, it sure did.

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Industry analysts who cover CIO careers will no doubt debate whether this shift to tactics signals a professional step back for strategic-minded CIOs. In following up with survey participants, however, one thing was clear: businesses relied heavily on IT to get them through the tough economic year, suggesting that tactical decision making was the new IT strategic thinking, at least in 2009.

A good example is Sharon Gietl, an award-winning CIO at The Doe Run Co., a St. Louis-based mining company.

"The recession caused us to re-budget four times as a corporation and department, cutting resources and projects and realigning priorities to accomplish what was needed to keep the company above water," Gietl wrote in an email. "We went to almost 80% to 90% tactical during the first six months of 2009."

Gietl said that in a "normal" year, she can count on spending 40% to 60% of her time on corporate executive and IT strategic planning at Doe Run, one of the world's largest lead producers. And she has the mission-critical projects to prove it: since her arrival five years ago, she has launched an enterprise-wide project management program that prioritizes Doe Run's entire portfolio of projects.

In 2008 she implemented the ITIL framework for change management and improved user satisfaction with IT by more than 10% in 12 months.

Gietl works from a six-year IT strategic plan that, in turn, is based on corporate strategy. Her IT roadmap of projects is continually recalibrated to align with company goals and designed with one purpose in mind: "to move the business forward." This year, "moving forward" was more like keeping afloat. Most capital expenditure projects were canceled or put on hold. She reduced staff and her expense budget. "We went to almost 80% to 90% tactical during the first six months of 2009."

Ron Washington, CIO at Jackson, Miss.-based Ergon Inc., said he normally spends about 30% of his time on tactics -- but in 2009 the percentage was considerably higher. "But that was accomplished by working longer hours," said Washington, a 25-year veteran at the privately held, $3 billion petroleum products business.

Indeed, a huge priority for Washington this year was protecting the millions of dollars invested in a 2002 SAP implementation and subsequent upgrades, including price margin and management software for three marketing divisions. The move to SAP is part of Washington's long-term strategic plan to put "more of the information directly in the hands of the business," he said. In the absence of a project management office (PMO), something he hopes to set up in 2010, he said he made sure the projects stayed on course.

"This takes a lot of project management. I had to fill that role," he said.

For Joe Marcella, CIO of the city of Las Vegas, cost-cutting tactics became a major part of his IT strategy at the first whiff of the housing bubble. With his tax-supported funding down 25%, largely due to property and sales declines, Marcella said he "began thinking strategically about how we were going to deliver services three years ago."

Having a centralized IT organization that delivers services to city agencies has helped enormously in keeping costs down, Marcella said. Developing a robust -- and award-winning -- Las Vegas website to serve the 24/7 lifestyle of Las Vegas citizens has also helped reduce costs by offering many city services online. And his trump card for staying on top of city strategy? "I am a director on the same level as all of the other city directors, so I have an enterprise perspective on the city."

IT a "primary conduit" for reducing business costs

CIOs and the analysts who cover them love to put the CIO career on the couch, probing for statistics that might reveal whether IT's top executive is gaining or losing clout at the C-suite table. A widely used barometer of CIO success, for example, is whether he reports to the CEO. So is the amount of time allocated to IT strategic planning, as opposed to day-to-day-operations: On this metric, the traditional mark of success is more time on strategy.

In this year's SearchCIO.com IT salary and careers survey, 50% of senior IT executive respondents said they normally spend 30% or less of their time on strategy; 41% spend between 40% and 80% on strategy, with the bulk of those respondents around the 50% mark. When budgets were cut due to the recession, however, 50% of all 952 respondents, a cohort that included midlevel execs and IT managers, as well as senior executives, took on more operational duties; 30% took on more strategic work and 20% did some of each (20% did neither).

So does a shift to tactics represent a career step back for CIOs and IT directors? Probably not, according to the CIOs and industry analysts we reached.

Extraordinary circumstances, namely the worst economic crisis since the Great Depression of the 1930s, call for extraordinary actions. At companies where the business and IT alike were required to find cost savings, the value placed on being strategic as opposed to tactical loses meaning. If a company like Doe Run needs to re-budget four times in one year to "stay above water," as Gietl said, finding operational efficiency and cost savings is a strategic endeavor.

"The leading issue is really how these companies define value," said Bruce Barnes, president of Bold Vision LLC, an IT and business consulting firm in Dublin, Ohio. Certainly the role of any senior leader, especially the CIO, is to help drive and deliver business value to the enterprise, Barnes said. "But if a respective company's overall definition of that 'value' is more akin to cheaper operations and tactical savings, it is not surprising that the CIO becomes more tactical and narrow in response."

CIOs like Gietl and Washington were not alone, said Jack Santos, a former bank CIO and analyst at Midvale, Utah-based Burton Group Inc. He works closely with CIOs in financial services and insurance, where the pressure to cut costs was relentless. "One CIO told me that budgeting has gone from an annual process to real-time budgeting. These people are in a lot of meetings trying to figure out what they can do to cut back and who they can let go. That takes time."

The recession caused us to
re-budget four times. …We went to almost 80% to 90% tactical during the first six months of 2009.

Sharon Gietl
CIOThe Doe Run Co.
But, like Ergon's Washington, he said he believes the CIO's intense focus on budget and tactics in 2009 falls into the "above and beyond the call of duty category," rather than signaling a step backward for strategic-minded CIOs. In addition, that focus on cost-cutting was true across the enterprise, not just in IT.

"This was not an IT massacre. We were, if anything, laggards when it came to having to cut," Santos said.

IT's role in the recession has been fundamentally different from previous downturns, when IT budgets were prime targets for cuts, agreed Jerry Luftman, distinguished professor and director of information systems program at the Howe School of Technology Management at Stevens Institute of Technology in Hoboken, N.J.

An annual survey Luftman conducts for the Society for Information Management, an association for IT executives, also showed a slippage (to 15% from 17%) in the amount of time CIOs spent on IT strategic planning in 2009, he said. Unlike in previous downturns, however, the top CIO priorities in 2009 were topics related to "working with the business to cut costs," he said, rather than cutting IT budgets, down to No. 5 on the list.

"IT executives are spending much more of their time on operational and tactical things, and that makes sense, because in this climate IT is trying to demonstrate immediate value in their initiatives," Luftman said.

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

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