Several years ago, a research study jointly conducted by IBM, the Harvard Business School and MIT showed that the role of the CIO was steadily devolving from one of shaping strategic business and technology strategies to one that was much more tactical and focused on operations.
This development didn't sit well with Harvey Koeppel (left), who from 2004 to 2007 was CIO and vice president of CitiGroup Inc.'s Global Consumer Group. This devolution of the role of the CIO was partly responsible for way too much business value being left on the table, he believed.
"For instance, CIOs just weren't looking at the more strategic and innovative enterprise applications. But it wasn't just about business and IT alignment; it was also about the acceptance and positioning of IT," Koeppel said.
It was this desire to rejuvenate the role of the CIO that led Koeppel to launch the Center for CIO Leadership, a worldwide organization with more than 2,700 members. He describes the group as a "global community to help advance the profession."
SearchCIO.com caught up with Koeppel, the center's executive director, to talk about the changing role of CIOs; the ways technology, including cloud computing, is driving that change; and the importance of business and technology innovation in helping create new revenue opportunities.
SearchCIO.com: How do you see the CIO's role changing, and what role is technology playing there?
Koeppel: The role of the CIO is changing, and frankly, I see this tug of war going on. That tug of war is being precipitated by technology on the one hand and business models on the other. Certainly, things like cloud computing, offshoring, outsourcing and shared utility models are causing tremendous downward pressure on the cost of IT products and services. In a limited way, [Nicholas] Carr in his story several years ago called "Why IT doesn't matter anymore" was right.
There is some validity to [Carr's] statement, because so much technology has become commoditized, at least from a CIO's perspective. Personally, I don't much care whether I buy a green server, pink server or purple server; I have hired people to care about all that stuff. I am much more focused on what my business is about; what the competition is doing; [and] how I can leverage technology to enable my business to be more competitive, to come up with more innovative products and services, to increase user satisfaction, and develop better business models.
What percentage of CIOs do you think are focused on technology innovations that can drive the business?
Koeppel: If by innovators, you mean people who are finding the better widget, then our data says about 65% are heavily involved in business model innovation. But frankly, the good news here is [that] a lot of the impetus for what we are calling business model innovation is coming from the CEOs [who are backing up CIOs in this area].
Is cloud computing specifically changing the role of CIOs today?
Koeppel: I believe so. The biggest changes I am seeing are time to market, and reduced costs models. But provisioning and capacity are also important because you no longer have to own the server farm. I liken where we are with cloud computing to where we were with Internet and intranet technologies 10 years ago. People were trying to figure out [whether the Internet] is just another distribution channel or a whole new business model. I see the same thing happening now with private clouds and public clouds.
That said, I haven't heard anyone talk about some huge opportunity they are missing, either. Everyone talks about agility, flexibility and scalability like religion. Some people have figured out how to scale up, but way too few have figured out how to scale down. If you think about agility, it has to go both ways.
Are social media and embedded technologies pushing the power in organizations down to those people who directly deal with customers?
Koeppel: Yes. Not only are technologies like this getting pushed closer to the customer, in many cases [they are] being pushed to the customer.
The role of the CIO is changing, and frankly, I see this tug of war going on that's being precipitated by technology on the one hand and business models on the other.
Harvey Koeppel, executive director, Center for CIO Leadership
What can CIOs do to get back some of that power?
Koeppel: You can either be threatened by it or you can embrace it. One example is a platform called InnoCentive, which has roots in work Eli Lilly did 10 or 12 years ago. They had a 20-year R&D backlog and about 125 research scientists working on that backlog. In Big Pharma, every problem you solve adds billions to the bottom line. They were trying to figure out how to leverage the input of 200,000 people working for the company to help shorten this backlog.
So, they created a Web-based "challenger-champion" model where scientists could pose a problem to the in-house population, and offered a $10,000 bonus for figuring out solutions to these problems. It was so successful in harnessing the problem-solving power of the company, they sold it to a venture capital company called Spencer Trask.
Should CIOs be aggressive in pushing internal app development to gain competitive business advantages?
Koeppel: CIOs aren't much involved with [internal application development]. Some of it is because they are buried in moving from crisis to crisis. Some of it is not speaking the right language, which is a big issue we deal with at the center in terms of communicating the business value of IT. They still walk into the CEO's or CFO's office talking about SLAs and CRMs and ERMs. After 15 seconds, C-suite executives are rolling their eyeballs and tuning it out. What they want to hear [from CIOs] is how to increase customer satisfaction or how to generate more revenue through new customer acquisition. Most CIOs simply don't know how to have that conversation.
So, what was your first move in helping rejuvenate the role of CIOs?
Koeppel: The first thing we did [at the Center for CIO Leadership] was establish a competency model for this new business-savvy CIO. We saw the need to evolve the role of CIOs from that of manager of the IT cost center to one where he or she is an enterprise leader who understands how to leverage IT to drive business value. The reality is, you are never going to get CEOs, CFOs and CMOs to learn more technology. It really needs to be the other way around. The IT people need to understand that the reason they exist is to support and drive the business.
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