To think like a CEO, CIOs should focus on ways to expand their company's revenue base and always keep an eye on the future, says Dave Castellani, CEO of New York Life Retirement Plan Services. In part two of this video interview, Castellani also talks about how technology is tied to business value and how technology smarts are now a core requirement for senior business roles. Watch part one of this video to learn about New York Life RPL's social media strategy.
Do you have any advice for CIOs on how they can better align their IT strategy and technology with a company's overall business goals?
Dave Castellani: I think that actually starts with the CEO of the business, whose job is to prevent IT from getting buried in the organization as a discreet function and make it part of the business unit. It starts with your overall organizational principles and strategy.
It also means that you have to have an organization that is willing to embrace that concept, starting with the CIO. The CIO has to do a better job, in general, of communicating broadly to his constituency or her constituency, what it all means. Sometimes, IT is caught up in jargon, or finds it desirable to be left in blissful isolation, when, really, you need to be embedded into the organization.
At least that's what we're doing; whether we hold true to this kind of form going forward or not remains to be determined, but we're looking at it and saying, 'There is a utility function to IT which needs to be split out from the business innovation side.' Things like email, security, data management, data warehousing -- all of that is largely a utility-based service. You may actually be using vendors that you're managing to provide that service. On the innovation front, those individuals have to be embedded into the organization, and they have to be talking the same language. My advice to CIOs who want to become CEOs is to begin to think like a CEO.
How can a CIO start to think like a CEO?
In a world where margins are collapsing around you, you have to look at alternative revenue sources.
CEO, New York Life Retirement Plan Services
Castellani: I think there are three points here: One would be optimization of your model. You have such competition for capital internally, and there's never enough; it's a finite source. How do you maximize the use of that capital to the greatest effect for your business? That's a constant decision-making process you have to go through. In an environment where there is scarcity, how do you allocate with effect? That would be point number one.
Point number two is you have to have a vision for the future. Where is the business going to be three years from now or five years from now, knowing full well that the rate of change we are going through is tremendous? I think back to how businesses operated five years ago and say, 'Boy, the change has been colossal.' We think about New York Life Retirement Plan Services 2017.
Let me give you a small but important example of that. About 90% of our participant transactions used to come through a call center five years ago. About 16% come through the call center today because of the self-service model. That means we need a different skilled individual in the call center, a higher skilled individual, because the questions that are coming through now are more complex, not less. That's a really important aspect of it.
The other aspect of it is to say, 'Where can I expand my revenue base?' In a world where margins are collapsing around you, you have to look at alternative revenue sources, and where you are going to open up into new markets, new lines of service and new businesses. The vision of where you are going to compete next is important. Of course, technology plays a huge role there.
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How is the role of IT changing at your company and in general?
Castellani: First, I think most senior leaders will have to have a deeper understanding of technology today. It would be my wish that they'd have a very deep understanding of technology, because it touches everything we do. It certainly commands the budget line in a really, really big way, but also an important way. Our chief marketing officer is very, very deep into technology; her name is Rachel Rice. I think she's really gifted and could easily go work in the tech group tomorrow and swap out back and forth here. Marketing is no longer your dad's Oldsmobile. It's not print material as it used to be, and it's not just PR as we know it. It's everything to do with e-delivery and of course social media. She has to really understand technology in a really important fashion.
The CFO needs to understand the spend line, a lot of which pertains to technology. If they can't discern between one project and another, without real good intelligence and hold people accountable, then the CFO can't do their job effectively. Think about HR, in both recruiting and retaining personnel, training and development, and hanging onto your talent; in generation Y, you have a lot more of a swap out factor, in terms of job searches around. Technology becomes a huge factor for HR. IT permeates all aspects of our organization. I think you're going to get left behind if you choose to avoid an understanding of what IT actually does.