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A CTO's lessons for technology integration and business strategy

Is technology integration with business strategy one of your 2011 goals? Learn from a veteran CTO how to mitigate the risks.

Steven Sheinheit is at the center of technology at QBE the Americas -- talk about a pressure cooker. The fast-growing New York-based property and casualty insurance provider is the largest division of QBE Insurance Group Ltd., a Sydney, Australia-based provider best known for performance. Last year, it ranked No. 1 among insurers in the world on return on equity -- 22% ROE is minimum table stakes across the company.

Niel Nickolaisen
Steven Sheinheit

About a year ago, QBE the Americas upped those stakes by embarking on a five-year plan for integrating technology with QBE's business strategy. Not IT and business alignment, mind you, because that would suggest that IT operates apart from the business objectives, said Sheinheit, chief strategy and technology officer at QBE. The top-to-bottom integration is aimed at breaking down silos among the company's many recent acquisitions, with the goal of making QBE tops in another important metric -- customer service.

"This might be the best job I have ever had," Sheinheit told an audience of business and IT executives at the recent Fusion CEO-CIO Symposium in Madison, Wis. His previous posts included serving as CIO at both MetLife Inc. and JPMorgan Chase & Co.

Why is this man so happy? A veteran technologist who started his career in the mainframe era, Sheinheit said that the difference between this project and countless others in his long career is his company's commitment to integrating technology with the business. "We had a vision here that combined strategy and technology from the get-go," he said. Even with a dedicated business partner, technology integration that is rapidly evolving with ever-shifting business strategies can get hairy. Here are Sheinheit's guideposts for mitigating the risks.

Beware the power of inertia: In an IT and business transformation that lives up to its name, industry knowledge generates a strategy that in turn dictates the new structure for the business. "The problem in many companies is that they use the existing structure to build a strategy, without knowledge," Sheinheit said. "That is inertia."

To forge its strategy for integrating technology with business strategy, QBE brought together 18 senior people. "For six months, they were heads down working on a strategy for the company," he said. The plan involved a lot of business process re-engineering. The initial reaction from the business units was, "That is not going to work and get lost," Sheinheit said. His response: "If technology is not upsetting the current structure, we are using it incorrectly, because technology today by definition can do much more than it could in the past."

Beware the power of the installed base: Integrating technology with the business always takes longer than anticipated, because the installed base has to operate every day. "We're changing the tires on the car while it is running, which is why it is so important that it gets done right and why it takes so long," Sheinheit said. A former boss once told Sheinheit that when the technology guys described a project, he multiplied the time and cost by two and halved the functionality. "Maybe we can do better today but not too much better, because the installed base only grows," Sheinheit warned.

Beware the telephone game: Communication is paramount in major transformations. The learning curve is perpetual as new people join or employees move to new positions. "If you don't spend every day reinforcing goals, repeating the message over and over, you are not going to penetrate the organization to make things happen," Sheinheit said. Recently, he was presenting to an executive management board meeting when a colleague interrupted, asking why the company was doing the project.

Sheinheit wondered aloud why he was being asked that question now, given it was the fourth time his colleague had heard about it, and quipped that from now on he would follow the rule of seven: namely, ideas need to be explained seven times before they are understood.

"It's not seven, it's 13, Steve," his inquisitor said. Also, don't even think about emailing a slide presentation to communicate. Words get lost in the translation. In a project integrating technology with business strategy, the job of the CTO or CIO in is to inspire people and empower them to take the next step, he said.

Beware the competitive landscape: Sheinheit aims to make IT a competitive differentiator at companies he's worked for. It hasn't always been possible, and it certainly is hard to do if you’re spending 70% to 80% of your time on maintenance and keeping the lights on, he said. The ingredients for making it happen, however, hold true for most businesses: cost efficiency, ease of use, analytics, product innovation and customer information. Achieving IT and business cost efficiency, improving speed to market and using analytics to understand which customers should be valued require him to be "a leader first, and CIO second."

Beware the decoupling of business and IT: How's the marriage going? Most IT and business relationships, in Sheinheit's experience, are more aptly described as coordinations -- touching base by phone once in a while to see if the groups are on the same page -- or what he calls linkages, CIOs and business leaders who have their separate plays and hope they link up at some point. Business must "own the IT decisions," he said. At a recent all-hands meeting, the head of one of QBE"s business units presented an important re-engineering process, and "you couldn't tell if he was from the business or IT," Sheinheit said. "That told me we were in the right place."

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

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