CIOs Bring Added Value to Business

The chief information officer’s image as a narrowly focused, operations-driven technocrat is giving way to a new model: that of the business-savvy executive who brings added value to the corporate bottom line.

CIOs Bob Schwartz of Panasonic and Michael Hugos of Network Services Co., both say today’s top IT professionals must not only deliver consistency of service but also must understand how to transform and enhance the industries they serve.

"From an industry perspective, I think most CEOs and boards are really trying to determine and understand what value is driven by IT today, which is a bit different, I think, than a historical model where it was much more about providing support services and execution services," says Schwartz. "[In] today’s world, it’s much less about the technology per se, but much more about how to provide services or solutions that grow a business."

Responding to changes
Bridging the gap between the old IT model and the new one remains a challenge for many companies. Yet the conflict was evident as early as the 1980s, says Hugos, who, early in his career, served in the Corporate IT department at First National Bank of Chicago.

As the bank’s directors and operations executives grew increasingly eager to install personal computers, attracted by the prospect of business information they could use and manipulate, the IT department clung tightly to existing areas of expertise.

"I saw that corporate IT, for the most part, was in denial about the PC and said it wasn’t a real computer and 'We don’t do things like that,'" Hugos recalls. Recognizing a business opportunity, Hugos went out on his own to design and install PC-based systems for companies hamstrung by their internal IT departments.

"I grew it up to five people plus myself," he says. "We had some good years; we had some bad years. I learned a lot." His follow-up business initiative also dealt with the divide between IT and a company’s core business mission.

"I was recruited by a global electronics distribution firm to start up a group of business analysts and systems designers that would bridge the gap between [senior management and] their internal IT staff, which had become very insular and estranged from the rest of the business," Hugos says. "[That was] in the early 1990s...a time of advancing technology and making IT come out of the back office once and for all, bringing the awareness to senior management that IT drives business."

Keeping the lights on
Hugos and Schwartz agree that today’s CIOs are expected to possess not only technical knowledge but also the business acumen to understand how IT applications can improve the processes and overall mission of the company. Yet while the CIO has gained new responsibilities in building and improving the business model, the position has not been stripped of its original role of providing IT services that run smoothly on a daily basis.

"You come in in the morning, you turn on your computer – just like you do the lights – and there is an absolute expectation, not even a thought that that’s not going to be there," Schwartz says. "If you can’t deliver those services, then that erodes your credibility in terms of trying to talk to the business and talk about the future."

The ability to communicate throughout the organization is also vital.

Creating a pro-IT climate
Schwartz, who sits on the executive committee of Panasonic, says he is ultimately responsible for creating a corporate environment that embraces information technology as an integral part of the business operation.

"If you’re trying to get your organization to focus on value contribution, it’s not just about supporting code or driving operations," he says. "It’s having your employees understand the value proposition you’re trying to create. The CIO role is really the leader that has the responsibility to drive that type of cultural shift or transformation."

Bringing that understanding to customers is another important task for CIOs, as Hugos has demonstrated at Network Services Co., where he puts information directly into customers’ hands by providing supply chain visibility for companies across the country.

"All of our customers can go to our Web site, type in their password and get daily updated online reports that show their usage of our products by all their locations, by individual items, by suppliers for a time period from one day to two years," he says. "They love that."

Transforming information into a value-added product begins by asking the right questions and then using the answers to gain a competitive advantage, Schwartz says.

Among the most compelling questions is this: How can the company use information to either reduce costs and beat the competition or increase revenue by offering enhanced value to the customer?

Resources to help
The business information systems and expertise available through SAS are proven resources in this area, Schwartz says.

"There’s no question SAS is positioned from a technology perspective," he adds. "One of the opportunities SAS offers is the intellectual property that the company possesses in terms of the skill sets, the analytical minds that have been grown through SAS."

Giving IT the task of gathering and sorting data can free up others in an organization to analyze trends and propose business solutions. For example, business intelligence software available from SAS, such as SAS Enterprise BI Server, will integrate information from across the organization, providing a shortcut for managers as they seek to make decisions and discover business solutions.

"A lot of businesses really destroy individual initiative by loading people down with boring work," Hugos says. "If the work is boring, it’s also easy to automate because it’s simple and repetitious." He goes on to say that people should focus their energy on doing the value adding activities that their company is known for in the marketplace. If a company cannot automate non-value adding work then outsourcing is another option.

"I think that a lot of companies have, and more companies will, continue to try to figure out whether or not it makes sense to maintain these things in-house versus outsourcing to someone who can do it at the same level, if not better, and do it for less," Schwartz says.

Expanding role for CIOs
As the CIO’s role is interpreted more broadly in the corporate management field, top job candidates are increasingly listing business education and experience alongside or even in place of engineering credentials on their resumes.

"If you look at CIOs in general, you see many more CIOs that lack true information technology background, that came out of the line of business or a business function with the intent to try and bring that knowledge to the IT organization," he says.

"It’s an evolving trend, but certainly, I think, it’s going to continue into the future." Schwartz says he fully expects CIOs to become more active at the executive level, especially those who are able to take a business perspective rather than the IT leaders’ traditional operational focus.

"But again, it’s going to be dependent on the individual’s capabilities and their vision," Schwartz says.

Michael Hugos
CIO, Network Services Co.