Offices of the CIO foster understanding between IT and the business.
For a company of 650 people, Irwin Home Equity is unusual in that 10% of its staff members are in IT. The company’s CIO Bill Packer had to juggle managing 14 direct reports in addition to his other responsibilities of understanding and responding to the business needs and setting an IT agenda. Decision-making was hampered because employees had to go through various layers of hierarchy.
CIO executive organization
So about four years ago, Packer set up an office of the CIO at the says the company, in San Ramon, Calif. Eight representatives from IT and the business units meet every other week for 90 minutes to discuss IT and the business. Packer says the office enables “people to quickly bring things to people’s attention, rather than go through the hierarchy.”
Gartner reports that 5% of the 2,000 CIOs worldwide who belong to its Gartner Executive Programs (EXP) have an office of the CIO, whether as informal teams that meet regularly, or as formal groups that wield budgetary authority.
“CIOs don’t have time anymore,” says Chuck Tucker, vice president and research director at Gartner EXP. “Their world has become more complex – they’re worried about security, regulatory compliance, improving competitiveness. And they have to provide [the business] with thoughtful and coordinated answers. Sometimes they don’t respond or respond off the cuff,” he says.
Tucker says offices of the CIO are useful as sounding boards and provide CIOs with direct business insight, since business unit managers are often participants. For instance, Packer has HR, accounting and regulatory/compliance represented in his CIO group, though he changes the business-unit mix every year to garner fresh ideas. The IT reps stay constant and hold positions in IS, business continuity, security, technology review and infrastructure.
Packer sees the office of the CIO as helpful for better understanding the business and delivering effective IT. “We coach people that we’re a financial firm, not an HR firm, not a marketing firm, not a tech form. We are all business people,” Packer says.
The office of the CIO at Irwin has helped to speed decision-making. “We had an opportunity to decrease the amount of time it takes to contact customers who expressed interest in being contacted. A mid-level marketing person raised this issue at an office of the CIO meeting. I suspect it would’ve taken them longer to get this issue heard if they had to go through the formal hierarchical channels,” Packer says.
At Toyota Motor Sales USA, the office of the CIO is a more formal entity that was established to mend the relationship between Toyota’s IT division with the rest of the business. The relationship had become strained as Toyota’s 380-person IT group, headed by CIO Barbra Cooper, was submerged in six corporatewide projects and was neglecting the other aspects of IT.
“In 2002 we heard some rumblings by other business units that IT was not as engaged in business as it should be, and so the top executives focused on what needed to be done to improve IT,” says Zack Hicks, corporate manager at Toyota’s office of the CIO in Torrance, Calif.
The result was a change in responsibilities for half of the IT workforce and the establishment of divisional information officers (DIOs) and business operations managers (BOMs).
DIOs are IT executives who report to Cooper and are aligned with a business unit. They are responsible for end-to-end delivery of their customer’s automation needs, Hicks says. The BOMs report to the DIO and are responsible for the business aspects of IT support, including business case creation and validation, cost management and IT resource management.
At Toyota, DIOs and BOMs support the business units of automotive systems, customer services (parts/service), and support (corporate services and Toyota affiliates). As part of IT’s reorganization, individuals who would be working closely with the business units received training on such skills as business management and project management.
“While we aligned DIOs to the business, we wanted consistency, so that was the genesis for creating the office of the CIO. We needed to know more about the business and anticipate their needs,” Hicks explains.
The office is composed of about 30 employees whose responsibilities include IT strategy, resource and vendor management, IT procurement, financial management and training. Cooper and Hicks meet daily with different representatives from the office of the CIO. Those meetings are in addition to the weekly discussions Cooper holds with her direct reports in which they discuss governance and management issues.
“Strategy, planning, lessons learned and financial IT performance are formally reviewed quarterly, which is facilitated by the office of the CIO,” Hicks says.
Hicks says the benefit of the office is to provide transparency for IT, so that the business knows what’s going on within all divisions. During one cost-cutting exercise, the office worked with each DIO to set high targets for reducing running costs. Everyone was motivated because everyone could see each division’s progress. In the end, the running costs were reduced by 13%, surpassing the goal of a 10% reduction. “Now everyone has a clearer understanding of the running goal. IT is no longer a black box,” Hicks says.
Although having trusted advisers available to CIOs may have its benefits, Gartner’s Tucker says CIOs should avoid the pitfall of making the office look like an impenetrable and expensive overhead. “It shouldn’t be a CIO imperial palace that becomes insular with an all-knowing, all-powerful group that distances itself from the people in the trenches,” he says.
