Mad Dog 21/21: CIO, Get Out Of That Glass House
October 5, 2009 Hesh Wiener
Chief information officers whose companies’ profits grew rapidly during the boom years of this decade seem to be outward-looking, ambitious, and interested in extending their influence far beyond the walls of their glass house computing facilities. That’s what IBM says, based on interviews it conducted with more than 2,500 CIOs, distilled into a study anyone can register to receive. The CIOs that IBM characterizes as leaders and IBM itself seem to be in harmony, which might not be such a bad thing if their companies can adjust to current business conditions as well as IBM has.
More than three-quarters of the CIOs that IBM interviewed were based outside the United States and about a third of the interviewees work in developing countries. If this group of executives defines IBM’s vision of its future, Big Blue may expect that the CIOs at its customers end up in the same locales where, increasingly, outsourced computing is performed. But there are other possible explanations for the differences between the geographical distribution of CIOs it studied and that of the company’s revenue. Whatever the reason, IBM’s research team managed to meet with computing executives from 78 countries.
After reviewing its in-depth interviews of the CIOs, IBM boiled down its findings by dividing the interviewees into three groups based on the rate at which their companies’ pre-tax profits grew from 2004 to 2007. IBM has not openly quantified the growth rates, but instead slotted each company it reviewed into one of three groups: high growth, medium growth and low growth.
IBM believes that on an issue-by-issue basis, comparisons between the high and low groups reveal behaviors that are worth emphasis and analysis. IBM’s presentation implies that these attitudes are causal factors behind the rates of their companies’ profit growth. And when the answers to particular questions and the findings of IBM’s interviewers are distilled into a six-axis graph IBM’s team dreamed up, the results suggest that there are significant differences among the CIOs of each of the three groups of companies.
IBM’s six-axis grouping is based on three pairs of viewpoints that seem to be contradictory but which IBM apparently believes are opposite sides if the same attitudinal coin. The three pairs in each full glass house are:
The last of these distinctions turns out to be the most dramatic. CIOs that IBM scored high as inspiring IT managers turned out to be very prominent at low profit growth companies. By contrast, CIOs IBM called collaborative business leaders were found at high profit growth companies. In general, IBM found that CIOs who moved out of the glass house and connected with others in their companies were likely to be the ones whose employers reported high profit growth, while the CIOs that were more tightly focused on computing could be found at companies that grew slowly during the boom years of 2004 through 2007.
IBM derived its classifications from questions that went far beyond routine operational concerns. For example, IBM asked the 2,500 CIOs about what they felt were visionary plans that would make their companies more competitive. The CIOs were shown a list of topics and asked if their plans included things that would fit into any of the items on the list. The most popular choice was business intelligence and analytics, chosen by 83 percent of the interviewees. So it seems as if most CIOs were thinking about ways to distill and use the data their systems stored, perhaps to guide corporate marketing or to identify corporate cost centers. But the second most popular item on the list was virtualization, picked by 76 percent of the CIOs. While there is no question that virtualization is a hot topic these days, there is no explanation how a CIO thinking about ways to consolidate servers might be considered a visionary. Virtualization lies at the intersection of geekdom and budgeting; it’s not an issue that corporate management understands, let alone appreciates.
So, while the details IBM provides are interesting even if sometimes a bit curious, the key issues that emerge from Big Blue’s CIO study are the ones that appear after IBM’s research team has distilled the particulars and applied its interpretation. Even with all the pictures and prose IBM provides, it’s quite difficult to see what Big Blue is getting at. IBM is most likely going to repeat its study and the next edition could show how companies performed during the economic contraction. If the CIO characteristics IBM said were related to improved profit growth survive the test of time, Big Blue’s findings are likely to garner considerable recognition. Every company in computing likes to think that its offerings and philosophy will help customers get better results, but it’s very difficult for IT vendors to persuade corporate customers that they can actually deliver the results they say their ideas can achieve. Maybe IBM will achieve some kind of breakthrough.
At the very least, IBM’s findings are good talking points for IT executives.
IBM says CIOs actually spend only 45 percent of their time dealing with technology issues. They put more time into planning computing initiatives that will extend the scope of computing in their companies, studying new services they might buy from outside parties, and pondering general business issues that they feel can be shaped by the technologies they manage. Apparently, as the IBM distillation suggests, the more a CIO is involved in developments outside the glass house, the more likely it is that his company will prosper. IBM says this is more than a notion; it can put hard numbers on this belief. IBM says that 64 percent of the CIOs at high growth companies said they were deeply involved in general business issues, but at companies that grew slowly from 2004 through 2007, only 33 percent of the CIOs said they shared that attitude.
Corporate management reciprocates the attitudes of the CIOs. IBM found that 78 percent of the CIOs at high growth companies were praised by their general managers, but only 53 percent of CIOs at low growth companies enjoyed that sort of appreciation.
The CIOs studied by IBM who found new ways to use the data their systems record and manage seem to have made a greater contribution to corporate success than those who did not. Among companies with fast profit growth, 58 percent of the CIOs say they deliver data in forms that can readily be used by corporate personnel, outsiders, or both; by contrast only 36 percent of the CIOs at slow growth companies say they do this. When asked related questions about the availability and security of data, the majority of all CIOs said their corporate data is both easily available and adequately secure. CIOs at fast growing companies score a bit higher by these measures, but the general indication is that the executives interviewed by IBM believe their information management and control technologies are pretty good.
The study also turned up data that indicates change to standardized technologies is underway and that it is proceeding somewhat faster at companies that report high profit growth. Some 61 percent of the CIOs at high growth companies say they are trying to cut costs by moving toward standardized business processes; at slow growth companies the proportion of CIOs who say they are going in that direction is 50 percent. Either way, the data suggests that proprietary business processes may no longer be particularly affordable. Whether that extends to the platforms supporting the processes is not clear from IBM’s report.
If there is a theme in IBM’s findings, it might be called the Gerstner Overture. The CIOs that IBM says oversee IT at companies with fast profit growth see themselves as active advisors on matters that extend out of glass houses and seem to include just about ever aspect of corporate activity. They spend more than half their time acting not like computer experts as much as McKinsey consultants, advising colleagues and finding ways to make the fruits of information technology relevant to executives and customers. By contrast, the CIOs who are more inwardly directed, who see their main role as that of an IT service provider with their corporations as a sole customer are more likely to be working at companies that report low profit growth.
If there’s a conclusion for CIOs it may not be that they ought to inject themselves into corporate activities outside their IT realms. It may be that the CIOs at slow growth companies would be happy to participate in more aspects of their companies’ activities. It might be that they work for organizations whose general managers are unable to bring out the best in their CIOs or simply disinclined to do so. Where that is the case, there is little a CIO can do to deliver greater value to the corporation.
The current study is IBM’s first attempt at a project of this type. Big Blue put made quite an effort to find out how CIOs feel and connect their attitudes to corporate financial performance. Still, there’s nothing in IBM’s report to address causality. Can corporations become more profitable if they empower their CIOs? Can CIOs boost corporate performance by getting involved in general management? It is, apparently, too early to say, even with all the effort IBM put in on its big CIO study. Nevertheless, by moving the discussion of the CIO’s role and its impact on business forward to the point where questions about causality can at least be asked, IBM has positioned itself as a vendor with an abiding interest in IT strategy.