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FutureemployeesGenerationsto come willlearn quicklyPage 2

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FT SPECIAL REPORT

The Connected BusinessWednesday November 7 2012 www.ft.com/reports | twitter.com/ftreports

Information technology now playsa critical role in most industries.And just as IT systems have cometo pervade almost every aspect ofbusiness, so the relationship

between the chief information officerand other senior – or C-suite – execu-tives has also shifted.

These changes are being acceleratedby trends such as cloud computing –the hosting of IT services on remoteservers – and the influence on corpo-rate life of devices aimed at consum-ers, a process known as consumerisa-tion. Such innovations raise questionsabout how much IT knowledge chiefexecutives and boards are expected tohave and about the future of the chiefinformation officer role itself.

As Cathy Bessant, chief informationofficer at Bank of America, says:“Technology began as a back officefunction, but in many ways it hasbecome the actual products andservices that financial institutionsprovide to our clients.

“That means the chief informationofficer has to know the businessinside out, and company managementhas to be engaged to a certain degreein IT strategy.

“It takes a balance. Technologiststoday must have technological capa-

bilities, but they must be able toadapt those capabilities to the needsof the business in order to deliver inthe marketplace.”

Such use of IT goes beyond finan-cial services. Peter Sondergaard, headof research at Gartner, the consul-tancy, says that as traditional busi-nesses are transformed into digitalbusinesses, chief executives will needto partner with what a new breed ofexecutive. “By 2015, 20 per cent oforganisations will have a digital busi-ness officer,” he says, adding thatchief information officers who makethe transition will play a strategicrole in driving growth and innovation.

Ron Tolido, chief technology officerfor application services at ITand research company CapgeminiContinental Europe, agrees: “No sig-nificant business change is nowadaysthinkable without IT.”

But he also notes: “Our definition ofIT knowledge is shifting as well, and[C-suite executives] should particu-larly understand how to apply IT forbusiness change and to create value,rather than just understanding thetechnology aspects of it. This is one ofthe great qualities that consumerisa-tion and the cloud are bringing.”

But he and other consultants admit

that many companies and theirboards are still trying to understandthe relationships between IT and theircore business operations – andbetween the chief executive, the chiefinformation officer and the rest of theC-suite team.

“It is an ongoing concern for chiefinformation officers that, despite theirgrowing prominence in the board-room, few are viewed as chief execu-

tive officer successors, and it is fair toconclude that many current chiefinformation officers have beenrecruited and assigned to . . . focusmainly on cost reduction and riskmanagement,” says Mr Tolido. “It isnot always realistic to assume such ajob profile would also include strategyqualities and business leadership.”

There is evidence the chief informa-tion officer role is becoming less tech-nical. According to Gartner, about 25per cent of chief information officersnow come from a non-technical back-ground, and that number is growing.

Conversely, only about 4 per cent ofchief executives were formerlychief information officers, accordingto a survey last year by VansonBourne, the research company,but this also is slowly changing.

Traditionally, candidates for the chiefexecutive role have spent time in mar-keting, sales or finance and perhapshad a stint overseas. But a growingnumber of large US companies arerecruiting IT professionals and SiliconValley entrepreneurs to run non-ITfunctions, potentially putting them inline for the top job.

But how much do chief executivesneed to know about technology? “Theamount of technology available in themarketplace today is virtuallyinfinite, but the chief executive’s listof priorities for improving share-holder value is finite,” says TomDeGarmo, global and US technologyconsulting leader at PwC.

“Chief executives shouldn’t bothertrying to decode all the technology

Continued on Page 3

Relationshipsin the C-suiteset to changeTechnological developments are reshaping theway that boardroomswork, saysPaul Taylor

Øivind Hovland

‘No significant businesschange is nowadaysthinkable without IT’

Ron Tolido, Capgemini

Staff members at Lowe’s,the US DIY chain, giveplenty of home-improve-ment tips to shoppers, butthey are rarely called uponfor advice on wildlife.

However, when acustomer presented workerswith a photograph of twosnakes hanging out of adomestic vent and askedthem what to do, modernmedia provided the answer.

Using the company’sinternal social network, theemployee found a colleaguewho could identify thesnakes as harmless, explainthat there was probably abird’s nest in the vent andthat the snakes were seek-ing food, and told the cus-tomer how to remove themsafely.

“That all happened with aretail store employee lever-aging the social network inthe Lowe’s organisation tohelp someone who cameinto the store,” says JeffSchick, vice-president ofsocial software at IBM,whose clients includeLowe’s.

Instant access to anorganisation’s expertise isamong the many benefits ofusing corporate social tech-nology. However, when itcomes to using social mediaas a strategic tool that canenhance every aspect ofbusiness operations, compa-nies must grapple not onlywith the technology, butalso how to manage it.

Some are still struggling,according to the 2012 HypeCycle for Social Softwarereport from Gartner, theresearch firm. “While theadvancement in the busi-ness use of social technolo-gies reflects a significantstep forward, there is still agreat deal of confusion,hype and risk aversion,which holds many businessexecutives and IT leadersback from pursuing socialinitiatives,” says the report.

Even so, adoption rates

are rising. In 2011, accord-ing to a McKinsey survey,corporate social networkingincreased its lead over tech-nologies such as blogs andvideo sharing, with 72 percent of respondents sayingtheir companies used atleast one social technology.

According to Gartner, the“consumerisation” of tech-nology (the influence ofconsumer-originated tech-nologies on businesses) is“in full force” when itcomes to social media.

“We’re seeing everythingfrom enterprise [corporate-specific] social networkingto wikis, blogs and micro-blogs,” says Michael Chui,an expert on social media incompanies at McKinsey, theresearch company.

Much of the value ofsocial technology lies in itsability to make collabora-tion and communicationeasier, speeding up every-thing from the exchange ofinformation on roguesnakes to product and serv-ice development.

When employees acrossan enterprise are connected,improvements in opera-tional efficiencies can alsobe accelerated, whetherthat is fine tuning a processsuch as account openings in

a bank or transferringinsurance claim processingfrom call-centre support toan online service.

“This is all about chang-ing the process,” says MrSchick. “You’re providingthe ability for people towork with experts and havethe right sort of informa-tion they need to makedecisions.”

Social tools can also beapplied to talent manage-ment. Rather than simply

posting job ads, companiescan now tap into sites suchas LinkedIn to search forcandidates, saving time andmoney.

“Social is a fantasticopportunity for recruitmentand understanding wheretalent is,” says Peter Sieyes,vice-president of consumermarketing for Infosys, theIndian IT consultancy.“Before, you had to go out

and find an individual, butnow you can understandthat individual via theirnetwork. So the recruit-ment process has becomemuch richer.”

As former head of digitalmarketing for Diageo, MrSieyes also sees opportuni-ties for companies to usesocial networking to makebetter connections withconsumers. “The old modelof marketing was the fun-nel,” he says. “Reach asmany prospects as possibleand hope to convert theminto a loyal consumer.”

Social media greatlyexpands this effect by con-verting active, influentialsocial media users intoloyal consumers and gettingthem to spread the word viatheir networks. “In the newworld, the opportunity thatsocial provides is to bemore efficient in the spend-ing of marketing dollars,”says Mr Sieyes.

But corporate socialmedia tools need to be care-fully managed. For a start,social interactions acrossan enterprise generate vastamounts of data. If properlyanalysed, companies canuse this to capture valuableinformation, for example, orto identify sales representa-tives meeting or exceedingrevenue targets.

“You can measure demon-strable return on invest-ment from social capabili-ties but analytics and theability to derive metrics areimportant factors behindthat,” says Mr Schick.

Most importantly, how-ever, reaping rewards fromsocial enterprise softwarerequires more than anunderstanding of the tech-nology. Human and organi-sational factors are equallyvital.

Mr Sieyes advocates ahub-and-spoke approach,with a group of social-savvysenior executives at itsheart who have decision-making power, with thespokes being the differentfunctions that connect tothe rest of the business.

“That’s critical because,however you come at this,it has cross-functionalimplications,” Mr Sieyessays. “From day one, socialneeds to be thought of as anenterprise-wide strategy.”

Internal networks let employeesmake better use of their skillsCommunications

Social media canbenefit all aspects ofbusiness, writesSarah Murray

‘You can measuredemonstrablereturn oninvestment fromsocial capabilities’

Wide network: social media is a useful in-store tool Getty

Rise of the techieFrom computergeek to executivepodcast.ft.com

On FT.com »

2 ★ FINANCIAL TIMES WEDNESDAY NOVEMBER 7 2012

The Connected Business

The next generation of busi-ness leaders are oftendubbed “digital natives”.With technology becomingan integral part of their per-sonal lives and education,they are adept and confi-dent users. But the imple-mentation of technology inthe workplace is different.

One way companies canensure the next generationis aware of this distinctionis by setting an example.

Victoria Ransom, founderof Wildfire, a social mediamarketing company ownedby Google, says: “If today’sleaders are early adoptersof technology and publiclyembrace newer customerrelationship tools such associal media, would-be exec-utives will follow suit.

“I’d also recommendcompany sponsored tabletsand smartphones, onlineworkplace collaborationtools such as Google Apps,access to a company’s socialmedia accounts, and send-ing young business leadersto digital marketing work-shops. All these things willhelp build technology andinnovation into [a] com-pany’s DNA.”

Alternatively, companiescould give these so-calleddigital natives the authorityto lead the way.

Allen Kupetz, executivein residence at RollinsCollege Crummer GraduateSchool of Business in theUS, says: “The leaders ofthis generation [need] tounderstand that the ruleshave changed and let thenext generation launch newsocial media marketingcampaigns to have conver-sations with customers andprospective customers.

“The mobility that smart-phones enable, coupledwith collaborative socialmedia that empowers con-sumers like never before, issomething a lot of seniormanagement doesn’t seemable to understand or will-ing to accept.”

Some consumer electron-ics groups, for example, aresuffering not because thenext generation does notknow how to run the busi-ness, but because thecurrent generation ofmanagers in those compa-nies failed to adapt to thenext generation of consum-ers, adds Mr Kupetz, whoalso teaches technologymanagement courses.

Victor Seidel, a memberof faculty at the Universityof Oxford’s Saïd BusinessSchool, agrees there will bea lot of beneficial bottom-upinitiatives. “It is incumbenton managers to discoverthese new ways and spreadthem across their organisa-tion,” he says.

In-house social mediacould be used to this effect.France Telecom-Orange, forexample, started using onecalled Plazza last year thathas provided much morefreedom and flexibility, saysCharles-Henri Besseyre desHorts, associate professor ofmanagement and humanresources at HEC Paris, thebusiness school.

Some 35,000 employees ofthe mobile and broadbandinternet provider have nowvoluntarily connected andmore than 1,500 communi-ties created, he adds.

Professor Besseyre desHorts values this type ofprivate network over publicones such as Facebookbecause it gives the organi-sation more control – theycan design it how they seefit.

However, he advisesagainst actually forbiddingemployees from connectingto the public ones. Anyonecan connect via their 3Gphone regardless so there isno point, he says. It isbetter to educate employeeson standard practices.

There may also be a needfor companies to tailor theirrecruitment process. NickBarniville, director of MBAprogrammes at EuropeanSchool of Management andTechnology in Berlin,believes companies shouldhire people who have hadexposure to the manage-ment of innovation in anapplied setting.

His MBA students, forexample, gain exposure toemerging technologiesthrough consulting projectsat companies such asSumUp, a mobile paymentsprovider. Three of the stu-dents – from France, Israeland Georgia – have sincebeen headhunted to workfor the company.

According to MrBarniville, the fundamentalcriteria a company shouldlook to cover are an under-standing of the principles ofmanaging a technologyportfolio and the technol-ogy life-cycle; a knowledge

of how to explore and iden-tify new applications in themarket for an existing tech-nology; and the ability towork with research anddevelopment teams toensure input from themarket is included in thedevelopment of relevant orapplicable new products.

Mr Barniville says it isimportant future managersare trained to consideralternatives to extendingthe company’s technologyportfolio and understandthe most likely organisa-tional structures that areoptimal for innovation.

And financial managers,in particular, should havean understanding of the ter-minology and know whatquestions to ask the expertswhen assessing their invest-ment priorities, he adds.

But the learning curve forthe next generation isunlikely to be a steep one.

Ms Ransom says: “Tomor-row’s generation of busi-ness executives is alreadyprimed to adopt digital andsocial technology in theworkplace.

“These are active socialnetwork users, with smart-phones, tablets and laptopsan arm’s length away. It’snot a leap for them tounderstand how hardwareand software can improvebusiness processes andcustomer relationships.”

Generationsto come willlearn quicklyFuture employees

The young will adaptto technology faster,so it will be naturalto use it in business,says Charlotte Clarke

‘Tomorrow’sbusinessexecutives areprimed to adoptdigital technology’

A typical IT department islike an old house that hasbeen mended and extendedso that the original designand infrastructure havealmost disappeared, saysPeter Chadha, chief execu-tive of DrPete, an IT strat-egy consultancy.

Nobody remembers thelocation of gas pipes andelectricity cables or how theplumbing works, makingthe building difficult toadapt to a new purpose.

“The ‘house’ is so difficultto update and ill-suited tomodern living, it is noweasier to put a Portakabinin the garden than continueusing it,” says Mr Chadha.

Similarly, meeting a busi-ness’s technology needs canoften now be better accom-plished using additional

products and services –such as smartphones, tabletcomputers, software as aservice (SaaS) and outsourc-ing – rather than upgradinglegacy IT systems.

For example, Mr Chadhahelped to implement aniPad-based electronic recep-tion logbook for The OfficeGroup, the meetings andevents organiser, usingGoogle Apps with GoogleScripting. “It gave receptiona modern feel and meantanyone in the buildingcould instantly know whowas in,” he says.

Business executives haveseen how quickly apps canbe implemented on theirpersonal mobile devices,and they expect IT depart-ments to be equally respon-sive to their business needs.

But most applicationsneed to be integrated withexisting systems – a diffi-cult, expensive, time-con-suming process, as ITdepartments point out.

Executives often think ofthe IT department as block-ing innovation, says RoopSingh, managing partnerat Bangalore-based WiproConsulting Services.

“This is a bit unfair,because IT departmentshave to worry about com-plexity, security, risk andsupport,” says Mr Singh.

“Moreover, since 2009they have been forced tofocus on minimising costs,keeping the lights on ratherthan making a difference tothe business.”

This showed in a recentUK survey of 1,000 senior ITdecision makers, commis-sioned by KCom, a servicescommunications provider.

Some 72.5 per cent ofrespondents said they hadno plans to invest in ITsystems during the comingyear, and 26 per cent citedan inability to demonstratethat IT will help meet stra-tegic objectives and providea return on investment asthe reason for holding back.

This lack of focus on busi-ness objectives is crucial,says Stephen Pratt, manag-ing partner of worldwideconsulting at Infosys inCalifornia. “It is very com-mon for the business to sayit wants something done intwo years and for the ITdepartment to say it willtake four,” says Mr Pratt.

“Most executives saytechnology infrastructure islimiting their ability toachieve business goals,” headds. “It ought to be doingthe opposite: driving theinnovation that pushes thebusiness faster than it’scomfortable with.”

Mr Pratt says IT shouldbe split into two parts,infrastructure and innova-tion. Infrastructure shouldprovide a basic service, asdo the office’s air condition-ing and coffee machines.

Innovation should focuson ways to help the busi-

ness achieve its strategicgoals. You need two distinctpersonalities to lead thesefunctions, Mr Pratt says.

“People focused on inno-vation are more likely tolook for progressive ways todeploy technology – theyare more likely to embracechange than resist it.”

Outsourcing applications,such as enterprise resourceplanning, finance and sup-ply chain, is a good way tofocus on innovation, saysBrendan O’Rourke, chiefinformation officer of Tele-fónica Digital, the telecom-munications company,which outsources manyapplications to IT servicesconsultancy Cognizant.

“An outsourcer can geton with the management,operation and maintenanceof IT, and is best placed tooptimise costs,” says MrO’Rourke. He involves Cog-nizant closely in developingapplications. “This meanswe can hand over applica-tion maintenance to Cogni-zant at an early stage, andeventually send it offshore.”

Mr Chadha cites applica-tions that make it possibleto implement customer rela-

tionship systems in “daysor weeks rather than themonths or years it might iforganisations implementedit themselves”.

Cloud-based SaaS systemsare also easier to try out,says Mr Chadha. This freestime to concentrate onimproving processes andtraining people.

Wipro’s Mr Singh says:“IT needs to engage withthe business and explainhow difficult it is simplykeeping the lights on.”

But he notes that ITdepartments are recruitingmore people who under-stand the business side.Banks, for example, are hir-ing regulatory experts whocan take proactive steps toensure compliance.

In retail, communicationsexperts are joining ITteams. This helps them notonly respond better to busi-ness needs but also letsthem articulate the benefitsand problems with techno-logical developments moreclearly. Such approacheswill help teams communi-cate more effectively and sodrive the business forwardrather than hold it back.

Driving innovation should be the main objective

Business schools are increas-ingly turning to emergingtechnologies – even thoughthey have traditionally beenwary of the threat they

posed.The change has come about because

institutions realise they can use tech-nology to enhance delivery of degreecourses, while also studying its effecton business.

This is not a sector renownedfor taking early advantage ofinnovation.

“I remember one of my studentsintroducing me to Twitter a few yearsago,” says Theodoros Evgeniou,academic director of the eLab atInsead.

“I think this is proof, frankly, thatbusiness schools have found it diffi-cult at times to keep up.”

Recent advances in teaching tech-nology are being used by schools thathad snubbed remote study, althoughdistance learning using different tech-niques was established long before theIT revolution.

A pioneer of the online delivery ofprogrammes is the University ofNorth Carolina’s Kenan-FlaglerSchool, which launched itsMBA@UNC degree in 2011.

While the programme has beendesigned to retain the rigour of itsfull-time equivalent, the technologyallows students to work from any-where.

As well as accessing interactivecourse content on demand, studentsconnect face-to-face with faculty andpeers via a virtual classroom. Weeklyclass attendance is compulsory,irrespective of location.

“There is, in fact, an intensitywhich does not always exist in per-son,” says Doug Shackleford, the pro-gramme’s associate dean.

“The tools allow us to give moreattention to individual students with-

out holding up the whole class.” Hesays traditional on-campus pro-grammes could benefit from technolo-gy-enhanced interaction, which isincreasingly used in the workplace.

A project at Imperial College Busi-ness School, London, embraces this.By embedding technology in its on-campus masters programmes, theschool tries to create what it calls a“seamless learning” environment. Anonline learning portal, or hub, con-nects students with faculty, studymaterials and each other in a mannerreflecting social media-style communi-cation.

“Schools like ours have been heldback by earlier virtual learning envi-ronments [that] have not encouragedsuccessful student interaction,” saysDavid Lefevre, director of Imperial’sEducational Technology Unit.

“By putting infrastructure in placethat reflects how students interact, wecan help them learn more and faster.”

To encourage early adoption of flex-ible learning practices, Imperial pro-vided 700 of its 1,100 students withApple iPads at the start of the aca-demic year. Though a significantinvestment, Mr Lefevre stresses thatthe iPads are an important tool toensure access to a suitable mobiledevice.

Student involvement and feedbackhas been encouraging, according toImperial faculty members.

“There is no question that we seeenhanced student interaction,” saysMarco Mongiello, director of Impe-rial’s highly ranked masters in man-agement programme, now supportedby the technology.

“Discussions are continuing beyondthe classroom via the class forum . . .where we can keep an eye on conver-sations and redirect them whereneeded.”

Dr Mongiello emphasises the capac-ity of the hub to facilitate feedback to

students who, he adds, increasinglyexpect it.

One objective of flexible studentengagement – and of the iPad invest-ment – is to enable collaborationbetween student groups, as stressedin Imperial curricula.

“We are training them to be respon-sible managers,” says Dr Mongiello.“Learning what tools are most effec-tive for collaborative work is part ofthis process.”

Some business schools have estab-lished leadership in “idea generation”at the nexus of IT and business.

One making efforts to keep pacewith technological innovation is theMIT Sloan School of Management, inMassachusetts, which established theMIT Center for Digital Business in1999. “For more than 10 years, we’vepartnered with industry and engagedwith the most cutting-edge, perplex-ing problems that companies face,”says David Verrill, the centre’s execu-tive director.

Individual Sloan faculty membersare matched with sponsor companies,

which fund bespoke projects to findanswers of economic value to them.Current sponsors include Google,Hewlett-Packard and McKinsey.

A representative of each company ishosted at Sloan to help collaborationduring the research period, and thenreturns to their company to pass onknowledge.

“Technology transfer is a full-contact sport,” jokes Mr Verrill.

Companies benefit from academicinsight, and the centre disseminatesits findings in publications, whilebeing sensitive to commercial confi-dentiality.

Project results contribute to thedevelopment of Sloan’s technology-driven curricula. MBA students canelect to take research assistant posi-tions and work with faculty on theseprojects.

Given the inseparability of IT frommodern management, Mr Verrill says:“We need to supply our graduateswith more than technological compe-tencies if they are to succeed astomorrow’s managers.”

Schools lookto instil digitalcompetenciesMBAsAdamPalin finds institutions areturning to high-tech teachingmethods

Online tutorial:weekly attendanceis compulsory forUNC coursesno matter wherestudents live

Consultant Peter Chadha

Technologists estimate 1.8zettabytes of data were cre-ated worldwide, last year.That equates to 1.8tr giga-bytes, according to IDC, theindustry researchers.

The volume captured isbelieved to be doublingevery two years. Althoughmuch of this is transient –such as TV signals or phonecalls – 80 per cent is theresponsibility of businesses,

and they analyse it toimprove performance.

How to handle so-called“big data” is fast becominga board-level discussion.

Bryan Cruickshank, glo-bal IT advisory leader atKPMG, the professionalservices group, says: “Ittends to be that informationis not reaching the rightpeople, in the right format,at the right time.”

IT is producing bettertools to handle data andpresent information butstruggling to keep pacewith volumes. Both trendsare outstripping develop-ments in management tech-niques for more data-drivenorganisations.

“Technology is far out-pacing managers’ ability touse it to their business

advantage,” warns DrVishal Sikka, chief technol-ogy officer at SAP, a busi-ness software company.

“Chief executives maysay they have control oftheir businesses, but theyneed to seriously disrupttraditional metrics. Theyjust don’t work any more.”

The challenge stems notjust from the volumes.There is also timeliness,and whether leaders can acton the insights data offer.

Conventional businessintelligence (BI) – includingdashboards, display screensoffering multiple sources ofinformation, and reportingtools – focuses mostly onhistorical data. BernardLiautaud, founder of Busi-ness Objects (part of SAP)and one of the fathers of BI,

notably described the toolas a “rear view mirror”.

Management can only doso much with reports aboutthe past. They want moreemphasis on real-time datafeeds, predictive analytics,and modelling the outcomesof proposed decisions.

Doing this forces compa-nies both to capture moredata, and to look furtherafield for data sources,including social media andpublic data such as trans-port flows and weather.

This insight is improvingdecision making, especiallyin fields such as retailing.Whether it is helping com-panies at the strategic levelis harder to judge.

“It is not the abilityto capture data that is thebottleneck,” says Andy

Rusnak, Americas enter-prise intelligence leader atErnst & Young, the profes-sional services firm. “It isthe human leader’s abilityto consume what is rele-vant. The business isdemanding more conciseinformation from IT.”

John Michelsen, chieftechnology officer at CATechnologies, a softwarecompany, says senior man-agers are asking for moredata, but their abilities toact on it are not keeping up.

“If they don’t execute onthose insights, they willdrive themselves out ofbusiness,” he cautions.

Mr Cruickshank agrees.“I don’t think we’ll getaway from organisationskeeping data because theycan. Storage becomes

cheaper, and there are legalrequirements to storedata . . . but businesses havenot learnt what their strate-gic, analytic requirementsare,” he says.

This puts IT departments,and chief information offic-ers in a difficult spot. Onone hand they are beingasked to store more data,

control the costs of storage,and also help derive morebusiness value from thedata they store.

On the other, senior man-agers are asking for moredata, without always con-sidering whether those datareally help the business.The risks of informationoverload and encouraging aculture of micro manage-ment are very real.

This is already causingproblems in larger organisa-tions, says Stacy Blanchard,a senior director at Accen-ture Analytics. Companiesare creating multiple busi-ness intelligence dash-boards, sometimes to satisfya handful of executives.

“If you have a hundredpeople creating dashboards,it is hard to see the return

on that,” she says. “Could abusiness use perhaps twodashboards, with clear met-rics, across the business?”

Executives might need adifferent way of viewingdata – perhaps on a tabletor smartphone rather thana PC – but this should be adifferent lens for viewingthe data, not different data.

“It may be that the boardis a special case, and it’strue that they are hard toplease,” says Harvey Lewis,analytics research directorat Deloitte.

He adds: “But you need tobe able to cater for differentviews and requirementswithin a BI system.

“Technology tends tocomplicate matters whenreally it should be simplify-ing them.”

Risk of information overload that threatens business growth

‘Information is notreaching the rightpeople, in the rightformat, at the righttime’

Bryan Cruickshank,KPMG

Systems management

A lack of focus onbusiness goals can bea big problem forcompanies, writesJane Bird

Leadership challenges

Executives wantmore data but theycannot keep up withthe quantity, saysStephen Pritchard

FINANCIAL TIMES WEDNESDAY NOVEMBER 7 2012 ★ 3

The Connected Business

buzzwords,” he says.“Rather, they should pullout their to-do lists forimproving shareholdervalue over the next threeyears and, for each entry,ask themselves: can tech-nology propel us towardthis goal and to whatextent? Sometimes technol-ogy will have a highimpact. In others, maybe IThas a minimal role. Regard-less, the chief executive hassome homework to do if theanswer is ‘I don’t know’ toany of those items.”

PwC says most chief exec-utives fall into one of twocategories. There are thosewho have never even con-sidered the IT departmentother than as a businessutility. “These chief execu-tives would benefitimmensely from looking atIT through the lens of busi-ness transformation,” saysMr DeGarmo. The secondtype, he says, has witnessedat firsthand the power of ITto achieve the impossible.“The difference between thefirst and the second is oftenreflected in the company’sbottom line.”

PwC has surveyed 489companies with annual rev-enues of more than $500mto discover what separatesthe best from the rest.

The 2012 Digital IQsurvey found 73 per cent ofhigh performing businesses– companies that achievedat least 5 per cent revenuegrowth over the past year –said their chief executivewas an active championof IT. In the bottom per-forming group, 44 per centof respondents made thesame claim.

For many years mostcompanies had the chiefinformation officer report-ing to the chief financialofficer. “That trend islargely behind us and sig-nals a shift in the chiefexecutive’s perception ofIT,” says Mr DeGarmo.

According to the DigitalIQ survey, 60 per cent of

Continued from Page 1 chief information officersnow report to the chiefexecutive.

“This is an indication themajority of business leadersunderstand the importanceof IT as a strategic ena-bler,” Mr DeGarmo says.But he warns this findingdoes not mean that chiefinformation and chieffinance officers have partedways, or that chief execu-tives are engaging withchief information officers asdirectly and frequently asthey should.

Often, says Mr DeGarmo,the chief information officeris helping the chief finan-cial officer harness thepotential of data analyticsto enhance the company’sfinancial operations. “Likethe chief finance officer,more chief executives arerecognising the power of ITto transform the business.However, we still have along way to go before suffi-cient numbers of chief exec-utives are standing at thewhiteboard alongside thechief information officer toscope out a plan forunleashing the full poten-tial of technology.”

Others, including McKin-sey, the management con-sultancy, argue companyboards also need to paymore attention to IT and itsstrategic role.

As Michael Bloch, BradBrown, and Johnson Sikesof McKinsey said in arecent article: “Technologyhas become too embeddedin the fabric of the business– and too critical for com-petitive performance – to beleft to the IT departmentalone.” They say many sen-ior executive teams havebeen called upon to getinvolved in technologyissues. “Boards are alsobeginning to take a strate-gic view of how technologytrends are shaping theircompany’s future. Moreboards than ever before areasking questions thatensure executives focus onthe right issues.”

C-suite relationsset to change

There has been a dramaticchange in the responsibilitiesof the head of corporate IT,or the chief informationofficer. It used to be about

keeping company IT systems running.That is now only a small part of thejob. In most companies it is nowabout much more.

Many chief information officers stillhave a background in technology –which some say they need to under-stand IT systems – or they may desig-nate that nitty-gritty role to a chieftechnology officer. But a growingnumber of chief information officerssays the most important qualifica-tions for the job are to understand thebusiness and the potential of IT totransform it and fuel innovation.

“Our job as the backbone of thecompany is not about what we pro-duce, it’s about how it supports thebusiness,” says Cathy Bessant, Bankof America’s chief information officer.“I don’t know how the chief informa-tion officer of the future, or even oftoday, could function without a keenunderstanding of the business.

“Technology and operating capabil-ity are not destinations unto them-selves but exist to serve customersand an institution in its risk andfinancial management,” she adds.“For chief information officers, theability to make judgments and beinfluential across the firm has to startwith business acumen.”

Butch Leonardson, chief informa-tion officer of Boeing’s EmployeeCredit Union (Becu), a not-for-profitfinancial institution, says people inthe role today “have the tools totransform the experience of their cus-tomers, and the more they knowabout the businesses they are in, themore successful they’re going to be.

“I think chief information officershave to use the language of the busi-ness, not the language of IT.”

Others, such as David Giambruno,chief information officer at Revlon,the cosmetics company, try to manageIT as an almost transparentinfrastructure that “enables thebusiness units to do whatever theyneed to do”. He says: “I make systemswork for people, rather than peoplework for systems.”

To reflect the fact the role haschanged, some companies have evendone away with the title of chief infor-mation officer. For example, GlennMorgan is head of service transforma-tion at British Airways.

“No C-level position has undergoneas many changes as the chief informa-tion officer during the past fewyears,” says Dermot O’Kelly, seniorvice-president and UK country man-ager for Oracle, the software group.

“In today’s business environment,chief information officers have aunique opportunity as everything isbased on information,” he says. “Therapid uptake of cloud computing[using computer services based onremote servers] and opportunities cre-ated by effectively analysing growingvolumes of data will accelerate theevolution of chief information officersas they work to become key leadersand business-driven executives.”

Mark McDonald, a vice-president atIT research group Gartner, says that,when asked, about half of chief infor-mation officers list supporting eco-nomic growth in their organisationsas a priority. “The fundamental ques-tion for chief information officers overthe past 10 years was ‘how do I con-trol costs and quality?’ The fundamen-tal question for them over thenext decade will be ‘how does

technology support growth?’ ”He advises them to identify specific

business outcomes and then use tech-nology to help make achieve them.For example, he says that when RoyalCaribbean Cruise Lines set no custom-ers standing in queues as an objec-tive, the chief information officermade a commitment to use hisresources “to make that happen”.

But Mr McDonald warns that not allpost holders understand the implica-tions of this transformation. “If youare thinking about how big yourbudget is, if you are thinking abouthow many people you control orabout all the projects you have going,and you are not thinking about thebusiness benefits you can deliver, youare speaking the wrong language andare really telling the business ‘there isno value in what I do so you may aswell manage me as a cost’. ”

Chief information officers who wantto have a greater strategic say, how-ever, may be pushing at an open door.

A recent Gartner survey of 175

board members found that, despitetheir pessimistic view of the economy,64 per cent of respondents at compa-nies with more than $250m in annualrevenues plan to increase their invest-ments in IT. Just as importantly, thedirectors also said they want chiefinformation officers to play a moretransformative role in their compa-nies, with 86 per cent saying theyexpect IT to make a greater strategiccontribution over the next two years.

Ultimately most IT experts agreethat, despite the challenges, chiefinformation officers have the power todetermine their own futures.

“They must unlock the potentialand opportunities they already haveat their fingertips,” says Mr O’Kelly.“It’s widely recognised they spend upto 80 per cent of their IT budget sim-ply keeping the lights on, which lim-its the amount they have to spend oninnovation. The demands placed onbusinesses have changed, so whyshouldn’t the IT systems be chargedwith satisfying demand change also?”

Power to evolveis in informationofficers’ handsExecutive potentialPost-holders inmanycompanies are looking at economic growth, notjust keeping the lights on, reportsPaul Taylor

Businessoutcomes: RoyalCaribbean CruiseLines’ chiefinformationofficer backed acommitment toget rid of queues

Sarah Flannigan neverpictured herself as a chiefinformation officer. But the38-year-old was attracted tothe idea of working for theNational Trust and saw inthe IT department abusiness unit in need of arevamp that she coulddeliver.

One of the first thingsSimon Jenkins, chairman ofthe National Trust, said toher when she started wasthat he hated computers.

“That’s fine,” Ms Flanni-gan answered. “I’m not hereto talk about computers. Iam here to talk about deliv-ering your business goals.”

Ms Flannigan is one ofthe new, emerging breed ofchief information officerwho are more concernedwith communication andbusiness acumen than theyare about bits and bytes.

She does not have a tech-nical background despitebeing in charge of a team of85 developers.

She says: “Perhaps fiveyears ago a chief informa-tion officer would havestarted out as an IT devel-oper, but I am not a techie.

“The leadership chal-lenges are the same in anydepartment. I have runteams of builders and I amnot a builder,” she adds.

A 2011 survey by Gartner,the technology researchgroup, found that around aquarter of chief informationofficers globally have non-technical backgrounds.

“We don’t have the for-mal data yet but we thinkthe trend is growing,” saysDave Aron, analyst atGartner. “The demands ofIT are more complicated.

“It is no longer about run-ning payroll and customer-relationship managementsystems, it is about how thebusiness exists in a digitalenvironment. Strategic,visionary and interpersonalskills are what is needed.”

Tim Cook, who leads the

IT officer’s practice at Rus-sell Reynolds, the London-based recruitment agency,agrees interpersonal skillstrump technical knowledge.“The chief informationofficer search is the onesearch that chief executivesoften do not want to do.They are worried they willbe faced with techies theywill not connect with.”

Hence, Mr Cook says, can-didates who have comefrom management consul-tancies or more business-oriented roles tend to dobetter in interviews.

Part of the reason chiefinformation officers nolonger need to be as techni-cal is that technology hasbecome more standardised,and less specialist. Its func-tions can be outsourced.

Some companies alsohave a separate role for achief technical officer, atechnical specialist whoreports to the chief informa-tion officer, says Mr Cook.

Ms Flannigan says: “Ineed to know enough tochallenge my team and

not be fobbed off. You haveto have a nose for bulls-hit . . . I respect their knowl-edge and consult with thembut when necessary I take aleadership role.

“What they get from meis clear direction.”

The trend is both goodand bad news for IT profes-sionals. It may help to makeIT a more appealing role fora wider pool of people, espe-cially women.

Ms Flannigan says thegrowing importance of com-munications skills may beone reason why morewomen are going into thejob. It is making the chiefinformation officer role amore desirable one, and onewith a clearer path to thetop management roles.

Mr Cook says: “Peopleused to joke that chief infor-mation officer meant careeris over. If you said to agroup of up-and-cominggeneral managers would

you rather spend timein IT or sales,

most wouldnot go for

IT.” But now it could be astep on the career ladder tobecoming chief executive.

Mr Aron says: “What weare seeing in the moreadvanced companies is that[the chief informationofficer role] is part of thechief executive fast trackfor senior executives.

“One of the commonlaments of chief informa-tion officers has been: ‘Whyam I not on the board?’ Butthis new kind of executiveoften is on the board.”

On the other hand, takingon a broader, more strategicrole, can be a difficultadjustment for older chiefinformation officers whohave come from more tradi-tional backgrounds.

Mr Aron adds: “It is quitethreatening for chief infor-mation officers towards theend of their careers.

“They need new relation-ships, they need to be work-ing on influencing theorganisation, a whole newset of skills.”

The trick he says, will beto bring a much broaderrange of people into the ITprofession at all levels.

Ms Flannigan says:“There is a dearth of goodcandidates out there.

“I recruit strategically atevery level for strong com-munication as well as tech-nical skills. I like to recruitstyle over substance.”

She adds: “The technicalskills have to be there, butthe right can-do attitudewill overcome any technicaldeficiencies.”

She also pushes her oftenshy technicians out of theircomfort zone, requiringthem to spend at least fivedays each year at Trustproperties, where they mayfind themselves washing upor polishing brass.

“I want my IT people tobe completely blended intothe organisation,” she says.

However, Mr Cook sayshuman resources depart-ments can do more to makeIT attractive. Policies ofmoving people in and out ofthe IT department wouldhelp. And chief informationofficers can be the bestambassadors.

Mr Cook says: “Chiefinformation officers have tomake it feel like more of acool job.”

Changing nature of IT job helpsclear path to the top tableCareer structure

Commercial acumenhas taken the placeof technical skills,writesMaija Palmer

Paul TaylorEditor,The Connected Business

Maija PalmerTechnology Correspondent

Charlotte ClarkeSocial Media Producer,Business Education

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4 ★ FINANCIAL TIMES WEDNESDAY NOVEMBER 7 2012