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Can the IS executive really join top management?

Can the IS executive really join top management?

The title of this article should perhaps be: "The Information Executive: On the Team Without a Playbook." Now what, you might ask, does that mean? If you'll bear with some sports analogies, it means that the information executive, the new kid on the team, has no fixed title, no fixed reporting responsibility, no fixed niche in a company's operations.

Most organizational playbooks are not in written form. They evolve over time, and become the informal system that makes things happen in an organization. The are influenced by culture, experience, history, and personalities.

In charge of the playbook is, of course, the coach, or the CEO. And often the coach is used to working with the organization's functional teams, for instance, accounting, engineering, manufacturing, and sales.

What happens when a new player joins the CEO's team? Typically, he or she has a hard time. The veterans have their own way of doing things, their own language, inside jokes, and traditions. In this sports context, the information executive is the rookie on the team. And he or she will face many of the same issues that any rookie faces.

Let's review some of the reasons why an information executive has a tough time making the team. First, look at the characteristics of the traditional functions. I'll call these the "special teams." These functions have been around a long time - figuratively speaking, their characteristics are etched in stone. Information systems, on the other hand, are relatively new - you'd need a pencil with a good eraser to track their characteristics.

Another reason IS has a tough time making the team is that it hasn't had a home inside the organization. It often started off as part of the controller's department. But it has also floated through finance and sometimes even into manufacturing and operations. But, today, it often reports directly to the CEO. This movement has not permitted the information systems function to establish an anchor, or a set of customs, inside the organization.

This same elusiveness is reflected in the educational underpinnings of IS. The first IS curriculum that we could find, in fact, was started in 1983. Today, there is considerable debate in the academic world about where the curriculum should be located. Some think that IS should be a separate discipline, like accounting, while others see it as an enabling tool that works across the organization and so should be taught in conjunction with a variety of majors.

The traditional functions have developed a common language - the language of business, focusing on money, time, resources, markets, and competitors.

Many would say that the IS function speaks in tongues, for example: "An X.25 failure crashed the SNA net, causing CICS to lose the translog with MBS abending ATM for 30 minutes." What that really said was: a main truck line was cut and the automatic teller machines were out of service for half an hour.

Why does this difference in language exist? The traditional functions have a vertical organization focus. That is, their work product is created within their function. For instance, engineers are creating an engineering work product, and they use their own language within their own function.

IS, on the other hand, has a more horizontal focus. While there are some vertical systems, such as accounts payable within the accounting function, most IS staff move freely across different functions as they gather information and build their systems. This has evolved to the point where the IS staff "owns" the language as well as the systems.

Given the language problem and the perceived power IS brings, along with the tension IS creates among the traditional groups who each speak a different language, how does the information executive become a member of general management?

In 1988, Touche Ross did a survey of large IS organizations. We wanted to know the human resource challenges within those organizations. We asked very few questions about the CIO, because we didn't expect to get much out of the companies. But we came up with some surprising data. The overall annual turnover rate among CIOs is 17 percent. And about half of those involved dismissals.

Our first conclusion was that this has got to create some problems within the IS organization. We also saw that the staff members below the CIO level are better at keeping their jobs, which led us to our second conclusion: it is the leader who takes the fall.

What were the typical reasons given for dismissal? Missed deadlines, for one - the two-year project that was three years late. Or runaway costs - the $10-million budget that's overspent by 20 percent. Or a catastrophic incident.

For example, one company introduced a highly integrated system under which all orders came in over telecommunications lines from around the U.S. The system worked beautifully, until one day when it went down hard for three days. Unfortunately, there were no backup systems, so there was no way that orders could be taken. Needless to say, that was a catastrophic incident, and it is not surprising that there's a new CIO in place at that company.

Where does IS go from here?

The real question that's facing us right now is: how should we interpret the current status of IS? Are we seeing the maturing of a new function? Or does the turnover rate merely reflect poor performance?

The answers will take some time to discover. In the meantime, management may become frustrated with the information systems it's getting, and the turnover rate of executives may accelerate.

What advice and counsel can be offered to the coach and to the other members of the team?

For the coach - First, the information executive need not report to the CEO to be successful. What the CEO should be thinking about is where to place the CIO, or the information executive, to make him or her most successful. The answer can be driven by either political or natural reasons. Thirty-five percent of today's CIOs report to CFOs, and 27 percent report to COOs.

Second, more and more successful information executives come from a dual background, with experience on the business side outweighing that on the technology side.

Third, strategic planning in today's world cannot be done without IS involvement. That would be like having eggs with no bacon. I should note that if a CEO excludes an information executive from the planning process, it could be a sign that the CEO has no confidence in that executive.

Fourth, language is very important to the link between the CEO and his information executive. No matter how much technology is involved, everything in business is reduced to time, money, resources, and competitors.

Finally, I take exception to the claim that you can't measure technological advances. You may not be able to measure some of them in the traditional sense, but you certainly can establish criteria and measurements for every endeavor. In fact, in terms of technology, more things can be measured traditionally than you might believe. You just need to take the time to figure it out.

For the other functions - The traditional functions cannot abdicate responsibility to IS. The products and applications that IS develops for them are theirs, and not IS's. They cannot step back and say, "Let the systems guys do this." That's the wrong answer, and the product will show it.

Next, insist that each application developed by IS serves the users in the organization. Their expectations must be met. Most systems fail today because they don't meet expectations, not because they're bad systems. You can't succeed by promising a shiny Cadillac and delivering a Chevrolet, even if the Chevrolet runs perfectly.

Language remains vital to the major players. The systems analyst who moves in to work on a product for a function should speak the language of that function. In accounting, the analyst should know the difference between a chart of accounts and a depreciation schedule.

Finally, even though the functions may not be charged on their budget for new systems, they should endeavor to measure each project - because they are spending the enterprise's funds and, if the funds are spent unwisely, the functions and the enterprise will suffer in the long run.

For the information executive - In addition to establishing the reporting relationship for the information officer, the CEO and the information executive need to think about the latter's title. In many environments, "chief information officer" is the wrong title. It communicates the wrong thing.

For example, if you're in an organization that has a vice president of engineering and a vice president of finance, would you want to have a chief information officer? Probably not. You'd probably want to have a vice president of information services.

In planning, the best advice to give an information executive is to go to IS's customers, to understand those customers and the products they buy, and to understand the processes that build and deliver the company's products. Because to participate fully in the planning process, the information executive must really understand the business.

Lastly, a good information executive should demand to be measured in the same fashion as are his or her peers, usually by return on investment. If the information executive is a member of the team, he or she has to be evaluated on the same terms as the rest of the team.

For everybody - Organizational dynamics are very important. We tend to forget that organizations are people-driven.

Education is also important. We have to work with universities to help them understand the curriculum that students need to follow if they are to be prepared for business.

Finally, competition is important, and performance in the marketplace can be helped or hurt by information systems. IS should improve the odds, not hurt them.

The CFO and the CIO

The CFO, or any executive, should understand the business implications of information services. What applications are being developed for the CFO's department? Who is the target of that application? What are the expectations it must meet? What is it going to cost? And what is the return going to be?

The CFO must understand this in terms of corporate finance. He or she must also have a basic level of understanding of information systems - not how it's done as much as what is being done, its value, and what it is going to mean for the organization.

As a member of the team, the CFO must balance the company's priorities. That is, most organizations do have budgets, and most IS operations do have a backlog of applications to develop. So the CFO and other members of senior management must work with the CEO and the information executive to develop a reasonable schedule and a reasonable budget for each project.

In other words, the CFO must make sure that he or she gets what is needed for his or her function. And the CFO must also put on a different hat and become a member of management. In short, the CFO must make sure that the whole enterprise is being served.

What does the information executive do? The information executive runs a business. If you think about it, it is a kind of business within a business. And that's one of the things that makes it difficult, I think, for information executives to blend in with the other traditional functions. The scope is so much wider. The information executive's scope is the entire organization, from R&D to the customers. The entire life cycle of a product can be covered by information systems.

And that's the information executive's most important goal: to help the company win in the marketplace. It's not just to help operations do something faster on the factory floor. It's to help the company become a market-oriented company, as opposed to a product-focused company, if that's its mission. It's to help deliver the product faster, quicker, and with higher quality.

In the end, it's everyone's job to make sure that the function of information systems plays a role in the organization's game plan - that it makes the team. Because if the systems fail, you forfeit the game.

PHOTO : A tugboat, made of tin and clockwork powered, circa 1960

PHOTO : Part of the "Soldiers of the Queen" series lead cast, U.S.A., 19981
COPYRIGHT 1989 Financial Executives International
No portion of this article can be reproduced without the express written permission from the copyright holder.
Copyright 1989, Gale Group. All rights reserved. Gale Group is a Thomson Corporation Company.

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Title Annotation:Management Strategy; information systems
Author:Atkins, William
Publication:Financial Executive
Date:Nov 1, 1989
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