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First eBook Edition: December 2004 ISBN: 978-1-5913-9577-5 For all the CIOs we’ve worked with over many years Contents Copyright Acknowledgments Introduction: The Crossroads 1 Laying the Foundation: Leadership PART ONE: Demand-Side Leadership 2 Understand the Fundamentals of Your Environment 3 Create Your Vision 4 Shape and Inform Expectations for an IT-Enabled Enterprise 5 Create Clear and Appropriate IT Governance 6 Weave Business and IT Strategies Together PART TWO: Supply-Side Leadership 7 Build a New IS Organization 8 Develop a High-Performing IS Team 9 Manage Enterprise and IT Risks 10 Communicate Your Performance Conclusion: Bring It All Together Appendix A: A Short Assessment of Personality Type Preferences Appendix B: Identifying Strategies and Synergies to Create Maxims Appendix C: IT Services Appendix D: The New CIO Leader Self-Assessment Notes About the Authors Acknowledgments For helping us get the research done … First, we thank the hundreds of executives who have worked with us over many years—especially CIOs, their executive colleagues, and their teams. All these people have taken us into their confidence, sharing their achievements, their challenges, and their frustrations and worked with us by challenging our thinking and by implementing our suggestions—in essence, testing our ideas into reality. Many are named in the pages of this book, but many more are not named. We particularly thank Paul Coby (British Airways), Joe Locandro (Yallourn Energy), and Tom Sanzone (Citigroup Global Transaction Services) for working with us on extended case examples. Second, The New CIO Leader draws on the work of many people, especially that of our Gartner colleagues as well as some business-school thought leaders and authors. For just about every month since the late 1990s, Gartner Executive Programs (Gartner EXP, a membership-based organization of more than two thousand CIOs worldwide) has released a report prepared exclusively for its members. This work has been led by members of Gartner’s CIO research team who work closely with program delivery teams from across the globe. This book has drawn on those reports, as well as the thinking and the case examples that went into them—or in some cases the examples that did not go into them! On the research side, we thank particularly Mark McDonald, Dave Aron, Dr. Marcus Blosch, Jeannette Kieruj, Patrick Meehan, Andrew Rowsell-Jones, Richard Hunter, Chuck Tucker, Roger Woolfe, and adjunct researcher Barbara McNurlin. On the program delivery side, we thank regional leaders Nick Kirkland (EMEA) and José Ruggero (AsiaPacific) and the many program team members who assisted us in working with CIOs they partner with and who alerted us to additional new CIO leaders. In the area of managing by maxims, this book extends and updates work Marianne previously completed with our good friend and colleague Professor Peter Weill, from the Sloan School of Management at MIT. Peter Weill’s groundbreaking work on IT governance at MIT in 2002 stimulated extensive research with Gartner EXP members. We thank other thought and practice leaders who have variously coauthored EXP reports, provided substantial input at EXP member forums and symposia, or shared with us their perspective. These include Professor David Feeny (Said Business School, Oxford University), Peter Keen, Don Laurie, Professor John Henderson (Boston University), Bruce Rogow, Dr. Jeanne Ross (MIT Sloan School of Management), Dr. Jeff Sampler (previously London Business School, now Templeton College, University of Oxford), Dr. Mani Subramani (Carlson School of Management, University of Minnesota), and Professor Mike Vitale (AGSM, Sydney). Among many Gartner research analysts and consultants, we particularly thank Audrey Apfel, Jackie Fenn, David Flint, Chris Ganly, Rob Gout, Mike Gerrard, Bob Hayward, Nick Jones, Andy Kyte, Al Lill, John Mahoney, Ken McGee, Simon Mingay, Diane Morello, Daryl Plummer, John Roberts, and Michael Smart. For helping us give birth to the book … Although the idea for this book was in our heads and hearts for some time, it was the experience of creating Gartner’s first CIO Academy in 2002 and then leading it many times that really illustrated the possibilities and need for this book. At the Academies, we saw that new CIO leaders were out there, that many wanted a guide on how to be a great CIO, and that we could help them. The hardworking Diana Cirillo deserves special mention as CIO Academy coordinator for extraordinary efforts in the Academy’s birth. On both a professional and a personal level, we especially thank Robin Kranich, Gartner’s very gutsy Senior Vice President for Executive Programs, whose roles variously as a friend, colleague, boss, encourager, and advocate resulted in a very stimulating and rewarding work environment. Her complete support and enthusiasm for The New CIO Leader made our jobs much easier. The work of a number of key professionals then nurtured the passage of the book. Heather Levy and Tim Ogden, Gartner Press’s publisher and editor, respectively, worked with agent Susan Barry and Harvard Business School Press editor Jacque Murphy on the scope of the book. The very patient and focused Kent Lineback helped us find the right focus and tone. Kent worked with us on identifying our key messages among literally hundreds of thousands of words we already had available to us. Tim Ogden did an amazing job as editor for Gartner Press, constantly challenging us about what was really important. Then Jacque Murphy came into the picture, again poking and prodding the manuscript to make sure our thoughts and words flowed as well as they could. We believe that Jacque’s keen feel for structure and flow has made it considerably easier to pick up our messages. For helping us to get on with doing what we do … Each of our lives required quite a bit of coordination—especially since this book was written while we were trying to just “get stuff done.” To that, we owe a big debt to the duo of Tim Ogden and Kent Lineback, who worked with us to form a very harmonious and productive quartet. But other people helped hold things together or took on extra loads at critical times. For Marianne, this support came from members of the EXP research team, especially the calm, organized, and truly dedicated Jeannette Kieruj, who was then our team coordinator. For Ellen, this support came from Brendan Conway, Mark Deacon, Chris Goodhue, Ione deAlameida Coco, and Judy Perugini, who gave extra of themselves so that she could focus on the book, knowing that our EXP members and team would be well looked after. Finally, we each want to thank our husbands and families and close friends for understanding and accepting the kinds of things we like to do. The opportunity to work with executives in many parts of the world means that you’re away from home quite a bit, that your family becomes adept at self-help, that your calendar always has to be consulted, and that your husband has to answer the often-asked question, “So, where is she now?” We know that Robert Broadbent and Larry Stevens are pretty special people—at least everyone else tells us they are, and we have to agree. Thanks, guys, for always being willing to explain to the kids, the grandkids, or the cat “where she is now,” even if sometimes you are not too sure. It is hugely appreciated. Introduction: The Crossroads Two paths diverged in a wood … and I took the one less traveled. —ROBERT FROST Chief information officers today stand at a crossroads. The role of each CIO is inevitably changing, because of two perspectives on information technology (IT). On the one hand, there is the lingering disaffection with IT from the Internet bust, the overexpenditure on technology capacity, the popular press’s assertion that IT is now irrelevant in discussions of competitive advantage, and the hysteria about IT jobs moving overseas. On the other hand, IT is gaining renewed interest for several reasons. The global economy seems to be finally escaping the doldrums, and business executives are desperate for innovation. Additionally, the regulatory environment has put far more emphasis on the timeliness, completeness, and accuracy of corporate information. Finally, technology is playing a foundational, if not a central, role in virtually every product and service. Standing still is not an option—every CIO will follow one of two paths based on these perspectives. The path influenced by the view that IT is irrelevant to competitive advantage leads to a role that might be called chief technology mechanic, a role that, while valuable, is far from being part of the executive team. The other path, influenced by the view that IT is at the heart of every significant business process and is crucial to innovation and enterprise success, leads to a role we call the new CIO leader. The new CIO leader bears all the prestige, respect, and responsibility of other senior executive positions (in fact, the position will be a not infrequent stepping-stone to COO and CEO positions). As CIOs examine these paths, there is good news and bad news. The good news is that each CIO largely controls what path he or she will follow— becoming a new CIO leader is within the reach of every CIO who aspires to it. The bad news is that each CIO largely controls what path he or she will follow— the responsibility for the outcome rests on the individual’s shoulders alone. Becoming a new CIO leader requires changes to the skills, approach, and priorities that CIOs have traditionally had. For the most part, these changes are evolutionary, not revolutionary; you will see no “everything is different now” statements here. Although these changes may lack the glamour of revolution, a CIO who does not make these changes will almost inevitably face extinction as an executive. To be clear, CIOs who consciously or unconsciously fail to make the shifts we discuss in this book and who become mere technology mechanics will not eliminate the role of new CIO leader in their organization—they simply won’t have the job themselves. They will be working for someone who has embraced these changes. If you think you are a new CIO leader, then the challenge for you is to continue to be one. If you’re not changing and growing as your enterprise changes, then you’re not keeping up. If you don’t think like a constantly “re- new-ing” CIO, you may be on your way to becoming an ex-CIO. The demands on CIOs are changing that much and that fast. This book is the culmination of years of research and hundreds of in-depth interactions we’ve had with CIOs and their executive colleagues. This research also includes Gartner’s annual CIO survey, which captures the priorities and agenda of CIOs from organizations all around the world. In 2004, more than 950 CIOs took part. The largest survey of its kind, it examines the balance between business, strategic, technical, and management priorities. Statistical data on CIOs throughout the book are drawn from these annual surveys. The New CIO Leader explains why CIOs are at this crossroads, what a new CIO leader is, and what it takes to be one. Our goal, our passion, is to help CIOs in these most interesting times as they look down the two paths. We firmly believe that those who embrace the challenge of these changes can become new