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Changing Role of the CIO
David Boyles
CxO Technology Advisor
Microsoft Australia & New Zealand
Agenda: Role of the CIO
BusinessTrends in Financial Services
Typical Financial Services IT Priorities
Some Things Haven’t Changed
Five Influences on the Role
Role in Transition
Skills of the new CIO
Frameworks for Success
Outcomes
Trends in Financial
Services*
Big is better – many mergers & acquisitions
Profitable niche plays (mortgage brokers, ING Direct)
Channel expansion (eg. internet, brokers)
Real time vs batch (eg. eTrade, Schwab)
Self Service (eg. internet banking)
Value management (eg. cross sell, risk management)
Fees increasing in importance as interest margins
decline
Information Security & Privacy
Workflow (& BPR) vs CRM
Mass customisation vs CRM
is my opinion, not quantitative research
Real*Note:
time This
analytics
& AI (eg. Capital One)
Typical IT Priorities
Decrease operating costs
Grow revenue
Comply with privacy laws & Info Security
Risk Management
Customer service enhancements including self
service
Real time analytics for sales and service
Wealth management
Business process improvement/integration
Business focused IT leaders
Source: Various Studies & Surveys on FSI Priorities
Some Things Haven’t Changed:
Expectations!
Operations: “Five 9s” (everything runs well,
100% of the time)
Costs: Decline or stay flat regardless of volume
increases
Benchmarks: Better than market best
Projects: On budget and on time – don’t come
up with excuses about incomplete specs, scope
increases and lack of resources
Execution: Plan and deliver infrastructure (1830 month timelines) even if the BU planning
timeframe is one year or less
Leadership: World class customer
relationships, employees, processes and
infrastructure/operations.
Some Things Haven’t Changed:
Challenges!
IT viewed as “shared services” cost, not core business
process
Budgets tight and spend difficult to justify
Infrastructure planning & investment horizon mismatch
with business priorities
Information Security issues
Cost vs Quality arguments (High Quality = Low Cost)
Facts versus opinions and feelings
BU silos, IT silos
“It’s my budget and I will pick the solution”
Responsibility and accountability vs authority
Five Emerging Influences
1.
2.
3.
4.
5.
Information security
Fully automated business processes
Growth of IT Capital spend relative to
other categories
Value/importance of intangible assets
Business Process Modelling (BPM)
Information Security
Becoming more of a business issue:
Privacy laws (Privacy Act 1988, Trade
Practices Act);
New director and officer responsibilities for
accuracy and integrity of financial and other
data (Clerp9, Sarbannes-Oxley);
Director and officer responsibilities for risk
management, including BCP/DRP.
(Note: CIOs have been dealing with this issue for years.)
Automaton, Capital Spend
Full Automation of Business Processes. There
may have been a dotcom crash, but the trends are
now plain to see – more and more business is over
automated channels. Thus, business success is more
dependent than ever on IT.
IT Capital Spend Growing as a % of total Capital
Expenditure. Related to the above. Highly visible
spend requires more visible IT leadership &
governance.
Intangible Assets & BPM
Increasing value of Intangible Assets. Physical
assets may have driven corporate market value
decades ago, but no longer. Increasingly, the market
value of corporates is dependent on intangible assets,
such as intellectual property and repeatable processes.
Generally speaking, repeatable processes are
manifested as software running on the IT infrastructure.
Business Process Modelling. Still relatively young,
but BPM has real promise to leverage the intangible
property of organisations. Good area for the CIO to take
the lead.
Functional Specialist to ???
“Old” Role
•Architecture,
Planning & Policy
•Solutions (SW)
Development
•Infrastructure
Management
•IT Leadership &
People Development
“Split” Roles
“New” Role
•Architecture,
Planning & Policy
•Solutions (SW)
Development
•Infrastructure
Management
•IT Leadership &
People Development
•Business Strategy,
Innovation, &
Change
Management
•Business
Leadership &
People Development
CTO
CIO
•Solutions (SW)
Development
•Infrastructure
Management
•IT Leadership &
People Development
•Architecture,
Planning & Policy
•Business Strategy,
Innovation, &
Change
Management
•Business
Leadership &
People Development
“Traditional” CIO Skills
Leadership
Project management
Vendor and sourcing management
Time management & prioritisation
Development methodologies
Legacy environments
Environments of the future (Web services/SOA):
Windows, .NET, C#, Active Directory, XML
Linux, Java (JBoss-Weblogic-Websphere), XML
Data Centre Operations
Networks (wireless and wired)
DRP/BCP (BU and IT)
Info Security, as relates to IT
Componentisation & reuse
Data Warehousing, Data Marts
“Newish” CIO Skills
All of the “traditional” skills, PLUS:
Vision
Aspirational and/or scenario planning
Business strategy & analysis
Change management
Business judgment, and the courage to implement
decisions
Reengineering & Business Process Modelling (BPM)
Team building
Communications & influencing
Public, employee, and customer relations
Continuous improvement: TQM, CMM, inspection, etc.
CIO Frameworks For Success
Structured IT Excellence Model
Clear Roadmap (explicitly links all IT
activities to delivery of business capabilities)
Leadership & Business Relationships*
People Practices*
Infrastructure*
Processes*
*Note: These are part of the Excellence Model.
CIO Frameworks for Success:
IT Excellence Model
Selection, development,
work environment
Strategic Partnerships:
Key Suppliers
Software:
Business Applications
& related intangibles
Infrastructure:
The “Dial Tone” of the Organisation
Critical Processes:
Architecture, Strategy & Planning;
Project Management;
Software Development; Operations Management
Information Security
IT excellence & the
delivery of business
capabilities is the
result of a structured
and comprehensive
program in seven key
areas.
Leadership & Governance
People:
CIO Frameworks for Success:
Roadmap to Deliver Business
Capabilities
Short term deliverables (<6 months), eg:
Review of needed business capabilities
Leadership team assessment, appointments & commitments
Cost targets
Quick hits: business capabilities, performance improvements, etc.
Top ten projects review
Vendor contracts review
Information Security assessment
Longer Term Deliverables (6-60 months), eg:
Business capabilities to be delivered, mapped to It project plans
Leadership & People frameworks, inc. development plans
Sourcing strategy & practice: vendor mgmt, quality, & costs
Governance models: business alignment & stakeholder involvement
Information Security improvements: BCP, DRP policies, frameworks, practices
Software Development policies, frameworks, practices
Project Management policies, frameworks, practices
Architectural roadmap
Applications & infrastructure SWOT analysis
CIO Frameworks for Success:
Leadership & Business
Relationships
Lead & govern proactively. Set up
stakeholder governance structures early on.
Use open, fact-based communication to
build trust. Solicit feedback.
Understand future business needs and build
a strategic roadmap that delivers. Share the
roadmap widely and frequently. Deliver.
Provide accurate and detailed costs for all IT
services.
Publish performance metrics based on
agreed standards.
Provide industry benchmark comparisons of
costs and quality.
CIO Frameworks for Success:
People Practices
Build a first rate IT team. Use a rigorous
hiring model.
Define and publish your people & leadership
principles (team member and leadership
values and behaviour defined). Don’t
tolerate exceptions.
Use “Open Book” management.
Deploy segmented development programs.
Share development opportunities with
business staff, eg project management
training.
Train everyone on communications, teaming
& quality techniques.
CIO Frameworks for Success:
Processes
Identify, benchmark and set performance
goals for all key processes (eg. project
management; architecture, strategy & planning;
solutions development; operations
management).
Actively deploy continuous improvement
tools and international standards: TQM,
CMM, Prince2 or PMI, ITIL, Inspection
Processes, ISO.
Treat software development as engineering,
use rigorous methodologies to prevent
errors (find code errors via TQM/inspection
processes versus back end testing).
Automate wherever possible for high quality,
repeatable outcomes.
CIO Frameworks for Success:
Infrastructure
Utilise “end to end” business process outcomes for
reliability measures, not technical components.
Periodic SWOT analysis to discover single points of
failure, bottlenecks, and business/user irritation.
Pay particular attention to the desktop in
“knowledge worker” environments.
Rationalise and standardise platforms to improve
reliability and reduce costs.
Utilise component-based architecture for simplicity
of installation and maintenance.
Some Outcomes:
Driven or Supported by IT Excellence
Desktop TCO reduced from AUD4000 to just over
AUD2000 per annum
Employee satisfaction from 46% to 80%
Cost to income ratio (financial institution) from midsixties to mid-forties
Reduction of telecommunications expense by 10%+
90% reduction of Severity 1 errors going into
production
CMM Level 5 Certification (Software TQM)
Thanks, Any Questions?
Note: The opinions expressed herein are my own, based on experience in the CIO/COO role, information
provided by CIO colleagues, and publicly available fact-based research.