When CIO UK embarked on a round of interviews with the two key executives of a business who hold such sway over IT and the career of their CIO, the remit seemed straightforward: contact CEOs and CFOs of leading UK businesses and canvass them for their views on how the CIO relationship has matured during two decades of relentless technological advances.
Just how far has the CIO gone in becoming a core member of the board? Has the mistrust generated by the blatant overselling of large systems software during the late 1980s and early 1990s dissolved as everyone learned to live with IT, a new commodity on the block?
The response to requests for comments was surprising. The surprise being that despite endless endorsements of technology as an enabler and the internet as a channel to market, very few British CEOs or CFOs felt able to enter into a discussion on a key colleague, their CIO. The job of the CIO may be daunting, but at the very top of most organisations the people signing off on expensive technology decisions would rather leave the whole shooting match to the person with ‘Information’ in their title.
"The whole IT function can become the whipping boy because everyone can complain about it"
Ian Campbell, CIO, British Energy
It would be entertaining to imagine that this spells a golden age of freedom for UK CIOs, but the depressing truth is that a lack of understanding and fear of engagement on this scale probably means CIOs have no choice but to work harder at communicating what it is that they bring to the party.
In no doubt
The good news is that an impressive number of board members, especially CFOs, have no doubts about what the CIO can do for their world. What these people have in common is a total absence of the fear factor that haunts other executives when technology is up for discussion. They not only know what it is, they know what they can expect of it. But that latter quality is nothing to do with affection for the IT industry or its systems. Their positive take on technology is dictated by a very relaxed and open communication with their board’s CIO. Those businesses that hesitate to think hard about the rewards a CIO can deliver could learn a lot from the comments that follow. Above all, they should note that it is time to start a dialogue.
If the CFO and CIO are men who often sit at opposite ends of the boardroom table, Stephen Billingham and Ian Campbell are not showing many signs of antagonism. The CFO and CIO of British Energy, the company that controls the UK’s nuclear power generating capacity, have an affable relationship. Asked the obvious question about whether he views IT as just another budget item Billingham refuses to take the politically correct approach and rhapsodise about the potential of technology. He just laughs. “It’s very much a budget item and Ian knows that! It’s a cost, no doubt, and our objective is to get it down.”
A balancing act
Billinghams’ next sentiment shows an understanding of what his colleague with the ‘I’ in his job title is up against. “People always want more from IT. It’s always a case of more speed for less money.” He describes the potentially frustrating experience confronting many CIOs as the financial side of the board worries about cost while the rest of the business demands bigger and better systems to accommodate corporate ambitions.
"You have to get the IT function to deliver and connect with what is relevant to the business and then anticipate business drivers and support and underpin the whole thing"
Himanshu Raja, CFO, BT Wholesale
Where does this leave the nuclear generator’s CIO? Campbell has a useful heritage. A veteran of UK software services pioneer Logica, he was with that company during its famously relaxed heyday in the 1980s. The then chairman of Logica, Philip Hughes, scored a powerful visual PR goal when he was summoned to 10 Downing Street to share his views on the emerging high-tech sector with the Prime Minister.
Hughes cannily cycled to the meeting and was photographed chaining his bicycle to the railings of Downing Street. This was in the days before security barriers put an end to such informality and this image helped to define Logica as smart but laid-back. These same qualities serve Campbell well at British Energy. He resorts to a motor bike when visiting the company’s London head offices in Paddington and insists on explaining his job in terms of the company’s core dilemma.
British Energy is a business with an interesting remit. The organisation operates via a deliberately split personality, reflecting two contrasting responsibilities. On the one hand, it runs all eight of the UK’s nuclear power stations, with all that entails in terms of safety and security. On the other, it is immersed in the world of energy trading, with a business arm that must sell electricity in the markets while measuring up the formidable variables found in oil and gas pricing.
Campbell has to work within the discipline imposed by nuclear engineering standards. Your local nuclear power plant operates in a series of 13-week quarters, each designed to allow for planned outages – such as when fuel rods need replacing or maintenance is required – and any change to technology has to fit into this diary. If it hasn’t been booked into a quarter it has to wait until the next 13-week segment of the year. No arguments. The traders however have a different ethic. New tools that might make a difference should be plugged in inside a week. Three days if possible.
"There was a lot of talk about trust, how we can trust each other as the technology function moves away from its traditional role, reporting to the financial controller, and begins to earn its own place on the board"
Keith Little, CIO, BBC
Campbell sums up this divide perfectly: “One side of this business has to be totally risk averse, the other has to be completely opportunistic.” The need to understand these differing demands extends to IT recruitment, where Campbell tests potential recruits for their attitude to risk. “The detail-oriented person, the guy who reads through the manual from first page to last before opening the box, is suitable for the generating side. The guy who tears open the box and switches on a product while ignoring the manual, he belongs in trading!”
Campbell knows that his job could get uncomfortable. “The whole IT function can become the whipping boy because everyone can complain about it.” The way out of this is to recognise how the CIO slot has evolved. “It’s about change and getting resources ready to allow change.”
He notes the multitasking ability of a younger generation epitomised by his teenage son setting up a new laptop while talking to his impressed father over the phone. This is the multitasking that Campbell knows businesses are performing and they expect him to reflect it.
“What does the CFO want of me? I and my team have to be market driven. We are all about getting to the energy market and driving down costs.” He is stark about the value of highly-technical IT staff. “Look at the amount of outsourcing going on. Who needs in-house programmers these days? I need more people who are commercial.”
British Energy uses a clutch of outsourcing contractors including Capgemini and IBM. They allow Campbell to keep his own department glued to what really counts. “Price per megawatt is our currency, the gas and oil prices matter, and IT is a factor in the cost per megawatt. We must minimise it because it can have an impact on profitability.”
Ban on mobility
This industry operates within an incredibly vigorous regime of rules and security codes. These emanate from the DTI’s Office for Civil Nuclear Security (OCNS) and extend to the vetting of staff. Mobility may be a given in most corporations, but historically British Energy had been hostile to staff using different devices on the go.
This was in order to provide maximum data security. Campbell has embarked on a scheme to relax the rules that militated against BlackBerries and home-working while complying with the existing data security standards of the OCNS.
"In addition to product and service innovation, we will concentrate our efforts on creating an unparalleled customer experience, where we deliver ‘right first time’ and as ‘timely’ as is possible"
Al-Noor Ramji, CIO, BT Group
He is understandably reluctant to provide too many details, but what is interesting about this initiative is that it was launched with the explicit backing of his CEO.
The need to find ways to support mobile working was what the board recognised. It was not about plugging into the latest whizzy gadgets. “On the board we never talk in terms of hardware, software and systems.”
His colleague volunteers the detail that after mobility British Energy wants to go into another field of technology that does not sit easily with the security mindset.
“This year it’s all about collaboration,” says Billingham. The CFO does not bother with the litany of collaborative tools software suppliers rant about. The objective of getting more out of teams is all that counts. “IT developing a life of its own is not an issue in this company, there are no IT-driven projects.”
Anything that looks like an IT-driven project would get short shrift from either the CIO or CFO at British Energy. It is an environment in which a CFO can spot the kind of complaint that irks his technology counterpart. Billingham notes the rise of the “PC World Syndrome, the way people put their hands up and say they could buy an item we have installed for a much lower price on their local high street”.
Campbell has just taken over the reins at the Corporate IT Forum, previously known as The Infrastructure Forum (tif), a working group of CIOs who exchange best practice and worst experiences on a confidential basis.
The object of the exercise is to cut to the chase and give a business the CIO it needs. Campbell’s appointment as chairman of this body seems like a logical move.
Telecoms is home to a bewildering tribe of technology projects and in the past they have had an unhappy habit of proliferating without ever reaching a natural conclusion.
The relationship between executives at the very highest levels of British Telecom today reflects a determination to make sure that history does not repeat itself. Himanshu Raja, CFO BT Wholesale, has to keep corporate customers spending huge sums very happy. Technology can do that for him, but only if he keeps it on a tight leash. His opinion of his own business expresses the absolute need for technology to be synonymous with speed of execution. “BT is one of the largest agile organisations around today,” he says.
The heart of the business
The price of admission to the upper echelons of BT’s management is high. “You have to get the IT function to deliver and connect with what is relevant to the business and then anticipate business drivers and support and underpin the whole thing.”
Raja sums up just what he expects of his technology right arm but also shows how he understands the enormous demands placed on his CIO. And he clearly thinks he has the right man in Al-Noor Ramji, boss of BT’s OneIT organisation.
“Saying IT is at the heart of the business does sound a bit trite, but how many businesses really have a CIO who can speak the language of the business and the language of IT and act as an interpreter of that language?”
Talking to Raja, his enthusiasm for how IT can be harnessed is remarkable. He really may have tamed the project management tiger that stalks every large organisation.
His answer? What he terms ‘hothouses’ allied to a strict 90-day development cycle. This entails competing development teams that are subjected to a punishing regime. “Developers and business people are put into a room together for three days, from 7am to midnight.” Three teams work in parallel, with both Raja and Ramji thinking this represents the most creative way to assemble a prototype project. One prototype is picked, but it can contain promising features from the other two. The winning team then has 87 days to implement the project, so the 90-day overall cycle really does mean business.
This approach to development gives Raja clarity on ROI, which BT envisages in three dimensions. Cost reduction, revenue growth and customer experience are the ways in which the price of any IT project is tied to the CFO’s own priorities. As Raja volunteers, any CFO has a blunt instrument – budgetary control – that he can wield against his IT colleagues. “You can use that to incentivise them, to make sure they only put forward the case for a development when the benefit can be seen straightaway.”
This keeps cost reduction in focus. Revenues are addressed through a Post Investment Review (PIR) of each project, the acid test that asks what was really delivered. And customer experience can be seen via cycle times, the simple measurement of how long a new service takes to give the end customer what it needs.
BT Wholesale brims with further metrics that evaluate each new service, but what springs out of conversation with Raja is his very constructive relationship with the executive who is effectively BT Wholesale’s CIO, Ramji.
Ramji’s background is in financial services and it shows in the rapid execution attitude of the hothouse timetable. And both men seem keen to contemplate trimming the 90-day phase back even further to a possible 60 days. “In addition to product and service innovation, we will concentrate our efforts on creating an unparalleled customer experience, where we deliver ‘right first time’ and as ‘timely’ as is possible,” says Ramji.
Raja is a total pragmatist. If technology works, fine. If there is any doubt, do not even think about exposing the corporate customer to it. His advice to CIOs is that long lead times are a thing of the past. Speed of delivery is everything and the CIO must understand the particular customer factors that his CEO and CFO are concerned with and what, in turn, adds value to those. He has given a lot of thought to the challenges facing CIOs. “There is a need for the CIO to find a true risk-sharing model, a way to involve suppliers in the whole commercial venture so that they are more than just salesmen looking in.”
He acknowledges that negotiating this kind of deal with today’s IT vendors will not be easy, but thinks that the smarter software houses are beginning to rise to the challenge.
This is a subtle trend that Mike Mulicka, IT strategy director at consultants Bearing Point, has spotted in his conversations with a broad swathe of CIOs.
“These people are beginning to move away from just taking orders from the business and managing that demand through the latest product offerings. They are looking at what is good for the business overall and this is much more of a financial discussion than a technology debate.”
Quality of content
The BBC has 32,000 desktops driving a media factory that runs on technology but lives or dies by the quality of its content.
Its CIO, Keith Little, outsources most of the day-to-day operations to Siemens while he contemplates issues the BBC’s staff are truly passionate about. “I want to forget about email systems and networks and to concentrate on the future of journalism and TV production and what technology can do for these disciplines.” He notes that many of his staff come from the emerging breed of “hybrid guys”, people who combine technology skills with strong broadcasting production credentials. Little recently attended a small gathering of CFOs and CIOs in London. What stays with him from that day is one persistent issue. “There was a lot of talk around trust, how we can trust each other as the technology function moves away from its traditional role, reporting to the financial controller, and begins to earn its own place on the board.” No easy answers emerged, though Little notes that the mood of the day was “positive and cordial”.
So corporate paranoia and mistrust seem to be fading into the past, but judging by the refusal of so many non-IT board members to tackle questions around the CIO, their disappearance has created a vacuum.
This gap might be a lot better than open hostility, but it still hints at an alarming degree of ignorance. Businesses such as British Energy, BT Wholesale and the BBC have clearly worked out how to put that behind them.