Changing Role of the CIO

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Changing Role of the CIO

• David Boyles
• CxO Technology Advisor
• Microsoft Australia New Zealand

2
Agenda Role of the CIO

• BusinessTrends in Financial Services
• Typical Financial Services IT Priorities
• Some Things Havent Changed
• Five Influences on the Role
• Role in Transition
• Skills of the new CIO
• Frameworks for Success
• Outcomes

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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
• Real time analytics AI (eg. Capital One)

Note This is my opinion, not quantitative
research
4
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
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Some Things Havent ChangedExpectations!

• 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 dont come up
  with excuses about incomplete specs, scope
  increases and lack of resources
• Execution Plan and deliver infrastructure
  (18-30 month timelines) even if the BU planning
  timeframe is one year or less
• Leadership World class customer relationships,
  employees, processes and infrastructure/operations
  .

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Some Things Havent 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
• Its my budget and I will pick the solution
• Responsibility and accountability vs authority

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Five Emerging Influences

• Information security
• Fully automated business processes
• Growth of IT Capital spend relative to other
  categories
• Value/importance of intangible assets
• Business Process Modelling (BPM)

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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.)

9
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.

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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.

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Functional Specialist to ???
New Role
Split Roles
Old Role

• Architecture, Planning Policy
• Solutions (SW) Development
• Infrastructure Management
• IT Leadership People Development
• Business Strategy, Innovation, Change
  Management
• Business Leadership People Development

• Solutions (SW) Development
• Infrastructure Management
• IT Leadership People Development

• Architecture, Planning Policy
• Solutions (SW) Development
• Infrastructure Management
• IT Leadership People Development

CTO

• Architecture, Planning Policy
• Business Strategy, Innovation, Change
  Management
• Business Leadership People Development

CIO
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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

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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.

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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.

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CIO Frameworks for Success IT Excellence Model
IT excellence the delivery of business
capabilities is the result of a structured and
comprehensive program in seven key areas.
Information Security
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CIO Frameworks for SuccessRoadmap to Deliver
Business Capabilities

• Short term deliverables (
• 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

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CIO Frameworks for SuccessLeadership 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.

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CIO Frameworks for SuccessPeople 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). Dont 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.

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CIO Frameworks for SuccessProcesses

• 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.

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CIO Frameworks for SuccessInfrastructure

• 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.

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Some OutcomesDriven 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
  mid-sixties to mid-forties
• Reduction of telecommunications expense by 10
• 90 reduction of Severity 1 errors going into
  production
• CMM Level 5 Certification (Software TQM)

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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.