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The Company's CFO Is Going To Be Watching The CIO…

When you become CIO you are going to discover one of the realities of IT life: you are not in complete control of the IT department. Rather, you are in charge of determining how to spend the money that the company allocates to IT. It turns out that how and how much money gets allocated is controlled by non other than the CFO. Are you ready for a corporate battle?

What’s In It For Me?

The CFO is always going to be looking over your shoulder when you become CIO. He / she will be trying to figure out what you are doing with the money that the company has allocated to you. This means that you’re going to have to do a good job.

One of the biggest issues that every CIO faces is dealing with your IT managers. While they may be excellent technical professionals, deep in their hearts they all want the same thing: more money to fund their team.

IT managers want more money so that their teams can do more. Their thinking is, perhaps rightly so, focused on only their team. As CIO you need to take the broader view: what’s best for the IT department and the company?

As CIO you are going to have to divide your limited IT budget into two groups: strategic and non-strategic spending. Everyone can probably agree on the strategic portion of the budget, it’s the non-strategic part that you need to be careful with.

Here you are going to have to establish what percentage of the overall IT budget you are going to be willing to allocate to non-strategic IT activities. Once you’ve determined how big the non-strategic pie is, you are going to have to split it among your managers in a fair way.

Once this is done, so that you don’t get caught up in daily low-level budgeting activities you need to delegate responsibility for spending it to your IT managers. The rules should be clear: follow your IT department technology standards and ask for permission when you want to buy entirely new systems.

It Takes A Department

Although you will eventually become CIO, I’m willing to bet that you don’t have any magical powers. What this means is that how best to allocate your limited IT budget among your different IT managers (which is what the CFO will be watching) needs to be done carefully.

Making your IT managers bring their proposed spending plans out into the open is the best way to inhibit IT silo building activities. A good way to accomplish this is to set up an IT department technology review board made up of IT department and finance department members who will review proposed projects.

The goal of such a committee will be very simple. They will evaluate proposed IT projects against the company’s stated objectives and attempt to determine if the project supports the objectives or is simply designed to build someone’s silo.

In IT we all like to buy the most powerful system available – and vendors always steer us towards them. However, another goal of the review committee that contains non-technical members would be to question just how much computing power is really needed in order to accomplish the task at hand.

What All Of This Means For You

Being a CIO is not all about new technologies and how best to solve business problems with them. Instead there is a lot of financial work that you will be responsible for and the company’s CIO is going to be breathing down your neck in order to make sure that you do a good job of spending the money that the company gives you.

In order to do a good job of this, you are going to have to control how your IT managers spend your money. One way to do this is to separate strategic from non-strategic IT spending. Allocate non-strategic budget fairly and then create a committee made of IT and finance staff to watch over how it gets spent.

No CIO looks forward to the effort that is involved in doing a good job of obtaining and spending your IT budget. However, if you can prevent IT silos from being built and instead make sure that the company’s objectives are being met by the IT department then you’ll quickly become the CFO’s best friend.

- Dr. Jim Anderson
Blue Elephant Consulting –
Your Source For Real World IT Department Leadership Skills™

Question For You: What do you think is the best way to choose who will be on the IT budget review committee?

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What We’ll Be Talking About Next Time

So at a high level, we all know that a CIO can add value to how a company is run. We know that by managing the IT department and motivating the IT staff, the CIO can keep the email system up and the network running. However, that’s not good enough. How can the CIO really transform the company? What does he / she need to do to make a difference? Turns out that over at Ascend One, they know the answer to this question…

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Post tags: budget, initial price tag, IT budget, it manager, new purchases, non-strategic, silos, strategic, technology standards

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The IT Department Is Uniquely Positioned To Uncover Fraud

When you become CIO, it turns out that you’re going to have a lot more on your mind than just how to use the latest and greatest technology to help the company run faster. You’ve got a problem that starts with “F” and rhymes with “Baud” and that stands for Fraud…

Bad Times Make Fraud More Likely

When things get tough at a company, people start to feel the pressure to deliver results no matter what. Some recent studies by behavioral psychologists have revealed a trait that all of us have called “reframing” . This occurs when in order to get away with cheating, we adjust the definition of cheating so that it excludes our actions. Neat trick, eh?

What this means for you soon-to-be-CIOs is that just about anyone working for the company is capable of committing fraud. Hard times brought on by, oh say, a global recession, can boost the chances that someone will cross that line that should never be crossed.

The Fraud Triangle

Look, you’re going to become the company’s CIO and unfortunately that’s not going to suddenly equip you with magical mind-reading abilities. Instead you are going to have to be aware of what is called the “fraud triangle” and keep you eyes open both within and without the IT department.

The fraud triangle has (of course) 3 sides to it: pressure, opportunity, and that ability to rationalize your actions that we’ve already talked about. Any one of these by itself probably isn’t enough to push one of your staff to do something that the entire company might regret, but put all three of them together and you’ve got the makings of a serious problem.

3 Categories Of Fraud

So how big is this fraud thing? Well first you need to understand that study after study have shown that people will cheat if they think that they can get away with it. What makes this even more amazing is that they will cheat no matter what their background is (Ivy Leaguers do it too) and they’ll cheat even if they really don’t have all that much to gain by cheating.

This is a big deal for companies. A 2007-2008 survey that was done by the Association of Certified Fraud Examiners (ACFE) revealed that companies may be losing up to 7% of their annual revenues due to employee fraud. Now that’s a big number!

There’s lots of ways that IT staff along with the rest of the business can commit fraud. However, if we had to group them together, they’d all fall into one of three different buckets. These groupings are: asset misappropriation, corruption, and financial statement fraud. It turns out that asset misappropriation is the most common and averages roughly $150,000 per event. On the other end of the spectrum, financial statement fraud is the least common but the most expensive – it costs the company $2M on average every time it occurs.

How To Stop Fraud

So how does the CIO fit into all of this you may be asking yourself? The answer is actually very simple: good leadership. The goal of every CIO should be to prevent IT staff from making bad judgement calls before they become fraud. A CIO who establishes clear standards for the IT department to follow has gone a long way in preventing fraud from occurring in the first place.

Of course, we’re talking about the IT department here and so there has to be a second level of effort – fraud detection. The CIO has access to the entire company’s data and it’s electronic tools. He / she is best suited to working with the CEO and CFO to implement the IT sensors that will alert them if something unusual starts to happen.

What All Of This Means For You

Fraud is, unfortunately, all too common in modern companies. A CIO has a key role to play in both preventing fraud from occurring within the IT department and detecting it when it happens in other parts of the business.

Understanding that anyone can end up committing fraud given the right set of circumstances is the key to preventing it. CIOs need to establish clear standards that make sure that everyone knows what is and is not acceptable behavior within the company.

In the end, it’s the tone set by the CIO that will be communicated down to the rest of the IT staff. Preventing fraud is something that a CIO can do by leading by example.

- Dr. Jim Anderson
Blue Elephant Consulting –
Your Source For Real World IT Department Leadership Skills

Question For You: What do you think the is #1 thing that a CIO can do to prevent fraud from happening in the IT department?

Click here to get automatic updates when The Accidental Successful CIO Blog is updated.

What We’ll Be Talking About Next Time

You want to become a CIO. You probably want to become a CIO in the private sector – you know, those companies that have owners or stockholders that they always have to work to keep happy. Why haven’t you spent any time thinking about becoming a CIO who works for the biggest employer out there: the U.S. Federal government?

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© Dr. Jim Anderson for The Accidental Successful CIO, 2010. | Permalink | One comment | Add to del.icio.us
Post tags: asset misappropriation, capability for rationalization, corruption, diminished morale, fewer resources, financial statement fraud, fraud, fraud triangle, layoffs, opportunity, pay cuts, pressure, rationalization, trait

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Thinking Like A Private Equity Investor Can Make A CIO Rich

What makes you think that when you become the CIO that you’ll be able to run things better than the current CIO is doing? Do you posses some magical management ring or have a bag of IT / business alignment powder that you can sprinkle on your staff that will transform today’s issues into tomorrow’s pillars of success? I don’t think so.

Maybe a better approach would be to go look for some help. One place where you can find out how to run a successful IT department comes from, of all places, the world of finance. Let’s talk with the big and powerful private equity firms and see what they have to teach us…

Just What Is A Private Equity Firm?

You’re good at IT; however, you may not be in the business of keeping up with just what private equity firms do. Let me explain. Private equity firms are basically combo consulting / banking firms. They scour the market looking for under performing companies. When they find one, they swoop in and buy them. Often times they need to borrow a lot of money to make this purchase so it’s called a “leveraged buy-out”.

Once they are in control, more often than not they take the company private — that means that they buy back all of the outstanding public stock. When they no longer have to worry about what the shareholders think, they get to work. Their overall goal is to boost the company’s profits so that they can turn around and sell it for more than they paid for it.

One way to boost profits is to slash costs to the bone, the other way is to boost profits. If you can do both, then you’ve succeeded. A few years down the road when the company is sold, the money from that sale is used to pay off the remaining bank loan and then everything left over is pure profit. A lot of profit.

Run Your IT Department Like A Private Equity Firm Would

So if you were a CIO who wanted to wring the maximum value out of your department, just how could you go about doing this? The big boy private equity firms (Blackstone; Kohlberg, Kravis, Roberts; and Bain Capital) have basically boiled what you need to do down to six steps:

1. Define Your Department’s Full Potential: If you want to maximize the value of your IT department, then you are going to have to do the due diligence needed to know what that “full value” looks like otherwise you’ll never know if you’ve reached it.
2. Create a blueprint: Once you know what you want to achieve, you’re going to need a plan for how you’re going to get there. The key here is that the blueprint needs to be detailed — who is going to do what and when are they going to do it.
3. Match: you’ve got to move fast if you want to have any hope of pulling this transformation off. That means that you’re going to have to match the right people to the right jobs and you’re going to have to start measuring the right things.
4. Hiring: you can’t get “there” if you don’t have the right people working in your department. This is why you always see such staff turnover after private equity gets involved — they don’t tolerate slackers.
5. Make Your Money Work: Although your IT department can’t borrow the way that a private equity firm does, you sure can make the capital that you have work as hard as possible for you. If it doesn’t contribute to your bottom line, you shouldn’t be spending on it.
6. Results: Make it so everyone in the IT department has a results focus — adopt the mindset of a private equity investor.

What All Of This Means For You

One of the big challenges of being the CIO is that it can be very unclear just exactly what you are supposed to do after your big promotion. The rest of the company thinks that you will just magically make all of their IT problems go away. The IT department thinks that you’ll provide them with clear strategic direction. Great — what’s a CIO to do?

In a nutshell, you can’t go wrong if you adopt the mindset of a private equity investor. Since they view a business completely from a revenue generating perspective, they are able to see through all of the clutter and focus on only the parts that really matter. This is exactly what you need to do.

No, you can’t do a leveraged buy-out of the IT department and then turn it around and sell it back to the company in a couple of years. However, you can work with your staff and using private equity thinking to pull off an amazing transformation. Once you’ve done this, it will be time for you to move on to your next challenge. How’s that for a Wall Street pay off?

Do you think that you’d have the guts to run your IT department like a private equity firm would?

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What We’ll Be Talking About Next Time

One of life’s great mysteries is “just exactly what do CIOs do” I’m pretty sure that we all think that we know what they do, but do we REALLY know? In order to prepare you for your future job as a CIO, I have undertaken a dangerous field study in order to observe the wild CIO in their natural habitat and I’m now prepared to make my report back to you. Listen and learn…

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Post tags: Bain Capital, Blackstone Kohlberg, full potential, Kravis, leverage, leveraged buy-out, private equity, private equity firms, results focused, Roberts

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1-800-Flowers Found A Way To Make Everyone Pay

Everybody wants their IT services for free. When you become the CIO, you’ve got to find an answer to the ugly question of just who’s going to pay you for all of those fancy IT services that your department can provide.

Sometimes there’s a single IT budget for the entire company that everyone draws from. But who gets what? Does everyone get the same amount? Do successful departments get more IT services than other departments? If they don’t, then will they start to set up their own IT department? Looks like another problem that you’re going to have to solve when you are the CIO…

Budget, Budget, Who’s Got The IT Budget?

In most of the civilized world clean drinking water is freely available all the time. Since it’s always available and we don’t really pay very much for it, we use it like there is no tomorrow.

Who cares about leaky faucets? Run the yard sprinklers, fill the pool, etc. – there’s really no cost to being wasteful with the stuff. This is all fine and good until something happens. When there is a sudden scarcity of water, all of a sudden we become much more aware of just how valuable it is.

I live in Florida and when a hurricane (or the threat of one) looms, bottled water is what everyone starts to stock up on. We can go without electricity for days, but not water.

The services provided by IT are the same way – if nobody has to pay for the helpdesk, or the onsite support, or the printer paper, then we all use them like they were free – which they basically are. As a CIO you’ve got a money problem. The internal customers that you serve are going to want you to do more and more for them while at the same time they are going to expect to not have to pay for any of it. Sounds like you’ve got a problem on your hands.

Flower Power

Tim Moran has taken a look at how the company 1-800-Flowers.com has dealt with this very problem. In the case of 1-800-Flowers, they had created a problem by buying other companies who came along with their own IT departments. They centralized the IT services; however, they were left with 14 separate brands and businesses.

Each of these separate businesses uses IT services; however, they didn’t have to pay for them – the IT funding came out of a central budget. This meant that everyone felt free to request as many laptops, Blackberrys, and cell phones as their little hearts desired because they were all, effectively, free to them. You can imagine the CIO headaches that this was causing – there was no financial IT alignment.

Pay To Play Saves The Day

There is a lot of talk about how CIOs need to find ways to innovate within their departments. Over at 1-800-Flowers CIO Steve Bozzo showed some innovation when he decided to solve this problem by starting to charge each of the company’s brands for the IT services that they were using.

It turns out that this isn’t really all that hard to do. There are plenty of good software programs out there that allow you to do this type of item-by-item billing using the Internet to provide online access to the bills. The real challenge is loading all of the data into the system in the first place.

There will be tricky decisions in many areas. Where servers are being used to support applications that are used by multiple departments you are going to have to find ways to divide up the expenses between all parties involved. Bozzo went about transitioning to this new way of doing business in a clever fashion.

Once the internal billing system was set up, he immediately started sending the business heads so-called “mock bills” that showed them what their IT bill would have been if the chargeback process was actually being used. This, of course, caused some shocked business executives to have some hasty discussions with IT.

The new IT billing system went “live” at the start of 1-800-Flowers new fiscal year. Having seen the mock bills and having had time to reduce their IT expenses somewhat allowed each of the business units to request the proper funding for their portion of the annual IT budget. No solution is perfect, but this approach allowed 1-800-Flowers to get a handle on their IT spending.

What This All Means For You

1-800-Flowers is now able to allocate every dollar in their IT budget to a business unit. This includes their entire infrastructure management from servers, security, voice services, to network services.

What this has allowed the company to do is to finally get true insight into just exactly where all of the money that they are spending on IT is going. Although it may not be in your CIO job description, when you become CIO providing this kind of transparency into your IT budget would be a good idea.

Once you are able to convince your firm’s senior management that you are indeed spending wisely the money that they’ve allocated to you, then they’ll be more likely to provide you with additional funding to work on those new projects that you really want to work on.

Do you think that there is any downside to providing so much insight into where the IT dollars are going?

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What We’ll Be Talking About Next Time

It turns out that a company’s #1 salesperson is their CIO. They may not go on sales calls, have an assigned quota, or even be up-to-date on the company’s latest product pricing plans, but at the end of the day the CIO is the one who drives (or drives away) the most sales.

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© Dr. Jim Anderson for The Accidental Successful CIO, 2009. | Permalink | 2 comments | Add to del.icio.us
Post tags: 1-800-Flowers, 1-800-Flowers.com, align tech, billing system, budget transparency, business executives, centralized IT services, chargebacks, CIO, cio job description, cio jobs, cio salary, cto, infrastructure management, it adjustment, it alignment, it alignment definition, IT budget, mock bill, Steve Bozzo, Tim Moran

How Did We Get Into This Financial Mess?

Man – what a mess! I’m almost afraid to unwrap the paper each morning because the font size of the headlines seems to be getting bigger and bigger as the financial news gets worse and worse. Stock trading firms are going belly up, others are getting bought. Fannie Mae and Freddie Mac (who are they?) got taken over by the government and now WaMu just failed. Clearly this is the end of the world. Maybe.

As a reasonably gifted technical person, I thought that I knew how the world of finance worked (and so to apparently did a lot of people who worked in finance); however, with the wheels coming off of the truck, now I’m not so sure. I really needed someone to explain to me just how so much could go so wrong so quickly. And that’s where Stephen stepped in.

Stephen Schwarzman is a true Master of the Universe in financial circles. First off, he’s a billionaire. Secondly, he’s the chairman and co-founder of the Blackstone Group private-equity firm. In case you aren’t aware of it, Blackstone is HUGE and they only play with numbers that end in “Billion”. So when the Wall Street Journal and the Yale School of Management hosted a round table of important people in finance, he was there.

Stephen started what was intended to be a Q&A session with an (almost) all-in-one-breath summary of just what the heck has happened to the financial markets. For geeks who like their technical information short & sweet and preferably from a guru, you’re not going to get much better than this. Here’s the whole quote:

It’s a perfect storm. It started with Congress encouraging lending to lower income people. You went from subprime loans being 2% of total loans in 2002 to 30% of total loans in 2006. That kind of enormous increase swept into a net people who shouldn’t have been borrowing.

Those loans were packaged into CDOs rated AAA, which lead to the investment-banking firms [buying them] to do little to no due diligence and the securities were distributed throughout the world where they started defaulting.

When they started defaulting, out of bad luck or bad judgment, we implemented fair-value accounting… You had wildly different marks for this kind of security, which led to massive write-offs by the commercial-banking and investment-banking system.

In the face of those losses… you needed to raise new equity…which came from sovereign-wealth funds, in part, which then caused political resistance to sovereign-wealth funds, who predictably have withdrawn from putting money into the system… It seemed pretty obvious that would have to happen. We now find ourselves with a liquidity crisis where fundamentally the cost of money for financial intermediaries [such as investment banks] is significantly in excess of their cost of lending it. So several institutions found themselves in a structurally impossible position… Goldman reverted to a banking charter for a lower cost of funds, which today is still not low enough for the business. So that is the story of how we got here.

Whew! All that in one breath? The man truly knows his stuff. If you got all of that, then you can stop reading now and you are fully prepared to be the star of the next cocktail party that you go to this week. However, if like me some of what Stephen said sailed over your head, then let’s take a few moments and do a some debugging and see what he was really getting at. Maybe if we step through what he said line-by-line it will make more sense:

It’s a perfect storm. It started with Congress encouraging lending to lower income people. You went from subprime loans being 2% of total loans in 2002 to 30% of total loans in 2006. That kind of enormous increase swept into a net people who shouldn’t have been borrowing.

Congress enacted the Community Reinvestment Act (CRA) in 1977 in order to encourage banks to extend loans to qualified people with low incomes. Home loans are actually divided into four different categories: prime, jumbo, subprime and near-prime mortgages. Everything is based on your credit risk: if you have a stable job and a good credit rating, then you can get a prime mortgage (lower interest rate). Jumbo loans are generally of prime quality, but they exceed the $417,000 ceiling for mortgages that can be bought and guaranteed by government-sponsored enterprises – basically if you are buying a McMansion then this is the kind of loan you’d take out. Near-prime mortgages are made at a higher interest rate than prime, but lower than subprime. These are for folks who may not be able to document their income or may have trouble providing a down payment. Subprime loans are for folks with poor credit ratings and risky sources of income. These loans carry the highest interest rates.

Things percolated along quite nicely and non-prime loans made up about 9% of all home loans being made up through about 2001. Then BANG! Two things happened: some clever mortgage banker devils decided to change how they calculated a person’s credit worthiness – they started using the same rules that were used to get auto loans (these were looser rules – it was much easier to get a loan). But wait, there’s more! By itself, just making it easier to qualify for a home loan would not have been enough to cause subprime loans to surge from 9% to 40% of all home loans being made in 2006. There had to be something else…

Once again, it was clever bankers to the rescue. See, it turns out that in order for a bank to make a loan, they need to have equity capital on hand to back those loans up (that’s what they are loaning out). When you run out of this, you’ve got to stop making loans and that means that you’ll miss out on making all that money that banks make when they process mortgages (remember all those “fees” when you bought a house?). What banks really like to do is to sell a mortgage to investors after they’ve completed the paperwork. This way it’s off their books and they’ve got more money to loan out. Hmm, the problem was that these subprime mortgages were too risky to sell to traditional investors. What to do? Sure seems like its time to invent a new financial vehicle to take care of this.

Those loans were packaged into CDOs rated AAA, which lead to the investment-banking firms [buying them] to do little to no due diligence and the securities were distributed throughout the world where the started defaulting.

Oh, oh – it’s vocabulary time. Remember, banks made prime mortgages funded with deposits from savers (you and me) and then sold them to investors. Near-prime and subprime mortgages presented a bit of a problem – no investor was going to touch them because they were too risky. This is where CDOs come in.

A Collateralized Debt Obligations (CDO) is a clever investment tool that was created to make investing in subprime mortgages easier for investors to stomach. What happens is that a lot of subprime mortgages were sold by banks and mortgage originators (non-banks that were handing out mortgages) and then these loans were stuck together into a CDO. Inside a CDO, individual loans were placed into one of three “trenches”: senior (pretty safe), mezzanine (sorta safe), and equity / unrated (uhh – I’m not so sure about this). Each trench paid a different interest rates with the higher risk trenches paying more to compensate investors for the higher risk. Got it so far?

What Stephen is talking about is that this all sorta works if there is a mix of loans (good/bad/ugly) in a CDO. What happens if they are all ugly? It turns out that these beasts are fairly complex and it’s quite difficult to accuracy determine how risky one of them is. The guys who are supposed to be good at doing this, the credit rating agencies (Moody’s, Standard & Poor’s), apparently were asleep at the wheel. An “AAA” rating basically means that an investment is a “sure thing” – its rock solid. They classified a lot of CDOs as being AAA when they were really made up of too many subprime morgages. Oh oh!

Things starting hitting the fan when folks started missing their mortgage payments on their subprime loans. This resulted in default rates shooting up. Hold on – this is where things start to get bad. Defaulting subprime loans then started to cause CDOs that were based on them to stop generating returns to investors (if nobody is making their monthly loan payments, then there is nothing to pass on to investors). All the clever tricks that had been set up to make sure that CDOs could withstand some defaults crumbled when it turned out that lots of CDOs were made up of all high risk subprime loans.

When they started defaulting, out of bad luck or bad judgment, we implemented fair-value accounting… You had wildly different marks for this kind of security, which led to massive write-offs by the commercial-banking and investment-banking system.

So the sky started falling. What made things get so bad so quickly? Well this little accounting trick called fair-value accounting sure didn’t help things. What this means is that the value of a CDO is based on the current market price for that CDO (whatever someone is willing to pay you for it right now). When the financial world started to turn upside down and the loans that made up lots of CDO started to turn out to be worthless, that meant that the value of the CDO itself started a race to $0. This is what caused the U.S. government to have to step in and save Fannie Mae and Freddie Mac they were backing too many bad loans.

When you are an investor and your investment has become worthless overnight (ouch!), what do you do? You write it off – you tell the world that your gold has become lead and you’ve just lost a lot of money. This happens all the time and everyone hopes to move on and do better next time. However, this time around lenders reacted to these signs by tightening credit standards especially on riskier mortgages.

When it became hard for everyone (prime, subprime, etc.) to get loans, people stopped buying houses. This meant that it became much harder to sell a house. This meant that if you got behind in your house payments then you couldn’t just sell the house and make yourself whole. You basically HAD to default on your loan and just walk away.

This meant that the banks and financial institutions could no longer raise money they way that they had been doing even as their investments turned to dust. Can you say cash flow problem? The perfect storm had arrived.

In the face of those losses… you needed to raise new equity…which came from sovereign-wealth funds, in part, which then caused political resistance to sovereign-wealth funds, who predictably have withdrawn from putting money into the system… It seemed pretty obvious that would have to happen.

So if you are a Lehman Brothers, what do you do now? You start cluching at straws. Your next best source of cash is what is called a Sovereign Wealth Funds (SWF). SWFs are typically created when governments have budgetary surpluses and have little or no international debt. A good example of a SWF is the Kuwait Investment Authority – lots of money looking for a home that will generate more money. Having foreign governments make big investments in the firms that control big parts of the U.S. economy made our elected officials in Washington D.C. very nervous. To make themselves feel better, they passed the Foreign Investment and National Security Act of 2007. Basically, this gave the government veto power over any deal that involved a SWF. The SWFs said, ok – if you are going to be that way, then we’ll go play somewhere else. If you were WaMu, then you just saw your last best chance for funding to save yourself walk away!

After this, everything just went to hell in a handbag. It’s not over yet. However, here’s the final take away that Stephen didn’t cover. Everything will work out in the end. What needs to happen is that the credit markets that businesses and people borrow from have to unfreeze. Once this happens, then people will start borrowing again (rationally we hope). Then investers will return and start to make investments. Life will once agian get back to normal. Grit your teeth and we’ll get though this together.

What do you think about the financial mess that we’re in? What do you think that this will mean in the long run for IT? Do you think that the computers and software that all of the banks and mortgage lenders used should have warned them that things were going to go wrong? Do you think that technology can save us from having this ever happen again? Leave me a comment and let me know what you are thinking.

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© Dr. Jim Anderson for The Accidental Successful CIO, 2008. | Permalink | 5 comments | Add to del.icio.us
Post tags: Blackstone Group, business, conflict, Fannie Mae, Freddie Mac, geek, information technology, IT, leadership, mortgage, Stephen Schwarzman, strategic planning

No holding back this time, I’m just going to let it all come out. I just got done reading my 1,000th article on how to improve an IT department and it was as worthless as most of the others that I’ve read. For way too long I’ve been listening to gurus, consultants, and other so-called smart people who have proposed band-aid after band-aid to stop the hemoraging that is going on in IT right now. As an industry we seem to be going through CIO-of-the-month scenarios, my friends and colleagues are burned out and fed up, and now we’re learning that the next generation of kids don’t want to have anything to do with IT.

What’s Wrong With IT?
In a nutshell, we’re too different. Yeah, yeah, I know that we treasure our late start times, all night work sessions, flip-flops at the office and multi-screen desktops that sit in front of our original Star Wars posters, but it’s killing us. Foosball tables in the hallways, SQL command hierarchy charts on the wall, and action figures lined up on top of cube partitions don’t do a good job of saying “we’re part of this company”. Instead, they say “we’re different”. That’s the problem.

I’m not sure how this all started, but I blame air-conditioning. The early mainframe computers could only operate from within well air-conditioned rooms and so naturally the technicians who maintained and programmed them were placed in the same room or near by. This allowed them to be hidden from the rest of the company. Out of sight, out of mind. The action figures showed up, the dress code got thrown away, and the MIS team stopped trying to fit in.

Who Cares?
You do. Your career is going to be very short and you are going to be quite bitter when your IT job goes away. The company views you and your department as a cost not an asset and they are even now looking for ways to reduce the expense that is known as you.

The CIO cares because he/she just doesn’t seem to understand why none of the other executives really want to play with them. The reason is simple, the IT department is weird and so by extension the CIO must be weird and who really want’s to play with a weirdo?

What To Do?
In the immortal words of the hair removal lady in the movie The 40 Year-Old Virgin, “…this is going to hurt.” What needs to be done is that IT needs to look, act, and talk like the other parts of the company. I’m going to go one step further and say that the role model that they need to follow is the finance department. “Ouch!” you say. Yep, put the long sleeve shirts back on, jettison the foosball table, take down the star wars posters, and let’s all get back to moving the company forward.

The thinking behind this is simple: who do we like to work with? We like to work with people who are like us. That means that if the IT department really wants to align itself with the rest of the business, then it needs to start to look like, sound like, and act like the other departments. The finance department is generally well respected and has the ear of the senior management team so they are a great role model for the IT department. In fact, the IT department should try to be viewed as finance’s “brother department” — if you’re talking to one, you should be talking to both.

What would this do for a CIO? First it would instantly boost his / her respectability. All of a sudden everyone would realize that the CIO and the IT department were really part of the company and that they were working to make a profit also. This would allow the CIO to start to take on different information management tasks that showed real value to the company. Finally! Alignment would be possible.

Don’t get me wrong here, I like foosball as much as the next IT staffer. However, I believe that the “IT markings” need to be taken down so that we can blend in with the rest of the company. There should be some special place buried deep within the IT department that can be turned into a shrine for IT. This is the place where the IT employees can go to indulge in IT talk and, perhaps, play some foosball. However, once they leave this special palace, they should re-enter a workplace that looks like they are a part of the rest of the company.

Tags: IT, CIO, weird, jargon, finance, align

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© Dr. Jim Anderson for The Accidental Successful CIO, 2008. | Permalink | 26 comments | Add to del.icio.us
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