Convincing the CEO
A CIO must convince the other members of the 'C' suite and
the board of directors that a proposed deal is the best one that can be negotiated
for his organisation. Rishiraj Verma looks at how CIOs go about handling
internal discussions before they sit down at the bargaining table with vendors.
|Have a very good reason for everything you do.
Sir Laurence Olivier
from the famous English actors quote above, picture this. You are the
CIO of the organisation. You have an entire room full of members of the board
staring at you. They expect you to convince them about the IT deal you have
proposed. You ought to know not just the whats, but also the whys, hows and
much more of the deal. Only then will the deal get the green flagand you
a sigh of relief.
In this feature we try to look at various things a CIO must make sure to do
before speaking with members of the board about his deal. We also try to understand
what steps the CIO must take while he is presenting his ideas to the board,
and how to ensure that the deal is not just taken seriously but also sanctioned.
The Changing Scenario
Krishnan T M
So how should the CIO ensure that his proposal is taken seriously?
Who better to answer this question than the CIOs themselves? Here they give
their opinions on what should be done and what avoided to get the boards
The first step in the IT deal is communicating the ideas well
to the board. Says Unni Krishnan T M, CTO, Shoppers Stop, The relation
between boardrooms and the IT teams has changed in some organisations in India.
Things seem to have eased out, and therefore routes of communication opened
up between the CIO and the CEO.
Does this new status help in getting the message across quicker?
The answer seems to be positive from most CIOs. They feel that because of the
increased communication between the management and the IT team, chances will
be that ideas are conveyed better, faster and in more detail. Pramod Deshpande,
VP IT at CDSL agrees, A lot of organisations have started feeling that
the CIO should be a part of the board itself. According to him, newer
technology needs have been recognised in the recent past, and board members
at most organisations have been open to ideas from the IT team.
Echoes Vivek Khanna, VP, IT at Havells, IT activities and the IT budget
are now regularly discussed in meetings of the Board of Directors as a main
point in the agenda. According to him, this is a drastic change from the
earlier scene where IT did not hold much importance with the board.
Thus, on the basis of the above two statements, it would appear that the relationship
between the CIO and the Board of Directors of his organisation goes to play
a pivotal role in deciding the future of the deal proposed by him.
|Steve Hodgkinson from Ovum on the best practices
that CIOs should follow to get the board listening.
On the CIOs preparations
Projects should be developed and run as business change projects with
investments required in processes, people and technology innovations.
CIOs should start to sow the seeds of new projects in conversation with
executives, and may sponsor investigative studies and business case projects
to frame a proposal, but it is critical that any major project is seen
as being owned by the business, not by the CIO.
On the CIOs problems
Poor communication is the primary problem. The project may be technically
brilliant, but it is worth little if the CEO or board either cant
understand it or do not trust the logic or facts behind the proposal.
On CIOs forming informal groups
Cross-organisational CIO forums or networking events are also good opportunities
for CIOs from different companies to share experiences, though there are
obvious constraints on the sharing of commercially-sensitive information.
The Deal's the thing
Of equal importance are the quality and the level of participation that the
management takes in making decisions regarding IT in the organisation. Most
CIOs feel it is essential that CEOs help in getting the best IT deal. They say
that this can happen if CEOs are involved in the decision-making process, and
dont limit the involvement to sanctioning the deal alone. Says Deshpande,
You cant expect anyone to know everything. He explains this
by saying that processes such as vendor selection and technical details are
best left to the IT team. The department of the organisation that is getting
affected by the implementation must constantly be in touch with the team so
that there are no discrepancies left.
Notes Krishnan, It would be good if the CEO/CFO participate frequently
in technology events where they hear from other CIOs/CTOs about a given technology.
This kind of association should ideally ensure that the management knows more
about technology and how it can affect their business. Thus, while the management
may be expecting the CIO to learn more about the functioning and in some cases
the intricacies of the business, the IT heads too expect their business heads
to know the technology that is being implemented or is planned to be implemented
in their organisation.
Getting down to business, what is it that goes through, or needs to go through
the CIOs head when he is preparing for the day he has to make the presentation
to the board members of his organisation? There are of course innumerable thoughts
that would cross their heads. We try to look at some of the most important keep
in mind pointers as far as the CIOs homework is concerned.
You need to get the market statistics
and evaluate the vendors before-hand so that it becomes much easier to
let the board know exactly what you have in mind
Among the processes involved, one of the more beneficial ones
for the CIO would be to talk to the functional head whose department will get
affected because of an implementationor the lack of it thereof. An interaction
with the board about the state of affairs of that department could help in getting
the point across more clearly.
Says Krishnan, We create a workgroup that consists
of technology experts and business users/ heads. He explains that such
a group has discussions, interviews or presentations, and from these activities
business requirements and business processes to be supported are charted out.
It is from such processes that CIOs and CEOs can collectively take decisions
about building the needed solution in-house or acquiring it from a vendor. Further,
evaluations must be made by IT teams, and the pros and cons presented to business
heads. Only then should decisions about the final implementation be made.
You need to get the market statistics right and evaluate the vendors before-hand
so that it becomes much easier to let the board know exactly what you have in
mind, says Deshpande. He feels that a set of best practices (such as fair
discussions about the market and correct evaluations) will create confidence
in the minds of members of the board, and then the decision is more likely to
go in the CIOs favour.
Khanna explains that his IT team consists of people from various functional
departments. They are picked up from within the organisation and trained
in IT so that we have a good first-hand idea of business requirements.
Hence, the processes of preparing the deal from start to finish, in collaboration
with the business side of the organisation, should be a highly-calculated and
prepared one. This again emphasises the importance of communication between
both parties involved.
Thorns in the CIOs side
There could be a few problems that would prevent the implementation, or even
its idea from being accepted by the board. One of them would be the fact that
in most cases the CIO and CEO are not on the same page. While the IT head may
be thinking of the best software to reduce the organisations downtime,
the business head may actually be planning a cost-cutting phase. In such a case,
getting the deal sanctioned may become close to impossible.
One of the more practical problems is pointed out by Khanna. IT comes
right at the end, after sales, production and finance, especially in our manufacturing
industry. He adds that getting time from the management for a discussion
on IT is very difficult, and when time is found, it is generally minimal.
Deshpande points out that there are hardly any people on the board who
really understand technology. He feels that this is the biggest problem
a CIO can face while trying to convince the business heads. It is probably because
of this reason that many organisations deploy an external committee of experts
to evaluate the CIOs plans. This helps them stay assured that wrong decisions
are not being made, especially because the IT spend at most organisations has
been on the rise in recent times.
Krishnan on the other hand believes that problems will exist in every phase
of the deal, and should be dealt with intelligently.
Yet again the onus falls on the CIO to ensure that any hurdles in the path of
his proposed deal are removed before it goes to the board for a review.
|What the CIO should remember before going ahead with
the proposal to board members:
- Communicating well with the board members is
a pre-requisite. The CIO must know the deal inside out, and must not
leave any room for the business heads to criticise.
- The CIO must be in constant touch with the head of the department
that will be directly affected by the implementation. This will help
the CIO get a business-side view of the project.
- He must also be good at evaluating the market and negotiating with
multiple vendors so that he can keep financial terms ready as and when
they are asked for.
- The CIO must always remember that the onus is on him to convince
the CEO/CFO/board that the deal he is proposing is necessary for the
- He must make sure to devise a technology model that will show the
CEO and his colleagues not just the long-term benefits such as profits,
but also immediate ones such as lower cost of operations.
- Finally, if possible, the CIO must get himself involved in informal
groups that discuss issues like negotiating pricing models with vendors.
This will help him get deeper insights about whats happening in
the market and also about what other CIOs do to get their IT deals right.
Being there, doing that
One of the most important things
the CIO needs to do today is to ensure that he is trusted by the board
of directors. He needs to be a master of communications, a business strategist
and a technologistall at the same time
One of the most important items that should be present on
the CIOs agenda at all times is the relation between the intended technology
model and the existing business model. He must consider the impact that one
could have on the other, as it will, to a large extent, determine the result
of the proposal he makes. According to Deshpande, the basic plan of action should
be showing the CEO that the implementation would have immediate effects too.
Profits come in only at a much later stage, but you can always show them
facts like lowered costs of operations and business processes being smoothened,
Krishnan notes that this relation could vary across projects. For
certain projects, ROI could be the most important factor, while for others,
compliance could be paramount. Here again, the CIO must understand from the
business side what is really needed and which part should be concentrated on
more than others.
It is clear therefore that CIOs today are expected to do much more than just
deal with hardware and software. They are expected to play the business strategist
too, making sure that what is needed is provided and everything functions smoothly.
At the end of the day, every information technology need arises only from a
business need, so understanding both sides becomes essential for the CIO.
Forming a peer group
A thing of interest to the CIO would be the formation of an informal group that
gets together and discusses ideas to get the most from IT deals. This would
help all members of the group in that there would be inputs coming in from various
market segments. In such a scenario, CIOs would ideally understand how to tackle
hurdles in their path to the right IT deal. Krishnan comments, Such a
concept will be of great help to CIOs.
Deshpande is more definite as he says, Such informal groups already exist.
In the IT fraternity, most people end up knowing each other. He opines
that general information such as ideas to get a deal must be shared. He adds
however that there are certain details such as discount rates provided by the
vendor that should be kept from competitors.
Khanna, who informs that he is part of such an informal group, is of the opinion
that associating with other members of the IT community is beneficial, not just
to him, but to all other members as well.
To sum things up, one of the most important things the CIO needs to do today
is to ensure that he is trusted by the board of directors. He needs to be a
master of communications, a business strategist and a technologistall
at the same time. If this is done with enough care, a time may come when the
CIO may not need to convince the board of his ideas, but only discuss
things with them.
In any other case however, there are more chances of his proposed deal being
considered only a very frivolous attempt. So Laurence Olivier may be correct