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Issue of November 2006 

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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

Coming from the famous English actor’s 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 flag—and 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 board’s nod.

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.

Analyst’s View
Steve Hodgkinson from Ovum on the best practices that CIOs should follow to get the board listening.

On the CIO’s 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 CIO’s problems
Poor communication is the primary problem. The project may be technically brilliant, but it is worth little if the CEO or board either can’t 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 don’t limit the involvement to sanctioning the deal alone. Says Deshpande, “You can’t 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.

Diligence Pays

Getting down to business, what is it that goes through, or needs to go through the CIO’s 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 CIO’s 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 implementation—or 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 CIO’s 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 CIO’s 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 organisation’s 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 CIO’s 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.

In Short
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 organisation.
  • 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 what’s 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 technologist—all at the same time

One of the most important items that should be present on the CIO’s 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,” he advises.

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 technologist—all 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 after all.

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