While philosophers grapple with the meaning of life, CIOs grapple with the meaning of technology—and rather than in a general sense, in the specific sense of what it means for their companies, and how to translate that meaning for executive management. John Sviokla, a partner at consulting firm DiamondCluster International and a former professor at the Harvard Business School, says the ability to convey technology's implications to others is the next key skill CIOs need to acquire.
Q: When you talk about CIOs' unique responsibilities, I assume you're referring to their being in the crosshairs of business and technology.
A: No, there's more depth to it than that. It's the CIO's unique responsibility to oversee the translation of technology onto the company's business model. The CIO has always been responsible for operational excellence of the technology function, by which I mean quality, good cost base, innovation. But with companies' strategic dependence on technology, the CIO needs to translate technology and new business models in terms of implications they have for the business. CIOs have to act as translators for the rest of the executives.
Q: Can you give me an example?
A: Sure. Take Microsoft's Watson system, the one that gives instant feedback [about nonresponsive programs] and enables the company to do bug fixes and better understand what's going on in the field when its applications are used. You can get more data from a system like that in one day than from doing customer-feedback surveys for a year. So what implication does something like that have for the business model of a bank? What implications do Wi-Fi and voice-over-IP have?
Boeing has committed to buying VOIP phones. You have to look at that development and see what it means. You can say, 'Boeing's making a huge mistake, or they're integrating voice and data [to save money].' It's the CIO's job to say, 'This is how it affects us.' That's a new responsibility because businesses are so much more dependent on technology. If CIOs don't take on this responsibility, they'll be relegated to basically being pumped-up purchasing agents.
Another area where this is important is open-source software. I was talking to [VisiCalc inventor] Dan Bricklin the other day about 200-year-old software. The federal government wants software that will last 200 years, and there's a movement to create an open-source code base to do that. CIOs have to think about the implications for their companies.
Q: But how are CIOs to know whether the technology they're looking at will have the impact of object-oriented programming or of OS/2?
A: That's a problem. Some technologies are overdemanded at the wrong time and underdemanded at the right time. Often, early in a technology's life cycle, senior executives, usually prompted by vendors, get excited by a technology too early. It could be radio-frequency identification (RFID), outsourcing, or the Internet. The problem is that most technologies move at exponential speed, and human estimation, as proven by cognitive scientists, is linear. So early on, people overestimate the implication of technology, and later they underestimate the implications. CIOs are constantly dealing with the potential of being the boy who cried wolf.
Q: So do CIOs have to chart the overestimation and underestimation phases?
A: Yes. They need to inform management of this strange new application that has this peculiar characteristic to it. It's up to the technology executive to explain it properly. Take RFID. Large companies were hot on RFID and spent lots of money on it about six years ago. A lot of companies blew wads of money, stopped development, and now they have to play catch-up again. If technology executives are smart, they'll say, 'We're in the overestimation phase, and what's the lowest-cost way to stay involved?' You stay informed and you watch the technology. You know that at some point, a gorilla is probably going to go in. In the case of RFID, it was Wal-Mart.
Q: This sounds like picking stocks--knowing when to jump in and when not to.
A: That's the thing about technology. For a small investment, you can stay informed. With RFID, if you were a large company, you didn't have to throw a lot of money or talent to keep knowledgeable about what was going on. It doesn't cost a lot to stay in the game. It's like buying options on stock, because the price of the options is low and the timing of the strike on the option is long. That's what technology executives get paid for.
Q: Are there other issues regarding the translation of new technologies into business implications?
A: Yes, and that's the idea of thinking about how technology can uniquely help your company. I talked to a consultant for one defense contractor whose engineers spent 30% of their time looking for information. It turned out that 16% of the contractor's costs were for engineering salaries. If you do the math, it means they're spending 5% of their costs on search. And how many people on the IT staff were dedicated to creating new search technologies to handle all their specialized databases? Zero. And that's not something any vendor can provide for them.
Q: Sounds like you're making a pitch for a consulting firm like DiamondCluster.
A: I'm not. That capability should reside in your company. Finding existing solutions and figuring out how they relate to needs is a core competency, a competitive advantage. If you go back in history and you look at where great wealth has been created, it's been through new core competencies. CIOs have been so pummeled by vendors [trying to sell them something], but they need to step up and say, 'We need to build this technology.' You need enough internal talent to be a smart buyer. You need to understand what's unique to your business model and have enough skills to be a smart supplier to yourself.
