Changing Role of the CIOChanging Role of the CIOChanging Role of the CIOChanging Role of the CIO

David BoylesCxO Technology AdvisorMicrosoft Australia & New Zealand

Agenda: Role of the CIOAgenda: Role of the CIO

BusinessTrends in Financial ServicesBusinessTrends in Financial Services

Typical Financial Services IT PrioritiesTypical Financial Services IT Priorities

Some Things Haven’t ChangedSome Things Haven’t Changed

Five Influences on the RoleFive Influences on the Role

Role in TransitionRole in Transition

Skills of the new CIOSkills of the new CIO

Frameworks for SuccessFrameworks for Success

OutcomesOutcomes

Trends in Financial Trends in Financial Services*Services*

Big is better – many mergers & acquisitionsBig is better – many mergers & acquisitions

Profitable niche plays (mortgage brokers, ING Direct)Profitable niche plays (mortgage brokers, ING Direct)

Channel expansion (eg. internet, brokers)Channel expansion (eg. internet, brokers)

Real time vs batch (eg. eTrade, Schwab)Real time vs batch (eg. eTrade, Schwab)

Self Service (eg. internet banking)Self Service (eg. internet banking)

Value management (eg. cross sell, risk management)Value management (eg. cross sell, risk management)

Fees increasing in importance as interest margins Fees increasing in importance as interest margins declinedecline

Information Security & PrivacyInformation Security & Privacy

Workflow (& BPR) vs CRMWorkflow (& BPR) vs CRM

Mass customisation vs CRMMass customisation vs CRM

Real time analytics & AI (eg. Capital One)Real time analytics & AI (eg. Capital One)*Note: This is my opinion, not quantitative research

Typical IT PrioritiesTypical IT Priorities

Decrease operating costsDecrease operating costsGrow revenueGrow revenueComply with privacy laws & Info SecurityComply with privacy laws & Info SecurityRisk ManagementRisk ManagementCustomer service enhancements including self Customer service enhancements including self serviceserviceReal time analytics for sales and serviceReal time analytics for sales and serviceWealth managementWealth managementBusiness process improvement/integrationBusiness process improvement/integrationBusiness focused IT leadersBusiness focused IT leaders

Source: Various Studies & Surveys on FSI Priorities

Some Things Haven’t Changed:Some Things Haven’t Changed:

Expectations!Expectations!Operations: “Five 9s” (everything runs well, Operations: “Five 9s” (everything runs well, 100% of the time)100% of the time)Costs: Decline or stay flat regardless of volume Costs: Decline or stay flat regardless of volume increasesincreasesBenchmarks: Better than market bestBenchmarks: Better than market bestProjects: On budget and on time – don’t come Projects: On budget and on time – don’t come up with excuses about incomplete specs, scope up with excuses about incomplete specs, scope increases and lack of resourcesincreases and lack of resourcesExecution: Plan and deliver infrastructure (18-Execution: Plan and deliver infrastructure (18-30 month timelines) even if the BU planning 30 month timelines) even if the BU planning timeframe is one year or lesstimeframe is one year or lessLeadership: World class customer Leadership: World class customer relationships, employees, processes and relationships, employees, processes and infrastructure/operations.infrastructure/operations.

Some Things Haven’t Changed: Some Things Haven’t Changed:

Challenges!Challenges!IT viewed as “shared services” cost, not core business IT viewed as “shared services” cost, not core business processprocess

Budgets tight and spend difficult to justifyBudgets tight and spend difficult to justify

Infrastructure planning & investment horizon mismatch Infrastructure planning & investment horizon mismatch with business prioritieswith business priorities

Information Security issuesInformation Security issues

Cost vs Quality arguments (High Quality = Low Cost)Cost vs Quality arguments (High Quality = Low Cost)

Facts versus opinions and feelingsFacts versus opinions and feelings

BU silos, IT silosBU silos, IT silos

““It’s my budget and I will pick the solution”It’s my budget and I will pick the solution”

Responsibility and accountability vs authorityResponsibility and accountability vs authority

Five Emerging InfluencesFive Emerging Influences

1.1. Information securityInformation security

2.2. Fully automated business processesFully automated business processes

3.3. Growth of IT Capital spend relative to Growth of IT Capital spend relative to other categoriesother categories

4.4. Value/importance of intangible assetsValue/importance of intangible assets

5.5. Business Process Modelling (BPM)Business Process Modelling (BPM)

Information SecurityInformation Security

Becoming more of a business issue:Becoming more of a business issue:

Privacy laws (Privacy Act 1988, Trade Privacy laws (Privacy Act 1988, Trade Practices Act); Practices Act);

New director and officer responsibilities for New director and officer responsibilities for accuracy and integrity of financial and other accuracy and integrity of financial and other data (Clerp9, Sarbannes-Oxley);data (Clerp9, Sarbannes-Oxley);

Director and officer responsibilities for risk Director and officer responsibilities for risk management, including BCP/DRP.management, including BCP/DRP.

(Note: CIOs have been dealing with this issue for years.)(Note: CIOs have been dealing with this issue for years.)

Automaton, Capital SpendAutomaton, Capital Spend

Full Automation of Business Processes. Full Automation of Business Processes. There There may have been a dotcom crash, but the trends are may have been a dotcom crash, but the trends are now plain to see – more and more business is over now plain to see – more and more business is over automated channels. Thus, business success is more automated channels. Thus, business success is more dependent than ever on IT.dependent than ever on IT.

IT Capital Spend Growing as a % of total Capital IT Capital Spend Growing as a % of total Capital Expenditure. Expenditure. Related to the above. Highly visible Related to the above. Highly visible spend requires more visible IT leadership & spend requires more visible IT leadership & governance.governance.

Intangible Assets & BPMIntangible Assets & BPMIncreasing value of Intangible Assets. Increasing value of Intangible Assets. Physical Physical assets may have driven corporate market value assets may have driven corporate market value decades ago, but no longer. Increasingly, the market decades ago, but no longer. Increasingly, the market value of corporates is dependent on intangible assets, value of corporates is dependent on intangible assets, such as intellectual property and repeatable processes. such as intellectual property and repeatable processes. Generally speaking, Generally speaking, repeatable processes are repeatable processes are manifested as software running on the IT infrastructure.manifested as software running on the IT infrastructure.

Business Process Modelling. Business Process Modelling. Still relatively young, Still relatively young, but BPM has real promise to leverage the intangible but BPM has real promise to leverage the intangible property of organisations. Good area for the CIO to take property of organisations. Good area for the CIO to take the lead.the lead.

Functional Specialist to ???Functional Specialist to ???

““Old” RoleOld” Role

•Architecture, Architecture, Planning & PolicyPlanning & Policy•Solutions (SW) Solutions (SW) DevelopmentDevelopment•Infrastructure Infrastructure ManagementManagement•IT Leadership & IT Leadership & People People DevelopmentDevelopment

““New” RoleNew” Role•Architecture, Architecture, Planning & PolicyPlanning & Policy•Solutions (SW) Solutions (SW) DevelopmentDevelopment•Infrastructure Infrastructure ManagementManagement•IT Leadership & IT Leadership & People People DevelopmentDevelopment•Business Strategy, Business Strategy, Innovation, & Innovation, & Change Change ManagementManagement•Business Business Leadership & Leadership & People People DevelopmentDevelopment

““Split” RolesSplit” Roles

•Solutions (SW) Solutions (SW) DevelopmentDevelopment•Infrastructure Infrastructure ManagementManagement•IT Leadership & IT Leadership & People People DevelopmentDevelopment

•Architecture, Architecture, Planning & PolicyPlanning & Policy•Business Strategy, Business Strategy, Innovation, & Innovation, & Change Change ManagementManagement•Business Business Leadership & Leadership & People People DevelopmentDevelopment

CTOCTO

CIOCIO

““Traditional” CIO SkillsTraditional” CIO Skills

LeadershipLeadershipProject managementProject managementVendor and sourcing managementVendor and sourcing managementTime management & prioritisationTime management & prioritisationDevelopment methodologiesDevelopment methodologiesLegacy environmentsLegacy environmentsEnvironments of the future (Web services/SOA):Environments of the future (Web services/SOA):

Windows, .NET, C#, Active Directory, XMLWindows, .NET, C#, Active Directory, XMLLinux, Java (JBoss-Weblogic-Websphere), XMLLinux, Java (JBoss-Weblogic-Websphere), XML

Data Centre OperationsData Centre OperationsNetworks (wireless and wired)Networks (wireless and wired)DRP/BCP (BU and IT)DRP/BCP (BU and IT)Info Security, as relates to ITInfo Security, as relates to ITComponentisation & reuseComponentisation & reuseData Warehousing, Data MartsData Warehousing, Data Marts

““Newish” CIO SkillsNewish” CIO Skills

All of the “traditional” skills, PLUS:All of the “traditional” skills, PLUS:

VisionVisionAspirational and/or scenario planningAspirational and/or scenario planningBusiness strategy & analysisBusiness strategy & analysisChange managementChange managementBusiness judgment, and the courage to implement Business judgment, and the courage to implement decisionsdecisionsReengineering & Business Process Modelling (BPM)Reengineering & Business Process Modelling (BPM)Team buildingTeam buildingCommunications & influencingCommunications & influencingPublic, employee, and customer relationsPublic, employee, and customer relationsContinuous improvement: TQM, CMM, inspection, etc.Continuous improvement: TQM, CMM, inspection, etc.

CIO Frameworks For SuccessCIO Frameworks For Success

Structured IT Excellence ModelStructured IT Excellence Model

Clear Roadmap (explicitly links all IT Clear Roadmap (explicitly links all IT activities to delivery of business capabilities)activities to delivery of business capabilities)

Leadership & Business Relationships*Leadership & Business Relationships*

People Practices*People Practices*

Infrastructure*Infrastructure*

Processes*Processes*

*Note: These are part of the Excellence Model.*Note: These are part of the Excellence Model.

CIO Frameworks for Success:CIO Frameworks for Success: IT Excellence ModelIT Excellence Model

IT excellence & the delivery of business capabilities is the result of a structured and comprehensive program in seven key areas.

Leaders

hip

& G

overn

ance

People:Selection, development,

work environment

Strategic Partnerships:Key Suppliers

Critical Processes: Architecture, Strategy & Planning;

Project Management; Software Development; Operations Management

Infrastructure: The “Dial Tone” of the Organisation

Software: Business Applications& related intangibles

Information S

ecurity

CIO Frameworks for Success:CIO Frameworks for Success:Roadmap to Deliver Business Roadmap to Deliver Business CapabilitiesCapabilities

Short term deliverables (<6 months), eg:Short term deliverables (<6 months), eg:Review of needed business capabilities Review of needed business capabilities Leadership team assessment, appointments & commitmentsLeadership team assessment, appointments & commitmentsCost targetsCost targetsQuick hits: business capabilities, performance improvements, etc.Quick hits: business capabilities, performance improvements, etc.Top ten projects reviewTop ten projects reviewVendor contracts reviewVendor contracts reviewInformation Security assessmentInformation Security assessment

Longer Term Deliverables (6-60 months), eg:Longer Term Deliverables (6-60 months), eg:Business capabilities to be delivered, mapped to It project plansBusiness capabilities to be delivered, mapped to It project plansLeadership & People frameworks, inc. development plansLeadership & People frameworks, inc. development plansSourcing strategy & practice: vendor mgmt, quality, & costsSourcing strategy & practice: vendor mgmt, quality, & costsGovernance models: business alignment & stakeholder involvementGovernance models: business alignment & stakeholder involvementInformation Security improvements: BCP, DRP policies, frameworks, practicesInformation Security improvements: BCP, DRP policies, frameworks, practicesSoftware Development policies, frameworks, practicesSoftware Development policies, frameworks, practicesProject Management policies, frameworks, practicesProject Management policies, frameworks, practicesArchitectural roadmapArchitectural roadmapApplications & infrastructure SWOT analysisApplications & infrastructure SWOT analysis

CIO Frameworks for Success:CIO Frameworks for Success:

Leadership & Business Leadership & Business RelationshipsRelationshipsLead & govern proactively. Set up Lead & govern proactively. Set up

stakeholder governance structures early on.stakeholder governance structures early on.

Use open, fact-based communication to Use open, fact-based communication to build trust. Solicit feedback.build trust. Solicit feedback.

Understand future business needs and build Understand future business needs and build a strategic roadmap that delivers. Share the a strategic roadmap that delivers. Share the roadmap widely and frequently. Deliver.roadmap widely and frequently. Deliver.

Provide accurate and detailed costs for all IT Provide accurate and detailed costs for all IT services. services.

Publish performance metrics based on Publish performance metrics based on agreed standards.agreed standards.

Provide industry benchmark comparisons of Provide industry benchmark comparisons of costs and quality. costs and quality.

Build a first rate IT team. Use a rigorous Build a first rate IT team. Use a rigorous hiring model.hiring model.Define and publish your people & leadership Define and publish your people & leadership principles (team member and leadership principles (team member and leadership values and behaviour defined). Don’t values and behaviour defined). Don’t tolerate exceptions.tolerate exceptions.Use “Open Book” management.Use “Open Book” management.Deploy segmented development programs. Deploy segmented development programs. Share development opportunities with Share development opportunities with business staff, eg project management business staff, eg project management training.training.Train everyone on communications, teaming Train everyone on communications, teaming & quality techniques.& quality techniques.

CIO Frameworks for Success:CIO Frameworks for Success:

People PracticesPeople Practices

Identify, benchmark and set performance Identify, benchmark and set performance goals for all key processes goals for all key processes (eg. project (eg. project management; architecture, strategy & planning; management; architecture, strategy & planning; solutions development; operations solutions development; operations management).management).

Actively deploy continuous improvement Actively deploy continuous improvement tools and international standards: TQM, tools and international standards: TQM, CMM, Prince2 or PMI, ITIL, Inspection CMM, Prince2 or PMI, ITIL, Inspection Processes, ISO.Processes, ISO.

Treat software development as engineering, Treat software development as engineering, use rigorous methodologies to prevent use rigorous methodologies to prevent errors errors (find code errors via TQM/inspection (find code errors via TQM/inspection processes versus back end testing).processes versus back end testing).

Automate wherever possible for high quality, Automate wherever possible for high quality, repeatable outcomes.repeatable outcomes.

CIO Frameworks for Success:CIO Frameworks for Success:

ProcessesProcesses

CIO Frameworks for Success:CIO Frameworks for Success:

InfrastructureInfrastructure

Utilise “end to end” business process outcomes for Utilise “end to end” business process outcomes for reliability measures, not technical components.reliability measures, not technical components.

Periodic SWOT analysis to discover single points of Periodic SWOT analysis to discover single points of failure, bottlenecks, and business/user irritation. failure, bottlenecks, and business/user irritation. Pay particular attention to the desktop in Pay particular attention to the desktop in “knowledge worker” environments.“knowledge worker” environments.

Rationalise and standardise platforms to improve Rationalise and standardise platforms to improve reliability and reduce costs.reliability and reduce costs.

Utilise component-based architecture for simplicity Utilise component-based architecture for simplicity of installation and maintenance.of installation and maintenance.

Some OutcomesSome Outcomes::Driven or Supported by IT ExcellenceDriven or Supported by IT Excellence

Desktop TCO reduced from AUD4000 to just over Desktop TCO reduced from AUD4000 to just over AUD2000 per annumAUD2000 per annum

Employee satisfaction from 46% to 80%Employee satisfaction from 46% to 80%

Cost to income ratio (financial institution) from mid-Cost to income ratio (financial institution) from mid-sixties to mid-fortiessixties to mid-forties

Reduction of telecommunications expense by 10%+Reduction of telecommunications expense by 10%+

90% reduction of Severity 1 errors going into 90% reduction of Severity 1 errors going into productionproduction

CMM Level 5 Certification (Software TQM)CMM Level 5 Certification (Software TQM)

Thanks, Any Questions?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.