SAN MATEO (04/18/2000) - Don't bother telling Dawn Lepore that the Internet has made the CIO's job passe. As CIO of the discount brokerage firm Charles Schwab & Co. since 1993, she's tackled some of the toughest strategic and operational challenges that the Internet can throw at a company.
Lepore, who is also vice chairman of the San Francisco-based firm, believes that a successful CIO must embrace the job's traditional duties as operations manager as well as the critical role of corporate strategist.
"I feel that you have to have both roles in order to be successful. If all you are doing is strategy and you never have to deliver, you lose credibility," Lepore says. "Nor do I forget that if I don't start thinking about the next great thing we are going to get into, I'll do the company a disservice."
But as e-business issues increasingly dominate companies' IT agendas, Lepore may be the exception rather than the rule, according to Jeffrey Elton, managing principal at Integral, a management consulting firm in Cambridge, Massachusetts. Only about 20 percent of the current crop of CIOs will be able to make the transition from an internal operations-oriented professional into the emerging, vital IT role of corporate strategist that the rise of the Internet economy demands, Elton says.
As a result, observers say, new models of IT leadership are emerging. In some cases -- often at dot-com startups -- the change means the rise of the CTO as IT strategist. In others, more often at large companies in which the CIO title is already well-established, a new breed of CIO is coming to the fore"Internet technology is driving disruptions across executive teams," says Peter McAteer, a vice president and managing director at Giga Information Group, a research company in Norwell, Massachusetts.
So in some corporations, CIOs such as Lepore are positioning themselves as high-level strategists, managing subordinates who oversee the operational aspects. In other situations, businesses are forging IT organizations with strategy-oriented and operations-oriented leaders in distinctly different positions, such as CTO and CIO. The strategy-oriented person may report to the CEO, whereas the operations-oriented person may report to the COO.
At New York Life Insurance, CIO and senior vice president Judith E. Campbell selected Mike Mazzariello as the company's CTO and vice president of advanced technology group (reporting to her) to handle the company's Internet technology strategy, while her own role was transformed.
"[My] position has expanded substantially to include an awful large share of strategy development, enterprisewide issues, and, in many cases, a leadership role on all of the Internet business issues, not just Internet development issues," Campbell says. "My CTO is my major Internet and technology strategist."
As CTO, Mazzariello acts as the right-hand man to the CIO. "I am a technology advisor, a sounding board, a key supporter in communicating Judy's [Campbell's] vision, and someone she can rely on to get things done," Mazzariello says.
Still, other companies are bypassing the CIO position completely and hiring a CTO -- or comparably titled professional -- to handle both the strategic-and operations-oriented tasks associated with e-business or to focus on strategy alone.
Titles in transition
The labels and the responsibilities of strategic IT leaders vary by company.
Even within a company, the roles are in a state of flux, says Giga Group's McAteer. If there are multiple professionals involved, the dividing line between duties tends to be whether the technology in question will affect an external or internal audience.
According to Elton, McAteer, and others, the new strategy-oriented IT professionals typically are on the executive management team, have their compensation tied to performance, spend more time considering long-term possibilities than day-to-day issues, and view their department as a profit center. That's considerably different from the traditional CIO who may have been several layers away from the CEO, had a set salary, focused on tactical decisions, and had the department viewed as a cost center, they say.
Change is needed because in many companies the CIO job has become a sort of super project manager, Elton says. E-business, on the other hand, demands an executive with talent and passion for strategy, he explains. That executive must understand the potential impact of Internet technologies on the company's business.
Most companies choose their top strategist based in large part on the personality and skills of the top IT executives they're able to attract, McAteer says.
"Companies are experimenting," McAteer added. "It's very much a set of political issues as it is a set of rational decisions."
New York Life's Campbell agrees that the title transformation may vary for some time.
"I think there are some other companies who have taken their business Internet person and called them a chief technology officer," Campbell says. "I think there's lots of misuse of all of the titles for those three roles. But the most important role is the more senior one that's actually sitting at the table with all of the business heads and is a full partner."
CTOs take on e-business mantle
Andy Martin, CTO of Garden.com, an online retailer of gardening products and services, exemplifies the rise of CTO as a new IT leader. In the early 1990s, Martin was chief programmer of distributed systems for Austin-based Trilogy Software, where he wrote the client/server back end for pcOrder, an e-commerce platform for selling computer products online. He then joined three Trilogy colleagues to join startup Garden.com, in Austin, Texas, as CTO and vice president of development.
For six months Martin worked solo, scrambling to build the back end and the front end of Garden.com. As the site blossomed, the company hired new programmers to help. Together they built a Web site, an intranet for data entry and customer service, and an extranet as a link to suppliers. Much of the work had to be done from scratch.
Martin eschewed internal IT duties -- the traditional jurisdiction of the CIO -- making sure they were handed off to a competent, operations-oriented professional. The line of demarcation between CTO duties and the traditional CIO duties was clear.
Martin eventually shed his vice president of development title, and he'll end his hands-on role this month. He will focus on strategy and systems that might be built six months to two years down the road.
Globalfulfillment.com's Phil Wilkerson shares the CTO title with Martin, but he does not share Martin's philosophy about severing operations and strategy. As CTO of the startup, a provider of fulfillment solutions for retailers, his duties range widely. With the help of his staff, Wilkerson deals with everything from systems engineering, database administration, project management, and relationships with outsourcing partners to worldwide operations.
Wilkerson joined the Los Angeles-based startup in January after four years with Gap, the $6.5 billion-per-year retailer, where he was the technology director.
He says he liked the way Gap blended operations and strategy, an approach he has tried to emulate.
"Because the market cycle is so short, you can no longer have a disconnect between the strategy and what you are going to implement," Wilkerson says.
CIOs as operational strategists
So in a digital economy, is the traditional CIO out of a job? On the contrary.
"The more that the CIO is profoundly successful, the more we need that strong operational CIO," Elton says.
Will the old-guard CIO lose standing to the strategy-oriented vanguard? It's possible, observers say.
"The CTO job category is hugely hot this year," says Marc Lewis, managing director and head of corporate IT practice at the executive search firm Christian & Timbers, in New York. "Historically, the CTO would report to the CIO, but the market has been turned on its head by a number of companies that do exactly the opposite."
Christian & Timbers last year placed roughly the same number of CIOs as CTOs; this year, however, it expects CTO placements to grow by 78 percent and CIO placements to increase by roughly 10 percent, Lewis says.
"There may be some loss of status among the old-school CIO types," Lewis says.
"For them to keep their careers on track, they need to market themselves to be given more responsibilities on Internet-related roles and customer-facing systems."
Charles Schwab's Lepore agrees that, in the age of the Internet, the CIO needs to embrace business as well as technology. "If [CIOs] think they can just focus in on technology and not have to think about the business and not have to develop relationships, I don't think they are going to be successful for very long."
It's inevitable for CIO and CTO to butt heads occasionally because they come from different perspectives, says Garden.com's Martin. But those differences of opinion can be healthy, he adds. For example, a CTO may favor a Solaris-Oracle platform for a Web site, believing it to be more robust and scalable than Windows NT and SQL. The CIO, however, may favor NT and SQL for a more practical reason: The company has more in-house expertise with those solutions.
"I'm not convinced that someone who has been a CIO for 20 years has a bloody clue about being a CTO, because it's all about innovation," Martin says. "They can't think out of the box as much."
Ultimately, Globalfulfillment's Wilkerson says, the difference between CIOs and CTOs may be attitude. "Many of these traditional CIOs have been successful.
They are afraid that if they make mistakes they won't be considered successful.
But you have to make mistakes to be successful."
Most agree that success requires a cohesive partnership that should between several strategic leaders with one goal in mind, although their titles and responsibilities will vary from company to company.
"I don't think one CTO, one person, can make all those decisions or set the direction," Lepore says. "With all the complications, you need multiple good minds focused on it."
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