Friday, May 20, 2011

Transform Your Techie

Michael J. Naatz was the CIO at transportation company USF Corp. in 2005, when it was acquired by what is now YRC Worldwide, (a $4.3 billion, Kansas-based transportation and logistics services company). Within four years he was promoted to that same title at the new company. But he found out that at YRC, being CIO meant a lot more than running computers.

First, CEO William D. Zollars asked his CIO to improve cash flow and speed up payment of accounts receivable. A few months later, freight bill entry and cargo claims administration were added. "Eight months after that I was asked to take on the sales organization," Naatz recalls. From there, Naatz decided to start analyzing client data, breaking it down by geography, industry and size to identify growth opportunities.

The upshot: In April 2010, Naatz added the title of chief customer officer, and the size of his department quadrupled to 1,200 people.

"The CIO has the opportunity to see across the entire organization," explains Naatz. "I know generally what's happening in operations, what's happening in finance, how they use the tools to do their job. It provides us with unique insight."

Indeed, the job of overseeing technology is changing as fast as the technology itself. No longer is the chief information officer the "nerd-in-chief," merely overseeing systems and software. Now the CIO is finding ways to use hardware and software for strategic business purposes, such as discerning market opportunities and improving customer service. The high-tech tools of choice can include sophisticated data mining, social networking, and enhancements to the company website.

"The CIO has risen to a point where he or she is a contributor to strategy, using information as a transforming tool to help the CEO to drive the business better," says Mark White, the CTO of Deloitte's Technology Practice.

And even when the CEO doesn't realize the tech department's potential contribution, his or her employees and customers do. "There is a shift in expectations, particularly among the younger generation," White says. "They have the expectation of free availability, the expectation that information automation is embedded in their work life." That can translate into constant demands for new ways to incorporate mobile devices, social networking and cloud computing into business functions.

The first stage in the CIO's transformation, starting maybe a decade ago, was to harness technology to increase efficiency, not just of the technology itself, but company-wide. That was a fairly straightforward expansion of responsibility, stemming directly from the office's core functions.

For instance, White says that the CIO of a large consumer-products retailer two years ago suggested adding more tech-enhanced methods for shoppers to contact the customer-service department, via instant-messaging, the company's Facebook page, the corporate website and Twitter. As CIO at Arrow Electronics from 2001 to 2006, Mark Settle (today the CIO of $1.9 billion Houston-based BMC Software) turned the company's internal tracking service into a marketing tool by showing prospective clients how Arrow could save them the hassle of tracking their suppliers.

The next step in sophistication—and probably the most widespread—is for CIOs to mine the mounds of data collected by the systems they maintain to identify trends and market opportunities. Whenever a customer places an order, requests service or files a complaint, information on that customer's name, address, type of product ordered, price, number of items and order history automatically flows into the IT department's coffers.

"The CIO has risen to a pointwhere he or she is a contributorto strategy, using information as a transformingtool to help the CEO drive the business better."

From the marketing department comes information about the company's sales force in the customer's neighborhood. To supplement that, says Chris Curran, the PwC principal who specializes in technology strategy, the CIO can purchase broader demographic information, such as population density and neighborhood sales trends, from market analysis firms. "Merge those things together" for the entire customer base, Curran says, and the CIO can study questions like: "Is this territory over-penetrated or under-penetrated? What kind of mix is being purchased in Illinois or Texas?"

That type of data mining is exactly what Naatz did at YRC. Once he'd analyzed the client data, trends emerged. "We found that we were growing with customers that had certain attributes and were shrinking were customers that had other attributes," he recalls. "When we identified those attributes, we were able to target that [underutilized] segment," such as small and medium-size companies, and certain geographical areas.

Through this pinpoint analysis, Naatz says, "we arrested a decline in market share and we've grown market share for the first time in three years," up 4.4 percent since last spring.

At the consumer-products retailer that Deloitte's White described, the CIO who had suggested more communication methods for the call center was able to use the additional data those methods generated, to improve service even further. "They go and mine the history of those transactions to discover patterns, to better know the customers' relationships with products, so they can feed that back into the customer-care scripts," White explains.

Such customer and marketing analysis is far beyond the bits and bytes of the traditional CIO job. It might have previously been done by the head of marketing or customer service, the chief operating officer, or possibly the chief executive—but only if those managers were aware of the wealth of data available and the technological possibilities.

"The logic in how you connect these things, and what you need for good execution, is not something in the forefront of a [non-CIO] business executive's mind," says Thomas Reichert, the senior partner who leads Boston Consulting Group's global IT practice.

As the CIO job expands so dramatically, a key question for the chief executive is whether the geek who feels comfortable only with a keyboard can handle all these responsibilities. Today, the CIO may be working directly with board members and undertaking customer-service, marketing, and new-product analysis. "More and more, sums up Sanger of Mayo Health, "CIOs are called upon to think like business people."

Thanks to Fran Hawthorne / Chief Executive Group, LLC.
 
 

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