A New Role for CIOs

I have always found the phrase "IT and the business" to be ironic. "And" typically connotes connection and unity, yet in this context, it is a divider. IT, this phrase suggests, may work alongside and support the business, but it is certainly not one and the same.

But now that companies are getting smarter about IT's importance to the business, there is a new "and" in town. The SVP of technology and operations role is springing up in all sorts of industries. It represents not only a new level of organizational integration between IT and the business but a new career opportunity for CIOs as well. Some heads of tech and ops preside over a newly merged organization, and others keep the organizations separate but have accountability for both. I spoke with three such ambidextrous executives to gain their perspective on the role.

Pat McNamee joined Express Scripts, a $19 billion pharmacy benefits management company as SVP and CIO in 2005. Two years later, he was named SVP of operations and technology, responsible both for IT and for client and patient services; less than a year later he was promoted to EVP of operations and technology. In his current role, McNamee runs an integrated organization of 1,200 IT staff and more than 5,800 operations staff responsible for making sure the company's 40 million members receive their prescriptions on time.

"In IT, we had improved our reliability and our ability to develop new applications. But there was still a disconnect between the capability of the systems and their impact on operational effectiveness," says McNamee. "So our CEO made the decision to integrate IT with operations, and he made me accountable for the whole thing. His thinking was that we could accelerate change and improve processes more quickly with a team that is focused on an integrated set of objectives."

A case in point: Prior to the integration of operations and IT, regionally distributed operations groups were using unique applications instances, and every regional GM had his or her own order management processes with a unique set of metrics. "When we merged IT and operations, we looked across all of the sites and found the five or six best practices on turnaround time and defect reduction and built an applications road map across all of the regions. We then held the GMs accountable for the new standards," says McNamee. "Having an integrated approach and control over so many levers put our process improvement on steroids." His advice for CIOs interested in a similar role:

Turn a cost centre into a corporate investment. In addition to the age-old wisdom of knowing the business and building relationships, McNamee points to something more specific. "As CIO, you are responsible for a significant spend in IT. If you can build a process for engaging the company in how most strategically to spend that money and how to bring a return on that investment, suddenly the discussion moves away from mainframes and infrastructure, and you become a leader in driving operational improvements," he says. "If you build a successful governance process, you have just worked your way up to the point of controlling a corporate investment that drives business value and revenue." Less an order taker and more of a business driver, you are one step closer to the integrated role.

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Mark Goldin joined the financial services company Green Dot as CIO in 2005. Six months later, he added customer care, retail production, logistics, supply chain and sourcing to his plate and became CIO and EVP of operations. In January, CEO Steve Streit wanted to him to increase his strategic role and made him chief operations and technology officer.

Green Dot is a rapidly growing young company. With customer activity increasing steadily, call centre operations were struggling. "It was unclear to our CEO whether our call centre issues were due to systems problems or operational management, so he wanted one executive to be accountable for both," says Goldin. "Once I moved into the new role, I sat down with the VP of customer care and together we designed a call centre strategy for redundancy and scale. We sorted out our staffing issues and turned the corner on service levels." His advice for CIOs who have just moved into an integrated role:

Hire a CIO. IT people represented more than 70 percent of Goldin's newly integrated organization so some of the senior call centre managers thought, 'Now I work for IT.' "That is not the perception that I wanted," says Goldin, "but I was reluctant to let go of the CIO role. Were I to have hired a new CIO, it might have been clearer that IT was not simply absorbing the call centre, but that we were integrating."

Go for the sudden impact. As head of IT and ops, you have a number of opportunities to add value. But, says Goldin, "You want to choose the areas where you can make a quick impact. Having had the initial call centre success, I felt I had the time to focus on other issues like reducing cost. The call centre bought me the time to tinker with the areas that I understood less."

From 1993 to 2000, Rob Autor was CIO for Nellie Mae, a Massachusetts-based student-loan provider. He joined Salle Mae following its acquisition of Nellie Mae in 1999 and has served in a number of senior roles, including vice president of consumer operations and CIO. In late 2007, Autor was named EVP of operations and technology and heads up the company's loan origination, servicing and call centre operations, corporate procurement and IT. In addition, he has full profit-and-loss responsibility for the company's guarantor services business and financial institution sales. With both of these business lines and a CIO reporting to him, he is responsible for reducing costs by 20 percent and for restructuring the business in response to the recently signed College Cost Reduction and Access Act.

To Autor, giving accountability for IT and operations to one executive makes good sense for Sallie Mae. "Both IT and our loan servicing operations are service organizations, and both require a strong degree of process discipline and design," he says. "When so many of our customers experience us through our technology, it is important to look closely at how both organizations can work together for a seamless customer experience." His advice for executives interested in a similar role:

Get both IT and ops under your belt. "I have moved between business and IT roles and deliberately made choices to broaden my experience," he says. "When I had some IT consulting under my belt, I went into business consulting. When I took on the CIO role at Nellie Mae, I took on operations responsibilities as well. The great thing about IT is that it gives you the opportunity to demonstrate that you can deliver on big, broad, complicated, expensive projects. Make the most of that exposure."

Martha Heller is managing director of the IT Leadership Practice at the ZRG, an executive recruiting firm in Boston. Reach her at mheller@zrgroup.com.