Cisco's CIO Talks about the Challenges and Opportunities for Making IT a Strategic Asset
March 12, 2008
Traditionally, companies viewed their information technology functions as a necessary expense, like transportation or electricity. But the Internet has revolutionized the role of technology in business. Now, many corporations realize that their information technology (IT) can be the lever they need to move their businesses in new directions; a strategic asset rather than an albatross of cost.
Certainly, Rebecca Jacoby, Cisco Systems' chief information officer, is a big proponent of IT's strategic value. Building IT's strategic role in a corporation is no easy task, for sure, but one that has her excited about being a CIO. News@Cisco spoke with Jacoby about how information technology can help a business grow. The following text contains modified excerpts from a News@Cisco Podcast interview with Jacoby.
What makes you excited about your job?
Rebecca Jacoby: The reason I'm passionate about being a CIO is two-fold. I think IT carries a certain responsibility to enable the business. It might not be glamorous to everybody, but it's certainly a very influential piece in the basic fundamentals of your business. And if you're really innovative-and what I find very exciting about it and the reason why I ended up in this job-is IT can really help a business improve and expand. Technology can change business models. And it can open opportunities. And so it's a very fascinating thing to be able to use technology to drive business opportunities and to have that kind of influence on the strategic aspect of your business.
Much of my experience is in supply chain management, and this job has all the elements of business operations common to the supply chain, and so I really enjoy that aspect of my work. But I wouldn't have taken the job just for that reason. I wanted this job because Cisco as a company is in a position to take advantage of some exciting growth strategies, driven in large part by globalization and new business models. These are transformational opportunities for us as a business and IT plays a tremendous role in each one of those. And so that makes this a very exciting job for me.
What are the primary tasks for most corporate IT organizations?
Rebecca Jacoby: The first task is to support the basic operational functionality of your business. How are you running your transactional business? How are you running your basic communications systems? And how are you keeping the lights on every day, so to speak?
Traditionally, I think you'd see most IT organizations somewhere in the neighborhood of spending 55 to 65 percent of their budget on supporting pure operational functionality. If you're talking about a business that doesn't leverage IT very strategically, that percentage would be a lot higher. If you're talking about a company that uses IT very strategically, that percentage might be a little bit lower.
The second area of activity for an IT organization is what I would call the category of business capabilities. How do you, on top of that operational functionality, provide the new and expanding capabilities that your business needs? Whether that's an ability to just process higher volumes or whether it's a new sort of business model. How do I add those kinds of new capabilities as I go along? I think that most businesses today spend 20 to 25 percent of their budgets on that kind of ongoing capability.
So that only leaves 10 to 20 percent of your budget to devote to what I consider the fun stuff: being strategically involved with a company's growth strategies. This requires the CIO to be investing ahead of the curve so the IT is in place when those growth strategies take hold. Today, for example, there is a tremendous opportunity in emerging markets. But is IT prepared to be able to support your business so it can efficiently move into those emerging markets? Or if your business is trying to go into a diverse business or a different business model, how do you support those kinds of things? For IT to be involved early in the decision making process of how those strategies develop is something that can be very crucial for an organization. But not that many IT organizations spend a lot of their budget there because they are caught up in trying to meet their other obligations.
How are you trying to change the typical approach to corporate IT operations?
Rebecca Jacoby: We're shooting for an aspirational goal over the next three to five years to shift our budget towards a greater proportion of spending on strategic growth. Our ideal is to have the budget divide equally among three areas with greater efficiencies in operational functionality providing new funding for strategic initiatives.
I think any time you talk about aspirational goals, you really get a spectrum of responses, right? You're going to get everything from the traditional cynic that says, "As long as it's an aspiration you can make up any numbers you want." But you also can get an adventurous talent who is excited to hear that leadership has some challenging ideas of what could be. The way I view it is that we may not make it to the exact goal but that ideal will help us drive the kind of change we need. The goal really just points out the direction. If we don't get all the way there, that's not necessarily the most important part. The important part is that we were able to make a significant change. And the key change we need to make is to shift emphasis from keeping the lights on to helping drive the growth strategies of our business.
What are some of the hurdles to making IT be seen more as an ally rather than a barrier to business initiatives?
Rebecca Jacoby: I think it is true that in some ways we take technology for granted. Technology is absolutely ubiquitous today in our lives. And, in fact, in the enterprise we're completely dependent on it. So when you're completely dependent on something, you can either take it for granted, or, in some cases, you can even resent it. If you don't understand it, it's a little bit difficult to live with.
Traditional IT is very controlling and standards based. And there's some of that that's necessary. But new technologies, such as collaboration applications, are really about driving broader participation from your business community. And it's less of a control approach in IT and more of a directed participation approach with guidelines. And that requires different kinds of leadership skills and different kinds of communications skills in IT than we've seen in the past.
What are some of your methods for supporting the business goals for the company?
Rebecca Jacoby: We've created an engagement structure in each area of the company. The structure is really a roadmap for executing business strategies. The roadmaps are a plan for how we move our business and technology architecture together over time to a shared goal.
So as we plan these roadmaps to meet our common goals for both the IT architecture and the business architecture, we get sort of a joint buy-in and passion for making these plans happen. Our success is not about selling business executives and employees on an idea. It's about inviting their participation. Because that's how you really get things done, right? And so I think the key there is to outline what your major transformational opportunities are. You use those as guides to making decisions about IT investments.
Our executable roadmaps include several parts. First, we establish ways to measure success. You have to be transparent about how you're going to measure your success. So you start with metrics, and get people to agree to that. After that, we establish strong and transparent structures for how we create our roadmaps and how people are able to engage at the appropriate time to allow their input and participation into the design of the roadmap.
And we have other methods along the way in the context of executing against that roadmap, such as how you create shared accountability. There are different checkpoints in the roadmaps where we must deliver business capabilities. At those points we measure, assess, and recalibrate the methods so that our performance-both the IT and the business operations performance together-is continually improved. Defining those shared goals, those measures of success, and the engagement process to move through a plan over time, that's the key to changing the strategy into execution. When I talk to John [Chambers, Cisco's CEO], we're usually talking about tying together our business architecture and our technology architecture to have those things move and breathe in unison. This is what the roadmaps aim to achieve.
What are some of the biggest challenges for you?
Rebecca Jacoby: You hear a lot about the younger generation and how they want to communicate using all the new and ever-increasing communications options. And from Cisco's perspective as a business, that's a great thing. And on one side of the CIO plate, these new technologies and methods offer a lot of opportunity. And on the other side of things, every CIO plays a major role in risk management for their company. You not only manage the risk, but you also have to be responsible for certain types of governance. That's just a basic part of every CIO's job. But making those two things come together effectively through your business and technology architecture is a real challenge for all CIOs. So there's a tough balance between implementing new and exciting IT capabilities and making sure they are secure, scalable, and just simply don't cause a whole new set of problems.
There's also a constant challenge to deal effectively with legacy architecture, especially for companies that have been aggressive about deploying technology. You need to run your business on your legacy architecture today while you're moving to the next iteration of your IT infrastructure. That idea of being able to move from your as-is situation today to your ideal infrastructure as fast as you can and as fast as your business wants and needs you to, that's a constant battle.
What can IT organizations do to become strategic assets to a business?
Rebecca Jacoby: I think for any company that wants to use IT strategically, the IT and the business sides must come together. For this to stand a chance of happening, you absolutely need to have business leadership that understands the value of technology. On the other side of things, your IT organization absolutely has to be business savvy.
For IT organizations, the most important thing they can do to make that happen is to communicate better and differently. This is something I talk to my own organization about all the time. Whenever my team asks me what they need to improve, I always say: communication skills. Each and every person in the organization has to be a better communicator. I will tell you that I think I'm probably one of the most extroverted CIOs you're ever going to meet. So I enjoy that aspect of my role immensely.
But I think it is very important to change the sort of traditional IT language and speak to the business issues. This need to understand and speak to the rest of the organization is an opportunity and a responsibility that IT organizations have because they're uniquely positioned to provide a certain kind of strategic communication in their companies about how things fit together.
IT has a big opportunity to fill that gap, and we have to step up to a different style of communication to be able to do it. I would tell you, I think most IT organizations absolutely have the brains to do it. But to be effective, they really need to have the communication skills to be able to talk to different aspects of the business and to talk with different leadership levels within an organization.
If you do it right, the IT organization can be sort of a synchronizer of activity and efforts throughout a company. IT is in a unique position to see where those connect points take place in the business and how they tie together different parts of the company. And so stepping up to making those things visible is a key aspect of the value IT can bring to a company.
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