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CIOs and the Future of IT

GEORGE F. COLONY

It’s time for CIOs to take charge of both back-office and business technology, leading
with a customer-driven mindset.

companies’ internal systems and processes. They saw

websites as marketing channels and were happy to let
chief marketing officers (CMOs) oversee that province of
technology. They had, and still have, plenty to do just to
keep internal operations running smoothly. Marketers
soon got into the habit of developing not just content, but
also software programs to better reach and transact with
customers. But now that websites and apps are becoming
cornerstones of the business, the stakes are too high to
allow this division to continue. The two sides of IT need
to come together, driven by customer needs.

It’s time to integrate. CIOs need to oversee all of IT — in

close collaboration with marketers and the business units.
Only then can companies deliver digital experiences that
win, serve, and retain increasingly demanding customers.

It won’t be easy to connect back-office infrastructure with

There’s an alarming digital divide within many
customer-facing programs. Each area calls for different
companies. Marketers are developing nimble software to
habits and skill sets. But the good news is that we’ve
give customers an engaging, personalized experience,
found many CIOs who’ve risen to the occasion. By
while IT departments remain focused on the legacy
overseeing both agendas, with a customer-oriented
infrastructure. The front and back ends aren’t working
mindset, they can ensure that these systems evolve
together, resulting in appealing websites and apps that
together to support the corporate strategy. That’s the only
don’t quite deliver.
way for companies to thrive in the emerging “age of the
We’ve arrived at this misalignment for understandable customer.”
reasons. Previously, most chief information officers
(CIOs) were hired to digitize and bring order to

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Back Office vs. Business

Technology
The two kinds of software systems — call them “back
office” and “business technology” — have very different
implications. Back office involves big, complicated,
expensive combinations of hardware and software,
epitomized by the enterprise resource planning systems Back office says, “We will build it, and you (the employee)
that integrate control and accounting functions. The goal will use it.” BT says, “We will sense and in some cases
here has always been reliability and affordability, anticipate what you (the customer) want, and we will
supported by careful planning. It doesn’t need to be build it.”
flashy; it just has to work all the time and not bust your
budget. And since the only users are captive employees, Forrester analysts estimate that back office still captures
usability is secondary and boring is fine. So we’ve bred a two-thirds of the $3 trillion technology spending
generation of control-minded CIOs who excel at stability worldwide. But the growth is with BT at 8% annually,
and efficiency — and have limited sense of the company’s compared with only 3% for back office. 1 Meanwhile the
customers or strategy. back-office trend is to outsource, virtualize, and shift to
the cloud, which will free up further funding for BT. With
Business technology (BT) focuses on marketing and Apple Inc., Amazon.com Inc., and Google LLC raising
selling to customers, which puts a premium on user customer expectations, most companies — B2B as well as
experience: Boring is dangerous. With customer B2C — will have little choice but to sharpen their game in
expectations continually rising, BT aims to be flexible and BT. Consumers increasingly purchase experiences, not
responsive. It aims for a minimally viable product as it products. User experience will drive competitive
learns from the marketplace, and it tolerates occasional advantage.
service disruptions. BT improves not with planning but
with continual experimentation and discovery-driven These rising expectations are also erasing the line
innovation. Most important, it’s about generating between BT and back office. Satisfying and even
revenue. (See “How Back-Office and Business Technology delighting customers has become such an imperative that
Differ.”) leaders are rethinking everything the company does. Even
the most operational areas, such as warehouse
management and HR systems, are starting to optimize
How B
Bacackk Office aan
nd B
Buusin
sines
esss less toward efficiency and more toward customer
Techn
hnoolog
logyy Dif
Difffer experience and revenue. Eventually most back-office
systems will have to reorient to serve as the staging
platform for BT. But that can’t happen as long as separate

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executives, with these different mindsets, manage the two the foundational systems themselves — which only the
areas. CIO has.

Why CIOs Should That integration is especially important now, to prevent

gaps that compromise cybersecurity. Marketers want to
Oversee BT make customer interactions as easy and informative as
Many companies are aware of the general problem. And possible, but that leaves companies vulnerable to attacks.
because they worry that CIOs will be hindered by their In the wake of massive leaks that undermine customer
back-office mindset, many of them have looked elsewhere trust, the CIO needs full authority to ensure a tight
for an integration leader. They rely on the CMO, or newer interface.
roles such as the chief data or digital officer (CDO), or
even chief of marketing technology. These assignments Some companies have put the CIO in charge of both
can be useful in jump-starting an IT organization that’s areas, but without enough integration. In “bimodal IT,”
slow to embrace BT. But they’re a dangerous long-term the CIO oversees two separate groups: One that builds up
structural solution. BT, and another that maintains back-office systems on a
limited budget. The idea makes intuitive sense, but it
If the CIO isn’t leading the integration, it’s a recipe for creates a two-class system. The back-office group feels
failure. Dueling tech centers end up fighting over data, marginalized and reduces cooperation with their BT
yielding incomplete systems of engagement. The CMO counterparts. Infrastructure is gradually starved of
builds a beautiful app, but the CIO hasn’t made sure the investment and talent, and fails to evolve with and
underlying databases are configured to support it. support BT. And because one is moving quickly and the
Customers eventually give up and seek a better other plods along, it’s akin to trying to win a race with a
experience with competitors. After all, almost every bicycle with a round front wheel and a square rear wheel.
customer interaction must ultimately connect to the
company’s underlying processes and systems of record. The best approach is to keep BT and back-office within
the CIO’s purview, but with a new perspective. Instead of
Back office and BT must work closely together, led by the seeing them as separate areas, CIOs can look ahead to
CIO. While a CDO may be in charge of the data their convergence and work on developing them together.
generated by the company’s systems, that’s just the end The mindset of customer-driven BT will eventually
product. It’s the CIOs who build and control the pervade back-office, albeit tempered by the practical
databases of record and the contextual data that is the raw demands of maintaining legacy information systems.
material of customer experiences. Only they have the
deep architectural knowledge and technical reach to
bring these systems together. To truly manage data for
maximum commercial benefit, you need authority over

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A Road Map for the BT agenda and given them more power. It doesn’t
require a housecleaning to construct successful and
Escaping Back-Office customer-pleasing technologies — many legacy CIOs can
make the transition.
Gravity
The solution, therefore, is for CIOs to lead the integration Digging deeper into the CIO interviews and CX results,
but with a BT mindset. This is not the first argument for we found a few more imperatives for leaders:
combining the technologies equally under the CIO. 2
But those calls ignore the mindset differences that Rem
emem
embber yyoour ext
exter
ern
nal ccu
ustomer
erss. It’s easy for legacy
prevent proper integration. It isn’t enough to give CIOs a CIOs to forget about the “end” customers. They get so
broad mandate. Nor is it about hiring the right person. caught up in serving internal customers, ensuring
CIOs need new kinds of organizational support. reliability and efficiency, that they forget the actual
purpose of the business: creating and satisfying the
In order to escape what could be called “back-office paying customers outside.
gravity,” companies may be inclined toward a new leader
without the biases of a conventional CIO background. New performance metrics, that reflect external service
While understandable, in most cases that would be a rather than technology speeds and feeds, can help. Jeff
mistake. For one thing, digital managerial talent is Henderson, the CIO of high-scoring TD Bank Group,
already too scarce to expect a new round of hiring. says he’s learned to “measure technology outages not in
terms of time but in terms of customer impact: How
More important, the looming convergence of the two many customers were affected and how?” He and his IT
technology agendas means that joint management is not colleagues are joining with business unit leaders and the
as daunting as it sounds. Just think of how chief financial CMO in continuous discussions with live customers.
officers have increasingly gone beyond budgeting and
financial control and taken on relations with activist From there, these newly enlightened CIOs can develop
investors. As long as they’re given expanded structural metrics that connect back office and BT directly to
support, existing CIOs can make the leap. business success. Janet Zelenka, the CIO at Essendant
Inc., a large wholesale office supplier based in Deerfield,
How do I know this? My colleagues and I have talked to Illinois, also has her teams listen to customer service calls
over a hundred CIOs in the past year, and studied and watch customers interact with the website and mobile
hundreds more from a distance. We’ve assessed their apps. The goal is to build their appreciation of customer
companies using Forrester’s Customer Experience Index journeys, reveal the pain points, and suggest where
(CX), a proxy for strong BT. If legacy CIOs weren’t up to technology can create a more compelling experience.
the job, then you’d expect companies with high CX scores
to have shorter-serving CIOs than the lower-scoring Em
Embbrace aaggile de
devvelo
loppmen
entt. BT is not just a choice; it also
companies. But on average, the opposite is true. requires skills. Especially important is agile development
Successful organizations have pivoted their CIOs toward — building software quickly and collaboratively in

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response to the fast-moving customer. CEOs can give units. Effective CIOs and CMOs often reside in the same
“permission” here by de-emphasizing back-office office, and their physical distance was half of what we
perfection and by valuing speed. Leaders must accept and found in the low scorers. They also share one-third to
welcome a modicum of chaos to achieve the agility one-half of their performance metrics. And CMOs are
required in the BT world. willing to collaborate: A recent Forrester survey suggested
that half of them see their relationship with the CIO as
To take an extreme example, Capital One Financial Corp. crucial, up from 30% five years ago. 4
sent CIO Rob Alexander to training in design thinking. A
method for boosting creativity to meet the needs of end In many companies, we observe a troika on business
users, design thinking helped his group make better use technology: the CIO, CMO, and the relevant business
of the bank’s data and analytics on their customers. From head. The more the CIO collaborates outside the IT
there, they built Capital One Wallet, the first banking app organization, the more he or she will develop a BT
with Android tap-to-pay, in under nine months. mindset.

En
Enga
gagge in ssttra
ratteg
egyy di
disscussio
sionns. Many CIOs, if they’re on For General Electric Co.’s CIO, Jim Fowler, that’s come
the senior team at all, play a secondary role. They react to directly from close ties with CMO Linda Boff. Their
others’ proposals, defend their budget requests, and partnership has taught him to go beyond better user
explain when and why their systems go wrong. But interfaces and work on helping customers become more
already we’re finding many companies, not just those with profitable. His team is now busy developing digital
high CX scores, expecting more from the CIO — solutions for improved service and lower costs for buyers
particularly around strategy. of GE’s products. They “start with customer outcomes,
not products,” and work jointly to teach business leaders
Jeff Henderson at TD Bank Group says in the past, he let the power of technology and how it could change their
others handle the “what” while he and the tech team markets.
focused on the “how.” He focused on new technologies
and how these would affect IT operations. But lately, he’s Cr
Creeate ffu
ull oovver
ersig
sigh
ht ffoor aalll B
BTT. Many companies have
been chartered to drive change throughout the company “shadow IT” left over from when business leaders
and help the senior team identify the future state of the developed BT for their own units. These programs often
customer experience. He’s also deciding whether certain connect poorly with infrastructure and prevent the senior
investments are truly strategic and differentiating. IT is team from having a unified view of all the company’s
no longer just working for the business. Now Henderson customers. It’s essential to move oversight of all digital
and his colleagues are working with the business. 3 technology to the CIO, including cloud-based
applications. That doesn’t mean CIOs become the czars of
Establilissh a ttig
ighht p
paartner
ersshi
hippw
wiith tth
he CM
CMOO. High-scoring BT — see below — but it does ensure the best possible
companies also engender close collaboration between the integration.
CIO and the CMO. That’s because CIOs rely on the
customer knowledge in marketing and the operating

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This universal responsibility for BT by itself can prompt Each of these steps by themselves may not free CIOs from
many CIOs to take it seriously. On a practical basis, that the gravitational pull of back office. But together they will
means gradually harmonizing the more innovative drive CIOs to shift their mindset and embrace the future
programs with corporate systems. of corporate technology: BT.

Unlike at Capital One, many high-scoring CIOs The Existential

outsource much of the development of their BT. But they
know they’re responsible for making everything work. Challenge to Companies
Business units can propose applications and even take the
and CIOs
lead in developing them, but CIOs have to be closely
CIOs have adeptly navigated a number of revolutions
involved to ensure proper integration and strategic fit.
over the last 30 years, from mainframes to personal
The buck stops with them, and that’s a powerful computers to the cloud. The age of the customer
inducement to change. Mark Boxer, the CIO of Cigna represents a very different challenge, and for the first time
Corp., says, “My role is at an articulation point. The requires substantial support from the rest of the C-suite.
customer is now at the center of all we do. We are no And as they work to change their companies, they must
longer tech managers; we are general managers. Think of undertake their own digital journeys.
us as the prime contractor managing many
This critical transformation is an extraordinary moment
subcontractors, with myself as the chief integration
for current CIOs. As Zack Hicks, the CIO of Toyota
officer. I do both agendas by giving the company what it
Motor North America Inc., observes: “There has never
needs at the right time: Sometimes it’s customers,
been a better opportunity to have a seat at the table.”
sometimes infrastructure, and at all times with
cybersecurity as a primary consideration.” An adapted version of this article appears in the Spring
2018 print edition.

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About the Author References www.youtube.com/

watch?v=dkteNKsXihY&feature=youtu.be.
George Colony is founder, chairman, 1.
1.A. Bartels, “Midyear Global Tech Market
Outlook for 2017-2018,” Forrester Report, 3.
3.S. Schick, “TD Bank CIO Discusses His
and CEO of Forrester (@forrester) in Approach to Transforming the Customer
Sept. 25, 2017, www.forrester.com/report/
Cambridge, Massachusetts. He Experience,” IT World Canada, Nov. 4,
Midyear+Global+Tech+Market+Outlook+For+2017+To+2018/-
tweets @gcolony. /E-RES140272. 2015, www.itworldcanada.com.

2.
2.“Who’s Really Responsible for 4.
4.See also K. Whitler et al., “The Power
Technology?” MIT Sloan CIO Partnership: CMO & CIO,” Harvard
Symposium, June 13, 2017, Business Review 95, no. 4 (July-August
2017): 55.

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