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Money -- how to make it, save it, grow it: If there's a thread that ties together the five finalists for this year's MIT Sloan CIO Leadership Award, it's their grasp of a fundamental reality of the commercial world -- businesses are in business to make money.
"When we talk about IT or digital technology, my team's focus is to raise margins, increase sales and improve the productivity of the entire organization." That was how Anupam Khare, CIO at OshKosh Corp., a 104-year-old maker of vehicles and equipment for military, firefighting and business uses, described his IT organization in the MIT Sloan CIO Symposium's online session showcasing the award finalists. His advice to aspiring CIOs? "Learn how the business makes money."
Although business-IT alignment has been an aspiration of enterprises for years, it has remained elusive for many companies. Whatever got in the way of productive IT-business partnerships no doubt differed from company to company. IT folks fixated on so-called feeds and speeds? Business leaders who viewed IT as simply a cost center? In any case, the worldview in which business operations and information technology somehow exist in separate realms has been challenged by the extraordinary success of companies like Amazon and Apple that seamlessly merged business and IT cultures -- and the failures of companies that didn't.
Business-IT alignment hallmark of winning CIO projects
At conferences like MIT Sloan's, the CIO focus in recent years has been on the technological and cultural changes IT departments had to make to achieve digital transformation. Transformation included shifting operations to the cloud and adopting DevOps. CIOs doubled down on data management as their companies adopted data-driven decision-making and tiptoed their way to using AI and machine learning.
What stood out about the achievements touted by this year's crop of MIT Sloan CIO Leadership Award finalists was how tightly coupled the IT work they described was to bottom-line business results, as opposed to technology per se.
- Vipin Gupta, CIO at Toyota Financial Services (TFS) and winner of the award, zeroed in on the private-label cloud platform his team built that allows the auto finance powerhouse to extend its financing and leasing services to vehicle brands outside of Toyota.
"What really excites me is that this is not just about technology. This really changes how we lead with a new mindset, behaviors and methods," Gupta said, adding that the company "needed to move at the pace of a digital startup" in order to pull it off. In April 2020, in the middle of the initial COVID-19 lockdown, his team launched Mazda Financial Services as the platform's first tenant after just seven months of development work, "leading to multimillion-dollar savings and multibillion-dollar asset growth."
- CIO Marina Bellini described her IT team's mission at British American Tobacco PLC (BAT) as applying technology and new ways of working to deliver commercial value. "In the broad sense of commercial value, it means better understanding the consumer, having insights to develop future products of the organization and making them available to customers, and find[ing] efficiencies in the organizations," said Bellini, who also serves as the company's digital officer and director.
- For Bryson Koehler, CTO at Equifax, IT's main job of late is business model transformation. Since joining the credit agency in 2018, Koehler has helped lead a $1.5 billion investment in digital transformation that includes moving 63 legacy data centers and 5,500 rebuilt databases to the cloud. But it was more than just an IT overhaul. Koehler, who joined Equifax in 2018 following the credit reporting agency's massive data breach, described the business-IT transformation, due for completion in 2022, as a "bold" response to the crisis. "We had to really reinvent who we were, rethink our product, rethink our culture," he said.
- Pertisth Mankotia, CIO at Sheela Foam Ltd., India's leading mattress maker with a subsidiary in Australia, operates from a deep understanding of the company's products and processes. Asked how he gained both IT and business knowledge over time, he attributed it to the productive partnerships he forged with Sheela business executives and the business systems he and his team built in collaboration with manufacturers, distributors and people on the shop floor.
"All-in" on Agile
Technology trends that in the past were viewed mostly through an IT lens are becoming business trends. In the case of Agile software development, for example, the critical point made was not about Agile's role in IT but about how CIOs can help their companies adapt Agile to business operations and decisions.
"Agile is not a consulting word anymore. It's also not an IT thing anymore," Bellini said. Her IT organization's ability to move forward "with limited information and a limited solution that is good enough for you to take a step and then build from it" serves as an example to the business, she said.
"I come from an organization that's over 100 years old, where usually it takes forever for you to make a decision because you're waiting for perfection. Guess what? That doesn't work when you're trying to create a new industry," she said, referring to BAT's strategy to move beyond traditional cigarettes to noncombustible products, such as e-cigarettes. "It also doesn't work in the middle of a pandemic to take forever to make decisions."
Toyota's Gupta agreed that Agile is not just about software development but about changing behaviors, habits and routines. "We can't just do it for one product or one project or for one department ... It has to be the real life of the entire company. You have to be all in," he said.
In his experience, it's the speed of the decision-making, not the engineering, that stymies innovation: "The speed of the boss is the speed of the team." At TFS, leaders from all business units participate in a program that combines Agile principles and tenets of the Toyota production system, he said, resulting in "Scrum-style" executive meetings.
Equifax's Koehler also argued that Agile at scale requires the "entire industry" to do it together in order to move at a faster pace. "If we're agile as a company but our customers aren't, they can't take our pace of change. As we go from one release a quarter to one release a day, if they're not agile, we're not agile," he said.
Business KPIs are IT KPIs
Also gone are the days when IT's value is measured using technology metrics -- at least they are for these CIOs, who uniformly use IT to drive business metrics. OshKosh's Khare reported that every project IT works on there is analyzed by business metrics -- cost, revenue increase, productivity. Net operating income is the yardstick by which IT is now judged. "It was a little challenging, but ... I can clearly describe that as a result of the projects IT has done, these many millions of net operating income have been realized," he said.
Bellini's team has adopted similar metrics, but she acknowledged that it can be hard to tease out the value of technology projects because the impact is not only driven by the technology but also depends on the actions people take. She cited analytics initiatives as an example. "We have a set of KPIs that I know are not perfect but at the same time know they can be heavily influenced by technology and data."
Gupta said his team has moved from project-based funding to product-based funding. "And it's really not a funding approach; it's really managing expenses and value." He explained that Toyota operates factories of fixed capacity. "It forces the decision-makers -- which is each of the product owners -- to always focus on the most valuable products, based on the highest value they can drive for the business," he said.
Spoken like a business leader.