The sky has fallen. Consider these recent findings compiled fromwww.cio-asia.com:

Their budgets are cut, work is outsourced, staff is downsized,and theyre pushed off the executive teambetween 2002 and 2003 theircompensation decreased by 13 percentthe number reporting to CFOsdoubledtheir influence vanished

Who are these pathetic losers? Who else? The people whose CareerIs Over. The beleaguered CIOs take it on the chin again.
Oh, how we love a good drama. But, dramatics aside, have IT and itscaptains really moved so far backward? No. Quite the opposite.

Over the past several months I have spoken with more than 30CIOs from the insurance industry. I could not discern anyatmosphere of doom and gloom; on the contrary, those CIOs showedconfidence, maturity, and a strong sense of belonging to theirorganizations.

True, their overall focus has changed from seeking opportunitiesto managing risks and reducing costs. That is simply a reflectionof the current business priorities dictated by the economic climateand overinvestment in innovation.

Strong Roles
Yet despite the tough economic times, the low levels of investmentcapital, and new risks related to heightened financial, legal, andexternal security exposures, the role of CIOs and their IT unitsremains strong. Most CIOs have managed not just to survive (atleast on par with the rest of the executive echelons), but tosolidify their agendas, as well.

This is not to say all or even most IT organizations havefinished maturing. While some have made significant progress, manystill have a way to travel.

For this reason, I offer up a synthesized result of myobservations and discussions to help companies along that road: TheIT Maturity Test.

The test is based on the premise a fully mature insurance ITorganization (A.D. 2004) must attain four specific high-levelgoals:
1. Integrated strategy
2. Influence parity
3. Joint processes
4. Excellence in delivery

Self-Assessment
Id like to invite you to take an active part as I elaborate onthese four goals. After reading each section, do an informalself-assessment by rating yourself: from 1 (have none) to 10 (haveit all).

1. Integrated strategy: IT is a chapter in corporatestrategy.
IT strategy cannot exist as a stand-alone entity. A good ITstrategy has to recognize two distinct dimensions: technologyinfrastructure and technology solutions. It is especially thelatter that has to be woven into the fabric of the corporatestrategy rather than exist on its own.

The CIO as a strategist has a dual role. First, be a prudentIT/business manager with a proven ability to drive down the costper unit of infrastructure and other established parts oftechnology operations. Second, be a partner (more on that below)who builds and manages strategic plans jointly with thebusiness.

Rate your IT organizations integration with corporate strategy.Whats your first score?

2. Influence parity: IT on equal footing with thebusiness.
Its a truism IT has to behave and act like a service-orientedorganization. How- ever, a frequently lurking hazard in someorganizations is service-oriented morphs into subservient. That isa major mistake. An organizations culture must assure IT never bein a meek and unassertive position vis–vis the departments itserves. Many business units still fail to recognize (or perhaps ITpeople fail to explain to them) managing IT is a complexundertaking and, as such, should be left to the pros.
We have learned not to interfere with other professionals: doctors,architects, or car mechanics. Yes, we want them to beservice-oriented, but in the final analysis, we reward them fortheir professional prowess. Which surgeon would you pick: a nice,smiling, jovial fellow whose hands are a bit shaky or a grumpy, tadarrogant old pro with a steady hand and an unflappableattitude?

It all starts with the CIO. Wherever on the organizational charthe or she belongs, the key to achieving IT parity is the CIOsability to do two things: influence and challenge. Much of thatability is purely personal. CIOs who demonstrate sustained passion,intellect, and courage combined with integrity and authenticitywill succeed regardless of their organizational chartplacement.
To understand the true influence of CIOs, one has to look wellbeyond who reports to whom. What do you make of the 2002 CIOmagazine survey that showed CIOs who report to COOs make more thanthose who report to CFOs and even more than those who report toCEOs? (I bet you all these counterintuitive statistics have to dowith the size of the organizations surveyed, i.e., biggerorganizations have more organizational layers. Goes to show howeasily statistics can be used to mislead!)

However, when it comes to placement in the corporate hierarchy,the deciding factor is the CEO. CEOs who are comfortable with ITgladly will see CIOs on their team; those who are not will keep theCIOs at arms length by delegating responsibility.

On a scale of 1 to 10: How much parity does your departmenthave?

3. Joint processes: planning and managing together.
Maintaining strong partnerships is always challengingespeciallywhen divorce is not an option. It requires a resilient culture,well-thought-out processes, a well-managed incentive system, andabove all, strong people skills.

The cultural element must start at the executive level. Onlythen can it permeate to all levels of an organization. One of thenatural starting points involves certain strategic-level technologydecisions that should be made only as a joint conclusion betweenthe CIO and the Executive/CEO. Here is a basic set that shouldundergo at least an annual scrutiny:
How much to spend on IT?
Who gets how much of ITs dollars?
What plans should get implemented companywide?
Whats an acceptable risk (how good must IT be)?

Surprisingly, very few organizations engage in the kind ofdialogue that leads to answering such questions. Yet the answersshape the foundation of effective management of IT as a corporateresource. And no one, other than the executive, has the sufficientperspective to provide them.

At the tactical and operational levels, IT has to find everyopportunity to partner with the business on every changeinitiative. Most importantly, IT management must recognize thetechnological element of change always disturbs the many people itaffects. Hence, a diligent and concerted effort must be applied toheed, explain, and minimize those effects.

The most important element, however, has to do with having theright people. No IT organization has a chance of partnering withits business clients if its people are seriously short on eitherbusiness knowledge or business acumen.

In the end, IT has to find a way to live with the businessthrough good times and bad times. They should jointly feel andcelebrate the results of success and live the pain of failuretogether.
Are you keeping score?

4. Excellence in delivery.
To establish excellence in delivery, IT has to perform well in fourbroad areas:
Project management
Resource allocation
Effective innovation
Efficient operations

Project management should be treated as a linchpin for all ITprocesses. Its implementation specifics inevitably will vary. Theywill depend on the company size, its structure, and the corporateculture, but regardless of the details, project management has tosupport a central formula: Deliver as promised. That statementshould be a guiding principle for IT culture and internalprocesses.

Disciplined resource allocation comes next. The worst mistake ITmanagement can make is to allow its resources to be viewed as anall you can eat buffet. From the strategic-level decision of whogets how much all the way to directing individual programmingresources, hard decisions have to be made and upheld. In thiscontext, saying no to avoid overstretching is a virtue, not asin.

Business growth and improvements come from innovation. However,new ideas have to come from people who have an in-depthunderstanding of the business. That means people who run thebusiness, not IT. The best models rely on business people whogenerate new ideas and then challenge IT to find the best practicalanswers. The CIOs target is that IT is treated as a trusted adviserwhose absence in any serious discussion is simply unthinkable.

Finally, the world of IT operations. Keeping the lights on is acritical element of IT service. It also is the element furthestremoved from strategy. Hence, my advice to CIOs is straightforward:To maintain focus and sanity, separate and delegate. Hire the bestCITO (Chief of IT Operations) your company can afford, put goodmeasures in place, and (virtually) walk away. Do not try to be ahero.

Proper measures of operational efficiencies must incorporate aminimum of three dimensions: service levels, costs, and competitivetargets. For example: 99.9 percent e-mail availability at less than$10 per month per user. Anything less than that, and before youknow it, the business goes to the external supplier. Conversely, ifyou cannot deliver such service, youll be well advised to call thatsupplier yourself.

How do you score on ITs ability todeliver?
By the way, and this may surprise you, a poor delivery record isnot the prime factor of CIO demise. Studies show less than 15percent of CIO departures are linked to nondelivery. More importantreasons are nonproductive relationships with the businessmanagement team, lack of contribution to company strategy, andbeing an ineffective change agent.

Time to Summarize
If you kept score, it is time to summarize. Whats your total? Areyou a 40, or do you have some maturing to do?

Marek Jakubik, a former CIO of Zurich Financial and PitneyBowes, is a co-founder and managing director of the InsuranceTechnology Group (www.insurancetg.com). He can bereached at 416-214-3445 or [email protected].

CIO Chronicles focuses on issues of concern to midmarketinsurers. Its content is the responsibility of the author. Viewsand opinions are those of the author and do not necessarilyrepresent those of Tech Decisions.