Tech choices: CIO or CTO?

Podcast Transcript

Zhamak Dehghani:

Hello everyone and welcome to another episode of Thoughtworks podcast. I'm Zhamak Dehghani, one of your hosts today, and I'm here with my cohost Mike Mason. Hi, Mike.

Mike Mason:

Hi. Hi, Zhamak. Hi, everyone.

Zhamak Dehghani:

Now we are going to cover the topic of the role of a CIO and CTO in today's organizations. And we have two guests today, Rebecca Parsons and Marcello De Santis. Welcome.

Rebecca Parsons:

Thank you, Zhamak. My name is Rebecca Parsons. I'm the chief technology officer for Thoughtworks. I've been with the company almost 20 years and I've been the CTO actually now for over a little over 10 years.

Zhamak Dehghani:

Thank you, Rebecca. Happy to have you here. Marcello, would you give a little introduction?

Marcello De Santis:

Absolutely. No, thank you for having me. My name is Marcello De Santis, I've been in Thoughtworks for six months. I'm pretty new. I'm the principal consultant. I work with companies to help them understand how we can use technology to power up their business models. Before Thoughtworks I was a CIO for Pirelli and Mondelez. Happy to be here.

Zhamak Dehghani:

Perfect. Glad to have you. Okay shall we start with, I guess demystifying the role of a CIO and a CTO in today's organization? I understand there is a fair bit of overlap between the two. Can you describe what a CIO and CTO does?

Rebecca Parsons:

Well, when I think about it, there is very clearly a split between who worries about the company's systems and who worries about the company's products. So when we think about a technology product organization, that's probably the easiest to talk about because it's very clear. The CTO is the keeper of the vision for the product that is being sold to the customers, where the CIO's responsibility is making sure that everything else in the organization works. The supply chain, the customer facing systems, all of those sorts of things.

Rebecca Parsons:

But when you start to get out of a pure product company, those lines tend to blur. And when I think of some of our clients who are in manufacturing or retail, there are interesting arguments really about where is the line between what a CIO was responsible for. Because if they're responsible for the company's systems and let's take a retailer, the way they engage with their customers, well that's a big part of what a product might look like, but that's clearly within the realm of the systems of the CIO. So I think as companies become more digital, as tech at core becomes more prominent, how you actually disentangle the roles of a CIO and a CTO becomes much more difficult unless you want to relegate them to the extremes. And most people I know who play these kinds of roles in today's enterprises, they wouldn't want to be shunted to one end or the other.

Zhamak Dehghani:

Marcelo, what hasn't been your experience playing the role?

Marcello De Santis:

Well, I had the opportunity to be on the two extremes. The extreme of being in charge of enterprise IT as Rebecca described very well. First of all, a CIO is a C suite member, so one of the responsibilities you have above and beyond running technology efficiently and effectively is to run a great company. You sit with the rest of your colleagues at the board to make business decisions. So you need to be able to manage the double hat, number one. I have done that. But the other side, I agree with Rebecca. In companies in where technology is at the core of the product service, you become more maybe of a CTO role. And it is still important to run the internal systems of the company. But it's much more important to make sure that technology choices we make are creating great products, great customer experiences. And that requires a completely different skillset.

Marcello De Santis:

To your question, yes I have done the two and the transition was not easy because I had to learn myself things about marketing and product development and why not finance, which for technology, digital products is a completely different conversation than for other kinds of products that we have in traditional company. So I agree with Rebecca. I think the two things are hopefully converging as most of the companies are going to have tech at the core. I do believe you know some people say CIO is career is over. I will say, well that's a very negative outlook of the role. I think CEO's have the opportunity to be business leaders building products and services and bringing to the table new revenue streams. That's what I would love to see the CIO role of the future.

Rebecca Parsons:

It's interesting you say that Marcello, because one of the things that I've observed is a shift since the dotcom bubble burst. Boards and the rest of the Csuite put all of this pressure on the CIO. You're a cost center, you're a cost center, you're a cost center. Make this efficient, cut costs, standardize, stabilize, and then they turned around and say, "By innovation has stopped in my IT department. I wonder what happened." And I do think that one of the things that will start to occur is this thinking about what parts of IT are truly strategic. This is a decision that definitely needs to be made in the C-suite. What are those assets that we really are going to treat like a utility? Payroll, probably email, many of these things shouldn't be a core competence of most organizations. And then that frees up the IT organization, whether it's run by a CIO, a CTO, or a pair of them to really focus on how do we make our systems create the kind of products and customer experience, that we want. But there is an organizational and a mindset shift from the board and from the Csuite that it has to free the CIO from that perception that he is the leader of a cost center because you cannot do the level of innovation, I don't believe if you're treated as a cost center.

Marcello De Santis:

I fully agree with you, Rebecca. And just sharing a story here, right? When we moved the operating model of our IT organization for being a cost center to a more revenue generation engine for the company one of the things that all I should say kind of suggested a new metrics for us, right? In the past we were measured by basically two things, right? Cost. Right? Cost of our revenue and operational excellence. Right? I mean how many times the systems were down or hopefully not too many times otherwise you will not have too many nights of sleeping. But when we migrate that to a more revenue generation engine within the company, it was about two very important things. First it's how much new revenue we were bringing to the table.

Marcello De Santis:

Right? Because of using technology to create these new customer experiences or products, but also interestingly now, employee engagement because when you look at any single employee engagement survey, maybe the ones from Gallup, that's one of the questions in the engagement survey is, do you have the right tools to the work? Right? And that put the IT organization to own the customer experience but also looking at the employee as a customer and making sure that the rest of the decisions that we were making on the enterprise side of the house, we're also creating the right experiences for our employees because the more productive they are and the more engaged they are, the better for the company. So fully agree with what you said, just wanted to bring a little bit of color on the metrics, which if those metrics are not in place, it's very difficult for CEOs to really focus their attention in innovation.

Mike Mason:

Because the old saying is you get what you measure. Right? And I know a lot of CIO organizations when they're treated as a cost center and the only two measures of the cost and the number of outages you have over the course of a year, the easiest thing to do is to just never change anything. So you become a blocker and it becomes more difficult to get value into production because you're getting what you measure. In the continuous delivery and DevOps worlds, there's this notion of the four key metrics around cycle time and meantime to recovery and the number of times you can get a change into production and that's kind of a more holistic set of operational measures. Would you say that the things like employee satisfaction and revenue and stuff are kind of analogous, they're not analogous, they're expanding the measures that you would use as a CIO.

Marcello De Santis:

It was an expansion, absolutely. It was not that I wasn't looking at cost. Right? Or operational efficiency. We have to do everything very well. Right? Because it happens that if you don't do your foundational work well, you don't run your operations properly, and if you do not have the company running on all cylinders, I mean then what happens is you don't have, I would say the chance to talk about innovation because you're fixing operational issues. So you need to be able to do all of them, Mike. All of them are equally important.

Mike Mason:

And I mean this might be getting too much into the detail, but how do you account for revenue then that the CIO organization has enabled? Is it some sort of simple, we enabled this business case and now this new business use cases generating revenue? Or was it kind of more complex than that at that accounting?

Marcello De Santis:

In the case I was mentioning, the revenue we were measuring what the digital products were bringing to the company, right? There was not the typical revenue coming from business cases because we just put the new ERP system so to speak to give you a different example. These were products like IOT enabled products that were monetizing data, right? And that data monetization was a new revenue stream for the company and they were saying, yes, our organization has created a new revenue stream and is growing this much, hitting these targets and the conversation changes completely, right? Even when you need new investments, right? When people see revenue going up in an area that was not existing maybe six, seven months ago, they want to talk to you and they want to talk about technology. They want to talk about cybersecurity. Suddenly technology is a sexy topic to talk in the board and people get interested because it's driving know the key metric which is business revenue. Right?

Zhamak Dehghani:

Rebecca, you mentioned thinking about the portfolio for the types of systems based on them being strategic or utility and really focusing on, know where you want to spend efforts. Do you see any, and Marcello you mentioned kind of innovation including innovation versus cost saving or to help cost saving and getting more revenue. Are there any KPIs that would directly measure that balance of the portfolio that you are spending time and money and efforts on both moving the innovation agenda as well as running business as is?

Rebecca Parsons:

From a KPI perspective, I think we first have to separate out what it takes to just run the business. There are basic systems. People have to be paid, accounts have to be filed, regulatory forms have to be generated. Generally accepted accounting principles have to be followed. So there are sort of foundational things that just have to work and you do want a certain set of KPIs around that and you want to measure those differently. You don't want to fall behind. And I love that Marcello brought up the employee engagement because the people who work in the payroll and HR department, they're important too, and if you don't give the right kind of experience even to those internal users and customers, you're not going to be able to retain people and we know what the job market is like. But there is a sense in which that's one area of the business that you really do from a measurement perspective, probably still want to think about differently.

Rebecca Parsons:

And then there's the second part, and I think this gets back to what Mike was talking about with the four key metrics. We need to be able to get new products and services out to our customers, internal or external, new products out quickly. We need to be able to recover quickly when things go wrong. And so I think if you look at those four key metrics from the accelerate book, those are the kinds of KPIs that you want to have for your operational systems. Some of that does have to do with innovation. How quickly, if somebody comes up with a good idea, what is the lead time between great idea and getting actual feedback in production from users, but some of that also does have to do with just the operational aspects. How long does it take to bring the system back up when something does fail? How often does it fail?

Rebecca Parsons:

Therefore, how rigorous are your processes when you're creating new products and services? How often are you able to put things out? What kind of cadence? Those four key metrics as we've seen in the accelerate report, really talk about how effective and how profitable and how innovative an organization is. But when you look at that, a lot of that does have to do with not just how quickly can I get something flashy out the door, but how well I do it. And that speaks, I think, to the balance between innovation and operational effectiveness.

Zhamak Dehghani:

In the conversation that we just had, you and Marcello both mentioned tech at core and I know it's the concept well understood among Thoughtworkers. We talk about it, we talk about our clients, where they are in their journey, but would you be able to describe what that means because I think it matters to the evolving role of CIO and CTOs as well.

Rebecca Parsons:

Well, I believe that more and more industries, more and more companies are effectively becoming technology companies that do something else. Whether they make tires, whether they sell shoes, whether they extract oil from the ground, whether they enable a stock exchange. They're all using technology in some ways and technology is becoming an increasing part of the products and services they offer, their ability to create new products and services, their ability to bring product to market in a timely fashion, the ability even to protect the health and safety of their workers. Many of the new applications in the extractive industries are looking at health and safety and how can we make it safer for employees to do some of these jobs that do have some inherent risk to them. And so as that happens, what it takes to be able to sit in that Csuite and make the kinds of business decisions Marcello was talking about, it requires an appreciation of technology.

Rebecca Parsons:

And I'm not saying that tomorrow every CEO needs to be able to write a line of code or even pass the Thoughtworks coding exam. But you have to have at least an appreciation of what technology is going to do to your industry and what are the opportunities that new technology brings to your business. What are the risks that new technology brings to your business? And so I see the entire C-suite over the next years, definitely not months, definitely not multiple decades. The C-suites are going to evolve where technology discussions are going to be much more central to the decision making of the business than they are right now. Many organizations still outsource thinking about technology to their CIO and/or CTO. And that's increasingly a problem because CEOs need to start thinking about what are the ways that I can differentiate? What are the ways I can use technology to leapfrog my competitors before the next Amazon or Uber of my industry comes along?

Rebecca Parsons:

So that's how I view tech at core is where technology is moved from the cubicles that we all used to sit in when nobody really talked to us and we were often in building completely by ourselves because you wouldn't want all those technology people getting anywhere near the business stuff to the really technology being the focus of the business. And it's a multi year, multi decade transition, but I think we're getting pretty close to the end of it.

Zhamak Dehghani:

Marcello, I'd like to hear your experience, because I know as a CIO you were working closely with thought workers before you joined us, building quite innovative solutions to run your business. So how that impacted your evolution, your personal experience, your personal evolution as a CIO bringing tech to core of your business.

Marcello De Santis:

Well, I mean just adding something to what Rebecca said. Just think about the following. Seven out of the 10 most, I would say important companies in the world in terms of market capitalization are tech-at-core companies today; five of them are in the US two are in China. So it's going to happen, right? It's happening, it's extremely visible. And then we can look at that ranking anytime in the [inaudible 00:20:59]. But to your question, I mean when I had the pleasure of working with Thoughtworks in my CIO role, I always refer to the moment as I have to actually reset myself in many aspects, right? Specifically how to lead product teams, which I did know how to do and I was glad I had Thoughtworkers pushing me. We are really pushy sometimes, but for a good reason. For a good reason. Because it's a big change in mindset. It's a change in mindset of how do you lead the organization, which is working in silos, and across different financials. How do you set up the teams, what is important for those teams?

Marcello De Santis:

And also you need to get back to basics and then sometimes you need to learn how to code. I had the opportunity to take coding lessons on Ruby on Rails. With my team and I went through those experiences with a lot of curiosity and that gave me the chance to connect with them in a different way because if you are a person leading technology in a company that has technology at the core you really need to know not only the trends, but also they want- The trends that you are using you need to know what do they make, right? I mean obviously at different levels of organization might have deeper knowledge on those things, but you really need to know. I'm very glad that Rebecca and you guys are putting together the Technology Radar. And I do believe thatits a great vehicle for technologists, but as Rebecca was saying before, how do we map those trends and what are the business implications for our business today, tomorrow and the day after tomorrow? So in summary it was a pleasure to work with Thoughtworks. That's when I fell in love with them, so that's the reason I'm here.

Zhamak Dehghani:

Good story.

Mike Mason:

I did want to ask about how you develop that characteristic because I think understanding technology a bit more because I don't think anyone in the C-suite would admit to being deliberately under-informed on technology. But equally there is some certainly historical behavior, which is sort of outsourcing technology decisions to the CIO, CTO, to the technology department. So how do you change that? Marcello, you just talked about curiosity. I mean is it curiosity? Is it a particular set of behaviors or activities? Is it reading the right things? How do you get in touch with technology?

Marcello De Santis:

I think it's different, the answer if I answer about myself, right? But if I answered about any member of the C-suite, I think if you're a CIO for a company, you need to take the ownership of educating people. And educating in a good way. Bringing those technology trends to the point where they can understand. Each member of the C suite can understand ‘what does it mean for her or his function or business, right? And this could be a long journey, right? I mean, we used to take them to do the typical Safari or startups, right? Silicon Valley. And we typically also were benchmarking our company with companies in the same industry, which to me it doesn't work anymore because any company can disrupt your business these days, right?

Marcello De Santis:

So we were showing them what was happening outside the company and not with presentations and PowerPoints, but taking them to talk to CTOs of platform companies. We can mention many of them, Uber or what to Google or the typical ones, LinkedIn. So they understand not only what those products were, but also how they were dealing with evolving those problems because the consumers continue to keep pressure on those companies to make the products better. And then when they hear that from the CFO of a traditional company,and here’s the CFO of a technology company that manages that from the finance perspective. You start to close the gaps and you make it very easy for them to understand. Now, I say it's a long journey because it doesn't happen with one basic [inaudible 00:25:57] startups. You need to do that, you need to land those trends into your business reality.

Marcello De Santis:

You need to make them understand that, as Rebecca was saying, in some cases we have an invested in technology for many years, so we have, I would say I was so set to the maximum the technology capability where CIO's in some cases became procurement managers, right? We are buying services from others. In some cases we just have an SLA. Now some of those capabilities, as Rebecca was saying, the core capabilities you might need to insource, you might need to have developers, you may need to have people that are cloud engineers. You might need to have the data side. And you need to be able to lead them, understand them and provide them a career. So everyone in the C-suite including the CIO, who's in charge of owning that educational process has to be curious and humble and understanding that, I don't know everything, but I have the opportunity to learn. So if you have that behavior and the curiosity at that level, things go well.

Rebecca Parsons:

Emphasize the critical role of leadership from the C-suite in that. And in particular when you think about not just the CEO role, but the CFO or the COO. People who are not traditionally seen as technologists. It's important for them to also be demonstrating that curiosity and being able to talk about the impact of technology on the business projections and how the business is going to operate. And when you get that level of leadership and people like the CEO and the CFO's saying, "Look, we have to think about our business differently." That sends a very strong message down through the organization. And where I've seen problems, it's not so much that people are deliberately trying to ignore technology, but there is a sense in which when the traditional business model begins to fray around the edges because of the impact of that technology, people in organizations within a company might start to feel, well, I'm no longer as in control of my destiny and human behavior is human behavior.

Rebecca Parsons:

And we get defensive. And so that leadership from the top that says, no, we're going to embrace this new world where technology has this broad implication and we're all going to learn this together. I think that's a critical part of how you get that organizational change to happen. Because if it's just championed by the CIO and the CTO, I don't think it really gets that far.

Marcello De Santis:

Absolutely. It's a great point. And another thing that is also happening is that as we get more millennials into the companies and as consumers use technology for their daily lives, the pressure comes both on up within the company and outside from our consumers. So there is a moment that is a little bit of burning platform there in where even if you want to learn or if you are curious or not, you are kind of obliged to learn.

Rebecca Parsons:

Exactly. Exactly. The expectations are enormous.

Mike Mason:

One of the other things that you mentioned early on was the sort of the opposite needs. So the need for the technologist who is moving into a CTO or CIO role to be a Csuite member. Can you talk about that transition a little bit and the challenges there?

Marcello De Santis:

What they can tell you from my experience is I started my career as a software developer. I built my software company in Argentina, I sold it, I got into consulting. And I remember at one point it was super technical and I knew my stuff. I was a C++ developer. But I sense that every time I was talking to my managers or other levels of the organization, they didn't understand me. The whole things about technology that it was secret sauce for technologists. So if you want to become CIO, as I said before, you're a C-suite member, so you need to know your business, you need to know what products you sell, how they are produced, who are your competitors? Which are the main challenges that you have from the financial perspective, from the compliance perspective, what markets are you operating, which are different challenges of those markets because people are suspecting that you contribute with your functional expertise, but most importantly with your business hat.

Marcello De Santis:

Because you're being paid pretty well to sit at that table. And if you’re just going to talk about the things that you know from your function, they will appreciate that. But they will expect more. So the same curiosity that we are asking our C-suite members to have about technology, technologists we have to have exactly the same curiosity about our business. And connect and learn and be ready for having those conversations and contribute in the same way that the CFO or CMO or a chief operating officer will contribute in any single discussion at the C-suite.

Rebecca Parsons:

And I think you can actually practice that much earlier in a career. Very often I will talk to architects and our clients and they'll be frustrated because I can't get the business to prioritize this failover test. And I said, "Well how did you describe it to them?" Well, the critical importance of knowing what the database recovery time is and how long it's going to take and it's like, stop. They don't care about that. The easiest way to convince them that this was actually a retailer in the UK and I said, "How would you like to not know how long it would take to recover your database on Boxing Day?" And they said, "What do you need?" Because you put it in business terms and even as an architect, even as a developer, as you're trying to think about and communicate about what you're building. Sure, we love technology. That's why we're geeks.

Rebecca Parsons:

We can geek out when we've got a table full of developers, but it doesn't matter to the marketing manager how shiny the technology is and how wonderful and cool and flexible and abstract and whatever wonderful words we want to say about it. They care about how effective it's going to be in the business. And so we can start to practice that skill of thinking about technology, not just from the perspective of a technologist, but what role does this thing that I'm doing now play in the broader success of my organization? And you can't do that unless as Marcello points out, what business are you in? How do you make money? What is the processes, what are the risks? Who are the competitors? And so this isn't something that you start when you're CIO minus one, you need to start it much earlier. And it results in much more productive conversations as a technologist because you were connecting it to what matters to your overall organization.

Zhamak Dehghani:

So I guess just wrapping up maybe for a segment of our audience who are aspiring CEOs and CTOs and talking about a few more skills that they need to have to be successful. You've mentioned curiosity about the business and understanding the business. What are another couple of key attributes then they need to have and key skills they need to develop?

Rebecca Parsons:

Well, I think one is the ability to articulate complex problems to multiple audiences. Being able to explain a technology vision and motivate a technology organization and turn around and be able to explain the technology vision, the same vision, but in a very different way in the Csuite or to the board to bring to life what that technology can do. And for a long time, CEOs and CTOs could live in this nice little technology silo and we didn't have to worry about that anymore or we didn't use to have to worry about that. But it's critical now that we'd be able to communicate across those boundaries affectively. And I think the second part, it's related really to the curiosity, but many people got into technology because they're really passionate about technology. That's their comfort zone and being able to step outside that comfort zone and speak at the Csuite table about business competition or the implications on our business of particular regulatory changes. That's not in the comfort zone for a lot of people who would consider themselves technologists. And so you really have to feel that you have the base from which to have those conversations because you won't succeed at the C-suite table if you don't do that. And I took the easy ones, Marcello.

Marcello De Santis:

Oh my God, now I need to think deeply on this one. So building up on what you said, which I fully agree with you, Rebecca. I think I will add only one. I would say influencing. In influencing we relate it to influencing not only your peers, so they understand what technology can do for them in business terms, but also [inaudible 00:37:02] we build technology product or we build a technology enabled capability for our company. We need to have some obsession for driving adoption of those capabilities. It's not enough to build something that is great from the technology standpoint. If the employees or the customers are not using, because adoption drives results, right? Either it is productivity for the employee. They have a better experience and they save time and they're more productive and more engaged. Or if it is a digital product or a technology product, it's about driving revenue. If no one is using my app, my technology is not good. It's not responsive. Most likely my customers are going to maybe using once or twice and that's it. So if we influence internally and externally and we really understand how to drive adoption of technology. I think with the things that Rebecca said and having that influencing capabilities, I think you will be a great CIO. I would like to work for you.

Zhamak Dehghani:

All right. Thank you so much for joining us. Thank you Mike for co-hosting with me. I truly enjoyed the conversation.

Mike Mason:

Happy to.

Marcello De Santis:

Thank you.

Rebecca Parsons:

Thanks.

Mike Mason:

Hi, my name's Mike Mason and on the next episode of the podcast, I'll be talking to the authors of a new book called Edge, which is about digital transformation.