A Brief History Of Information PoliticsInformation politics has origins in 7000 BC with the invention of clay tablets to make property records using cuneiform markings. Since CFOs do not know how to keep records they employed CIOs for data management (using write once/impossible to read ever coding methods). If a CFO found a property holder to be politically incorrect the records would be misread and the property defaulted to the CFO. That is how information management became an instrument of information politics.
In 1435 Johann Gutenberg invented printing technology. He was the first systems integrator. The trouble was that Gutenberg decided to put monks out of business because he believed that information technology is here to increased productivity. Gutenberg died as a pauper when he could not get a budget appropriation from the employers of the monks. Gutenberg was forced into bankruptcy. This is an example how information politics influences the success of information technology.
The first time the title CIO was used anywhere was in 1980. Bill Synnott was then the head of Management Information Systems at the Bank of Boston where the CFO had complete control over IBM mainframes. When loan officers arranged to get their own DEC minicomputers they needed somebody to legitimize their acquisitions. They got Bill Synnott promoted to the same level as the CFO and anointed him with the title of CIO for better effect. This is an example how information politics influences the careers of information technologists.
These three episodes define the CIO power games in a long history. In most cases there are usually only two players, the CFO and the CIO. Now let's see how these games are played in the real world.
Three Political PropositionsTo understand the CIO power games I offer three propositions that guide the talk about CIO Power Politics:
The primary focus of a CIO is not to program, not to operate computers, not to make technical choices. The primary job is power politics - to play several different roles simultaneously. The job is to manage conflict, to oversee the re-distribution of power and to re-allocate money so that information technologies may support the success of an organization.
Power politics is a professional job. It is not for amateurs, visionaries and certainly not for people whose sole expertise is in computers. A politician is a diversified professional who is nevertheless subject to a discipline and to rules of conduct. A good politician is able to operate in several different arenas simultaneously.
The only way a politician can win is to execute plays according to the rules that reduce the uncertainty of the political games.
Information Politics Is A Game With Only Few RulesChief financial officers have accounting principles, employ methods of financial analysis, are subject to generally accepted financial reporting practices, follow regulated reporting of accounts and operate within a defined structure consisting of analysts, accountants, auditors, timekeepers and treasurers. CFOs have to qualify for their position through certification and accreditation.
The power of a CFO is defined by the extent of their oversight over investments and budgets. The power of the CFO is also derived from legal and fiduciary accountability. CFOs can go to jail for malfeasance. The reason the CFO is politically powerful is because they are surrounded by more enforceable codes of conduct than anybody else in an organization.
The conduct of an Army General Officer is regulated by doctrine, by elaborate code of conduct, regulations, precedents, traditions and warfare skills. To become a General one must pass through a grueling process of evaluation, education and peer appraisals. The power of a General is measured by lethality; influence over weapons and control over people. Generals who mess up can be court-martialed. Generals have power because of the enormous discipline that is imposed by the rules that surround their position.
Contrast this with the power of a CIO. There are hardly any accepted practices. There is no body of professional conduct that is enforceable. There is no code of ethics, accreditation or certification as to qualifications. Law and regulations are missing as compared with laws and regulations of other professions. (Clinger-Cohen is mostly concerned with acquisition practices). The CIO cannot possibly win because the information technology plays are changing faster than the scenery in which a few attempted regulations that are now emerging. This is reflected in the misunderstandings about what are the real rules by which the CIO games are played. As result, even the brightest CIOs have only a slim chance of winning. In a game without rules there cannot be any winners since there is no way of keeping the score.
Description Of Three CIO GamesThe objective of this presentation is to describe where and how the CIO power moves are acted out. My purpose is to set out the playfield so that we can finally start understanding what the CIO job is all about. The purpose is to offer an understanding of actions which otherwise would not make much sense to most executives. My view of most of the CIO jobs is that what we have here is like a bull fight where only the bulls knows what to do, but neither the toreador, the matador nor the spectators know exactly what happens next.
For an understanding of CIO power plays one must realize that the CIO job is played out according to three scripts:
The Technology CIOThe first role of a CIO is in the form of the Technology CIO. The scope is limited to expenditures classified as I.T. In the Federal Government this covers $56 billion of annual expense. It amounts to only 2.4% of the total Federal budget. The U.S. industry median (I.T. budget/revenue ratio) is 3.4%. That makes the CIO only a minor player when time comes to carve out budgets into allocations for all other players.
The reported spending numbers overstate a CIO's real power. Often the personnel with the CIO title manage only a small headquarters staff. At best the CIOs are empowered to veto a new procurement or to be accountable for cyber-attacks.
Technology CIOs have hardly any control over operations, maintenance, software development and communications costs that make up most of the I.T. spending. Once money is appropriated it is the Program Mangers and Departmental Heads who dispense the money. The Technology CIO is, in fact, a custodian who has the responsibility for fixing whatever is attributable as a computer failure, such as viruses, computer downtime, loss of data as well as coping with occasional scares such as when there are two missing zeros in calendar dates. Needless to say, the technology CIO can never win any popularity contests because the omnipresent email failures make them automatically culpable for one of the most frustrating workplace experiences.
Technology CIOs are engaged mostly in power plays for wrestling greater control from existing holders of information technology assets. Such games are usually in the form of centralization vs. decentralization contests or owned vs. outsourcing acrimony. These games are played as encounters of techies vs. techies (a form of civil war). The net score is usually a zero sum gain. Rare cases of success occur only when a CIO delivers results on a faster schedule than dictated by the next reorganization occurrence (which averages 24 months or less).
The job of the technology CIO holds great promise in the future as integrator of an enormous variety of services delivered over networks. I do not see the technology CIO of the future occupied with software development contracts, setting up servers, worrying about desktop outsourcing and legacy systems migration. The customers are only interested in what shows up on their graphic display. They could not care less about how the information got there. The technology CIO will therefore have to rely on competing vendors to deliver usable information products to points of use. My model of the future CIO role is closer to that of a Wal-Mart store manager who has to make sure that competitively priced merchandise is always available.
Therefore, the technology CIO has to get out of the information manufacturing business and become a distributor of useful information. The technology CIO will continue to be important as a power plant manager or the supermarket manager. Those jobs are important but not at a sufficient level to make CIO one of the decision-making actors.
The roles of the technology CIO will rise as information technology budgets increase and the choices of technology become critical to how an organization can compete. The technology CIOs have only one choice of how to acquire political power. They must upgrade themselves from purely technological concerns into the much wider scope of influence which is in information management.
The Information Resources CIOThe second role of a CIO is in the form of the Information Resources CIO. Information Resources are over 30% of the total Federal budget (and often greater than the costs of direct labor in commercial cases.) Information Resources include the cost of the Federal Civil Service as well as all non-combat personnel in the Armed Forces. An efficient Information Resources CIO can earn their pay through business process streamlining and by promoting simplification of information workflows. The scope of such efforts is somewhat defined by regulations, such as the Paperwork Reduction Act (ineffective), the Records Management Act (unenforceable) and as defined by OMB when they call for business process improvement which must precede all information technology investment business cases (a heroic objective). Information resources management is a great job if the office holders and administrators will let you do it.
The typical power plays in this arena are efforts to achieve standardization and to deliver consolidation of functions, such as the 40 years' worth of attempts to install a uniform financial system for DoD or to make sure, for example, why the Marine Corps and the Air Force ought to use the identical communication protocols for executing close air support mission.
The actual role an Information Resources CIO is allowed to play depends very much on the personality of the incumbents and on power politics. Embedded bureaucracies jealously guard their business processes. These are welded into place by decades of regulations, administrative procedures, precedents, unions and customs.
The Information Resources CIO is only welcome when one bureaucracy has won one of the frequent centralization vs. decentralization contests and then proceeds to rivet in place a new process in place using the strongest bonding that is available: a multi-million dollar software program that is for all practical purposes not replaceable nor even modifiable except by spending money on yet another multi-million software upgrade.
The transformation from the Technology CIO to an Information CIO is essentially a political act where the CIO becomes a key player in reengineering information flows and in streamlining decision processes. In this capacity the Information CIOs assume the roles comparable to that of industrial efficiency experts. Industrial engineers held dominant management positions for over 50 years since 1900 as the USA became the most efficient industrial power. Industrial engineers still hold important jobs, but their position is now taken for granted (and has migrated to factories in the Pacific rim). They are now rarely seen as holding political power.
The Information Strategy CIOThe third role of a CIO is in the form of the Information Strategy CIO. This scope remains largely undefined, though here and there you detect initiatives that look at the missions of information technology beyond costs and budgets and towards organizational effectiveness through transformation of how the business of Government should be conducted.
Information technology based strategies now appear in the form of information warfare (my hero is Duane Andrews, who institutionalized this concept in 1991), and as E-Gov initiatives (my hero is Mark Foreman). Information technology strategy can slo be seen in supply-chain integration projects and B-to-B commerce initiatives - just to offer a few examples.
Information strategy thinking takes place when the scope of the CIO extends beyond operating the internal information infrastructure of an enterprise and when it deals with goals, objectives and performance of the entire organization in a hostile competitive setting.
A Strategic CIO views information technologies as reaching beyond the boundaries of an organization. It includes the interactions with suppliers, customers as well as competitors (often defined as adversaries or enemies). When strategic management becomes a CIO role, the arena of information politics of the Federal CIOs would extend to every element of a Department or Agency. This would include an examination how information technologies can improve services to taxpayers, how to confuse adversaries by counter-intelligence and how to deliver greater lethality into enemies.
The Importance Of StrategyThe most significant insight about the relative importance of the respective roles of the Technology CIO, the Information Resources CIO and the Strategic CIO come from the research work done by the Strategic Planning Institute of Cambridge, Mass. Over a decade in-depth studies were conducted which tried to identify which variables would analytically explain success or failure of business firms. These studies ended up with the following conclusion: commercial success is in over 65% of cases associated with strategic moves and only 15% of the causes of success were attributable to superior efficiency alone, as compared with competitors.
Information warfare is now everywhere. The competition between Wal-Mart and K-Mart was waged as information warfare (K-Mart lost even though it could use the identical technologies as applied by WalMart). The fight between Folger's coffee vs. Maxwell House coffee for grocery shelf space was information warfare pure and simple. As I see it the current worldwide protests against globalization are nothing but an expression of anxiety that US corporations could dominate the world economically through advanced uses of information as a commercial weapon.
This suggests that there is only a limited amount of benefit that can be gained from concentrating on I.T. efficiencies by trying to cut the costs of information technologies. There is only a limited amount of cash that can be extracted from worrying about cost reductions such as server consolidation, upgrading operating systems and consolidating payroll processing (by all means do that).
Yet, that is where the contemporary CIOs spend most of their time. There is not that much to be gained with yet another desktop outsourcing (taking dirty and torn wash and throwing it over the fence while expecting shiny new laundry in return) or enterprise-wide software licensing programs (for homogenized discounts) if one considers the enormous penalties to business function from aborted programs and failed acquisitions.
Summary Of CIO RolesThe Technology CIO controls about 2 - 3 % of the budget (at best). The ideal Information Resources CIO is supposed to oversee about 30% of the budget. The Strategy CIO would participate in increasing the effectiveness of the entire organization. Clearly, this means that the scope, priorities and attention of CIO power politics should shift from low-yielding cost reduction opportunities to high-yielding strategic advantages. The Technology CIO must refocus in order to fulfill the Strategy CIO roles.
One should not despair about the fact that most government CIOs are still bogged down in political haggling over who controls 2-3% of costs. After all, the CFOs with real power and clout - who nowadays sit around the table when 100% of budgets are allocated - used to be ordinary cashiers 100 years ago with hardly any discretionary power. It takes time to rise from a cashier to a CFO. It may take another few decades for the CIO label to acquire the influence of a true Chief Information Officer.
The Strategic Importance Of The CIOI take the position that the role of the CIO in the information age should be equivalent to that of the CFO. Economics dictates such comparison. CFOs value only dead assets, such as property, cash, computers, telephone switches, weapons, buildings and land. The fact that an enterprise is populated by live, educated and trained people who depend on information is never reflected in anything a CFO reports according to the Financial Accounting Standards.
For CIOs to rise in power calls for freeing themselves from the frequently morbid fascination with material assets, such as computers, servers, routers, switches and peripherals. The CIO focus must now shift to an examination of how an organization acquires trusted intelligence, how personnel can obtain the skills to make use of information technologies and how know-how is communicated to be timely and relevant. CIOs must start focusing on creating what I call the Knowledge Capital of a living organization. CIOs should leave to CFOs to deal with dead Financial Capital.
Let me illustrate this point:
The Financial Capital valuation of a corporation, as reported by the CFO, reflects only the book value - or simply stated what a firm is worth if it is liquidated (that's "carcass" caluation).
The Knowledge Capital valuation of a corporation reflects its earning capacity, after all expenses (including the costs of debty and shareholder capital) are paid for. If a firm prospers, the Knowledge Capital will be worth a large multiple of the Financial Capital.
The Financial Capital valuation of an armored division, as reported by the DoD comptroller would be the book value of the tanks, the equipment and the base housing. The Knowledge Capital valuation of an armored division would be the complete reconstitution costs of fielding, organizing and motivating a brand new fighting force, including the cost of recruiting and training, plus intelligence capabilities, plus all of the command and control.
I have published Knowledge Capital-to-Financial Capital ratios for thousands of U.S. and European firms. The evidence is overwhelming that what the CFO's are accounting for is less than half what a firm is worth. Successful organizations - without exception - show that Knowledge Capital always exceeds Financial Capital by a large multiplier. I have every reason to believe that organizations such as NASA or the Department of Defense are worth much more in terms of the Knowledge Capital than what is shown in terms of the Congressional budgetary projections.
Summary ConclusionsThe implications of these observations on the conduct of the CIO job in the next 20-30 years are far reaching. Here are my conclusions:
The message to strategy-minded CIOs is: go and acquire the power to guide the accumulation and protection of Knowledge Capital assets - data, information and intelligence - that serve customers and help to defeat our adversaries.
CIOs - As General OfficersInformation technology is the weapon of choice in 21st century competition, whether it is military or commercial. The CIOs must start viewing themselves as General Officers whose purpose is to maintain the overwhelming lead of the United States of America in the applications of information technologies.
The legitimacy of the political power of strategic CIOs is therefore a matter of national importance, not exclusively of only enhancing a personal career. I pray that we have the wisdom to bring into the services of the U.S. government the next generation of CIOs who will see their vocation in that way.
back to strassmann.com