CIOs Must Keep the Focus on the Big Picture

Friday, January 07, 2011

Rahul Neel Mani

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A smart CIO knows when to stay out of tactical initiatives within the company, let his team get on with it, and keep the focus on the big picture, says Anjan Bose, CIO Haldia Petrochemicals Ltd. Bose equips himself to always see IT as a component of business and never business as means to deploy IT.

Q:Would you say the CIO's role is more operational or strategic?

A: It depends on the state that the organisation is in. When the organisation is in growth mode, the role of the CIO is to ensure that the business growth is supplemented by faster roll-outs in the right places in the organisation. At this time the CIO’s role is operational.

When the organisation is changing, especially during times of economic crises like in the last couple of years, it is important that the CIO takes a strategic role. The C in the designation implies that s/he sits in the management committee or the board of operating directors. While there is an element of operations and a day to day role that is given to the operations employees, most of the CXOs meet for strategic reasons.

Q:Can CIOs make a tangible difference in growing business, how?

A: There are organisations such as banks, insurance companies, telecommunications providers or retail businesses where after finance or business per se it is IT that decides if the business can grow or not. We come from the manufacturing side which is essentially B-to-B. In this scenario it is more about building relationships.

We have a highly capital intensive plant with a few customers. The same is true for our vendors. Further, in our business, the relationship between the vendor and customer is very blurred. We do not know who is the customer or the vendor, there are frequent role reversals. They supply us some products and they buy other products from us.

The chemical industry is always in a group. It is a group that shares common molecules. In that environment the technology piece is of extreme importance because of the robustness of information needed; to ensure the level of transparency in what is being shared and if there are changes they are informed in advance of the changes.

At any point of time, because our fixed costs are high, we always balance what grade to produce at what point of time. If the residency of the molecule in our plant is high, it means that it is taking longer to produce, which implies that it is taking more asset time and is thus more expensive to produce. Business decisions are taken based upon this fact.

If I have committed a product that takes longer time to produce in the plant and I am not getting enough revenue from the market, I have to tell the customer. Either he can pay more for the product or we give him a choice to move away from our product. We develop that market for him.

We must optimise the product mix on the fly and that is where the value of IT comes in. This is because we cannot control the prices as they are governed by indexes.

Q:Please cite examples where you have been able to achieve this?

A: I will give you a crude-based example that will help understand what we do. We produce LPG, the cooking gas you normally use. Look at the complexity, we get LPG after we crack Naphtha. We can do three things with it – we can either sell it in the market, we can crack it further to create ethylene or propylene; or we can burn it in our power plant.

This runs into crores per hour. For instance, currently, in real time we are not cracking any LPG. We are feeding 244 tonnes of naphtha per hour, and we are producing LPG at 24 tonnes per hour. We are selling it in the market because the price of LPG is high in Europe because of freezing winters in the region. The market price of LPG there has doubled.

This is where IT is beneficial in deciding and anticipating the market conditions before we produce. For instance, if the global market is on the way up, we do not crack LPG or burn it in our furnaces. In our case the use of IT is more internal than external.

Q:Should CIOs be on the management committee – what should they do to get there?

A: It is very difficult for a CIO to be in this position unless the company believes that IT is of strategic relevance. He can push himself to the board but nobody will listen to him, and it is hard to find anyone that does not think like this.

The issue is that if the CIO goes to the board and does not know the business part, he will cut a very sorry figure. There are all kinds of CIOs, and my thinking is that a majority do not look at business as a business but they look at it as an opportunity to deploy IT. This is not going to work. This also makes it difficult for the next CIO to get on the board too.

Finally, it is extremely important for the CIO to speak the language of the business that everybody understands. He negates his importance himself if he is not understood by the business.

Cross-posted from CTO Forum

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