At the beginning of the year, the Center for Information Systems Research (CISR), part of the MIT Sloan School of Management, unveiled its landmark study The Future of the CIO, on the present and future roles of CIOs worldwide.
Among its findings, the report concluded that the CIOs are expanding from a role that focuses on providing internal IT support, to one that is called the “Embedded CIO”. This new type of CIO works with non-IT colleagues on the organization’s strategy, business process execution and innovation, as well as new product development.
One example of this new CEO–CIO partnership can be found in Singapore-based Saxo Capital Markets.
As chairman and CEO, Kevin Ashby works closely with his CIO, Tobias Straessle, to support his company’s products to clients in the Asian region.
“I am interested in how we are able to support the Asian market, such as providing it with the ability to connect to particular exchanges elsewhere,” says Ashby, whose organization offers online trading in areas such as the foreign exchange, stock and futures markets. It is also part of the Denmark-based Saxo Bank Group, a global wealth management firm with 1,200 employees across offices in Copenhagen, London, Singapore, Marbella, Geneva, Zurich, St. Petersburg and Beijing.
The group’s profits soared by 78 per cent to US$74.3 million in 2007 compared US$41.7 million in 2006. The group also recorded growth in revenues, earnings and shareholders’ equity in 2007 as the number of client accounts, deposits and trading volumes increased. The combined effect drove group operating income up 56 per cent compared to the previous year, reaching a record level US$318.7 million in 2007.
Ashby also looks at what enhancements are available to his company’s products. One example is multi-language support. Another area of interest to him is the reduction of latency times, whether “there are solutions that are able to connect people across the Internet faster, whether we have high-speed hubs that help us connect to Europe,” he says.
Ashby’s working relationship with his CIO is challenging, given the fact that Straessle is based in the organization’s headquarters in Copenhagen–thousands of kilometers and several time zones away. Not only does Straessle work with Ashby on the Asian region, the CIO has to work with Saxo’s other business heads in various parts of Europe as well.
Keyed In
With a team of 350 IT people, Straessle needs to support the company’s business, one that sees to serving customers in more than 100 countries. This means ensuring that Saxo’s applications conform to the world’s various regulatory environments.
“In Europe, you have the Data Protection Act, which has strict rules on where data can reside,” explains Ashby. “And different countries in this region have different laws that are in conflict in the European Data Protection Act.
“In another example in the area of security, you have some parts in this region where two-factor authentication is a legal requirement, and some where it isn’t.” Therefore Ashby must work closely with Straessle on customizing their various products to fit into the Asian region.
According to Ashby, there is also the process for getting the solutions to cope with the region’s different legal environments. “For example, we allow clients to be able to download our platform, open dummy accounts and practice trading. We often run competitions on that,” says Ashby. “Now if you are going to run a competition in Singapore, and you are going to give a prize, you have to check out the legal situation because giving away money here is more complicated than in other countries.”
The CISR report points out that a growing trend among CIOs–especially in the financial services industry–is that they are increasingly interacting directly with customers. The report notes that CIOs now are meeting customers to discuss how to deliver their products and services.
In the case of Saxo, Straessle actually takes on dual roles–that of the CIO and the COO–where he heads the group’s operations and IT departments. Straessle has responsibility for a large part of the physical operations of the bank, handling customer service operations that deal with the clients and the partners, answering queries and setting up accounts.
No Tech Talk
Just like the CIOs of Motorola and Nortel, the Saxo CIO takes on more of a strategic role in directing the company together with the executive leadership. “He actually sits on the same operating board as I do,” says Ashby. This is because Saxo is a technology-driven business, he adds.
“Because you are a technology-based business, operations and technologies go hand in hand. The person needs to have a good knowledge of the business that we are in, the commercial pressures and the operations aspects of the business,” says Ashby, adding that one of the most important attributes a CIO should have is an understanding of his organization’s business and its revenue issues.
Straessle is so anchored in the strategic role that Ashby says he has almost forgotten the last time they talked on IT issues. “I think the only time in the past 18 months that we have had any discussion on technology was when we were talking recently about changing our major vendors for our e-mail, Blackberry and voice services,” Ashby recalls.
Common Dialogue
The most important thing in ensuring the relationship between a CIO and CEO is to have a common dialogue, Ashby explains: “The people who are running the business need to explain to the CIO what the commercial imperatives are. You need to have that interaction where businesspeople are able to explain to people in IT what commercial benefits there are, and what the downsides of doing something else are.”
The other factor that Ashby cites as fundamental is that both business and IT need to have a sense of ownership for projects they undertake together. He says that he has seen too many instances where IT departments are criticized for building projects that businesses asked them to. “Rarely do you see the business accountable for delivering what they said. So both parties have to made accountable and measured on delivering,” he adds.
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