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CIO Professional Services LLC |
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July 22, 2019 Issue |
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CEOCFO MAGAZINE |
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CIO Professional Services LLC is helping companies understand how to better Support their Business Strategy with their Technology Portfolio |
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Managing Partner
CIO Professional Services LLC
Interview conducted by: Lynn Fosse, Senior Editor, CEOCFO Magazine, Published – July 22, 2019
CEOCFO: Mr. Richards, what is the focus at CIO Professional Services? Mr. Richards: Fundamentally, CIO Professional Services is an IT strategy firm. We specialize in helping people understand how to better support their business strategy with their technology portfolio. What we have seen is that giving somebody a 40-page PowerPoint deck explaining what their strategy should be does not get them very far. The value is in the execution of that set of recommendations that define that strategy. Not surprisingly, that is where we generate most of our revenues.
We offer a short, sharp, fixed-price assessment that starts with the business strategy and then looks at the entire IT portfolio: plans, budgets, material contracts, etc. Then we survey the user community regarding their current satisfaction level, requirements and how well the organization has executed change projects in the past. Then we come back with an, “Okay there are some overlaps, but there are definitely some gaps and this is how you should close these gaps, and this is what the transformation plan looks like over the next six to 18 months.”
CEOCFO: Who is using your services and when might they turn to you? Mr. Richards: I think the best way to answer that question is with an example. Last year our largest client was a rapidly growing consumer products organization. The new CIO was a client in his former position. Within two weeks of starting his new position he asked us to come in and help him figure out what he got himself involved with. We delivered the assessment process (which we had also delivered for him at his former employer) that I spoke of and came up with a 30-, 60-, and 90-day plan. Subsequently we are in our thirteenth month with helping them execute that strategy.
When we started in June a year ago, there were a little over 400 people and not quite a billion dollars in revenue. Today they are approaching 4,000 people and $3.5 billion revenue in one year. That sort of meteoric growth cannot be accomplished with people who have not been through that exercise before. Most of our team are former CIOs, CTOs and CSOs who have delivered similar results for their companies. I am a former Ernst and Young consulting partner, so I am pretty good at telling stories and distilling issues so client executives can understand complexities fairly quickly. However, it is the intellectual horsepower that our team brings that helps our clients ride the roller coaster.
CEOCFO: Why is simplicity so difficult? Mr. Richards: Back 25 years ago when we were doing business process reengineering and Michael Hammer’s book, “Reengineering the Corporation” was popular, Michael had an axiom that went something like this: a “process left unregulated will change for the convenience of the person who operates that process and not for the convenience of the person that that process is meant to serve.” This still holds true today.
People will find a way to get their job done, but they are going to put the blinders on and figure out how to do it in a way that best suits them. This frequently leads to some point solutions that have optimized their process but resulted in a suboptimal aggregate. They didn’t consider the bigger picture because they were just trying to get their jobs done.
Depending on the age and maturity of a company, most IT portfolios are the result of an evolution that might have been a little choppy. The grand over-arching ERP that is the control tower for everything probably does not exist, even if it was ever part of the objective. The elegance that comes from making complex things simple is difficult to come by. That is what we do.
CEOCFO: When you look at a company, what can you find that the “IT guy” cannot find? Mr. Richards: There are a few shopworn jokes about the CIO acronym standing for “career is over.” For me sometimes they are the Chief Introvert Officers. Some are sitting in the engine room waiting for the call for “more power, Scotty.” We spend time helping CIOs learn to “speak business.” The bottom line is form has to follow the function. IT is an instrument of policy and not an author of policy. You have to understand what the business is trying to accomplish and how they want to operate. You want to bring the art of the possible to the discussion as much as possible, otherwise the CIO can become typecast as Dr. No.
When someone is looking for a CFO, it is a very prescriptive list. You likely have been in public accounting, understand accounting, treasury, debt, know how to deal with the analysts and the banks, you know your way around a transaction and you know how to deal with the board.
There is no prescriptive list to become a CIO. Maybe they were the right person at the right place at the right time. They may have come up through IT operations or through the network stack or the application stack.
There is no pedigree that one must have to become a CIO, so it is kind of an uneven skillset for people who end up in that role. We always go back to the first principles of what does the business want to do, how do they want to do it, how can we make it work better. That is how we can bring the reality of the latest buzzwords like AI, ML or RPA to bear, but not until we understand how the business wants to run.
CEOCFO: Do you find that you have to help a business figure out how they want to run? Mr. Richards: Yes. A good case in point is the call that I was on with my team before my call with you. Tomorrow we are delivering an assessment to the executive team at a small but promising technology company. It became clear in our sessions with them that the manufacturing team really were not talking to the people in R&D, because it came down to the manufacturing team using some apps that the R&D engineering folks did not even know about—and it is a 90-person company.
These people are sitting in the same building and they are not talking to each other because they have deadlines to meet and there is not enough collaboration even at the executive level!
For us it is frequently a matter of just getting everybody to step back to take in the larger perspective. One of our recommendations for this client is that they need to come up with a full-blown business model for the organization, because they do not have one. What is the hand-off between R&D and engineering or engineering and manufacturing or manufacturing and procurement? This place has been around for 15 years, but it is about to be in a commanding position relative to their technology lead and they have been running so hard and lean for so long, the fact that they have a significant investment earlier this year, they have not changed their behaviors to become mature.
CEOCFO: Do you do much outreach or are people coming to you? Mr. Richards: Most of our work is referral based. We have the luxury of having fairly broad networks and being pretty well-known in Silicon Valley. We have clients outside of the area, in the Northeast it’s Philadelphia, New York, and Boston. In the Midwest it’s Dallas and Oklahoma City, but the bulk of the work emanates from Silicon Valley. We only go overseas at the behest of the US multinationals.
We do have a marketing spend and we are active bloggers and promote things on LinkedIn and Twitter, etc. We were honored to be recognized as a “Top Fifty Tech Company” at Intercon in Las Vegas last month. That is a pretty rigorous selection process. We have made marketing collateral out of that, but it is really just more to stay top of mind with our existing network.
CEOCFO: How do you evaluate new technologies and how do you keep on top of technology that was good a year ago which might not be so good today? Mr. Richards: First off, we have a healthy dose of skepticism. For example, we have a lot of guest speakers come to our Tuesday evening staff meeting to tout what their latest technologies are, and what they think they are going to market with. While we are not the hostile audience, we are the pretty circumspect, “smoke and mirrors detectors” audience.
Annually we run what we euphemistically call a “Start-up Speed Dating” event. We gather up a couple dozen of the CXOs that we know and ask them what the top three problems they are dealing with this year. We normalize the 75 submissions into 30 to 40 different ones, because a lot of these people will be grappling with similar issues. We then remove the specific attribution of issue to company and shop it to our friends in the VC community who we work with pretty regularly. We name the companies that have this set of issues, e.g., Facebook, AMD, Cisco, Citibank, etc., and ask, “what portfolio companies do you have that can solve those issues?”
They usually submit over 300 of their portfolio companies for the 30 spots at the event. In order to curate them down we have to review them all. So, we are pretty familiar with what is coming down the technology pipe.
What that does for us is we know what is hot for our client and target client base, and then the VCs tell us where their investments are that they think can deal with those issues. We distill that down to what we think are the top 30 and then have a “Speed Dating” event with the corporate executives and 30 of what we think are the top startups for the year.
CEOCFO: CIO Professional Services provides interim CIO employees. Is that more of an accommodation or is that an area that is growing for you? Mr. Richards: It is growing on both a full time and part time basis. The marketing buzz word for part time is “fractional” and it is growing faster than full time interims because a lot of our clients are under $1 billion in annual revenue. A lot of these organizations cannot afford nor do they require a fulltime CIO. A heavy-hitting CIO in the Valley here is north of $300,000 a year plus a good variable and some equity as far as an annual salary.
A couple of our people are in fractional positions because the client does need somebody to set strategy, negotiate deals and talk to the board, but they do not need them 48 hours a week. That is probably the largest-growing sector.
About a third of our people are CIOs who are in-between and would prefer to go back into industry and take the seat again. Every year we put two or three people in temp to perm roles and they usually end up taking the permanent position. That helps keep friends in the network and hopefully they become clients.
CEOCFO: Do you like CIO Professional Services as much as you expected? Mr. Richards: I have a wonderful job and have been in this role for 10 years now. Those who go into consulting and stay have a low tolerance for boredom and a high tolerance for ambiguity. I do a lot of “same-as-except,” but it is never the same thing. We have seen a lot of things like this, we have solved something similar to this, but it is never the same way twice. There are a lot of things to leverage but you still have to devise something new every time you go out.
CEOCFO: What is next? Mr. Richards: Fundamentally it is to grow the business. We’ve got offices in Palo Alto, Portland, San Diego, Denver and south Florida now. We are reestablishing our office in Boston. We are working on growth.
If we were not so obsessed with the level of quality, we would be five times our size, but when you are a few-million-dollar consultancy with a couple dozen people, one “Ah rats” and you are finished. We work through our networks and it is all referral based, so we have to be scrupulous about the standards of quality that we deliver. We are not inexpensive, we are not McKinsey prices, but we are not an offshore Indian firm either.
CEOCFO: There are many companies offering services, why does CIO Professional Services stand out? Mr. Richards: I think it goes back to the level of quality we deliver. I think it is the talent that we have on the team, and our assessment approach. I started with Arthur Young in 1988 and we were doing assessments then. The way in which we do them now with a lot of facilitation tools has accelerated the process to such a degree that within three weeks we can get a client an answer on what they should do about their problems, as opposed to a six-month study.
Then there are some quick wins, some near-term recommendations, and some longer term. Within 45 days of engaging us, they are making progress through improving and likely saving enough to fund the rest of the projects. At the end of the day there are no differentiators in this business, everybody can claim to deliver well, everybody can claim that they have great people. No CIO that I know makes a buying decision without talking to another CIO, and luckily we have a lot of them in our corner who will recommend us and say, “Call those guys, they really helped us.”
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“The elegance that comes from making complex things simple is difficult to come by. That is what we do.”- Jeff Richards
CIO Professional Services LLC
Contact: Jeff Richards +1 (650) 353-5855
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Jeff
Richards