The Power Nerds

The revenge of the nerds isn’t always so sweet.

After all those years waiting to be picked for playground teams or allowed into the treehouse, the pocket-protector set has infiltrated perhaps the most exclusive clubhouse of all, the executive suite.

Increasingly, they have parlayed their command of computers into jobs that bring plush offices, six-figure salaries and the fancy title of chief information officer, or CIO.

But the politics of the boardroom, it turns out, are often not that different from the politics of the playground. And CIO, as the uncomfortably accurate joke goes, really stands for Career Is Over.

Few positions are more critical to corporations today, but few are more treacherous. CIOs are given the daunting task of managing the use of computers throughout a company, and they are increasingly expected to map out strategies for using technology as a weapon in the cutthroat Digital Age.

They must traverse a terrain strewn with land mines. CIOs must endure insults from employees every time their computers hiccup, cope with continual changes in business technology and report to executives whose technological skills can be exhausted operating voice mail.

CIOs generally have the same perks as other top executives, but animosity toward them runs deep. According to a recent survey of top executives by Forbes ASAP magazine and Sterling Software, 70% said they would like to jettison their tech departments and start from scratch. More than half said meeting with the information services department is “a source of regular anxiety attacks.”

That anxiety is heightened by the fact that information technology is one of the costliest and most problematic issues facing corporations today. Enticed by glowing accounts of technology successes, many companies sink millions of dollars into computer systems that disappoint, become obsolete or fail altogether.

As might be expected, turnover among CIOs is high. According to a recent survey by CIO, a trade magazine, the average tenure in the job is just under five years. That is much longer than many observers expected, but it’s still shorter than for comparable positions in finance, human resources, sales and every other corporate department.

But that may be about to change. A new breed of cross-trained executive is emerging, people with both management skills and technology smarts. But for now, CIOs are under fire.

“As CIO, you are in the middle of a maelstrom of conflict,” said Max D. Hopper, who pioneered the CIO role at American Airlines in the ‘70s, even before there was such a title. “Other than the chief executive, the CIO is probably the toughest job in a company today.”

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Korn/Ferry International, a large recruiting company based in Los Angeles, specializes in finding executives, including CIOs.

But the abrupt departure last year of the firm’s own CIO, who maintains that he became a scapegoat for higher-than-expected computer system costs, shows that even recruiting experts don’t always find the right match.

The problems at Korn/Ferry focused on how to resolve the cumbersome task of matching candidates to jobs.

Company Chairman Richard Ferry recalled that for years the firm relied on a homespun system of sorting cards and knitting needles. A mainframe computer system installed sometime later eventually became passe as well. But about two years ago, the company hired a new CIO, David King, to oversee a sweeping upgrade.

King, a veteran technologist with a degree in electrical engineering, walked into a system so clumsy that the company’s partners “just weren’t using it,” he said. “They would give the searches to their assistants, and it would take a couple of days to get the information.”

After months of work, King unveiled a sleek new system at Korn/Ferry’s annual partners’ meeting in Arizona in October 1995. The response, he says, “was euphoric.”

The company’s entire database would be in one place for the first time, and partners could search it by any combination of criteria. Even better, partners could e-mail candidates and one another.

Even Ferry was impressed, saying, “It was much more user-friendly than the old system.” But several months later, when King presented his department’s budget, Ferry was aghast that maintenance on the new system would cost $1 million more annually than for the previous system.

King says board members and top executives had known this all along but had neglected to tell the other partners.

“I was a scapegoat,” he said. “I was a convenient person to blame. That’s a fairly common situation to be in for a CIO.”

Ferry insists the extra annual cost came as a shock, adding, “I don’t like surprises.” After further budget meetings had erupted into shouting matches, King resigned.

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Because they tend to come from such different backgrounds, CEOs and CIOs often speak different languages. Technology training and their job experiences leave CIOs unprepared for the politics of the executive suite.

CEOs, on the other hand, have usually come up through an organization’s sales, marketing or manufacturing ranks and regard technology as a budgetary black hole and a mystery.

“I’m not a technologist,” Ferry said. “I don’t want a technology- driven, technology-designed, technology-administered program. I don’t care about saving nanoseconds. You’ve got to tell me how the client is going to benefit from the money we’re spending.”

At the shareholder meeting at FHP in Santa Ana last month, Chief Executive Westcott Price III introduced the health maintenance organization’s CIO as “the one who knows all about our computers--at least he says he does.”

Price made the comment with a chuckle, but it underscores the fact that CEOs often know little about the technology coursing through their company’s operations.

“Many CEOs I meet secretly want to reveal that they aren’t as computer savvy as they would like to be,” said Lance Eliot, a former CIO who now works as a consultant in Huntington Beach.

“One CEO who called recently wasn’t even sure how to ask how efficient his programmers are. He was tempted to ask his CIO about the number of lines of code they produce.”

That would be a bit like evaluating a quarterback by how many passes he throws. When it comes to writing computer programs, precision counts. Fewer lines are usually better.

That same CEO “could tell you how to evaluate a sales or marketing person,” Eliot said. But when it comes to technology staffs, “he doesn’t really know.”

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Max Hopper never actually held the title of CIO, which didn’t gain popularity until the early 1990s. But in many ways, he defined the position.

In the early 1970s, Hopper was hired by American Airlines to help the company upgrade the computer system it used to keep flight records. He added more information to the system until it was tracking not only seats but also ticket prices, flight plans, crew schedules and more.

In those days, airlines still kept this data to themselves. Travel agents had to call each airline separately for information on ticket prices and seat availability. Clearly, the industry was ripe for a technological transformation, and Hopper was among the first to recognize it.

Two years and $20 million later, American unveiled SABRE, the first major automated booking system available to travel agents. It offered not only access to American Airlines’ flight schedule but also to those of other major airlines as well, and American collected a fee for each booking the system handled.

“In the late 1980s and early 1990s,” Hopper said, “SABRE generated more profits than the airline itself.”

Today, SABRE is a “travel supermarket,” and the system is used by more than 40% of the nation’s travel agents, said Hopper, 62, who recently retired from running it. Now a separate company, SABRE collects about $2.50 per booking and takes in more than $1 billion a year.

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There have been other technology success stories in recent years.

Wal-Mart is the country’s leading retailer largely because of its highly efficient computerized inventory system. Federal Express is the leading overnight package delivery company largely because its digital system tracks packages with an accuracy unprecedented in the shipping business.

The onus is often on CIOs to replicate those kinds of successes, or to at least keep a step ahead of the competition.

Trouble is, there just aren’t enough Max Hoppers to go around, said Tim O’Shea, a Southern California recruiter for Heidrick & Struggles, which specializes in finding CIOs.

“To find the kinds of CIOs companies want today, you need to find people capable of being a CEO in their next role,” O’Shea said.

Even when CIOs are successful with the big projects, they can be blindsided by the small stuff.

As CIO for MGM Studios several years ago, Ed Altman was responsible for developing a new computer system that would help the studio make millions of dollars licensing its film titles to television stations around the world.

But when a single computer used by MGM’s television division developed a glitch, Altman was summoned to a meeting that he said had all the makings of an ambush.

“Unbeknownst to me, [executives from the TV division] produced a book 1 inch thick documenting how bad our organization was,” Altman said. “After you read it, it was amazing we had enough sense to tie our shoes and chew gum.”

Altman placated the executives by shuffling some of his employees. Technology departments are rarely blameless in such situations, he said, but he added that the incident illustrates the fact that CIOs often have no shortage of enemies.

“It’s always been OK to pick on information technology,” said Altman, who later left MGM to become a consultant with MCI Systemhouse. As CIO, “you just take the lashing.”

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In the future, it may be hard to tell a CIO’s resume from a CEO’s.

Cynthia Feeney, 29, is a student at UC Irvine’s Graduate School of Management, where every student has a laptop computer, every chair has a data port and class schedules are published on the school’s Intranet, a private network that operates like the Internet.

The school still focuses on basic business principles, of course, but many of the courses and case studies emphasize technology. Feeney, for instance, enrolled last summer in a class called Business Process Reengineering. One of the projects in the class was to evaluate a hypothetical situation in which a large company that makes snack foods was losing money because snack products that didn’t sell were going stale on convenience store shelves.

The correct answer to the problem turned out to be that the company’s salespeople were not properly using their hand-held computers to track which snacks sold quickly and which did not at specific stores.

“In about 80% of the cases we do, there’s some sort of technological component,” Feeney said. “Last year we set up businesses on the Internet.”

Feeney is being prepared for a future in which she could be a CEO or a CIO, as are students at many of the premier MBA programs across the country, including Stanford and UCLA.

It’s all part of the “transformation from the Industrial Age corporation to the Information Age corporation,” said Vijay Gurbaxani, associate dean at UC Irvine’s business school. “A year ago, nobody heard the term ‘Intranet.’ Most big companies have one today. If you don’t respond to technology, your competitors will find a way to use it to outperform you.”

And if you’re the CIO, your career could be over.