Redefining Information Technology
Continued
The Secret to Their Success
AFG is basically betting its business on its hyperefficient combination of IT, marketing, and customer management. Surprisingly, it's making that bet without a CIO in place. "We no longer have a CIO," says Watkins. And they're not thinking of replacing him.
"We've deliberately decided not to have a CIO," he explains. "Instead, what we did was break down IT into a different structure because we didn't want it all funneling up to one person. That just builds bottlenecks. It was hampering our understanding of the risks in our business and isolating our IT department from the rest of the business."
For Watkins, IT is absolutely fundamental to AFG's survival. It's also fundamental to its growth and to maintaining and expanding its marketing position in the future. But rather than highlighting the importance of IT, these points seem to underscore Watkins' belief that as a result, IT (and IT management roles) needs to be integrated into the business, rather than isolated from the business.
For example, AFG had four IT managers who were responsible for a range of topics, from user interface development to business analytics to infrastructure, all of whom reported to the CIO, as in a traditional organization.
But when AFG restructured its IT group, the first thing it did was to make the CIO redundant by making those four managers report directly to the business managers in the sales channel.
"We made them responsible not for the delivery of the technology but for the return on investment of the technology," says Watkins. "For example, our user interface person is accountable for whatever developments are done in the sales interface to ensure that it delivers the salespeople's biggest priorities. We actually measure it to ensure that it provides what we call a return on development, so that the performance, accuracy—whatever the object was—is satisfied."
The result? The development team is never just working on something technical that's not explicitly related to the business. Instead, they've got to put their skills to use by working closely with the business channels to make sure any changes or new processes roll out and deliver on the company's critical business needs.
The structure ties the IT managers extremely closely to their counterparts on the business side. The IT managers receive the same reward and incentive-based pay that the salespeople do. If the sales channel delivers increased profits, then the people in IT share in that profit. Says Watkins, "The IT managers are very closely linked into our sales and business performance, since they're basically on par with our senior salespeople."
"We're running a very different model than we started out with, and it seems to be working exceptionally well," says Watkins. "We're getting past the bureaucracy and building products that really address our true business needs. Our unique IT structure makes it possible for our business managers and salespeople to grow the business as fast as they can."
AGF's rapid growth and premier position within the Australian financial services industry highlight the benefits of a cutting-edge business model and the willingness to take risks early in the company's life to ensure that the systems were in place when they were essential for competitive differentiation. "I think it's one of the secrets to our success," says Watkins.
For More Information
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David A. Kelly is a business, technology, and travel writer who has written for numerous publications including the
New York Times and
Oracle Magazine.
