CEA’s First CIO Reflects C-Suite Trend

By | May 20, 2013

Technology veteran Todd Coombes’ approach to his new job as the first chief information officer for the California Earthquake Authority is to keep an enterprising yet cautious eye on the risks and rewards that emerging technologies offer.

Among the issues with which CEA’s first CIO says he will be concerned when he starts his job on June 3 are security, efficiency and the task of integrating new technology into the organization.

Acting in the role of opportunist Coombes also plans to be mindful of what he calls the “consumerization of IT,” or as he puts it another way, “the technology in hands of everyone now.”

CEA is among a slew of organizations that are adding CIO positions to their executive ranks, and more firms are placing growing importance on that role, making it more of a transformative position, experts say.

We have seen an increasing share of companies who put the CIOs right up at the top as the core of people who run the company.

“We have seen an increasing share of companies who put the CIOs right up at the top as the core of people who run the company,” said John Challenger, CEO of Challenger, Gray & Christmas Inc., an outplacement consulting organization. “I think it’s a recognition by companies that the strategy around what information is collected and how it’s used to change behavior – to report to customers, and report to shareholders – is core to a company’s strategy. CIOs used to just be the technologist who fixed the machine or operated it, but now businesses are so dependent on the technology and the risks are so great to the company through the technology that many more companies have started to do this.”

CEA’s governing board approved adding a CIO position to the CEA executive team following a recommendation by consulting firm PricewaterhouseCoopers.

A memo last year from the board of the privately funded but publicly managed not-for-profit provider of residential earthquake insurance stated the CIO “role would extend to CEA’s relationships with key vendors and with participating insurers.”

“While achieving much success in its core business segments, CEA’s development of internal business processes – including information technology – has often lagged behind because of staffing limitations that have restricted the organization’s ability to build a diverse skill bank,” the memo states.

The memo notes that CEA’s business model assigns its most complex and demanding technology-dependent business functions, such as policy issuance, billings, and customer notices, to its participating insurers.

“In that regard, the CEA recently experienced numerous undue complications as it tried to implement new, lower rates, revised policy forms, a new product, and related (and required) systems enhancements,” the memo states. “Those experiences well illustrated the inefficiencies inherent – and inescapable – in the current operating structure, as some participating insurers’ aged computer systems presented (and to this day present) difficulties that are labor-intensive and costly to remedy, inhibiting CEA’s ability to effect timely, needed change.”

To oversee changes that are often fundamental to how a company operates requires not merely technological knowhow, but business smarts, according to Tom Silver, senior vice president at Dice.com, a career site for technology and engineering professionals.

“What we’re also seeing is that the role of a CIO is now broadening to someone who not only has technical capability, but someone who has business understanding and business acumen,” Silver said.

According to Silver the number of companies hiring CIOs or creating such a position continues to be on the rise, and the importance of the role is being bared out by the salaries for which the position is being rewarded.

The average salary of CIOs was $119,000, up 5 percent from a year ago, according to Dice.com’s annual salary survey for 2012-2013.

“Salaries for CIOs have demonstrated the importance of the position within an organization,” Silver said.

Overall tech salaries are up, according to Dice.com. Tech professionals in 2012 earned a greater than five percent increase in average annual wages to $85,619, up from $81,327 in 2011.

The average annual salary for IT management – CEO, CIO, CTO, VP, Director – is $123,081, up 6 percent from 2011, according to the survey. The increase in wages comes at a time when the vast majority of tech professionals (64 percent) say they are confident they could find a favorable new position in 2013, the survey shows.

John Seely Brown, co-chairman of Deloitte LLP’s Center for the Edge, told CIO Journal, a part of The Wall Street Journal publication, that CIOs can also help tune a company’s top executives into the most recent events in the world of technology.

“They can help the C-Suite better understand how the company can use digital tools in incredibly powerful ways,” Brown said.

He added, “CIOs can also start thinking about building more flexible IT infrastructures that allow the players in a company’s ecosystem – customers, suppliers, third parties – to come together, build connections on the fly, and preserve their own unique way of operating, rather than having to fit into a rigid infrastructure. Many companies are trying to figure out how to harness the power of their ecosystems to survive in this rapidly changing business environment. Understanding ‘ecosystemic thinking’ and rethinking corporate infrastructures can present a fantastic challenge and opportunity for CIOs.”

Coombes, a business-technology executive with more than 25 years of leadership experience in insurance and other industries, comes to CEA from ITT Educational Services Inc., where he was executive vice president and CIO. Before ITT, he was part of the leadership team at CNO Financial Group.

It was for his work at CNO that in 2012 Computerworld named Coombes one of its “Premier 100 IT Leaders.”

Coombes sees opportunity in the changes being undertaken at CEA, as well opportunities such as those being brought about by cloud computing, and the ever-expanding capabilities of mobile devices, enabling an organization like CEA to communicate in more and more powerful ways to its customers and insurance agents.

“It creates opportunities and it raises expectations,” Coombes added.

He was referring to the rising expectations from the consumer community, which is being equipped with faster and more capable technology that is enabling them to complete just about any task, including buying insurance, on their smartphones and handheld devices.

Coombes believes more consumers will place a greater emphasis on a conveniences like as being able to buy policies and communicate and give information from a smartphone when choosing carriers and services.

“It’s the expectation people have about what the new normal of technology is all about,” he said.

Coombes said that “new normal” is something the insurance business and CEA needs to be out in front of.

“In terms of the insurance business overall I think that technology will be much more integrated into the entire value chain,” he said. “The CEA in particular is interested in creating more accessibility to the products, and operating with more efficiency, and providing better support for the insurance organizations.”

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There’s another benefit to putting a CIO in the C-Suite, according to Challenger.

In an environment of increased regulation, as well as growing concern and public suspicion over the ethics of corporate practices, moving to add a CIO can help provide greater transparency, something that can help protect a company from itself, according to Challenger.

“Information shines a light on what’s happening,” Challenger said, adding that by having a CIO as a top-tier executive it makes it difficult for information to be obfuscated. “Authorizing it at the C-Suite level gives more power to that information, and more power not to hide it. We’re in an era of transparency. Information is transformative. Transparency is what drives change.”

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