Why the future of the CIO lies in the cloud: Q&A with Netsuite CEO Zach Nelson

"The people who are still saying 'cloud never' will be the 50 per cent of IT leaders who won't be CIOs in five years' time," says NetSuite boss.
Written by Mark Samuels, Contributor
NetSuite CEO Zach Nelson.
Image: Eric Millette
Zach Nelson is one of Silicon Valley's most experienced business leaders. After roles at Oracle, Sun, and McAfee, Nelson became CEO of cloud provider NetSuite in 2002, leading the firm on its journey from a 2007 IPO to a business now worth more than $7bn.

ZDNet met with Nelson at the firm's SuiteWorld event in San Jose, where he talked about the changing role of the , the impact of the cloud, and the importance of entrepreneurial vision.

ZDNet: Is the CIO still an important part of the executive team?

Zach Nelson: It's often suggested that the CMO is going to become the new CIO, but no CMO that I know is going to become the new CIO. Instead, what you're actually seeing are examples of CIOs becoming CMOs, so the trend is actually a reversal of how it's commonly perceived. One example is John Strain, who is CIO at Williams-Sonoma and has helped transfer the retailer's digital business. He is now CIO and chief digital officer.

CIOs are starting to take on elements of the CDO role because the requirement to bring all of this technology together, and to solve the challenges that businesses face, is such a complex task. So, I think it's more likely the CIO is going to become the CMO, or to at least take on some of their responsibilities.

I think both roles are going to evolve. But if you're a CMO, and you don't have a deep understanding of technology, you're not going to become the CIO. Our CMO, Fred Studer, is awesome, but there's no way he is going to become my next CIO. To be a CIO, you need to have deep, technical knowledge to take your business through a digital transformation. Understanding the power of brand is great, but you have to understand the technology in order to make these transformations happen.

That sounds like good news for IT leaders today, but will the CIO still be seen as an important c-suite role in five years' time?

I think the answer to that question depends very much on the individual role of each CIO. I see a split happening in the CIO role. One side of the position is focused on integrating existing enterprise software. The other side is more interested in re-platforming - and those are the CIOs who will still be playing a crucial role in business in five years.

The IT leaders who are still trying to integrate and patch won't be around. Their approach won't stand the test of time and they won't be helping their organisations cope with the digital transformation. Trying to tie hundreds of systems together is just a really bad strategy.

Unfortunately, I think a lot of CIOs are still making those kinds of decisions. I still meet CIOs who tell me they have a 17-year rollout plan for SAP and I can't believe it - your business is going to change irrevocably during the next 17 months, never mind the next 17 years.

Does such change mean the cloud will be the default option for CIOs within five years?

I think that ultimately, if you're looking to do an ERP replacement in five years, even if your propensity is to not feel comfortable in the cloud, I think that you're going to evaluate cloud-only providers because, well, why wouldn't you?

Given a fair shot, I think the perception of most doubters, who are still wedded to their servers, will change. Part of the reason such perceptions might change is because on-demand creates more possibilities than an on-premise system. The cloud allows you to be more agile and being able to provide new services quickly to customers is going to change perceptions.

The shift that I've seen is from 'cloud never', to 'cloud maybe' and now on to 'cloud first'. And I think the people who are still saying 'cloud never' will be the 50 per cent of IT leaders who won't be CIOs in five years' time.

Is a strong entrepreneurial vision the characteristic that defines a great leader?

A real challenge that I've observed is around how you push your vision down as a CEO through an entire organisation. It gets harder and harder as the company gets bigger and bigger. It's amazing how often you have to remind your employees about the key focus of the business.

I've been fortunate to work with some of the greatest CEOs in the world, such as Scott McNealy and Larry Ellison. These guys would always give the same presentation internally over and over and over again. They'd never change their talk track because it takes that much effort to align a business with what you're trying to achieve as CEO.

I think one of the key skills for any c-suite executive is to think about how you can make your mantra simple enough so that you can push a complex message down through the group. It's interesting to think about how much of your marketing spend is actually directed at your internal people because, at the end of the day, they are your external voice. When I used to sit down with Larry Ellison and work out advertisements, he'd say: 'This ad isn't for the customers really, it's for the sales guys, so they can understand in simple terms what the company is doing.'

How can you promote innovation within an organisation and how important are spin-off groups within the business?

Keeping a company entrepreneurial is tough. I have often been in the position of running a startup business within a larger organisation. And it's interesting because the rest of the organisation actually hates you. They're generating all the revenue, yet all the CEO's attention is focused on your entrepreneurial spin-off, which is actually generating none of the revenue.

You have to work hard to convince people that your startup matters. And you have to find an individual who will run this startup and take the lashes from the rest of the organisation as he or she tries to re-invent the way things work.

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