Tech, Please

This story appears in the January 2005 issue of Entrepreneur. Subscribe »

After starting a New York City ad agency in 1997, Alex Konanykhin got into creating websites with animated graphics and surfed the internet boom. But after the dotcom bust, he began selling software. Today, KMGI Software Inc.has $1.4 million in sales, and Konanykhin, 38, counts himself lucky. But he can't take all the credit because key moves into producing animated websites and then into retail software were suggested by KMGI's chief information officer (CIO), Alex Koshel. "Our strategy changed as a result of our [CIO's] ideas," says Konanykhin.

He and Koshel have been friends for 18 years, which partly explains why Konanykhin is willing to take business advice from an executive whose position in many firms is relegated to that of "the computer guy." But the relationship may be a model for other entrepreneurs.

Eric Monnoyer, a Paris-based partner of McKinsey & Co., has studied changing roles of CIOs and found that "next-generation CIOs" don't just supply technology-they also help company leaders understand how to use technology to control costs, increase innovation and compete effectively.

"A critical success factor for the CIO is to understand the business," says Monnoyer. CIOs should constantly examine new technologies and competitors' IT practices, and introduce their organizations to useful ideas for products, services and process improvements. Entrepreneurs, for their part, must hold CIOs and business leaders-including themselves-accountable for IT costs and for finding innovative ways to use IT.

While Monnoyer's findings came from studies of large firms, that doesn't mean small firms don't need next-generation CIOs. Says Judy Smolski, vice president of small and midsize business for IBM, "The smaller the business, the more true it is because one manager has to play multiple roles."