It's clear that Richard Rothschild can successfully lead an IT organization -- during his 25 years in the industry, he's been a head of IT at BEA Systems, Ariba and TiVo. But it wasn't until he started his most recent position as vice president of enterprise information services at Pandora Media Inc., the Internet radio service provider based in Oakland, Calif., that he experienced a change of heart about cloud applications.
"Before, I wasn't sure how much I wanted to rely on the cloud," he said. "[Now] I'm definitely an evangelist -- it's clearly a lot better." Today, he supervises an exclusively cloud-based IT ecosystem and said if he were to ever return to a previous employer, he would bring the message of the benefits of Software as a Service (SaaS) with him.
While he said IT managers' aversion toward cloud-based systems is understandable, he urged them to scale back their reliance on legacy systems by moving some functions to the cloud. As for the view that cloud applications threaten the role of the IT organization, Rothschild said the change that SaaS brings is positive, not something to be feared.
At Pandora, "the paradigm has shifted to where we want to be," he said. "With legacy systems, you spend your time just surviving. Now we're doing things to help transform the business."
Cost, agility create compelling case for cloud applications
Pandora's executives decided to move to an all-SaaS ecosystem before Rothschild started in late 2011, so embracing cloud applications wasn't so much a choice as something that was thrust upon him. Still, the advantages quickly made him a convert. "It's one-third the cost or less and I have one quarter of the staff than we did at TiVo," he said.
The company has deployed cloud-based systems even in business areas where there is still slow adoption, such as finance. After considering NetSuite and FinancialForce.com, Pandora executives selected the latter system to move core accounting to the cloud, in part because it was a component of the customer relationship management vendor Salesforce's Force.com platform. Rothschild also cited the system's "high velocity of change" as a perk, which allows the platform to keep pace with Pandora's growth. However, he said reconciliation across multiple currencies has been a challenge with FinancialForce, and more complex reporting capabilities are on his wish list.
Security and privacy risks often dissuade CFOs from considering cloud-based financial management software, but Rothschild said, in his opinion, the security with SaaS providers is actually greater than what could be achieved on premises. He also pointed to the increased agility that comes with cloud applications, which is especially important for a growing company like Pandora.
"We don't have a huge amount invested in SAP, so [that] we could never rip it out. We could rip out FinancialForce in a couple months if we wanted to," he said. "You can evolve your business and adapt much more quickly."
IT has the power to transform
Equally as important as decreased cost and increased flexibility, Rothschild said, is the ability of cloud applications to boost the role of the IT organization by freeing up time spent supervising legacy system upgrades and maintaining servers. "You have to think of IT as a business. [It's] not just some service in the background," he said.
And Rothschild said shifting the perception of IT from a tangential service to a central function, both within the IT department and among other business units, is a key component of what it takes to be successful as a head of IT. "I've seen IT really transform the business and be a significant part of making a company more productive," he said.
For example, during his tenure at TiVo, Rothschild said his group constructed a way to offer content outside of broadcast television, on services such as Netflix. "We were the first company that did that, and it was largely because our group said 'we can do this; let's figure out how,'" he said. "Now that's fairly common, and it helped TiVo a lot."
Rothschild's advice on how to work with business leaders is simple: Build relationships. "We are in service to them, so we put them before ourselves," he said. "When we give them what they need, then we maintain a good relationship, [and] we become part of the process."
He also said strong relationships can help IT build influence, which in turn makes it easier for the department to assume a transformative role. When business leaders trust IT, Rothschild explained, they are more receptive to suggestions about how to redesign or enhance processes.
Communication skills essential in strong IT teams
While Rothschild's resume mainly comprises IT positions, he received his bachelor's degree in experimental psychology and began his career at NASA conducting experiments in cognitive research. It was there that he learned how to use a computer, which "wasn't as common a skill as it is today," he explained. His computing background helped him land a job at Apple as an IT manager, which launched his career in the industry.
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Because he has been the head of IT at several organizations experiencing rapid growth, Rothschild said he has become adept at building effective teams. Over the years, he has identified 18 traits on which to base hiring decisions that he boiled down to five main characteristics: motivation, smarts, integrity, responsibility and good communication.
Rothschild said his emphasis on communication skills supports his belief in building relationships. "Work is just a bunch of individual relationships," he said. "If you don't communicate well, the relationship will fail every time and the company will suffer."
Divide and conquer to lessen reliance on legacy systems
It's often easier for young or growing companies to move to SaaS systems, but how can established organizations running entrenched legacy systems begin to embrace the cloud? Rothschild recommended a divide-and-conquer tactic.
"Start taking little pieces and separating them out," he said. "Over time, you can start to move those pieces to the cloud -- HRIS or expenses or some other part of the business -- and make the chunk of [the legacy system] smaller."
He added that while the strategy of combining cloud and on-premises deployment that mega-vendors SAP and Oracle have started to market is feasible, the better choice in his opinion is to "divest reliance on large installations in favor of specialty SaaS applications."
And as a cloud applications convert, Rothschild said he can act as a resource. "Talk to people like me to see what works and what doesn't work," he said. "And realize that at the end of the day, you could run your business for one-third the cost."
Emma Snider is the associate site editor for SearchFinancialApplications.com. Follow her on Twitter: @emmajs24.
This was first published in February 2013