With annual revenue of about $5.6 billion (will change with new earnings), Owens Corning reigns as the world's largest manufacturer of fiberglass and related products. In fact, the company's Fiberglas brand products have found their way into everything from boat hulls, to automobile roofs, and electronic windmill blades. The woes of the downturn in the economy pale in comparison to the difficulties Owens Corning experience in 2000. At that time, the company filed for Chapter 11 bankruptcy protection caused by a massive liability from the settlement of asbestos related lawsuits.

The Owens Corning bankruptcy, however, kept senior executives, such as David Johns, the company's CIO, focused on steering a steady course for the business. Johns carried out a steady to take cost out of the business, while increasing productivity, and improving the governance process to make better technology investment decisions. He says, "Taking cost out of business has helped us to drive the low-cost manufacturer. The economic downturn just magnifies that situation and help promoted us to focus more on our customers. We want do as much as we need to do for them."

Enteprriseleadership.org recently down with Johns to talk to him about he has navigated his company's technology course beyond bankruptcy. Here is what he had to say:

EL. Can you describe your technology organization?

DJ. We have one global IT organization staffed with about 400 internal IT professionals. They focus on applications development, business value, business consulting. I am also accountable for our global shared services organization. A service manager handles much of our outsourced IT infrastructure. We got into outsourcing early. Third-party outsourcers handle our entire commodity IT services. We have a development team in Europe, Asia and U.S., which covers our North American/Canadian and South American interests.
 
EL. Because your company went through some tough times in the early 2000s, how have you built IT to drive the company forward?
 
DJ. From 2001 to about 2006, we were in we were in Chapter 11. We have always had tight ties to the business especially for driving global standards and common solution across the enterprise. We always have strived to customize and localize services where we required them. 
 
EL. How have you created business impact of IT throughout your tenure at Owens Corning?
 
DJ. During our Chapter 11 years, we focused on reorganizing the company and taking cost out. Being in Chapter 11 gives you a chance to rethink and do over much of the things that you have done in the past. We focused on taking cost out of both IT and the businesses. I also operated our supply chain organization for seven years. Here we focused on logistics and supply chain planning.
 
EL. Where specifically did you take cost out of IT or the business?

DJ. We took much cost of our backoffice transaction systems and our logistics organization. Owens Corning focuses heavily on logistics. After all, how we get our products to market depends on our logistics capabilities. We concentrated on more effective logistics processes, and sourcing processes.

When it comes to the backoffice, we look for more efficient and effective ways to work with and connect to our customers. We also look for ways to leverage processes across our three major business franchises, as well as the different regions of the world.

As a function, IT enables us to drive leverage. We have a purview across the enterprise that perhaps other folks in the organization do not have. We also have a focused global shared services strategy to standardize the backoffice processes that do not touch our customers. We have made these processes more visible and transparent, as well as effective. We have outsourced the processes that provide no value to our customers.
 
EL. What processes are IT focused on and why?
 
DJ. Today, we look at financial process, such as accounts payable, accounts receives, cash applications, payroll, and HR administration functions. We also concentrate on general accounting processes, such as fixed assets.

We have moved quickly into the HR administrative processes and backoffice administrative processes for our customers. We do not plan to focus on a one-size fits-all strategy for our customers. If something will not help us get closer to our closers, then we will not do it.

Sourcing is another area for us. We look for common areas across our supply chain processes. Long-term forecasting, however, has been tough during these economic times. To this end, we look at short-term forecasting.
 
EL. What types of investments have you made to get closer to your customers and to drive that revenue?
 
DJ. Our diversified, expansive customer base ranges from a local building contractor all the way to a Home Depot or a Lowes. Our businesses have done a great job of trying to understand our customers better and determine how to serve their needs. We have a customer discovery process where we go out and talk to our various customers across the various businesses. We listen to their needs and respond with how we can provide value to them. For example, customers often respond to us with in-depth interviews and feedback about what services they value from us. We then take that input and adjust it to provide our customers with the appropriate services, such as online access to EDI transmission of documents or different call center technologies to vendor managed inventory. 
 
EL. Can you tell me about specific investments you have made?
 
DJ. We have invested heavily in SAP and in some Web technology that we use today. We also have invested heavily in our call center technology that we use. We have call centers across the world.
 
EL. Where is your business impact of technology coming from?
 
DJ. Our focus is productivity, taking cost out and enabling ease of business to our customers. We want to provide an environment for our businesses and our innovation folks to engage in open innovation. This concept will enable us not only to drive product innovation internally, but externally as well.
 
EL. Can you give me an example of how you are making it easy for your customers to do business with you?
 
DJ. We allow our customers to go online and see their status of orders. That is a very simple one. Our composite business is more business-to-business oriented. As a result, we provide electronic communication to our composite customers. It allows us to interface more efficiently with them and makes it easier to do business with us.

EL. Have you linked your supply chain with your customers' supply chains?

DJ. In some ways, we have. It has been easier to connect our supply chain with those of our smaller customers than with our larger customers. Sharing forecasting and vendor managed inventory, and gaining more visibility into their supply chains has helped us to work closer with our distributors and to service our end customers better. 
 
EL. Do you know how much cost you have driven out of the business?
 
DJ. It depends on what time frame you mention. From an IT perspective over the years, we have driven out well over $100 million. From a business perspective, we have focused some technology initiatives every year in the supply chain area. We also have manufacturing technology groups that look for ways to build a more stable, less variability, more quality manufacturing technology platform. We have targets in the $25 million to $35 million a year range just on those programs alone.
 
EL. Are those technology groups part of your organization?
 
DJ. Yes! We also have a business integration group. It works with our businesses and our business leaders to understand what goes on, what issues we have, and what opportunities come our way. We then translate these things into ways technology can help us take advantage of new opportunities. That group works with the individual businesses.

We have our manufacturing technology group which works with our manufacturing group. We also have what I would call functional groups that work with finance, sourcing, HR, and legal. They go through the same kind of process about looking to apply technology to our opportunities.

We bring all of the information back and then go through a rigorous priority process -- both form a top down and a bottoms-up standpoint. As we continue to evolve more things, we begin to drive from the top down rather than the bottoms up. We have some good line of sight into some things that focused on making some good progress for the business.
 
EL. What is your formal governance process?
 
DJ. We have spent much time with other senior executives of our company to understand what the big issues are, understanding what the big strategic direction is, and then figuring out how to apply technology the best way to drive business value.

Our governance process has gone through various phases. An acquisition we made in 2007 threw our entire portfolio process on its ear. We spent much time focusing on integrating this major acquisition. Today, we have begun to re-establish our process where we will meet regularly monthly. Sometimes we will also meet quarterly. It all depends on the cycle and our priorities. 
 
EL. How do you look at your portfolio? Do you have different types of investment categories?
 
DJ. Yes! We have investment categories for productivity, cost out, customers, regulatory, and compliance.
 
EL. How do you measure the results of these investments?
 
DJ. It depends on what the investment is. Part of the investment decision rests on the quality of the business case. We have a rigorous process for business case submission. It ensures that not only do we deploy a technology that provides value that we actual track the value and make sure it is sustainable. One of the biggest mistakes many technology organizations make assumes that something can sustain itself. We rarely see this happen. You have to put the processes in place to ensure that you can sustain the project. For most of technology investments, we will track the savings or track the benefits for about a year.
 
EL. What methodology do you use to track these investments?
 
DJ. For a deployment or an investment, we use the stage-gate process absolutely. We make sure that we deliver the benefits we said we would. We have a very well defined stage-gate process that we all go through for all technology investments. We also use financial metrics such as return on investment and economic value add. Some times, we use pure cost take out and time value return. We partner with our finance organization to track those benefits that way.
 
EL. Do you use the balanced scorecard at all?
 
DJ. We have used the balanced scorecard in the past. Right now, we do not want to use it. Everything has a purpose depending on your cycle. 
 
EL. Are you getting into more analytics?
 
DJ. Absolutely! Our biggest initiative today looks at providing better visibility and analytics into our technology investment cycle. Our weakest performance over the years has been on investment patterns and acquisitions. For example, we have lacked standards within the business because of our inability to provide good analytics. We have greatly improved the quality of our analytics to the business.
 
EL. You said your company made an acquisition a couple of years ago. Have you improved the speed up the integration time?
 
DJ. It was the biggest acquisition that our company has made in quite some time. It made us a true global company. We have been successful in driving synergies, but we concentrated on building the ship while we sailed along. We have looked how to build the right approach or platform for us to speed up the integration of an acquisition. 
 
EL. How has the economic downturn affected Owens Corning?
 
DJ. It has tough economically for many companies. We are happy with where we are. We performed very well given that the economy affects how we operate. Taking cost out of business has helped us to drive the low-cost manufacturer. The economic downturn just magnifies that situation and help promoted us to focus more on our customers. We want do as much as we need to do for them. 
 
EL. Are you currently hiring IT professionals?

DJ. We are always looking for good talent who can make the company successful.

Elizabeth M. Ferrarini is a technology writer from Boston, MA. Reach her at elizabethferrarini@yahoo.com.

If Tom Adams has his way, his company, Rosetta Stone, could become the Google.com of the $83 billion language learning product industry. Rosetta Stone's disruptive technology enables people to learn a foreign language in an interactive, immersive methodology. The company markets its more than 30 language learning products in more than 150 countries. The millions of customers include the U.S. Army, U.S. State Department, Reuters, and Marriott Hotels. When Adams joined Rosetta Stone as CEO in 2003, annual sales were a palfrey $10 million. His emphasis on technology innovation, and innate immersive language learning helped the company to grow revenue to more than $200 million for 2008. In 2009, the company took a confident giant step by doing an initial public offering. Adams says, "We raised half of the $112.5 million total ourselves. The rest came from the sale by our private equity backers. On the first day, the stock went up close to 40 percent. Because our business was doing well, we felt comfortable going ahead with the IPO."

Enterpriseleadership sat down with Adams to learn about his strategy for growing Rosetta Stone. Here is what he said:

EL. What are some of the factors that have contributed to Rosetta Stone's growth?

TA. The company has grown tremendously because the market is very large and disruptive. We differ from other companies. We are more cost-effective, and a more convenient way to get great results when you learn a language. We eliminate the need to spend thousands of dollars on classroom solutions. In an economic environment, people look to get more bang for their buck and that makes us more compelling.

EL. Can you frame this context of being disruptive?

TA. We teach in a technology enabled way with an immersion method. We do not explain the language. You learn the language the same way you learned your first language. The way babies learn. Toddlers figure out the language by themselves and parents sort of point to stuff. There is a context around the child. We leverage your innate ability with both structured activities and curriculum sequence. In effect, you learn very naturally. That has been very successful because you use your natural language learning ability.

What makes us a disruptive technology company? You can pass tests after you have taken language training with other offerings, such as tapes, books, CDs, online offerings, and classes in school. On the other hand, most likely you will not be able to speak the language to any great degree. People focus on wanting to learn to speak a new language. They do not want to learn how to translate literature in a foreign language. That is how we differ. If you really want to learn to speak a language, you can spend the money, stay in the country for weeks, and immerse yourself in the language. That is a proven way of successfully learning a language. Few people have the time or the money to do that. We have that same immersive type of offering, but we deliver it in a very convenient technology-enabled way.

Based on findings from our massive Nielsen Research study, we learned that people spend more than $83 billion on tools and classes to learn a language. Institutions represent an equal amount of demand again. We have not been able to conduct a survey to get that type of data. Organizations spend massive amounts of money on language training products that are inferior to ours.

EL. What is your growth rate like?

TA. Since I have joined the company, we have had a 20- fold expansion in revenue. In 2008, a challenging year for us, we grew 53 percent. Our revenues last year were $209 million. That was the largest growth year for us. Like everyone else the economic downturn has affected us. For example, because people have been traveling less, we have seen less activity at our airport kiosks. People have to be more careful with the money their because credit is in short supply. Despite all of the things, we still grew at an incredible rate.

EL. What is behind your product's technology? 

TA. We have two kinds of technologies that drive our company: the digital technology and the pedagogical technology. The digital technology leverages our interactive technologies such as speech recognition. The second technology leverages our method and unique teaching system. Our product improves over time as we innovate and find better ways of effectively teaching our technology to speak a new language interactively. Likewise, as the competency of our speech recognition technology expands, we will be able to provide augmented experiences in our offering. You will be able to use your voice to drive a learning experience inside our offering. Again, all of this might sound complicated or abstract, but it is very simple when you start to use the product.

EL. How much do you invest in technology to drive the innovation?

TA. We invest about 10 percent of sales. We have maintained this investment rate for the past several years.

EL. How do you decide what you are going to invest in?

TA. We are a vision-oriented company rather than a customer-oriented company. We do not look to the customer to tell us what to do. We talk to the customer extensively. We try to understand what their problems, such as why they struggle with current methods, and current tools. We are all about customer insight. On the other hand, we do not worry too much about what they say they want. 'Why?' Most people work within the old paradigm of traditional language instruction. We look at what language learning should be like, how it feels, and what you should learn.

EL. What is your business process for making these investments as a visionary company?

TA.  Our senior product team tries to figure how specific innovative technologies can help us move the dial for people who want to learn languages. From here, we will start to define a product concept, design and build, and iterate as we go along. We test the efficacy of our product on an on-going basis. None of us speak 30 languages. Some of our speak six or seven languages. To this end, we can try a new language fresh and see what it would be like for a new learner. This approach gives us a rigorous innovation.

EL. Do you work with your IT organization to make these investment decisions?

TA. Yes. Our IT organization gets involved in that we do. IT, however, functions as more of a support service for what we want to achieve. For example, we depend on our IT staff to track students' activities and progress. We work with them to make sure we follow through on our customer support. CRM applications are important here.

EL. Do you package the product in such a way that you break it into different types of modules for different types of experiences?

TA. Yes. For example, our level 1 and level 2 comprehensive curricula provide us with enough language so you can manage in a country. You will be able to every day functions done in that country. In level 3, you move toward being able to connect with people. You will be able to talk about your opinions, your feelings, and more abstract notions. A grammatical progression follows that.

We currently offer five levels in both English and Spanish. You get about 200 hours of instruction. Most people opt for the three levels. People who try to learn enough of the language for a vacation usually opt for the single level.

Although our mission is to teach you to communicate verbally, we teach both reading and writing comprehension.

EL. Are you looking at leveraging this technology with other types of products?

TA. We plan to launch an online socialization offering. It would allow you to practice the language you learned with reverse sound with other native speakers. For example, a French learner would use his or her voice to interact in a software environment. We augment that by allowing you to go through conversationally coaching class. Here you use the language you have learned to practice speaking with a native speaker. That person is exercising your speaking ability. Beyond that, we will be enabling you to mix with French people who want to practice their English. You will do a language exchange activity with them in French for five minutes, and then the activity will turn to English.

EL. How does your speech recognition technology work?

TA. Speech recognition is one of the unique things about our product. We have developed a proprietary speech recognition technology. For example, as you speak a particular phrase in French, the speech engine will recognize each word you say, and it will highlight the words that you said very well. It will be clear that you said some words not well. If you really said the wrong thing, it will not accept your answer. That is extremely powerful.

When we task people why they want to learn a language, everyone says that they want to speak it. If they use language tapes or CDs, they do not get any feedback from these methods. They do not know if what they said is right or wrong. With us, the system gives you voice prints.

EL.  How are some of your more established competitors falling short with technology?

TA. Berlitz is one of the oldest, established language training companies. It still uses the bricks and mortar classroom approach. It does offer some videoconferencing. This company does not an interactive, proprietary technology the way we do. They are not investing in speech recognition either.

Many companies use technology in the language learning space. They, however, rely too much on translation. They think that the old ways of memorizing vocabulary lists, understanding the difference between direct and indirect objects, and conjugating verbs are a valid way to learn a language. They operate operating on a flawed assumption.

EL. What takeaways would you give to someone you are at the helm of a company involved in disruptive technology? What can management people from your company besides a language?

TA. Do not give customers what they want; give them what they need. Customers struggle with saying what they really want. If Henry Ford asked people what they wanted, they would have said faster horses. Instead, he built a motor car. You have to understand what people really need. Do not listen to customers too much, but care about them enormously.

Do not focus so much on your competitors. If you study competitors over time, you will end up being like them. Happy companies make a difference, especially if they are comfortable and visionary in their own skin. They also need to be passionate about what they do and strive not to be outstanding, not incrementally better.

EL. What is your view of language education in schools?

TA. Education has had too little innovation. Yes, people spent money on technology within school environments or university environments. They, however, have gotten very little for their money. We really do not focus on true innovation within the learning state. Rosetta Stone is only doing this in the language space right now. We think we can transform our schools and make effective pedagogical innovation in language learning.

Elizabeth Ferrarini is a technology writer from Boston, MA. Reach her at elizabethferrarini@yahoo.com.

The Internet might have sounded the death knell for print newspapers and magazines in the United States. High quality print media, however, continues to thrive around the world. Developing countries in Eastern Europe and Asia have stepped up their efforts to keep pace with people's demand for print media. In fact, Goss International, a $1.1 billion developer and manufacturer of web offset presses, plans to capitalize on the international appetite for print media, especially newspapers, magazines, catalogs, and advertisement. The Shanghai Electric Corporation recently bought a majority interest in Goss International.  The company also expanded its global business focus through the acquisition of Heidelberg Web Systems in Germany.

Goss's presses and finishing systems print everything from books to directories from coupons to advertisements for customers on four continents.  The company sells it presses to large advertising agencies, major metropolitan newspapers, magazine publishers, and major commercial printing companies. Customers include R.H.  Donnelly, KP Group (Russia), AIW Printing (Australia), Segerdahl Corporation (U.S.), and Valpak. (U.S)

Founded in 1895, Goss International has become known for aligning technology innovation and product reliability with customers' requirements. Some of the company's technology firsts include the four-color newspaper tower, tele-color remote ink key control, and high-speed circular newspaper inserter. Bill Rogers, Goss International's CIO, says that the company's innovations, such as marrying print with wireless and online access, give advertisers new capabilities. Meanwhile, Rodgers says that the company has begun to apply its engineering expertise to new markets such as wind turbines.

Enterpriseleadership.org recently saw down with Rogers to talk about Goss International's process for making technology investments and driving innovation.

EL. Can you describe some of the international growth areas Goss is looking at?

BR. Prominent families in the U.S. own many of the major metropolitan newspaper. It has been a rough road for them.  U.S. newspapers have been losing advertising dollars to the Web. Several major metros have closed and others have been losing money. The international market for print continues to drive our growth and revenue.

We have seen much growth potential in China. It will accelerate once we get passed the current economic situation. Right now about 10 percent of the Chinese population has the discretionary income to buy newspapers and magazines. As that percentage grows, there will more of a demand for not only newspapers but higher quality print products such as magazines.  In fact, Chinese people gather in droves at newspaper viewing stands to read about what's happening around the world.

We have customers with global operations in China. They have already started to invest in huge printing facilities that will accommodate about 40 presses. India is another growth area for us. There are about a dozen Indian families that control much of the wealth. A few of those families want to use the same U.S. model of family-owned newspapers. We have customers who have bought many multiples presses within the same family. At this time, the print quality in both China and India cannot compare to that in many parts of Asia or in Europe. We sell presses that are priced for that economy.

EL. What distinguishes your presses from your competitors?

BR. We do much personalization of print media. For example, we can print catalogues that have specific items for sale or that will go to a specific demographic population. So, instead of one catalog going to an entire group, we can produce a special catalog for 100 or 1,000 people based on their needs.

We provide the print system, but we don't provide the demographic data. The customers get the demographic data from database marketing firms. After our press prints the material, it sorts it into books or signatures and then bundles that the books with either twine or in plastic.  If you go to our Web site, you will see a time lapse movie that shows one of our folders that took about three months to build. In 60 seconds, you will see the complexity of handling the folder.

EL. What is the challenge of building a printing press, say, to handle a magazine or a newspaper?

BR. We engineer everything to the customer's specifications. For example, we configured a printing press to stuff plant see packages in the publication. As a result, we build very few of the same thing. A customer's specifications can be based on geographical needs or physical needs. For a customer that wants to get new technology, but is located in a major metro area, we would fit the new technology to reside within the specified building. In the meantime, we would keep the old press running until we built the new one. Some of our customers have constructed a building just to house the printing press.

EL.  Are any two printing presses alike? 

BR. No! Some of our low-end presses are very similar. A customer might order six of the exact same thing, but they are engineered to order.

EL. Your company has earned a reputation for innovation. Can you talk about some of your technology innovations and the value it provides customers?

BR. Goss RSVP is technology that connects a cell phone to a two-dimensional bar code on print material, such as an advertisement. Depending on the cell phone, you can use his or her cell phone to scan the bar code in the ad. You would get a five-digit code to get more information about the product or you could connect to a Web site or see a video. A project we did for a real estate agent allows you to scan a particular house in the ad, put in a short code, and view more information about that house, including a short video. We are ahead of the times. We have designed some of this for the next generation phone that will run on 3G, and eventually 4G. Today we have lots of customer using the SMS part of it.

EL. Can you talk about other innovative technologies?

BR. Our tagline is 'innovation for business.' We have 1,000s of patents. Many of these patents fall into several areas - reducing labor for the customer, improving print quality, and reducing environmental impact. For example, a few years ago, we developed a technology called gapless printing. It decreases the space between the images or between the pages in the book and thus uses less paper.  By using this technology we have helped customers collectively save about 2.2 million trees over the last 10 years or about 4,300 acres of forest land.

EL. What percent of your annual revenue do you spend on product development and innovation?

BR. It's about 15 percent. We have sustaining engineering for our older equipment and new engineering for recent products.

EL. What process do you follow to make technology investments?

BR. All of our major investments are business investments. We do not like to distinguish between investment types, such as technology. The technology team works closely with the business team to develop and conceptualize ideas. We then put together a business case. Depending on the size of it, we might do a pilot. From there, we will develop an appropriation's request with a project plan, benefits, and return on investment.  We will review the request at the quarterly steering committee meeting that I chair.  All of the business leaders from around the world attend that session. We go over the status of major projects and upcoming projects, and anything else people might want to talk about. It is a governance meeting because we have about 15 people in a teleconference at the same time.

We also have a technology leadership team comprised of all of the on-site technology leaders. We meet monthly via a conference call for two hours to discuss what we accomplished, what we need to get done, and who needs what help.

EL. Are you part of other major investment decisions in the company besides technology?

BR. I participate in all decisions about technology, including our computer aided design systems. I also participate in decisions about engineering, marketing, and sales. I have input into decisions about how we support our customers with technology. For example, most of our newer presses have the ability for us to monitor that press remotely and to adjust it remotely. For example, we can adjust the print quality or the speed of the press, or we can look at what is coming off the press. It is like a remote console.

EL.  Where does the innovation come from?

BR.  We have a research and development group. Because many employees have been with the company for many years, they have solid relationships with each other and the management team. Our innovation comes from the open dialog we have with employees and our customers. For example, I might ignite some of their ideas when I talk about what I have seen at other places or conferences.

I have a card that says I am the chief innovation officer.  A colleague recently came to me and said: 'Because you build large, rotating, high reliability devices, have you ever thought about getting into the wind turbine business?' As a result, I have met with executives from wind turbine companies, as well as have attended a few industry conferences. That technology has a deep tie to how we build high quality presses. In fact, some of our presses have been printing the same newspapers for 60 years. Our technology undergoes much stress testing to ensure the reliability of engineering.

EL. Are you thinking about having a core of the business in wind turbines?

BR. Yes! The manufacturing and design engineering section on our Web site talks about projects we are doing with several wind turbine manufacturing companies. We might never put together a wind turbine and sell it. On the other hand, wind turbines have many components that look similar to those found on a printing press. Both types of components have similar lifecycle and duty requirements.

EL. Have you come up with other innovative ideas?

BR. Because we have a large service force, we have added some things such as Skype. Our Skype videophone enables our service people to see remotely how a press is operating. For example, if a press is making a loud noise, we can dial into it electronically, but we can't see what is wrong with it. This new device will function as our remote eyes and ears. Service people will be able to transmit video of a customer's press to our engineers in the main office. The engineers can help to speed up the solution to the problem.

EL. What marketing challenge does your business face?

BR. Our business is based on relationships.  You do not go shopping online for a multimillion dollar printing press. We spend much time educating prospective customers about what we do, how we do it, and why it is better than what our competitors offer. Depending on the price of the press, our sales process can take several years.

EL. How do you communicate business impact to your constituents?

BR. I came up with a periodic checkpoint meeting comprised of directors and vice presidents from functional areas. We each go over some tactical issues about our area. We also talk about we have accomplished and what we need to improve.

EL. Do you attend any meetings of the board of directors?

BR. We are privately held. I, however, attend four board meetings a year to talk about technology and innovation. The board presentation package helps me to further understand our strategy.

EL. What is your process to revise the corporate strategy?

BR. Once a year, the global management team meets. We go through a series of presentations about each site, including any functional areas. Our customers also attend this meeting. Print industry consultants provide us with a three-year vision on where they see the market going.

Elizabeth M. Ferrarini-She is a technology writer from Boston, Massachusetts. Reach her at elizabethferrarini@yahoo.com

Just about every IT professional at some point in his or her career has run into an IT disaster based on either having to do more with way less, or poor decisions made by senior management. Charles Nault, founder and chair of Atrion, a New England-based systems integrator, can sympathize with these IT professionals. Likewise, during the past 20 years his company has pitched, some of the senior executives who have caused these IT problems for one reason or another. He says that IT problems are more rampant in small to medium -size businesses where CEOs do not understand the strategic value of IT.  He adds that these types of companies are more vulnerable to network downtime than large enterprise companies. Nault, rather than dwell upon what went wrong where, has written a book called Risk-Free Technology: How Small to Medium Businesses Can Stem Huge Losses from Poorly Performing IT Systems.

Enterpriseleadership.org sat down with Nault to discuss some of the concepts in his book. Here is what he said:

EL. Can you briefly describe Atrion's business model? BTW, how do you market your services?

CN. We think of ourselves as a high-end systems integrator. Our business model includes going into companies and establishing a relationship with a C-level executive, preferably the CEO or the COO. Usually, we just see the CIO or an IT director. First, we want to understand everything we can about the company, especially what it does, how it does it, and what tools will help it do better.

When it comes to getting new business, we hired a marketing company that sets up C-level appointments for us. We found that it is easier to start at the top and work down the organizational ladder. The marketing firm gets paid if I sit down with the appropriate executive. So far, it has worked well for us.

EL. Can you briefly talk about several IT disasters you have run into?

CN. We worked with a company that had a good IT team managed by a great IT director. This person totally revamped the network, making it IP based. The company eventually hired a CIO who had his own set of ideas. The CIO and the IT director butted heads with each other. The CIO fired the IT director. Once this happened, the IT staff had rampant turnover. Because the CIO did not like dealing with us, he gave us the boot too.

We came across a multi-billion dollar with a pieced-together network. Senior management had a hands-off approach to IT, giving full IT responsibility to the new CIO. This individual had two flaws - incompetent and mostly self-taught about IT. He thought he did the company a favor by buying inexpensive equipment and solutions, and making the network run at the lowest cost possible. That is the so-called value he brought to the company. He failed to do any planning.

We came across a hospital CIO whose senior administrators hailed him as its hero for keeping the cost of the new network as low as possible. This CIO apparently went with the lowest bidder for each project. He really did not care about the vendor's credibility, as long as the price was right. Eventually, some of our partners and friendly competitors said they no longer wanted to deal with this CIO because his network was a mess. We tried to sell this CIO some point solutions to correct a few problems, but he would not listen. The CIO's successor had to rebuild the network from scratch. Ironically, the hospital's senior administrators still hold the former CIO in high esteem.

EL. The title of your book is Risk-Free Technology. It is possible to achieve this?

CN. The idea of risk-free technology can come about if IT organizations strive to build what I call utility grade networks. This type of network offers peak performance and little, if any, downtime.  Building this network does not happen overnight. You first need to build a rock-solid network infrastructure with enough redundancy and reliability, the appropriate backup strategies, proper documentation, and well-trained and adequate staff. That is just the beginning. You also need support from senior management. You cannot align an ineffective network with the needs of your business.

EL. Do small to medium-size companies invest adequately in their network infrastructure?

CN. Some do. Here is the issue. Some companies have good IT organizations staffed with people who know that they are doing. They submit propositions and proposals. For example, they do their homework and then propose a good solid architecture.  Unfortunately, someone at the top gets the pen out and starts trimming the IT budget. Before you know it, the IT organization has no choice but to live with an inadequate budget and resources. Eventually senior management gets surprised and angered when the network fails to live up to their expectations. In this type of company, IT management does a good job of planning but often becomes blindsided by slashed projects or shelved projects. In the end, the IT organization might give up on system redundancy or settle for an inadequate service contract.

EL. What motivated you to write this book?

CN. When I met with the multi-billion dollar company with the pieced together network, I said, 'The CEO cannot possibly know what type of a shoestring his network operates on. If he did, he would not sleep at night.' I also knew it was not my place to call the CEO and throw his CIO under the bus. That scenario became my original motivation. As I started talking with CIOs and IT managers who worked for our customers, I learned that they shared a common frustration: Senior executives, especially CEOs, do not want to know anything except how much does it cost and how can I cut costs. IT organizations in small to medium-size companies suffer from a lack of realistic support from senior management. My other motivation for writing the book included being a champion for these IT professionals who did not get what they needed to do a job, and at the same time, give a wakeup call to those CEOs who paid lip service to IT, not realizing how it could make or break an organization.

EL. Will a technology such as cloud computing eliminate some of the networking problems you mention in the book?

CN.  It has the potential to do that. If an organization can use hosted applications and those applications come from a solid organization with a secure configuration, then why not. It can reduce some of the problems associated with the server layer and desktop layer. Few companies will be able to relegate all of their applications to the cloud. Even if they could, they would still need a utility grade networking. For example, if your Internet configuration does not include redundant hardware, redundant circuits, and automatic failover, then you will have more trouble than if you had servers on your location. It could become a double edge sword. If you do it right, cloud computing has a ton of potential.

EL. Which parts of the IT Infrastructure Library (ITIL) are your customers moving towards?

CN. A lag times exist between when you finish the book and the publication date.  Much has changed. I wrote my comments on ITIL during the introduction of version 3 of ITIL. Everyone said that this ITIL version was more condensed and well suited to small to medium-size businesses. Because it was pitched as IT as a service, many of our customers, especially those governed by regulations such as HIPPA and Sarbanes Oxley, peeked under the ITIL v.3 hood. Some of these customers even did version 3 training. Many of our customers have postponed moving forward with version 3 implementations because of the expense. In addition to the training, they usually have the cost of an ITIL consulting firm. In fact, I know of ITIL consulting firms that will not work with small to medium-size companies.

EL. What about qualities practices? Do you see Six Sigma or COBIT in your marketplace?

CN. I see COBIT more than anything else, even more than ITIL. I, however, tend to see COBIT in larger organizations. I have not seen much of COBIT in smaller organizations. I have seen it at some banking institutions because they need to inject it into their Sarbanes Oxley strategy. If you are financial institution, you need to be compliant with this regulation. You need to look for some type of a documented strategy that enables you to carry out those best practices.

EL. Can you discuss how you helped a large company and why it brought you in?

CN. I have a presentation called taming the IT beast that touches on a large insurance company with component IT people. Unfortunately, senior management constantly squeezed these folks for money. They had to look first at what equipment cost, not what it did. They did not have adequate staff. Most of all, they did a poor job of writing documentation. We dealt with these people on the fringe. We provided some remote access multiprotocol servers into their network. At the time, we did not have a close working relationship with this organization.

One day, we got a frantic call that the company's network went down. Business had stopped completely. No one could log into the network. We did not have much access to the network, except with the remote solution we provided. At the time, this company had many dedicated connections. We tried to do some remote troubleshooting, but we did not get anywhere. At noon, the senior management team sent everyone home and closed the business. Thousands of agents around the country could not do anything that day. We eventually got the problem solved late into that night. Because we solved this problem, the company called us in to do a more formal presentation of our services. The company wanted to know specifically how it could avoid this in the future. We began with 'here is your business today. We need to understand what everyone does each day. This information will get us to the point where we can make the company's IT infrastructure rock solid.' We did that. To this day, this company has not had an unplanned network outage.

CN. What takeaways would you give CIOs and CEOs about the business impact of IT versus just keeping the lights on?

EL.  I advocate that companies pull together a technology advisory committee. We did this at Atrion. It involves getting a member of the senior management team to sit at the IT table.  You need to have senior members from IT, as well as leaders from the business units. You also need to have a cross-section of customers, both internal and external, sitting at this table. No way can you isolate yourself from management. If senior management does not want to show up, then you need to work a little harder. Perhaps, you need to do a better job of learning to speak the language of the business.  Do you really know what the CEO and CFO consider important? Ask to sit in on the meetings other departments have.  Observe what people say; refrain from talking about IT. Learn all about the business, both from both an internal and external market perspective. Acquiring this type of knowledge will help you to know how IT can have a better impact on the business objective.

Remember, IT is nothing more than a means to an ends. You need to learn what the ends are. Finally, you need to have a razor focus on effective networking. For example, in my book I reference Cisco's study about people who try to do alignment with networks that are not utility grade. The study found that you create more problems that way. Making the network infrastructure rock solid includes an initial investment in redundancy, appropriate backup strategies, and the proper documentation. Once you make this investment, you will end up cutting IT costs in the long run. You will also gain more efficiency.

EL. What are you looking for in IT talent?

CN.  We want IT people who possess integrity and humility. I say this because they must know how to function as part of a team environment. We have made the mistake of hiring people with a tremendous amount of technical expertise, including the ego to go with it. These characteristics can prove devastating to the entire team. We can spot these people right away. Ego does not work. Next, we look for the core competencies. The IT professional has given way to specialties, such as networking or security. To this end, we look for people with current certifications in specific areas of IT, such as Cisco or Microsoft.

We also look for a specialty area, such as security, routing and switching, or storage. We offer an on-going program so our IT professionals can keep their certifications current.  Some IT folks function as jacks of all trades. We prefer people who have mastered a specific area. We also look for people who have exceptional communication skills. They need to be able to talk in technical terms to their peers and in plain English to non-technical folks. The latter capability is harder one to find.

ElizabethFerrarini is a technology writer from Boston, MA. Reach her at elizabethferrarini@yahoo.com.

These days generics are the hottest growth market in the pharmaceutical industry. And Ranbaxy Laboratories Limited ranks as one of the eighth largest generics producers in the world. With annual revenue of about $1.7 billion, Ranbaxy offers generic drugs that cover the majority of chronic and acute segments. The company sells in 125 countries and has a physical presence in 49 countries. It also distributes about 80 percent of its products through the three top pharmaceutical distributors: AmerisourceBergen, Cardinal Health, and McKesson. Emphasis on new drug research into areas such as metabolic diseases, oncology, and urology help distinguish Ranbaxy from its global competitors.

Several years ago Ranbaxy underwent a business transformation to do a better job of carrying out its mission deliver value everyday to customers. This transformation included making sizable technology investments so Ranbaxy could both accelerate and lower the cost of bringing new products to market, and streamline the process of developing new chemicals and new chemical entities. The results paid off for Ranbaxy. In early 2009 Ranbaxy became an operating company of Daiichi Sankyo, an $8 billion global manufacturer of branded pharmaceuticals and the 15th largest company in this marketplace.

Enterpriseleadership.org recently sat down with David Briskman, Ranbaxy's chief information officer, to talk about the strategic integration of technology to better enable the company's key business processes.

EL. Can you describe the structure of your technology organization?

DB. We have a centralized technology organization comprised of both internal technology staff members and outsource partners in about 30 countries. Most of our applications, technology support, and our governance process follow a centralized model. Our key technology areas include the following research and development, drug discovery, and manufacturing technology.

EL. How will your business model change because of the Daiichi Sankyo relationship?

DB. Daiichi Sankyo ranks number 15 globally in branded drugs. We plan to follow a hybrid global business model that combines generics and the branded drug globally.  Our growth opportunities will include leveraging our capabilities with those of our parent.

EL. I read that your CEO wants to use technology to drive business transformation. Can you describe the areas where technology provides the most strategic value to the company?

DB. Developing a molecule that falls into the multimillion-dollar drug segment, and keeping that intellectual property for years have driven the traditional branded drug market. In the generic market, you have to be very efficient as possible if you want your business to thrive and to be successful. It is a highly competitive business, much like private label, consumer packaged goods. You have to produce a very good basket of goods or else you will not be successful. For us to accomplish this goal, we depend of technology to support our three key business cycles. One key cycle includes moving the product form the research and development cycle to the filing and registration and finally delivery to a particular market.  Our supply chain, another cycle, needs to be incredibly efficient, given our product diversity.

Our third cycle looks at how we run our business. For example, we market directly to doctors in India where customer intimacy is less of a focus. For the rest of the world, our business growth opportunities depend consistently on delivering a good quality selection of diverse products.

EL. Can you describe some of the key technology investments you made to improve the business cycles you mentioned?

DB. We have moved our research and development for new products from a manual process to a highly automated one. We submit all documentation electronically to the U.S. regulatory authority using a specific format. We are one of the early adopters on that technology. It has enabled us to obtain faster approvals on the submissions and subsequently to bring faster products to market. We also have deployed our global regulatory database that allows for our tracking, monitoring, and managing of all our regulatory submissions. This database has facilitated our ability to look at our product suite in a more meaningful way. Before this database, we had to figure out what we registered across all of the products in all of our markets.

We invested very heavily in business intelligence and our SAP supply chain suite. In fact, a variety of our business intelligence initiatives focus on enabling the business to respond better to customer demand. Some of those areas include everything from mobile phone-based automation tools in India to the different data mining, and dashboard tools.

EL. What changes did you make to your enterprise architecture for some of the things you mentioned?

DB. Because we have to be efficient, we prefer not to dabble in lots of different technologies. We have a different architecture and set of applications in research and development. Our enterprise architecture, however, revolves around our supply chain backbone and our Microsoft capabilities. We try to leverage these two platforms.  Our current enterprise architecture is less than ideal on the sales force automation front.

EL. Can you describe how you are handling sales force automation to make your organization efficient?

DB. We have 17 different sales force automation systems. That might sound like an inefficient number of systems. On the other hand, this number of systems complements the way we operate geographically. We have different business models for certain countries. Most of the business advantage does not come from the architecture of a given system, but from the local market intelligence available on those sales force automation systems. Our global studies show that we are far more effective growing our business with our regional and local players versus an enterprise approach to sale force automation.

EL.What is your governance process for making these investments?

DB. We have both formal and informal governance for making technology investments.  Our formal governance process is very straightforward. I sit on both the budget committee and the operating committee.

Each year we go through a very rigorous assessment based on a value framework we adopted from Gartner. It accesses all of the different technology investments to do a multi-cycle review process.

Throughout the year we have councils comprised of leaders from the different business areas. These councils also include my direct reports and me. We meet quarterly to assess the amount of progress we have made against the specific plan. These business councils provide a formal structure for what we must work on, along with any unexpected projects.  Depending on the region and business function, a business council might have as many as 25 people sitting around the board room to an informal gathering of five people.

Most technology projects have steering teams, which comprise our informal governance process. These teams include mostly technology professionals and some representatives from the business units. Together they work with the different business leaders to understand their priorities, vision, and strategies beyond that quarter.

EL. How will your governance process change because of Daiichi Sankyo?

DB. The governance model going will grow because of our relationship with Daiichi Sankyo. We have made most of the strategic investments and put in place the platforms that enable our generic business to run efficiently on a global basis. The exciting opportunity for me is the ability to extend that efficiency to our parent.

EL. Do you link technology to new sources of revenues, new products, or new improved processes?

DB. We rank all of our technology investments on this value framework. The framework's four areas include the following: financial metrics such as ROI, strategic implementation, compliance, and feasibility. The last one involves the ability of our business to take advantage of an implementation.

I produce an annual report that quantifies the business value associated with each investment. We have been through several cycles on this. In the first year we used this value framework, we focused on ROI. I found that we spent too much time trying to quantify dollar values where we should have been looking at qualitative capabilities.

We can say that our new supply chain platform drove our inventory reduction, but other factors contributed to this reduction.  We make sure we can have quantifiable metrics associated with each project. For example, pharmacovigilance is the compliance process for tracking adverse events in drugs used by patients. We do not put a financial benefit on that system per se, but we have started to improve the timeliness of our regulatory reporting.

By focusing on the metrics directly attributable to the investments, we have improved the overall perception of the investment's value. For example, for many of the dashboard and collaboration platforms we have set up, we measure efficiency factors, such as how many reports we run and how many active users we have. We prefer to do it this way rather than this particular report helped us improve revenue by so much. That type of process leads to much interpretative discussions and in turn does not lend credibility to technology. By focusing on the business capabilities we provide, we will derive a perceived value from the knowledge we provide with those capabilities.

EL. How integrated is technology into your business?

DB. It is integrated into the business on several levels - as a centrally managed function and as a strategic driver. We have moved from the perception of being help desk order takers to playing a strategic role in the business. We have become more proactive in our ability to propose business changes and technology investments that will improve the business.

This year my team is leading a project sponsored by our CFO to streamline the financial close process. We are in partnership mode on this project. The same goes of our sales force automation and CRM efforts. We have taken a more strategic stance in bringing solutions to the business and suggesting changes to business operations. For example, we worked on how we could improve our customer management process in India.

EL. What is your process for reviewing the corporate strategy? How will change because of the Daiichi Sankyo relationship?

DB. We have been on a three-year cycle for reviewing and setting our corporate strategy. Our relationship with Daiichi Sankyo, however, will influence how we look at our corporate strategy. I told my team that we do not have to sit down every few years and figure out our corporate strategy and alignment for generics. Instead, we need to get as many good quality products to market and to make sure we deliver them in a timely and efficient fashion. We also have to accomplish this in a compliant and profitable manner.

The generic drug industry is very simple. We support the industry's best practice for new drug development. As our business model evolves with Daiichi Sankyo, we will move forward to leverage our cost advantage in the global branded pharmaceutical market too. Many of our competitors have a federated business model versus our forthcoming centrally controlled business model.

EL. How has the global economy affected your business?

DB. Before 2009, we had been growing at 12 percent per year. Our growth rate is now about six percent. The global economic downturn affects about 10 percent of our business. We have refocused our efforts on becoming more efficient by enabling the appropriate technology and business process to achieve productivity. It has also helped us to leverage and to stick to carrying out more standard policies and procedures that facilitate productivity. For example, we rolled out unified communications and IP telephony to the increase the use of collaboration technologies.

Elizabeth Ferrarini is a technology writer from Boston, MA. Reach her at elizabethferrarini@yahoo.com

After 20 years as an IT executive, including CIO, at Capital One's Financial Services division, Doug Moran decided it was time to do what he really loved - coaching and  leadership development. Moran's tenure at Capital One focused on getting his team to work with business partners to achieve business impact of IT. They carried out technology solutions and the integration of disparate technologies from numerous  acquisitions. Some of the projects had budgets up to $100 million. He admits that on occasion his goal of achieving business impact of IT took a backseat to the politics of being a CIO. Along the way, he spent much time mentoring his direct reports and other leaders. Before joining Capital One, he served as the Deputy Secretary of Health and Human Resources, Deputy Commissioner of Social Services, and Telecommunications Director for the  Commonwealth of Virginia. He began his career at Verizon.

Moran's new company, If You Will Lead, LLC, is a leadership consultancy focusing on executive coaching, executive development, and  infrastructure strategy. His forthcoming book is called, If You Will Lead: Enduring Wisdom for 21st-Century Leaders. He serves on the boards of the Virginia Children's Health Insurance Program Advisory Commission and the Better Housing Coalition.

Enterpriseleadership.org recently sat down with him to discuss the challenges of carrying out the business impact of IT and the need to mentor subordinates. Here is what he had to say:

EL. What does business impact of IT mean to you?

DM. The president of the  division that I was CIO for put everything in perspective for me when he said, 'IT isn't an overhead function. It's  essential to our operations. It's core to who we are.' His words were a sign that I made a difference in how our business leaders thought about IT.

It seems self-evident that if you cannot justify the business value or the business impact of IT, you shouldn't be doing it. Before I became a divisional CIO at Capital One, I was a business information officer. During my first leadership meeting as BIO, my new boss said that he expected me to think and act as a business leader. He went on to say that if I was just going to be an IT professional, he didn't want me to stay. He expected me to be able to describe the problems in business terms, not technical terms. He still expected me to be competent in technology.

When I acted as a member of his leadership team, I had to act as a business leader with a technology bent not the other way around. That view stuck with me for my entire time at Captial One. At the end of the day, you need to be able to quantify IT. Too many technology leaders focus on the attractiveness and the excitement of the latest toy, as opposed to the business value we must deliver.

EL. Can you give a couple of examples of how you created and quantified business value of IT?

DM. A good example is in that business group I mentioned. When I got there, I looked at the list of projects for the IT organization. I immediately cut the number of projects down to a manageable size. At the top of the list, we had a large project to deliver a new capability that would require  outsourcing  to a new vendor. We spent a lot  of time talking about this effort to the business. We started looking at the business case. The project was an idea that many people wanted to do, but we could not quantify the value.   We decided to shut it down rather than take the risk and waste significant time and money. The value we brought was avoiding a huge investment that offered questionable value for the organization. This enabled us to focus on higher value projects.  This reinforced that my role was not just about delivery new capabilities.  IT was also about managing risk.

Before I left Capital One, I worked on replacing our lending platform. The acquisition of a couple of different banks gave us the challenge of how to deal with different platforms all doing the same thing. We said, 'Here is what it costs today. Here it what it is going to cost if we continue to operate with these disparate systems. It’s not just  the hard cost of running them, but the missed opportunity of an  integrated  customer experience.' We put together a compelling case and wound up replacing the system  three years before we had intended. We showed that this effort made  sense. It was controversial. It required the business to go through  change that itt did not want to embrace.

EL How did you communicate business impact of IT to your constituents?

DM. We used their language or terms to build a business case that was grounded in the business metrics that the business unit valued. We had regular meetings. Each of the CIOs who reported to me had to become an integral part of the business they served. They were at the table, attending all of the meetings. They had to work closely with our business partners to help them understand all of the issues. When it came right down to it, my team's job was to learn the problems the business was experiencing and be part of solving them. There were the natural business things that occurred. When we got together to figure out what we wanted to do, we would have meetings to prioritize and make sure we got access to the technology professionals we needed to solve the problems.

EL. Did you handle the politics of being a CIO?

DM. I tried to minimized the politics by keeping the end game in mind. If you deliver business value, then the politics can work themselves out. Often politics become an excuse to   rationalizef why certain projects cannot get done. On occasion, I would run into that problem, and I would fall back into that excuse saying,, 'It's the politics of the systems that keeping mefrom getting the resources I need.’ The fact was, I could not make the case for showing what I needed to get done was more important than other people's projects.' I have spent much time looking back at what went well and what did not go so well. I often blamed others for not getting everything done. In a most cases, I had not done the best job of figuring out how to put the most compelling case before the appropriate stakeholders.

EL. As a CIO, what did you look for in staff?

DM. I looked for people with a good work ethic, and strong technical skills. Capital One has a culture of rigorous testing and assessment. We did much screening before we hired anyone. As a result, I knew that the people I interviewed had made it through a tough  process. I also looked at peoples' creative abilities and willingness to think about problems in business terms, not as a technologist. I wanted my direct reports to be very business savvy.

EL. Did you do any type of mentoring to help your staff improve the raw skills you were looking for?

DM. I am a great believer in mentoring. Capital One invested much money in enterprise training. I invested much of my time in mentoring and developing leaders on my team. The love of mentoring inspired me to set up my company. Of all the things I have done, mentoring and coaching made me the happiest.

EL. Are you glad you are longer a CIO in an organization?

DM. I am glad to be doing what I am doing. I loved being a CIO. At times, it frustrated me. At the same time, I found it to be very rewarding. Unfortunately, my role became too administrative, where I focused more on making sure that the businesses underneath me did things correctly, as opposed to being a thought leader and driving business.

EL. Can you describe your forthcoming book, especially why you decided to write it?

DM. I have based my leadership book on Rudyard Kipling's poem, IF. Kipling’s poem described 16 attributes required to be a man. When I rediscovered this poem in my late 20s, I realized that it was a simple set of rules for being a better leader and a better person. I have used it in my personal development since then. About six years ago, I started introducing it to people I worked with, especially people I was mentoring.

The book takes the same 16 attributes in the poem and looks at leaders from history who have used at least one of them. I have written a chapter about each of those leaders and the lessons we can learn from them. The first line of the poem says, 'If you can keep your head when all about you are losing theirs and blaming it on you.' As a leader, you need to have composure and to be able to maintain it in tough times. I wrote about George Washington during the early days of the American Revolution. Each chapter has a different leader associated with it. I encourage people to ask, 'How can you learn from this person? What can you do differently to maintain composure or to demonstrate the characteristic that makes a strong leader?' That's the essence of the book.

People who want to be leaders must decide to make that investment themselves. The book's introduction says that the content is not for people looking for a quick fix. Instead, the book is for people who want to invest the time and energy to do it right, recognizing that being a leader is just as important as investing in any technical skills.

EL. Are you currently mentoring any IT colleagues from Capital One?

DM. I still mentor people at Capital One or people who have left and gone on to other jobs.

To be a CIO, you have to be credible in the IT community. You also have to be credible to the business. A former colleague and I often debate which comes first -- the business side or the technical side. At the end of the day, the IT folks need to know that you are one of them and the business folks need to know that you are one of them as well.  I help people shift gears to remain authentic with whoever their audience is.

EL. What are you perceptions of young people coming into IT today?

DM. They are so anxious to get ahead  now. They are always looking for the next promotion or the next opportunity. They are the hungriest and most aggressive group I have ever seen. I always encourage them to take their time, learn their skills, and grow them in a reasonable way. The ones who are not doing this are burning out.They often not have the foundation beneath them to support themselves. We are seeing a mixed bag of young people. The most successful ones I have seen are those that really love the relationship between technology and its ability to enable business growth. If you want to work in financial services, or any other industry, you need good technical skills, but it is more important that you understand how technology will enable the business to deliver results and create value. Sometime people who I mentored wanted to be pure technologist.  They really loved the technology. I would often encourage them to follow that path by going to pure technology firm where their skills and passion would be most appreciated.

I am a big fan of off-shoring. It has enabled significant changes in the IT field. It is also presenting challenges for young IT professionals. Today’s young people are competing with some of the best talent from across the globe. The talent coming from offshore firms, especially India, is exceptionally strong. As an IT leader, my challenge was finding ways to attract and grow both in-house IT talent and off-shore talent. That really requires balance.

Elizabeth M. Ferrarini - She is a free-lance writer and IT consultant from Boston, Massachusetts. Reach her at elizabethferrarini@yahoo.com

Why do some CIOs struggle to keep the lights on and butt heads with management every time there is another cut to the IT budget? In contrast, why do some CIOs receive all types of accolades, awards, and publicity for their IT leadership accomplishments? The latter CIOs have an easier time achieving business impact of IT than their struggling CIO counterparts for several reasons: These CIOs know how the business works and have been empowered to use IT to make things happen. What’s more, these CIOs work for CEOs who know that IT done well can make a difference in the company’s growth and profitability. These executives work together to find the right IT model for the business, make a range of IT investments to fuel current growth and to explore new ideas, and make sure the company can function in a digital global economy.  In other words, these executives are IT savvy. 

Executives who want to become IT savvy should pick up a copy a 150-page book written by Peter Weill, chairman of MIT Sloan School’s Center for Information Systems Research (CISR), and Jeanne Ross, director and principal research scientist at CISR.  In fact, the 160-page book is appropriately titled IT Savvy – What Top Executives Must Know to Go from Pain to Gain. Written in easy-to-read language, the book draws from research down by CISR, including vignettes about companies that have done a good job of transforming their IT organizations. The book’s appendix has a survey that allows you to rate how IT savvy you are.

Enterpriseleadership.org recently sat down with Jeanne Ross to dig deeper into the advice both authors provide in the book. Here is what she had to say:

EL. In the case of Aetna and BT, you talk about what the CEO did to bring about an IT transformation. What was the CIO’s role in this?

JR. We see successful cases where a CIO can take the lead and help the CEO see what it is possible. That’s not the point of this book. If you are a CXO, don’t wait for that to happen. You need to grab control and think of how you want IT to take your business forward. Meg McCarthy, Aetna’s CIO, will tell you that that Ron Williams, the CEO, was in charge. ‘He knew what he wanted, his vision was very clear, and my job was to deliver.’ She had to be extraordinarily good at that. On the other hand, she frames her role this way. It is a very different kind of leadership role. She didn’t have to convince anyone of the importance of IT to the company, as many CIO do. She just had to make sure that IT was first rate, and very professional. She also had to do the things so many CIOs assume they should do, but have trouble doing them. Why? Many CIOs lack the authority or have not been given the go ahead to take the business leadership role. Williams gives McCarthy all of the credit in the world for delivering.

EL. Okay, so what role did the CIO play in the IT transformation at BT?

JR. The BT CEO knew that IT needed to be more important than what it had been.  He brought in a CIO who could help him derive more value from IT. BT is a similar case to Southwest Airlines, which is also in the book. At Southwest, however, the CFO, who later became the CEO, spearheaded the IT transformation. These leaders realized that IT has to be really important. They also want to use IT in a way that yields the most value. They find the best CIO. Together they work hand in hand to make things happen in this company. In both cases, we saw a very tight partnership between an IT leader who helped provide much of the vision the CEO knew he wanted. The CXO was waiting for a CIO to help him see it more clearly.

EL. Is an IT transformation part of an overall corporate transformation?

JR.  Companies that base the transformation on moving more toward a global digital world will often recognize that IT has a critical element in making that happen.

EL. When selecting an IT operating model, what role does the business architecture and other architectures, such as enterprise, play in the process?

JR.  In an ideal world, you pick the operating model and then you define all of your architectures. Realistically you need to know where you are starting from. If you have had a siloed architecture, then you will get into trouble if you adopt, say, a unified operating model, where you standardize everything and integrate everything. If you grew up with siloes, you will have a long journey to unification. You would be better off taking intermediate steps that would take you to either replication or coordination.

Companies that haven’t had any discipline around technology, and that haven’t been thinking about architecture cannot just select an operating model. It just is an overwhelming change, and it is hard to do. As a result, companies in this situation might have their options limited. On the other hand, if you have always been good at architecture, you can select anyone you want and probably be able to pull it off.

EL. You say that IT savvy firms have a 20 percent higher margin than their competitors. Can you discuss your research process to arrive at this figure?

JR.  Because this is Peter Weill’s research, I need to piece this together. I should have asked him this question. Of the 600 firms in his sample, he took the top 25 percent of performers. He then went to those that were publicly held and pulled out the financial data. On the average, these companies had profit margins above 20 percent.

The methodology we used to pick these IT savvy companies would lead us to a very similar profile. My research focuses more on enterprise architecture, while Peter looks at how companies spend their IT dollars. We find a huge overlap in the companies with mature enterprise architectures and those companies that spend their IT dollars wisely.  Although Peter and I ask very different questions, we come to very similar conclusions on which companies are really deriving value from IT.

EL.  Many CIOs say that measure the success of their IT based on ROI. Is this a reliable metric? If not, what do you recommend they use?

JR.  ROI is not a bad metric. However, if that is all you are using, you will be headed down the road to more siloes. You have to be careful using an ROI. If you are going to make different kinds of investments for different reasons, you should be explicit about that. You do not want to have an ROI metric for everything you do because that it not why you are making all of your investments.  You are making some investments for ROI, and you might be making some investments to experiment on new ideas. ROI doesn’t work for experimentation or exploratory investments. You will eliminate all experiments real early if you use ROI.

In chapter 3, we say that your portfolio of financial investments has different goals so should your portfolio of IT investments. You should be very explicit about that and then match metrics to whatever you are looking for. So, most companies need to have an experiments budget for IT. Peter Weill calls them the strategic investments. As I mentioned, an ROI will absolutely destroy that effort. You need to look for a metric that helps you to evaluate what comes out of the ideas you have.  If you go back and look at the portfolio of things you did two years ago, you might look at what things had potential and what you should continue to invest in. If nothing had potential, you might say that you have the wrong approach, you are investing the wrong amount, or you are inveseting in the wrong projects. There is no single answer to that question.

We think that post implementation reviews are essential. So you put together a business case, and you ask yourself honestly what are we trying to get out of this? After it is done, you ask yourself if you did. That is how you are going to learn going forward. It is not so much what metric you use. It is about how you use those metrics. You need to follow up on them to check to see if they were realistic and you got what you expected.

EL. The federal government uses the earned value management metric for IT across all departments. Is this metric good for the private sector to use or is it just tailored to the government?

JR. I am not sure how they are doing that. I don’t think I can answer that. Our research does not extend much to the federal government IT. We have done a fair amount of presenting to government people and occasionally advising them. Our sponsors are all for-profit companies. That’s why we have had little interaction with the government.

EL. What are some of the methods IT savvy organizations use to communicate business value to their constituents?

JR. We noticed that Yury Zaytsev, CIO of Swiss Reinsurance Company, a global financial services company, always talks about IT situations in business terms. We said to him: ‘You are always talking about what the business is trying to do. It doesn’t matter if you are talking to IT people or business people, you instinctively talk about business. How do you do this and how do you train your people?’ He replied that he just does it. I get his point.

If you look at the cases in the book, such as Campbell Soup, Southwest Airlines, and Seven 11 Japan, executives at these companies do not realize they are doing something different from people who do not communicate well. They just say this is the way I talk. This is what we do in our business.

Some CIOs instinctively talk in terms of real business value, while other CIOs do not get it, but they think they have it. For example, these latter CIOs might talk about network downtime. No one cares about downtime. They might say, ‘Well, we talk about it in business terms.’ You do not talk to your business partners about downtime. You need to stop having interruptions or downtime by getting the basic operational stuff to work right. You should not have to explain what is going on with the technology, why it breaks, and why it is expensive. You have to get passed that.

You need to focus the attention of IT on how the business runs and makes money, and where does technology have an impact. If you start your own thinking process from the other end, then you will not be so concerned about how to communicate in value of IT or what metrics you use to measure IT value. You, instead, can concentrate on understanding the company’s biggest concerns and what IT can do about them. In IT savvy companies, CIOs think differently than their counterparts. IT savvy CIOs look at what is happening while everyone is in the valley tries to figure out what they are doing. These CIOs recognize that they have this unique perspective and can articulate and believe what is possible in the organization.

EL. Do you ask CIOs how they communicate with their rank and file?

JR. It is a very interesting question. George Westerman is working on that right now, and he will come back from this study with some ideas.

EL. In IT savvy organizations, what is the CIO’s role on the board of directors?  Do these boards have an IT committee or does the CIO sit on the audit committee?

JR. I will have to admit that we have not looked at that at all, especially in this book. We try to define the role the CEO and other CXOs ought to be taking. Are they savvy enough to recognize where IT fits in all of their operations and thus what they would have to report up to the board? You pose some interesting questions. I am surprised we have never studied that issue at all. On the other hand, if we go out and get a feel for the landscape, we will probably find many CIOs who have limited contact with the board of directors. We would have to search for those CIOs who engage regularly with their board.

EL. Have you looked at the types of portfolio management tools that companies use for IT?

JR. No. we have not gone into that at all. We have looked at the strategic view of how organizations think of their IT portfolio as opposed to what tools they use to manage it.

EL. About 60 percent of UPS’ one billion IT budget goes for running the business, and the rest goes for new investments. Do most CIOs have a good handle on a metric like this one?

JR. CIOs should pay much attention to that type of metric. Many of them don’t know the answer to that question. It is valuable to monitor that and to try to push money out of the operation and into the development side.

Elizabeth M. Ferrarini - She is a free-lance writer and IT consultant from Boston, Massachusetts. Reach her at elizabethferrarini@yahoo.com.

Budget Cuts. Layoffs. Shrinking Revenues. When tough times hit, many executives have a hard time singing the praises of their companies' greatness. J. Barry Griswell, the retired CEO and former COB of the $11 billion Principal Financial Group, says adversity provides executives, as well as their employees, with an opportunity to make positive adjustments and then some. In fact, Griswell, along with Bob Jennings, has written a book called, The Adversity Paradox: An Unconventional Guide to Achieving Uncommon Business Success.

The personal adversity Griswell experienced growing up became the underpinning for much of his success as both a corporate leader and a humanitarian leader. While he was CEO of Principal, which offers 401(k) and retirement plans to businesses, he oversaw a $1.8 billion initial public offering (IPO), which helped the company's expand its product line. As of 2008, the company had $308 billion in assets under management and 19 million customers. Griswell serves of the boards of Herman Miller and Principal. Throughout his career, he has been active in various industry and community organizations. He has received many public service awards, such as the Horatio Alger Association Distinguished American Award and the Alexis de Tocqueville Society Award.

Enterpriseleadership.org recently sat down with Griswell to get his perspective on successful leadership, especially the role of a CIO. Here is what he had to say:

EL. Usually consultants and academics write books about effective corporate leadership. Why did you, as the former CEO of a major company, decide to write a leadership book focusing on adversity?

BG. If you want to have a successful book, you should write about something you care about and something that has touched you. I came from a tough background, riddled with much adversity. When I got into management and started recruiting people, I learned success, particularly for sales people, included learning from exposure to adversity. If you can overcome adversity, then you have a greater chance of being successful. You can learn the lessons of life -- tenacity, persistence, and optimism. I got so interested in this.

In 2003 when I got the Horatio Alger Award, I couldn't believe I was joining other award recipients, such as Oprah Winfrey, Denzel Washington, and Howard Schultz, CEO of Starbucks. Each one had overcome some type of adversity, learned from it, and then went on to achieve great success. Bob Jennings, my co-author, and I decided we wanted to study adversity and see what makes it happens. Of the 100 resumes we reviewed, we selected a number of top people to interview. Our goal was to come away with a number of lessons we could pass on to our readers about how to overcome adversity.

EL. Some management reports say that CEOs average about four years in a position. Some CEOs have gotten themselves in trouble. Where do some CEOs go wrong?

BG. Some CEOs forget where they came from and just look at where they want to go. A chapter in my book talks about what matters most on the job --integrity and moral development. Some people just do not have well- developed morals. These characteristics take years for people to develop. You need to make sure they are foundational and real. Some people who get to leadership levels lack moral development. It becomes apparent as time goes on. It is unfortunate. Letting power go to their head causes many people to get off track. They think they are invincible. Some CEOs think because they occupy the top spot in the company, they cannot do anything wrong. Not true! The CEOs I have seen fall possessed many of the negative qualities I have mentioned.

EL. How did you give back to the community so you just were not just a corporate person?

BG. Being on a corporate board is self-serving. People of means should give back their time and their energy, and their financial resources. They need to lead in that area. I have tried to do that. You need to do things to help your community and the people in need. That's how you can make a difference.

I have been extraordinarily involved in a number of things. Today, I still serve on the board of the United Way of America. I run our local campaign. I support the Boys and Girls Club, both locally and nationally. I am trying to help the people of the Crow Creek Native American Indian Reservation get back on their feet. I provide significant financial support to my alma mater, which is a local college.

EL. Do you look at that kind of character when you hire executives?

BG. Absolutely! You want to ask people: 'Give me some examples of how you have given back to the community over time.' It is so easy to spot. If someone says, 'I really believe in doing those things, but I'm so busy in my career. I haven't had time yet.' I don't like that answer. We need well-rounded individuals in corporate management. People can find time to give back a little bit of their time and money.

EL. You ran companies that had great financial strength. How did you balance that with philanthropic pursuits?

BG. The Principal exemplifies a company that has tried to balance its financial strength of earning money and returning profits to shareholders, but also doing what is right for employees and the community.  If you got one of these things out of kilter, it ultimately causes you to warble and have problems. For example, United Way named has as one of its

best supporters a couple of years ago. Latina Style named us the best employer for Latinos. Fortune magazine has named us to its 100 Best Places to Work in the United States seven years running. We have many philanthropic awards.

EL. What qualities did you expect your business leaders to possess?

BG. Everyone would probably give you the same list. I always start with honesty, integrity, and then reliability. If you do not think someone is speaking the truth, then that's a red flag citing a potential risk factor. People need good intellect in order to play in the game. We all want to have people who like being on a team. It looks good for the cause. You also want people who have their own ambitions. On the other hand, if their own ambitions outweigh the good of the organization, that you have a problematic situation. You look for some flexibility and some collegiality. Of course, you want them to have a strong passion and drive for what they do. It is a blend of all those.

EL. Because CIOs work with colleagues across multiple business units, they need to work from a position of influence. How did you work with your CIO?

BG. When I was CEO, our CIO reported to me. That person now reports to the current CEO. Every company has its own way of handling the reporting structure for the CIO. We have gone back and forth with this issue. Today, we have a very strong CIO. We expect him to set standards, drive efficiencies, and drive platforms that the business units can use. At the same time, each business unit has its own CIO who is responsible for driving the use of technology within the business unit. You need to have strong central leadership along with some business unit leadership. It's about creating balance. My company has had a skewed IT organization on several occasions. If you let the business units run the show, then you do not get the advantages of the common platforms and efficiencies. Conversely, if you just have the corporate CIO running everything, then you do not get the best use of applications at the local level or business unit level. We have achieved the right blend of IT management.

Because our business relies on technology, the CIO role is important to us. We are the leader in administering 401(k) plans, daily values, and paperless movement of data. We do millions and millions of transactions. We would be swamped if we weren't innovative with our technology. In fact, In 2008 Computerworld recognized us as one of its Premier 100, the top 100 companies with innovative uses of technology

EL. Is there a process you followed to make the right investments, especially in technology?

BG. Like every major corporations, Principal has to quantify the return on investment. When I was CEO, we had a Web-based ROI computation that had many inputs. Each business unit's project management handled large technology projects.

Although corporate uses uniform tools, we also recognized the need for judgment and gut feeling if we in the early stages of dealing with something new. We want to be on the leading edge, not on the bleeding edge.

EL.Does your CIO deal with the board at all?

BG. He does to some extent, but he deals directly with our board's audit committee. He reports regularly on a number or things. He occasionally attends a full board meeting, but he regular attends the audit committee meeting.

EL. What have you learned from your CIO?

BG. He is a very calm, methodical, good thinker who approaches things at a very high level. He has a calming effect on us all. I have enjoyed dabbling in technology. In fact, I have tried to be out front about the technology we deployed. When the Internet became in vogue, I remember our CIO telling board members at a retreat how the Internet would change business. What he said motivated me to take a more hands-on approach to technology.

EL. What important technology investments did you make during your tenure?

BG.  We made numerous technology investments. After I became CEO, we made one of the most massive investments in our company's history. Our joint project with IBM, called Express Processing, was a massive effort to automate all of our systems. We went from 100 percent paper driven, or process driven, or telephone driven to almost 100 percent Web-based processing. The technology also allowed us to establish remote processing offices around the country. As a result, we could enter cases immediately into our system as we received them, and then we could move them instantly to one of those processing centers for adoption. That's was our greatest technology investment.

We also took our basic pension system and we replicated it with a version that had international values. PIIS or the Principal Insurance Information Systems is our standard, global defined-contribution record keeping system. If we go into a new country, we can plug in this adaptable system. We made some changes for language and regulatory purposes.

EL. If you were to look back at your career, what is the one thing you would have done differently?

BG. I don't spend much time looking back. Some of my decisions did not pan out as we expected. A large acquisition we made in Australia turned out to be a bad move. We eventually sold that business. We have stayed in some businesses longer than we should have and have gotten out of some too soon. We have tried to learn from those mistakes. We always do look-back analysis to determine what we did wrong and how we can avoid making the same mistake.

EL. Can you tell me a story about a professional adversity you had to overcome?

BG. In 2001, we were in the process of going from a mutual company to a publicly traded company. We had been working on the IPO for several years. On Tuesday, September 11, 2001, we were in our hotel room getting ready hold a briefing about our IPO. Of course, 9ll happened. We stayed in Paris until that Friday. We fly from Paris to Reykjavik, Iceland, where we spent the night. We then took a plane to Winnipeg Canada, where we rented a van to drive to Des Moines. A few miles after we entered the United States, we had a terrible accident with the van. Although we all had some sort of injury, we managed to regroup and make it to Des Moines. On October 23, we became the first company to go public following 911.

EL. Now, can you give me a more personal vignette about what you learned from an adverse situation?

BG. My parents got divorced when I was very young. My father was an alcoholic. During the last part of my MBA program, my father committed suicide. My brother and I had to deal with that horrible situation. Unfortunately, my father died with no life insurance. He left a small business ridden with debt. My brother and I took out loans to help my family move forward. Because of this experience, I decided to pursue a career in life insurance. I did not want to see families go through a situation like mine, if they can avoid it.

Elizabeth M. Ferrarini - She is a free-lance writer and IT consultant from Boston, Massachusetts. Reach her at elizabethferrarini@yahoo.com.