by Elizabeth M. Ferrarini

The name "Ryder" means one thing to a lot of consumers and business owners -- it's the company you call when you want to lease or to rent a truck. However, that's just one part of Ryder System, Inc.'s business. Based in Miami, Florida, and with yearly revenues exceeding $5 billion, this global organization ranks as the leader in providing outsource services for supply chain management. For example, Visteon, a 1997 spin-off from Ford Motor Company, outsourced the logistics of its freight transportation system to Ryder, which includes everything from international oceans to airfreight.

IT has definitely helped Ryder distinguish its supply chain service, as well as fleet operations, from its competitors. This situation might run counter to some of the themes in Nicholas G. Carr's Harvard Business Review article (May 2003), "IT Doesn’t Matter." The article caught the attention of a lot of major IT executives, especially Robert E. Sanchez, CIO, of Ryder System.

Sanchez has kindly taken the time to answer some questions about how he runs his IT organization, what cost-cutting initiatives he's taken over the years, and, of course, what he has to say about the B-School article. Sanchez, who received a Master's in Business Administration from The Wharton School at The University of Pennsylvania, held several senior operational positions at Ryder, including president of the fleet management solutions area, before he was promoted to CIO.

EL: Can you describe the IT infrastructure that supports your supply chain  or transportation outsourcing business?

Our supply chain business unit has a series of logistical systems we have integrated with some homegrown software. That system can manage anything in the supply chain both inbound and outbound, including transportation, distribution centers, and interfaces with suppliers. Our platforms consist of UNIX, Windows, and AS400s.

EL: What cost-cutting, or improvement initiatives have you spearheaded  over the years?

RS: We outsourced all of our applications development and management to Accenture. In 1997, we decided to bring that piece in-house.The cost savings were significant. In 1995, we also designed an asset management system to improve the company's North American fleet of 150,000 truck rentals and truck leasing business unit. In addition to owning these vehicles, we have about 700 shops scattered across the country that maintain these vehicles. This system enabled us to have more accurate information about the status of these vehicles. As a result, we've made better use of our fleet across the country. The system was built on a client server called PowerBuilder. The data resides in an IBM DB2 database.

EL: What's the business model you have for IT?

RS: Our internal IT organization operates as a shared service with about 250 employees. We operate with a combination of cost allocation and also direct costs in some areas going to the business units. We also outsource the management of our infrastructure to IBM Global Services. Some IBM employees reside at our facility.

EL: How do you work with your business units?

RS: Having run one of the business units, I know what it's like to be sitting across from IT folks. I'm also a member of the company's leadership team, which consists of the nine top leaders. We make a lot of the strategic decisions for the company.

We also have a pretty structured IT steering committee and IT strategy process we go through. The process enables systems administrators to identify, document, and gain support for projects we need to work on. There is also a strategy team which works with each of the business units. Each team consists of a director level individual who helps prioritize the identified projects. Once a year, the strategy team meets with the leadership committee to decide which projects, based on the allocated budget, will be carried out in each business unit.

EL: Do you use any kind of best practices such as Six Sigma or  ITIL?

RS: During the past three years, we've spent a lot of time developing a process called ACE, or Analyze, Chart, and Execute. The idea of it is to develop standard processes across the company, not just for IT, mainly for our supply chain business. ACE entails documenting all the different processes we use in the supply chain.

EL: How do you measure your success?

RS: We tie our success to the success of the business units.We don't look at, "did we get our project done on time?" Instead, we consider how well that project translated into value for the organization.

EL: Did you build up the infrastructure during the dot.com era, and did  you have to deal with the aftershock of your purchases?

RS: Like many companies, we created the rate of spend by purchasing a lot of hardware and software during the dot.com period. We felt a lot of pressure not to fall behind. A lot of the software we bought didn’t turn out to be very useful. Today, we're really focused on the key technologies that add value and that work. For the supply chain, we selected a standard transportation management packaged and integrated into our homegrown system.

EL: What projects are you working on that are really important for the  next year or so?

RS: We're continuing to enhance our supply chain in terms of the in-house proprietary tools. We're working on fleet reporting and analysis tools for our truck leasing and maintenance side. We want to allow our shops to view their fleet information online and provide our technicians with tools that can make them more productive.

EL: Did you read the Harvard Business Review article?

RS: Yes. However, I didn't agree with everything he [Nick Carr] says. First of all, he limits his definition of IT infrastructure to servers, LANs, WANs, and some components of ERP, such as general ledger. Based on this definition, I would agree with his comment that this type of an IT structure would not help an organization strategically differentiate itself from the competition.

The author refers to a lot of proprietary technology as being outside the IT domain. I don't agree with this. For example, the systems we have to manage our supply chain and fleet business, according to the author, are not part of IT. By developing these systems, we can continue to gain a competitive edge.

Our scenario is similar to FedEx. Where would it be without its tracking systems? That technology enabled FedEx to grow and distinguish itself from the competition. The supply side of our business is really about selling IT. The supply chain is really interesting because we mostly sell IT. If you come to us and want to outsource all of the components of your supply chain, we'll bring you the people, the process, and the technology. Many of our customers have tried to handle their supply chains, but failed.

EL: What are you looking for in your manpower requirements?

RS: We're considering technical expertise, expertise in the Web development area. We also have a need for individuals who have combined their technical skills with a business background, perhaps an MBA.

EL: Your leadership team decides on the projects IT will carry out. How do you handle the day-to-day management of these projects?

RS: My group has directors that are aligned with each business unit. These directors, in turn, have program managers who carry out these projects. The program managers report to the IT organization, but they sit with the business unit. The co-locating arrangement, which began in early 2003, provides us the best of both worlds. On one hand, we decentralize IT by enabling individuals to sit close to the groups they support. On the other hand, everyone in IT works under the same IT umbrella. No one has a dotted line to a business unit.

We also have programs managers who oversee that IBM Global Services meets its  service level agreements.

EL: Has you role changed since you became CIO?

RS: We're focusing more intensely on the value of IT and making sure that the money being invested in technology provides the appropriate return on the appropriate value. These things have become a big part of what the CIO needs to be able to provide. He or she needs to know when to veto decisions if the IT value doesn't translate to business value. I say "no" to technology daily. For example, I said no to installing an ERP system for general ledger and finance. The cost was out of line for the organization.

EL: Your leadership team decides on the projects IT will carry out. How do you handle the day-to-day management of these projects?

RS: The supply side of our business is really about selling IT.

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Elizabeth M. Ferrarini is a freelance technology writer  based outside of Boston, Massachusetts. Reach her at elizabethferrarini@yahoo.com.

by Elizabeth M. Ferrarini

Ben Salzmann is proof that a CIO can have a career as a C-level executive. After eight years as a CIO at Acuity, a property and casualty insurer that operates in 15 states, Salzmann was promoted to CEO. His leadership has brought a plethora of outstanding achievements to Acuity, which manages $1.8 billion in assets and writes $800 million in premiums. For three straight years in a row, the company has made the Great Place to Work Institute's list of the top mid-size companies to work for, and InformationWeek magazine's list of the top 500 most innovative users of IT in the U.S. That's not all: Acuity has received about 32 technology awards from ACORD, an insurance industry association. AARP also has named Acuity one of the best places for people over 50 to work.

Enterpriseleadership.org sat down with Salzmann to get his view of what it takes to prepare for the CEO spot, how he has created a great place to work, and how he has made smart decisions about using leading-edge technology. Here's what he had to say.

EL: As a former CIO, what helped you the most to take over the helm  at Acuity?

BS: As a CIO and a company officer, you see and interact with just about every department. You have a chance to develop a broad perspective about the business. However, you need to have the business inclination and an interest in becoming a CEO.

Some CIOs say "no" every time managers suggest a new way of doing something. From day one, the CIO has to listen to managers, to come up with  approaches that work, and then to provide them as plausible solutions. The CIO has to continue to find ways to make things work better.

A CIO who has come up the IT ranks has both a profession and an occupation. You're profession is as a technologist, be it systems or applications. The organization you work for determines your occupation within a certain industry. To climb the corporate ladder, you need to make a commitment to the organization, and to master both the organization's industry and business.

EL: If you're going to move up to become a CEO, you can't have a lot of adversaries. How does the CIO transition to being more of a colleague or business manager?

BS: First, the CIO needs to get him-, or herself, invited to important business meetings. For example, every time our underwriting field force comes to our headquarters, we make sure the CIO is present. He's viewed as part of the organization and can speak with underwriters during breaks and at lunch. If a CIO wants to earn recognition and get a sense  of ownership, he or she needs to demonstrate knowledge about what's going on in the business unit. Managers need to see this.

Also, CIOs should sit in on financial department meetings to hear everything that is coming. It gives them more ammunition for developing strategies about how to get things done.

EL: What is the biggest mistake some CIOs make during their  careers?

BS: Some of them take on massive mountains to climb, not realizing how long it takes to get to the top. A mountain climber goes up the mountain one step at a time. So, if you're constantly under a tremendous number of project deadlines, perhaps that's because your projects were poorly designed to begin with. Even if you have a large project, you're better off taking a baby-step approach and having a constant stream of deliverables you can provide on time and on budget. This approach might prolong the project a little; on the other hand, the IT team learns as they install smaller pieces.

EL: Does it matter to whom a CIO reports?

BS: It certainly does. I hope all of my competitors have their CIOs report to someone who isn't a company officer. This is a good way to hamstring the entire IT department. The CIO should report to the CEO and should be considered a company officer.

EL: How do you feel about outsourcing IT?

BS: Likewise, I hope all of my competitors outsource a major part of their IT organization. Our technologists built our claims system, our underwriting system, and our policy processing system. We wouldn't want to outsource a commercial underwriter. Yet, some insurance companies will turn around and outsource the development of their major systems. How many outsourcing firms really know the in's and out's of all phases of insurance? When you outsource IT, you pay them a small fortune to develop a moderate knowledge of your business, to use this knowledge to build a mediocre system, and then to move on to the next project!

EL: Should the CIO role be designed as a temporary, rotational  role?

BS: No. That type of model is an extreme belittlement of the  technology deployed in the organization. It's like having a  CIO-de-jour. Again, not employing this type of model helps my organization be more competitive. Good CIOs needs to have a technology background and business acumen. Their jobs aren't to explain the difference between a mainframe system and a network-based system, but to look at the organization and know how it fits into an enterprise technology model.

EL: For three years in a row, your company has been named as a great place to work. What are doing to make it such a great place?

BS: You have to first meet employees' basic needs; next, to listen to and communicate with your employees; and then, to provide them with a great working environment.

For example, since 2001, we haven't increased the health insurance premiums our employees pay, but we've improved their health insurance benefits each year. We contribute eight percent to their 401K plans, even if they don't put in a dime. We give them an additional 401K bonus so they will hit 10 percent of their annual income, even if they don't put in a dime.

We have an awesome suggestion committee, which goes over each suggestion submitted by employees. They can get a bonus for a suggestion. And, we hold town hall meetings where we bring in all the employees so they can get updates from the company officers.

Then we have our fun side. We've done everything from mechanical bull contests to chocolate fountains to Acuity's version of "American Idol." We hold our Christmas Party at a five-diamond establishment.

EL: You are one of the first companies in the insurance industry to  go paperless. Can you discuss the process?

BS: We started going paperless 16 years ago. We began with our personal lines, which insures houses and cars. As the file retention dates passed, we didn't have any paper to file. We worked with regulators and governmental bodies on how they can audit a paperless insurance company. Next, we went paperless in our commercial business lines, and in our claims systems. The advantages have been outstanding.

Wherever employees are in the world, they can use the Internet to not only check their email, but to go right into the personal lines system, the  commercial lines system, or claims system. They can read what's going on for a specific account, and then turn things around. For example, we can have 40 people at a time looking at the same system in 40 different locations. They all can be deciding on how to handle a multimillion-dollar business account.

By harnessing this technology, things happen fast, and we have no linear flow. Our work management system orchestrates all of the various reports we need to give to an underwriter. This way, the underwriter sees the entire picture at once and can make a better decision than if he or she were seeing bits and pieces over a few weeks.

EL: What's the biggest mistake insurance companies make when they go  paperless?

BS: Installing a workflow system at the same time as an imaging system can spell trouble for an organization. You end up imaging too many documents and making paper into intangible paper. For example, your computer can't calculate rates for an image of an insurance application: you need stored data. Many insurance companies have carried out their work management system in parallel with their imaging system.

In contrast, we did our work management system with our data collection systems and then brought in our expert system. We needed to put in the expert system before we put in our imaging system. If you put in the imaging system first, you're data-starving your expert system because your expert system can't read intangible paper or images.

EL: Because of your paperless environment, how have you improved the  quality of your transactions?

BS: We have world-class service levels based on rapid processing and very high quality ratios. We track every transaction for an entire year, and we announced that we have a 99.7 percent accuracy rate in a given transaction.

EL: You've won dozens of technology awards from ACORD --  can you  explain the significance of these awards?

BS: We've received more ACORD awards than any other insurance company in the country. ACORD is an insurance industry association vital to accelerating and advancing technology and setting standards for it. ACORD promotes the interface between insurance agents and insurance companies by standardizing  data and by promoting technology. The awards are to recognize technology leaders our industry.

At the ACORD LOMA Insurance Systems Forum in May 2006, we received seven national technology awards, including the Business Integration Enable award, the Early Adopter award, and the Greatest Number of Transaction Implementations award. For example, we received an ACCORD award for the way we download policy changes to our agencies' computer system, which automatically trigger the databases to update.

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Elizabeth M. Ferrarini is a freelance technology writer based outside  of Boston, Massachusetts. Reach her at elizabethferrarini@yahoo.com.

by Elizabeth M. Ferrarini

Dr. B. Joseph White has studied and practiced leadership for more than 30 years. Since January 2005, he has been president of the University of Illinois, an academic institution with 28,000 faculty members and staff, 70,000 students, 21 Nobel laureates, and an operating budget of $4 billion per year. Dr. White has also gotten to know notable leaders, including Steve Jobs, Madeleine Albright, and Archbishop Desmond Tutu. In his new book, The Nature of  Leadership: Reptiles, Mammals, and the Challenge of Becoming a Great  Leader, Dr. White shares what he has learned about the blend of capabilities it takes to lead successfully -- and the secret to truly great leadership.

The Nature of Leadership reveals the dichotomy at the core of every effective leader: being part reptile -- analytical, rational, and tough as nails -- and part mammal -- nurturing, participative, and warm as toast. The book also has a leadership pyramid that shows the traits of a great leadership at the summit, and the traits of the reptile and mammal next to each other.

Enterpriseleadership.org recently talked with Dr. White about his book and his views about how CIOs, especially, can become great leaders.

EL: How would you rate the leadership abilities of most CEOs of the  Fortune 1000 companies?

BJW: Today, executives are under a lot of pressure to achieve high performance; to deliver top-line growth and bottom-line growth; to provide strong returns on investment, and most importantly, to grow the share value of their companies. Such performance includes a combination of good leadership and good luck.

Unfortunately, CEOs often don't have a lot of time to turn weak performance around or to improve on good performance. Their abilities to do so are extremely varied. The average tenure of CEOs has gone down to less than six years. Many boards and owners figure that if the CEO hasn't achieved strong performance after a couple of years, he or she isn't going to do it. Some CEOs have 18 to 24 months to prove themselves. To this end, CEOs need to have great leadership abilities and the wind at their back, too.

EL: Most of the executives profiled on Enterpriseleadership.org represent technology leaders in large organizations. These people are usually chief information officers (CIOs). What would you recommend they focus on if they want to become CEO of a company?

BJW: Information executives who want to become CEOs should focus on three areas: make sure their financial ability is first rate, make sure their people skills are excellent, and make sure they know how to develop a track record of making substantial consequential change.

The ability to change sits at the top my great leadership pyramid. A leader's success today depends on his or her ability to make consequential change, such as turning around an under-performing company. For CIOs, this type of change usually means leading the migration from one major system to another without missing a beat. For CEOs, it means doing things to foster internal growth, containing costs, and making smart acquisitions. All of these things will help to grow the market value of the company.

Most CIOs have strong change-making leadership skills. They've acquired years of experience taking their organization through generation after generation of new technology.

On the other hand, CIOs need to develop their financial skills. Often, CIOs function as budget managers, lacking first-hand experience dealing with the corporate profit-and-loss, and cash flow. And, some CIOs who are very good technically might also need to hone their people skills.

EL: In your book, you define five qualities you define for great leaders, and you mention having a "helicopter view" of the past, future, and current events. How can executives, especially CIOs, develop this helicopter view so they don't get a cloudy picture?

BJW: They need to learn all of the business's dimensions. CIOs who want to become CEOs need to be able to go from being professional heads of an organization to being general managers. GMs have a broad perspective, or, the helicopter view, which is knowledge of the business's past, its present, its future, and its functions, and how they fit. This view is also called strategic thinking. This is what boards look for.

EL: How do you feel about rotating CIOs through the business so they  can develop a helicopter view?

BJW: I first saw that being done 30 years ago with big Japanese companies. Executives in Japanese companies often rotate through operational areas such as finance, manufacturing. This is how you learn about the business and all of its dimensions. CIOs would get a lot from the experience. For example, going into the corporate planning function would help a CIO become more of a strategic planner.

CIOs, as well as CEOs, should never stop learning by reading good business  books. Tom Friedman, the author of The World is Flat, has become very  popular with executives because the book helps them to develop a helicopter view  of things.

EL: Some companies have programs to encourage innovation. How should  these programs be structured?

BJW: Because leaders are responsible for making change successfully, they need to have a great interest in new ideas. This applies to everyone from CEOs down to managers of small workgroups. Innovation begins with the process of turning these ideas into reality.

In my book, I share some of my experiences leading innovation efforts. I developed a concept called "the presumption of yes." lf someone comes forward with a new idea, there is the presumption of yes that we will carry it out.

Leaders need to have creative ways to encourage employees to come forward with good ideas about doing things better. Often, employees hear everything from "it's too expensive," to "we've tried that before and it didn't work." "The presumption of yes" helps a leader promote the value of innovation in an organization.

EL: Your "great leadership pyramid" ranks risk-taking at the top. What happens when a leader takes a risk that doesn't benefit the organization?

BJW: Every leader needs to understand that risk-taking involves a batting average. No one always bats 1000 -- not in baseball, and not in leadership. If you're batting 1000, you're probably not taking enough risk. If you're batting 250, you're probably taking too much risk, or you're not managing your risks very well. If what you try fails, there's nothing inherently wrong with that; you need to look at your batting average over time. A good leader should be batting about 650. In other words, one out of the three things you back, or attempt to back, ought to end up being successful.

EL: Some great leaders, like Steve Jobs of Apple and Larry Ellison of Oracle, are known to be tough on their employees. Should you admire a great leader, but avoid working for one?

BJW: You have to distinguish between great leaders and people whom you would personally select to work for. Keep in mind, there are a lot of paths to success in businesses. Some executives advocate that, you either  perform, or you're out of here. Some of us might not want to work in that kind of culture. It doesn't mean the organization won't be successful. Executives like Ellison and Jobs rate high at the top of the pyramid skills. They're very innovative, like to take risks, have the helicopter view, and sizzle with a lot of sparkle. They also attract the most talented people. They're also very good on the reptile side of the pyramid. However, they aren't very good on the mammal side of the pyramid, which explains why you might not want to work for them. Because I've spent some time consulting with Steve Jobs, I saw up close how he gets great people to work for him, even though he is rough on them: He makes them rich. It's the same with Ellison. A lot of us would opt to work for more nurturing leaders, but that's not the only way to be successful.

EL: Where does governance belong in a company?

BJW: The number one task of a board of directors -- the chief governance committee -- is to select a person to lead the organization. This person is either a great leader, or is someone who has the ability to become a great leader in a short period of time. If a governance committee does just that, things will go just fine. If they don't, they can do everything else, and the organization will not perform very well.

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Elizabeth M. Ferrarini is a freelance technology writer  based outside of Boston, Massachusetts. Reach her at elizabethferrarini@yahoo.com.