by Elizabeth M. Ferrarini

Since it pioneered the microprocessor in the 1970s, Intel Corporation has been creating value and quality for all of its stakeholders. In fact, the corporate mission at this $36 billion company with 100,000 employees is to do a great job for customers, employees, and stockholders by being the preeminent building block supplier to the worldwide Internet economy.

Providing business value and quality to both internal and external customers has become the underpinning of the information technology organization. In 2002, Intel IT established the IT Business Value Program to measure the bottom-line impact of IT solutions on Intel's business results. Enterpriseleadership.org spoke with John Johnson, one of Intel's two CIOs, about  the challenges running IT at Intel. Along with Stacy Smith, Johnson is responsible for leading the company's 7,500 employees and 2,500 contractors in 124 global sites.

EL: Apparently, Intel likes to have executives work in tandem with each other. You are one of two CIOs. Can you describe this concept?

JJ: Intel has many executives who share the same title and similar responsibilities. In fact, we've had this two-in-the-box concept for many years. This approach allows you to groom and to grow two people. You can build on complementary skills. On the other hand, you have to check your ego at the door when you interact with your partner.

EL: How have you and Stacy Smith, the other CIO, divided up  responsibilities for IT?

JJ: I've been on the job since 2005. Stacy Smith has been in the role since 2003. When we started in March 2005, we didn't identify any focus areas. It took me four months to get settled and to understand what areas of the organization I wanted to focus on. Stacy and I  agreed to split the management of the IT organization. I have the operational elements, including data centers, network, servers, telephony, desktops, and other aspects of office automation. Stacy has supply chain improvement and all of applications development which is working on the company's vision. We decided to manage collaboratively areas such as security, risk management, and Sarbanes-Oxley compliance, as well as staff development, and IT strategy.

We both do external activities, generally not together, as we can cover more ground by going separately to places. We share our engagement with our internal customers, senior managers, and senior executives. But, we're not totally independent; we work back and forth. We each have our focus areas: Stacy is a marvelous two-in-the-box partner. We've matched up very well.

EL: Your IT Business Value Program refers to a two-step approach to  internal IT operations. Just what exactly is this approach?

JJ: The two-step approach is about first driving operating costs down and then applying recovered dollars against a prioritized list of opportunities, including business value and ROI. We track how much business value we've been able to deliver back to the company. Then, we report that to the lines of business and to the CIO. This approach helps to align IT along business lines.

We have to make sure that anything we do has some very distinct and measurable business value to the company. Finance calculates business value. It provides a mechanism for understanding which things to do and which things to pass on. We know which projects will offer the largest payback to the company.

EL: How do you comply with the second step in this approach to looking at  business value?

JJ: The second step involves our operating costs, which we call Keep the Business Running (KTRB) cost. We look at our operational costs, try to establish goals to reduce that expense, and then use dollars saved to fund incremental programs in specific lines of business. For example, if I can drive down HR operating costs for IT, then I can buy this group more business tools.

EL: Translated into dollars, how much business value have you returned to  the company?

JJ: In 2005, we delivered $1.7 billion in gross business value. This figure does not include cost. In 2006, we evolved this a little bit to look at what the ROI elements are of these programs and start to create a multi-dimensional method for measuring overall value. Our annual IT performance report has a section about our IT business value program and shows progress from 2002 to present.

EL: What does your director of innovation do?

JJ: Martin Curley, who reports to me, is director of innovation and  research. In fact, his book, Managing Information Technology for Business  Value, is gaining a lot of momentum within the IT community. The book talks a lot about the Capacity Maturity Model, one of the foundations he thrives on.

The most noble thing he has done is to create IT innovation centers. The 14  centers in large sites across the country enable us to show our Intel customers and people from universities what one can do with technology in the business world.

EL: Do you use best practices such as the IT infrastructure  library?

JJ: For several years, we've been deploying different aspects of ITIL. It's one of three means  we're using to move the IT capability forward in the company. We continue to pursue this effort with other things, such as the systems-oriented architecture in our applications development, overall program management, and program-lifecycle management. These are the tools we use to drive a solid, systematic approach to how we deliver services and improve the organization.

EL: What's the most challenging thing you've ever done as a CIO?

JJ: The answer is driving consolidation of the different capabilities in the company from an IT perspective. I have groups that do the same things for different customers. The ITIL framework helps us to drive costs down. With KTBO model, we had to push folks to look at consolidating the work into one organization or one set of business processes and practices at a minimum. For example, we gave the call center a clear set of standards for first-level support across the company. On one hand, most teams don't welcome these kinds of directives. On the other hand, these can result in less process and consistency of the tools within the organization, so we can reduce our operating costs.

EL: Reports in the computer trade press say that Intel's spending for IT  has been flat for the past few years. Is this true?

JJ: Our spending has been an interesting thing to look at. We've seen an increase in the company's growth. We've announced several plant expansions and incremental spending to support the business need. If I look at the growth and the spending that has occurred in the lines of business, we tend to run at best at half of that. It forces us to be more efficient, keeping up with the growth of the company and delivering the services the lines of business need. It's always a battle to deliver what everyone would like to get, and do it at the absolute minimum cost possible. Every single day, we have to remember that we're a cost center.

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Elizabeth M. Ferrarini is a free-lance writer from Boston,  Massachusetts.