If you think being a CIO at a major university has fewer headaches than being a corporate CIO, think again. The two environments are both different and come with their own set of challenges, according to Gerry McCartney, CIO and vice president of information technology at Purdue University. Based in West Lafayette, Indiana, Purdue has more than 40,000 undergraduate and graduate students, more than 6,000 faculty members, and expends about $400 million a year in support of research system-wide, using funds received from the state and the federal governments, industry, foundations, and individual donors.

McCartney knows what he's talking about. His experience cuts across both the professional side of managing IT and the academic side of IT leadership. Before McCartney's CIO appointment at Purdue, he was assistant dean for technology at Purdue's Krannert School of Management, where he taught in the executive MBA program and in the engineering program. He also was the associate dean and CIO at the University of Pennsylvania's Wharton School. He holds a doctorate in sociology and in anthropology from Purdue and diplomas in advanced computer programming and systems analysis from the Graduate School of Engineering at Trinty College, in Dublin, Ireland.

Enterperiseleadership.org recently sat down with McCartney to discuss how he makes strategic capital investment decisions, and what key differences exist between the CIO leadership role in academe versus working in a major corporation. Here's what he had to say:

EL. Can you describe the structure of IT at Purdue?

GMc.We have about 1,000 IT professionals. Half of these people work for me. The rest, are in the various schools, departments, and administrative officers. These people meet the local needs of end users. I run the central IT services or the enterprise organization. The challenge is how to define a central service versus an edge service. My group manages the data center, ERP, all of the classrooms and labs, video production facilities, telephone services, all of the networks, and IT security for the campus. We even oversee a large research enterprise.

My $70 million budget has different colors of money. Half of that amount comes from the university for us to run the operation. The rest of the budget goes for recharge activities. For example, you can recover your cost of phones and networks. Because end users pay for these services, we don't have to invest any company dollars in them.

EL. Is there a formal process for the way you make investments in IT?

GMc. It's by the area. We need to distinguish between areas that are strategically important to the institution. Put this way, we need to excel at some things, while we can get away with just being good at other things. When we buy servers, for example, we try to get them at the best price we can. Because servers are a commodity, there's no competitive price advantage when it comes to buying them.

During the past two years, we've made several capital IT investments -- one was for $3 million and other, $1 million. Both investments concerned a research computer. In this case, research is our most strategic activity. We leveraged funding elsewhere on campus. We didn't have a board or a review committee. We put out a shingle that says we're interested in doing this and who is interested in being with us. We both built and bought a fairly large machine. About 75 percent of the funds for the machine came directors from researchers' pockets.

EL. Is that the way you normally make capital IT investment decisions?

GMc. That's the way we do it for research. On the other hand, if it's an ERP system, we handle it different because all of the funding comes from the center. It looks like a corporate purchase and goes through the board of trustees. It has many levels of approval and people poking at it.

EL. What would be your involvement with an ERP system purchase?

GMc. The need for a new ERP came from the business owners, which include the vice president of finance, the university treasurer and the director of human resources. They review our systems and decide if they're good enough or if we need to make a strategic change here. They would involve us as technical advisers and implementers. However, we outsourced the implementation of our current SAP system to Bearing Point, a consulting company.

EL. What role do you play in the governance process for making capital IT investment decisions?

GMc. I'm on the executive steering committee as a technical adviser. All of the governance committees have representatives from my staff. To this end, I have representation on all the committees that would be involved in this type of a decision.

I should point out that ERP isn't an IT project, but it's a business project. Now that we've completed the implementation of the ERP system, finance and human resources have given us the responsibility for managing and operating this system. The original owners of this ERP have now become users of our system. The relationship changes somewhat. Now, we're talking about amendments to systems where things go through our normal set of processes.

EL. Are there other influencers outside the university that having input into capital IT investment decisions?

GMc. Not in any significant way! The business owners might talk to their colleagues from other institutions. The board of trustees takes an active role in these types of decisions, by reviewing quarterly reporting.

EL. Do you monitor and track these investment decisions?

GMc. With the ERP system, the business owners monitored the investments because it was their dollars. For research, we're the fiscal coordinator for that. We monitor and do all of the negotiations. The monitoring for the research computer was a short process. We went from the first meeting on February 29 to having the supercomputer spinning disks and running jobs on May 5. That was the entire process. It's a very handmade activity.

EL. Have you encountered a bad investment decision in your career in IT?

GMc. It's easy to make a bad investment decision. The systems are so tightly coupled into our other systems. There's no discipline. During the 1990s, no one worried about what anything cost. It reminded me of an Oklahoma land chase with everyone trying to get things up and running in the shortest amount of time. During the past five years, we've started to ask what should we think about the value of it, and what's it worth to us. If you want to ask the latter question, then you need to know what is IT costing you.

EL. What do you hear from your corporate colleagues about assessing the value of IT?

GMc. That's something that many of my corporate CIO colleagues have shared with me. Based on discussions my colleagues have had with their CFOs, I've gotten a clearer picture of how IT runs completely differently than the rest of the company. CIOs know in gross what things cost them. For example, 20 percent of a global brewery's corporate budget went for IT. The brewery's CIO started to ask why the CIO couldn't give him precise costs for specific IT tasks. The CEO said that if he asked plant managers at any of the company's breweries how much would it cost me to change the color on this label from blue to teal, they could tell the CEO down to the penny. On the other hand, if the CEO asked the CIO how much it would cost to redesign a header on an email package, the CIO would have no idea of the cost. They can't give you discrete costs. They have no experience doing that.

EL. Where do you see difference between the corporate IT group and the business units?

GMc. During the 1980s and 1990s, the role of IT became more significant in most organizations. To this end, CIOs became the keepers of the keys to the IT domain. Things have changed. Business people today know more about IT than IT people know about the business. Business people have become more comfortable with their technology and better-informed consumers of it, as well. If you were a good COBOL programmer in 1986, then you'll be unemployed today. That skill has no value for us at all. If you where a good CPA in 1986, you're probably still a good CPA today. Many IT skills have a short shelf life. IT people can't live in glass houses thinking they're doing important stuff, they have to move with the times.

EL. What makes working in IT in a university differ from a corporation, and what do you look for in IT talent?

GMc. Universities have a unique culture, similar to the two-class system found in law practices and in hospitals. I look for people who've worked in those bifurcated societies where there is a rainmaker and it's not you. Rainmakers in hospitals are the doctors, and in law firms, the lawyers. At a university, it's the professors. The support staff, which IT is part of, enables these rainmakers to do their job.

Corporations, by their nature, tend to treat everybody the same. So, if you've only worked in a corporation, you won't get the bifurcated model, where many people see themselves empowered to make decisions. When I interview people, I always ask them about their experience with decision making or their experience handling conflict. At a university, a letter from president won't solve the problem as in a corporation. There everyone sits down and listens. So, good IT candidates for a university need to know how to listen, to collaborate, to negotiate, and to set their personal feelings aside.

EL. What's are the top three problems IT people have trouble with?

GMc. I have laid off some people because I needed the money for something else. Agility is the key characteristic of a successful IT operation. Agility means change and change means people coming and people going. IT people find it hard to deal with change. It's kind of ironic because IT is all about change. A cadre of hardcore IT people has deep technical skills. The sweet spot is to find those IT people who have genuine technical skills and genuine business skills. Those people are a challenge to find right now.

Some companies don't regard their CIOs as business leaders. How many CIOs do you know that have moved into other non-IT positions? What credibility does a CIO have to run marketing or finance? If a CIO is doing his or her job right, they should be the only senior executive, other than the CEO, who has a global view of the organization. They could be dealing with all of these people daily, but this doesn't mean they are. Many CIOs like to think of themselves as technology directors. If that's the case, they should be CTOs, not CIOs.

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Managing the Business of IT: Maximizing the Power of Service Resource Planning, the Next Step in Business Service Management

Interview conducted by Elizabeth Ferrarini at elizabethferrarini@yahoo.com