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.

Jack be nimble, Jack be quick, Jack jumped over the candlestick. You might ask: "What does a children's nursery rhyme have to do with IT." It sums up what companies now look for in senior IT talent. Shawn Banerji, managing director of Russell Reynolds Associates' global technology sector, says, "Today's CIOs have to be agile enough to react to unexpected situations or challenges without getting burnt." Banerji's firm is one of the oldest executive search firms specializing in recruiting CIOs for clients such as General Motors, Hewlett-Packard, and Toyota. He says, "We have done several hundred CIO searches. In 1996, we recruited Ralph Szygenda away from Bell Atlantic to become global CIO of General Motors."

While at the MIT Sloan CIO Symposium 2009, enterpriseleadership.org sat down with Banerji, a speaker at this venue, to talk about job prospects for CIOs and their direct reports. Banerji has been with Russell Reynolds since 1999. Here is what he had to say:

EL. Can you explain how your firm works?

SB. We are one of the oldest retained (contingency) executive search firms in the country. Client companies pay us to help them identify, assess, recruit, and retain qualified talent. About two-thirds of the candidates we source currently hold executive management positions. Their employers recognize

the value they provide to the organization. We use our network to go after these candidates and then introduce them to our clients' opportunities. About one-third of the candidates we source are proactively looking for positions and have reached us through their own network. If these people meet our clients' criteria, we will engage with them about our recruitment process. Unlike some firms, we don't shop candidates' resumes around to multiple companies. We recruit for specific positions and get paid if the client company hires one of our candidates.

We operate with the C-suite. For technology, we recruit mostly CIOs, CTOs, and their direct reports, such as a vice president of applications, a vice president of infrastructure, a chief enterprise architecture, or a chief security officer. We don't touch the layer below these executives.

We deal with some of the largest companies in the world. We also recruit for privately held companies with anywhere from $100 million to $400 million in revenues.

EL. What is the corporate attitude right toward IT?

SB. We see two schools of thought evolving. Some organizations value IT more so than ever for two reasons: governance and efficiency. These companies say, 'I need to do more with automation and efficiency in my business. How do I drive my operating model to a shared service model? How do I automate all of these manual processes so I can cut some of my staff?' When it comes to governance, organizations need to have a more transparent view of what is happening inside the company, especially within the critical business lines, such as finance. It is not enough for the right hand to know what the left hand is going. The fingers on each hand must work in concert. Companies need to have strong IT leaders who know how to upgrade and will continue to invest in the existing environment.

EL. So, what kinds of IT leaders are companies looking for at this time?

SB. Companies are looking to turn people over and go after transformational leaders who can demonstrate the business impact of IT. Companies don't want IT managers of the status quo. For example, CIOs have historically measured themselves by two primary criteria: head count and budget. How many people work for me and how many dollars do I control? Those metrics determined the importance of the CIO's role and contribution to the company. Companies have turned this around by creating a new paradigm of the business information officer. This individual aligns better with the commercial interests of the business. This individual focuses on governance, as well as operational efficiency, and knows how to drive that kind of change in a meaningful, substantive measure. That individual does not look at headcount, but focuses on business contribution. He or she looks at their role in setting the company's governance policy. Creating business value by leveraging existing resources is another key area for a transformational leader focuses. How do I do a better job of selecting and managing key vendors? How do I free myself up from running the daily operational aspect of IT and contribute more to the senior leadership teams? A transformational leader strives to answer these questions.

EL. Are there reasons why a company might turnover its IT leadership for new players?

SB. I don't want to sound harsh, but some companies look for a new CIO because of return on investment. Not all companies value IT in terms of governance and efficiency. Many companies value IT as it relates to what the IT spend contributes to the organization. For example, if the largest line item on the balance sheet is technology, then the return on that technology investment better yield ways to increase revenues or to attract new customers. Some times, companies might replace a highly paid CIO with someone who makes far less. It's not worth paying something an exorbitant amount if they can't produce the kind of results the company expects.

EL. Are you dealing with many new CIO positions?

SB. We have a number of them in the pipeline. We went through a period where we did many new assignments for brand-name companies.

EL. Some CIOs leave positions with Fortune 1,000 companies to start their own consulting firms or to go work for a startup. They don't seem to rebound to where they once where. Is it hard for some CIOs to get back on the Fortune 1000 saddle again?

Some of these executives are in transition. Perhaps, they left on their own or were asked to resign. Many of these CIOs will have a hard time regaining the stature they once had for several reasons. Many of them are viewed as the archetype of that legacy paradigm of the CIO. Like the great generals of yester year, they commanded troops across large and complex global businesses. Today's organizations don't perceive these executives as nimble, fast-moving CIOs who can drive change through influence rather than by direct edict or mandate. Legacy CIOs have been empowered to drive change or to tell people in the organization what to do. Today's paradigm stresses collaboration and collegiality. CIOs need to lead by the carrot, not the stick. They have to convince and persuade business line managers and divisional CIOs who now report directly to business units, instead of the corporate CIO.

Some CIOs in transition didn't fall into the company's succession planning continuum. If someone has 30 or 40 years of IT experience, perhaps he or she did not mesh well with people coming up the ranks. On the other hand, some companies might want a well seasoned or a retired CIO who doesn't mind staying for a few years, grooming a successor, and then leaving. This happened at Chubb Insurance. Last year, a bank asked us to find a retired or a semi-retired CIO to sort out the current technology situation and create a succession plan.

EL. Do you see any consistencies with the backgrounds your CIO candidates possess?

SB. In the past 10 years, we have seen more diversified backgrounds, with a greater emphasis on business. We don't necessarily look for people who have a computational, engineering, or mathematical background. Instead, we look for people who are superlative business and process executives. These individuals know how to look at a business and understand where the opportunities exist and where to apply technology to create business value. For example, if a company manages technology more for cost than innovation, it will hire a CIO who understands finance. The CTO has become the be-all and end-all global technical executive who understands things like service-oriented architecture.

EL. Can you be specific about the competencies that companies want in a CIO today?

SB. Companies want someone who can apply technology to create more broad-based business value, but who also has expertise in another area such as sales or marketing. This individual might have an MBA or be someone who has run an operational business unit.

The majority of candidates we see have spent some time in areas outside IT of during their career. At some point, they decided to return to IT, either to head up a project management office or to do strategic planning. These roles provide a segue to take on broader IT operational responsibilities.

Ten years ago, we got more requests for consultants from McKinsey or Accenture. That has changed. Organizations want people who have owned the business processes and have accepted accountability for the results. Consultants don't operate that way. On the other hand, candidates who have been in consulting during their career usually have strong strategic planning skills, good project management skills, and good client relationship skills. We would consider candidates who have married this experience with corporate IT experience.

EL. What is your firm's formal process for screening candidates and what similar process do client companies follow?

SB. We use a very specific methodology called competency-based interviewing. It causes people to relive their professional experiences. It's analogous to drilling a well. For example, we might ask a person this question: Tell me about the time that you had to drive change across an enterprise and you got pushback from key stakeholders? Someone can easily give a theoretical answer to that question. Based on the answer, we might then ask: Who gave you the most pushback and why? How did you bring order to the governance process to win over this stakeholder? What concessions did both parties make to bring about a compromise? How were you able to demonstrate the business value of IT?

The more we drill through the answer, the more we learn about how the person handled the situation. If someone hasn't done what we ask about, then he or she is usually lost for words. You can't make this stuff up.

Our cadre of industrial and organizational psychologists helps us to evaluate candidates. Working with each client, we create an index of specific competencies, which we force rank. We interview against those specific competencies to develop a candidate assessment. The client company also interviews against the same set of criteria.

EL. Do you screen for whether or not the candidate fits the client's corporate culture?

SB. Yes, cultural assessment is very important to us. In fact, we recently rolled out a new tool called a cultural analyst. There is a rigor and a discipline in the science of assessing the competency of people to do the job. We marry these things into a very scientific rigorous process that provides a holistic view of this person. Although a candidate might have great skills, he or she might be a disaster because of the cultural fit. Conversely, a candidate might have most of the skills and competencies, but be a better culture fit than candidates with better qualifications.

EL. Is there any reason why you won't work with a qualified candidate?

SB. We've seen a number of candidates who have lied on their resumes. For example, some candidates will turn a one-week executive leadership course into an MBA.

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

In 2004, Andrew McAfee, an associate professor at Harvard Business School, wrote a case study about a Japanese taxi company that used Japan's i-mode technology to bypass the dispatch center and immediately put customers in touch with the closest cab. That case study led McAfee to search for other tools that allowed for similar interaction. Meanwhile, a student introduced McAfee to Web 2.0 tools, such as blogs and wikis, which had just started to become popular. Further research led McAfee to become a proponent of Web 2.0 tools, which he calls Enterprise 2.0. As a result, he developed a technology paradigm that companies can use to buy or build digital platforms for enabling their employees and other constituents to collaborate more freely. Each letter in his SLATES paradigm stands for the first letter in one of the six components -- search, links, authoring, tags, extension, and signals. In fact, McAfee, who is also a visiting professor at MIT's Center for Digital business, has chronicled his findings in his forthcoming book, Enterprise 2.0 - New Collaborative Tools for Your Organization's Toughest Challenge (Harvard Business School Press).

At the MIT Sloan 2009 CIO Symposium, Enterpriseleadership.org sat down with McAfee to discuss the challenges CIOs face in making technology investments, especially in Enterprise 2.0. Here is what he had to say:

EL. Is there a correlation between a company's profitability and the amount of money it allocates annually for IT and the maturity of its IT investment process?

AMA. Those correlations tend to be very weak. Much of the research shows that the amount of money a company spends on technology is a bad indicator of how much benefit it gets out of technology, and what its profitability is like. As far as we can determine, that raw investment number is not a good predictor of things we care amount.

EL. Is the maturity of a company's investment process an indicator of anything significant?

AMA. Most executive teams look at capital IT investments the same way as any other capital investment. The amount of attention everyone in the company -- ranging from the executive team to business unit managers -- pay to technology issues determines the success of these investments.

EL. If technology decisions are driven from the top, is there a better chance these investments will have a high success rate?

AMA. Yes, especially if the technology investments are intended to change the business. The business side of the company doesn't get involved in things such as upgrading routers or swapping out databases. If the purpose of the technology project is to bring about change to the business, then you need to involve business people.

EL. What industry sectors have increased their technology investments and what payoffs do they expect to them.

AMA. My research shows that companies in IT-intensive industries, such as finance have experienced turbulence and higher rates of growth concentration than non IT-intensive counterparts. You, however, have to put things into perspective. These days finance is such a strange place to do business. It is very hard to predict what is going to happen going forward. On the other hand, companies in IT intensive industries can't switch horses in midstream and slow down their rate of investments. It might take longer, but they will realize a payoff.

EL. Are there any other companies that stand out in your mind that really exploit technology?

AMA. I did a case study about the Spanish clothing company Inditex, Europe's largest clothing retailer. Zara is this retailer's most popular brand. It is an inexpensive but fashion-forward retail chain. This company is a brilliant user of technology because it does not throw too much technology at the business. It has developed great insight into the kind of customers it wants to go after -- 20-something forward people. Trends for this market segment are hard to predict, As a result, Inditex does not do much forecasting or looking into the future with technology. Its technology enables store managers all around the world to articulate what products will sell in the next couple of weeks. The company can then design the clothes, make them, and then get them to the stores quickly thanks to a fast replenishment cycle. Inditex can take advantage of trends while they are still hot, instead of trying to predict what 20 year olds are going to wear 18 months from now. That is impossible to do.

EL. If a company has immature technology processes, what steps can it take to catch up and move forward?

AMA. You don't begin by throwing buckets of money at the problem. The company has to make the commitment that it can catch up, especially if the company has not historically had technology as a strength.  The company has to understand the needs of the business, and then look at the technology landscape to see what it needs to adopt.

EL. How does your approach to technology differ from some other approaches?

AMA. Many of the approaches have a great deal in common. We all focus on people, process, and technology. Keep in mind that enterprise deployments can vary widely. You can run into different kinds of problems or pitfalls depending on what kind of implementation you are doing. If you just do finance and human resources, you won't run into many problem. On the other hand, because technology deployments for distribution, sales, logistics, and manufacturing are more complex, you will incur more risk. As a result, you need to plan these deployments carefully.

EL. What guidelines would you give CIOs about measuring the success of technology investments?

AMA.  I try to help companies understand that cost and time are not the most important criteria for measuring progress and success with technology initiatives. You need to keep our eyes on those things, but more importantly, you need to look at the business impact of IT. That is hard to measure. You need to keep you eye on achieving the objectives of the project. Is the project doing what we need it to do? If not, how can we turn it around? Is it giving us the capabilities we are after?

EL. What are some of the shortcomings of the tools and techniques large companies use to guide the capital IT investment process?

AMA. When I look around, especially at larger organizations, I see too much decentralization of decisions about technology. The governance process revolves around letting each division or business unit make a set of technology decisions. The corporate level winds up stitching all of these technology decisions together. That's hard to do. You wind up with a fragmented technology environment riddled with inconsistent business processes, and inconsistent data. You can't drive the enterprise, never mind see what is going on. I tend to advocate more centralized governance around the enterprise decision-making approach. It doesn't mean that headquarters makes all of the business decisions. You just try to layer and place some consistent technology across the company.

EL. Many companies use an ROI approach for measuring technology investments. Is that a good metric for technology projects?

AMA. It is tempting to try to turn a predicted ROI number into a business case in advance for a technology project. These numbers are extraordinarily speculative. At the start, people come up with whatever number they want. I don't advocate that companies spend much time on that. Whenever I have a chance to talk to companies that do technology well, I ask them about creating a business case and coming up with an ROI. Many of these companies say they don't focus their energy on these things. Instead, they focus their energy on making sure they select the right technologies. They watch their budgets carefully so they don't spend more than they anticipated.

EL. Your forthcoming book, Enterprise 2.0, outlines your concept, called SLATES. Can you give examples of organizations that are moving in that direction?

AMA. The 16 agencies of the U.S. intelligence community, including the FBI and the CIA, really surprised me. They have deployed a consistence suite of 2.0 tools that have all of the SLATES elements. This toolset has started to change how some of the analysts go about their work. This is good news. Perhaps the federal intelligence agencies could have prevented the September 11 disaster if they would have been able to connect the dots among all of the people and all of the pieces of information throughout the community. The intelligence community's Enterprise 2.0 platform, called Intellipedia, provides a very consistent internal blogging environment. It has something for tagging, such as an internal del.icio.us. It comes pretty close to comprising the entire SLATES complement.

EL. What companies are embracing Enterprise 2.0?

AMA. Many of the high-tech companies are doing many aspects of Enterprise 2.0.Sony is a big user of these tools.  You also see unusual industry sectors, such as insurance, embracing Enterprise 2.0. In fact, Northwestern Mutual Life is a big Enterprise 2.0 user. Other heavy uses of Enterprise 2.0 include Procter & Gamble and Pfizer.

EL. What must proactive CIOs need to be thinking about in order to move in the direction of Enterprise 2.0? What challenges do they face in that area?

AMA. The main challenge is for CIOs to get out of the way. If you want to control events and control outcomes, you have to give up control of people and trust them. Enterprise 2.0 technologies put that philosophy to the test. If CIOs want to be successful with Enterprise 2.0, the need to trust that people will use the tools appropriately and encourage them to lead by example. CIOs need to stop trying to be interventionist managers. CIOs should deploy the tools, model the correct behaviors, and have some faith that good things will happen as a result.

EL. Can you summarize what C-level executives will learn from your book.

AMA. They will learn what is new under the sun. The 2.0 suffix is not hype. There really is a new set of tools out there. They will learn what those tools are, what characteristics they have in common, and how organizations are deploying them and distilling lessons about how to profit from this new opportunity going forward.

EL. Can you describe some of these tools?

AMA. All of these tools have SLATES elements, such as blogs and virtualization. They tend to very social or community-based. Overall, they tend not to tell your role in the workflow. They do not impose a business process. For example, wikis and Wikipedia are good examples here. We used to think that if you wanted a high quality encyclopedia article, you needed to assign people into roles and walk them through a very specific workflow for generating a good article. Wikipedia comes along and shows you don't need to do any of that. Instead, you can tap into a huge amount of energy out there to write articles, share knowledge, and just be helpful. You can generate the world's largest encyclopedia. By some measures, Wikipedia is a good encyclopedia developed by not dictating terms to people.

Whenever I do seminars on Enterprise 2.0, I ask audience members how many regularly use used Wikipedia. Almost every hand in the room goes up I then ask if it is the first place they click on to start learning about new topics. Again, almost every hand in the room goes up. I ask people to think about how remarkable that is because this it has no formal editors staff. Any one of us can make changes to almost any article. The lack of formal ground lines is bazaar. My point stresses that this experience is not an accident --it is what is key to what is going on right now. The new technology toolkit is a great assistant and a great help for open innovation.

EL. What are some of the benefits organizations will get from SLATES?

AMA.  They can come away with a better product than would have otherwise had. For example, they can take advantage of new ideas that did not expect, such as a customer who offers an idea for how to improve the product. This process gets built into the way the company does business. It can help to generate revenues.

EL. Does SLATES change the organizational culture?

AMA. It does not have to change the formal organizational structure. I keep stressing that the results of Enterprise 2.0 capabilities are an alternative to the formal organization, i.e. having a formal organization chart, a boss, and a hierarchy. Call it a complement, if you will because it is in addition to all the formal business processes and the hierarchy of the organization. As you deploy these tools over time, they will start to change the culture a little bit, and people will start to think in a more democratic way about many issues. It is not this deep threat to the existing organization and the existing hierarchy.

EL. Some companies have devised their own internal version of LinkedIn or Facebook. Doesn't those social media projects cut across organizational boundaries?

AMA. Absolutely! These technologies inherently do not respect organizational boundaries. They do not care what business unit, division, or geography you are part of. As a result, these technologies enable you to bring a globally disbursed workforce together to look at problems and to contribute knowledge to share what they know. It cuts across organization boundaries, but let us be clear. We already have technologies, like telephone and email, which are equally indifferent to those kinds of things.

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

Founded in 1983, Erickson Retirement Communities is not your typical construction company. John Erickson, the company's founder and current chairman, saw the need for building continuing care retirement communities (CCRC) for middle-income seniors, especially the baby boom generation. Today, the company's 23 communities in 12 states house more than 21,000 seniors. The $1.3 billion company has designed each CCRC as a self-contained campus with apartments for independent living, an assisted care facility, and a skilled nursed facility. Each CCRC has a fitness center, a convenience store, a restaurant, and a full-service medical facility.

While Erickson is currently building new CCRC's in Colorado, Kansas, and Virginia, it has begun to leverage its expertise in geriatric care and technology to build a series of medical facilities to serve the local community. Since 2004, Erickson has been investing in electronic medical record (EMR) technology to drive these facilities, as well as healthcare at all Erickson's CCRCs. John Lambeth, senior vice president and chief information officer at Erickson, says that our "technology investments in both healthcare and construction differentiate us from our competitors. In 2008, the InformationWeek 500 recognized us for our construction software and our EMR."

Enterpriseleadership.org recently sat down with Lambeth to talk about the company's process for making and evaluating technology investments to enter new markets.

EL. Can you describe your business model and your business strategy?

JL. We build continuing care retirement communities (CCRC) and then populate them. Once the community has created value, we sell it to a third-party who sets it up as a standalone 501C3 corporation. Erickson then gains it revenues by providing the management services to that community, as well as reimbursements from the Medicare billing. We set up a benevolent fund for those people who run out of money and can no longer afford to pay.

Our overarching part of our business strategy resolves around our senior communities, especially how we provide care to seniors. Part of our business strategy includes our growing medical practice, which extends outside of our communities. We have based this on the electronic medical record (EMR). For example, our Howard County medical center services people that are not our residents. This facility highlights the advanced geriatrics medical practice we have in our communities. Our strategy also includes things such as our retirement living television channel, which appears on cable networks in a variety of states. We also have our own Medigap insurance product, which our residents can purchase at a lower cost than similar products offered by AARP. It is called Erickson Advantage.

EL. What do you offer that other senior living communities do not have?

JL. Our on-site medical practice has become a key competitive differentiator for us. No other CCRC offers that. As a result, our residents can live within our communities through the span of independent living, and on to assisted living or at our skilled nursing facility. Each community has a fully functional medical practice. We have stepped out in front with the use of EMR technology. Moreover, we have also integrated our EMR technology with long-term care systems to create a level of productivity that even doctors in private practice or in another CCRC do not have.

EL. What is your technology platform?

JL. Our infrastructure runs of products from Cisco and Microsoft. The two core medical systems include GE Healthcare's Centricity for EMR and CareMedx to manage the skilled nursing facilities. We have integrated Centricity into CareMedx. When it comes to our enterprise architecture, we distinguish the portfolio of systems related to the medical side from those for the construction side. We manage the portfolio of operational systems as a side entity.

EL.  Can you describe some of your key technology investments?

JL. We have been investing in EMR technology since late 2004. Our goal is to have a complete EMR. For example, we added an e-prescribing component, which gives us the ability to do prescriptions electronically. Our e-orders component enables physicians to put orders electronically into the record. We link to external labs. If residents go outside for specialty lab analysis, we get those results back electronically. We now do advanced directives electronically and associate those with the EMR, such as meals or dietary.

EL. Can you describe some of the benefits your EMR capability provides your residents?

JL. Usually, when new people move to one our communities, they often continue to use their own outside physician. After about six months to a year, many residents decide to go with our community physicians because of convenience. At that time, the residents will bring in paper medical records or we will get them from their former physician. We have an initial process to get as much information into our base EMR system. Our community physicians do a full series of diagnostics for residents who decide to use our medical services. We also scan the paper records in their original form and make them attachments to the EMR.

Many of our residents arrive with a shoebox of medicine. Because of our EMR capability, we offer those residents who use our medical facilities with one place that records all of their medications. We can look and see if what interactions those medications have with each other. We also offer programs that help our residents to get off certain medication. Many of our residents wind up taking rid of many of their medications because they just do not need them or they do not work well together. That is the beauty of the EMR.

EL. Do you have any clinicians on your team?

JL. Yes, a medical doctor who reports to me is our vice president of medical informatics. He also makes rounds at one of the communities. I spend an hour or two a week either with the chief medical officer or with his direct report.  We talk about the direction we are heading with EMR.  The equivalent head of nursing who is our VP of health and operation relies on that same technology set. We meet weekly to make sure we are in harmony. We all sit collectively on the e-health executive team.

EL. What technology investments have you made on the construction side to build your communities?

JL. We are a large construction company. Building a CCRC's has all of the complexity of building a college campus. We invested in building construction management software, called EricksonWare. It helps us to manage all of the different components, the documents and the workflows associated with one of these construction projects. A CCRC can cost several  $100 million. The software really used by the construction division is unique.

EL. Can you describe any other major technology investments?

JL. We have a significant investment in our data center. Because of our EMR capabilities, other CCRCs and private physician practices have started to approach us about handling managed medical services for them.  This offering will become a new source of revenue. Our data center houses the systems that manage all of the activities for our 23 campuses and our 21.00 residents. In addition to our medical capabilities, we deliver a host of other systems such as general services, work order systems, menu management systems, HR systems, and door-entry access systems. We deliver all of these services remotely from one location.

EL.  Did you have to invest in network infrastructure enhancements with the idea of offering new services?

JL. Yes. We made significant investments in our network capacity. We had to make sure that our each of our systems had adequate bandwidth to come back to our location. We also needed bandwidth to provide Internet access for our residents. None of our communities has less than a 3-megabyte circuit to and from their community to our data center. We also invested in fibre and optical networking technology to connect out data center with our four corporate buildings.

EL. Can you describe the process for making these capital technology investments?

JL. Our annual capital investment budget has an allotment for technology. All of our investments have to align with our business priorities and the business strategy. Our capital steering committee includes members from our executive team. Our CEO presides over this committee. We usually look at our main thrust for the year. If it is revenue generation, we might have a higher portion of our capital investment monies going to technology and sales and marketing. We usually carve the pie accordingly based on our priorities.

Next, various project committees hear requests for capital. For example, our e-health executive committee reviews capital investments in technologies related to our medical facilities. Each group requesting funds has to bring a business case with an ROI to that committee. The chief medical officer, the executive vice president of health and operations, and I sit on the e-health executive committee where we approve projects about our capital investment allocations. Our enterprise executive committee includes the chief marketing officer, the chief financial officer, the executive vice president of health and operations, and me. This committee hears all business cases outside of healthcare.

EL.  How do you measure the success of these capital investments? Does the board of directors get involved here?

JL. The board gets regularly updates about our capital investments. The board has the oversight responsibility of ensuring that we spend our dollars according to our intended allocations. The board also has a keen interest in how we spend technology dollars among the different departments. The audit committee takes much interest in what we do with technology. Either the CFO of I will give regular updates to our audit committee about compliance issues around technology.

EL. What methodology do you use to measure the success of these capital investments?

JL. We have an ROI process and a customer satisfaction process. Our semi-annual technology satisfaction survey looks at customers' direct satisfaction with technology in the areas of innovation, strategic focus, service delivery, and general quality of services. This survey goes to both executives, as well as users of the systems. For every project, we apply go-live practices from the Project Management Institute. It includes an after-action review. Once we take the project live, we institute a process to do a post-deployment ROI for our capital investments. For example, we just did this for our investment in a human resources information system, which was more than $1 million.  We hired an external consultant to interview all of the folks throughout the business to see if we did get the kind of benefit that we expected. We validate whether we achieved the stated ROI or not.

JL. At the end of the day, do you show capital investment linkages to new customers, new sources of revenue, or improved processes?

EL.Yes! Our executive team has a business strategy and a business plan for technology that both map to the planks (strategic drivers) in the overall business strategy. For example, in 2008, our business strategy focused on becoming a leader in senior living, attracting and retaining the best employees, and demonstrating corporate social responsibility. The technology planks for becoming a leader in senior living might include attracting new customers, increasing sales growth, and improving sales productivity. Next, we define some investments against that, such as replacing our sales automation system. We made some investments in our CRM system and our data warehouse. The latter investment will help our sales department to understand price elasticity.

EL. What is your role in the corporate strategy?

JL. Our business strategy has a technology component. After the executive team sets its overall business strategy, I initiate our annual portfolio planning process. I meet with each executive team member. We develop a portfolio of prospective investments. I then take those investments back to the executive team where we prioritize against our business strategy. Next, the team carries out a quantitative voting process where we measure them on ROI or impact to the business. We then go through an above-the-line-below-the-line process for looking at our portfolio of investments. This process helps us to decide if we can squeeze in any pending projects or scale down.

EL. Has the economic climate affected your business in anyway?

JL. Erickson is a construction company that builds large communities years before we populate them with residents. We have no shortage of demand for our communities. On the other hand, some prospective residents have had to wait longer to sell houses than they anticipated. The bond market that drives the construction market has become very tough to crack. We have relied on many of our long-term financing relationships. Many one or two campus CCRC campuses are struggling. Some of them have approached us about managing all of their services or running their communities.

EL. What are you doing in the area of innovation around technology?

JL. We are working with Intel on some pilot programs in home health technologies, which is a booming field now. These technologies will allow a person to have a higher level of support than pure independent living. For example, we have a device that combines a blood pressure cup, a scale, and a thermometer. A Bluetooth enabled patient station sends those statistics in real-time to the doctor or the nurse to interpret. If something does not look right, a nurse could go over and visit the resident and say, 'Your temperature has been up for three days.' The home health concept allows the resident to stay in his or her apartment longer. It costs us less as a community for residents to be in independent living than in assisted living or skilled nursing.

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

In 2007, Adrian Fenty, the mayor of the District of Columbia, went on a mission to invest in making his municipal administration more responsive to constituents' needs. He appointed Vivek Kundra to serve as chief technology officer for the District of Columbia. Working with Mayor Fenty, Kundra successfully leveraged sizable technology investments to make government smaller, more open, and more accountable to the city, its employees, and its citizens. For example, Kundra eliminated unnecessary costs by the use of commercial software, and increased efficiency by streaming processes, such as the movement of paper.

During his campaign, Barack Obama said he would appoint a chief information officer to oversee the U.S. Federal Government's $71 billion annual IT budget. A month after taking office, President Obama appointed Vivek Kundra to oversee the world's largest IT budget. Kundra plans to focus on getting the entire federal government to make the appropriate investments and to have good oversight for the annual IT budget. Kundra's proposed agenda also resembles what he did as CTO for the District of Columbia -- lowering of the cost of government operations, driving innovation, driving transparency and accountability, and at the same time, ensuring a secure computing environment.

Enterpriseleadership.org recently sat down with Kundra to discuss how he plans to carry out his agenda while improving the way federal agencies use technology.

EL. What challenges have federal CIOs faced trying to be good oversight stewards for their department's technology budget?

VK. To begin with, technology has some macro challenges. Look at the scientific evidence around Moore's Law for how technology evolves and how you get new systems in place. You need creativity, and new approaches to solve the problems the federal government faces. Now put that against the backdrop of the institutions in the federal government. They have specific processes for how you evaluate most of the systems across the government. These processes are not very agile. For example, it can take anywhere from 12 months to 18 months for a procurement to go through. During this time, the requirements might have changed, the business case might have morphed, and the technology itself might have changed. Many federal CIOs have to look at things in this context as they run their agencies.

The federal government has 100s of bureaus and agencies, more than 10,000 IT systems, and 24,000 Web sites. When people hear the number of Web sites, they immediately say, 'Why so many?' It is because of the way the government has organized itself. Moreover, the federal CIOs have focused primarily on enforcing policies rather than rolling out solutions. The federal government has no central IT organization. Each agency does its own thing. It becomes difficult to have oversight based on business requirements. For example, the Federal Aviation Administration differs significantly from the National Institute of Health, which differs from the Dept of Labor. CIOs in each of these agencies approach problems in a different way. They need to look at areas where technology is a commodity.

EL. The Clinger-Cohen Act is supposed to provide some discipline and a set of controls for how departments manage technology across the federal government, but some CIOs say there are many inconsistencies across federal departments. Given that, what types of controls are you going to put in place to correct these problems so there is consistency and the rules are enforced?

VK. We need to rationalize how CIOs report information. The government is evolving in terms of technology. The Clinger-Cohen Act created the CIO role across the federal government, and put in an oversight process in place around the technology spend, especially for the annual government budget. As a function of the rigorous oversight reporting, I want to make sure that CIOs rationalize these reports, that we leverage IT to collect the data we need. We do not need any more actors in between when it comes to creating reports, scrubbing the data, and trying to glean insight from that data. An entire cottage industry has grown up around reporting and submitting reports.

After we have rationalized many of these reports, we want to make sure we are extremely transparent. We can do this in parallel when it comes to how we procure technology, what we procure it for, and where we stand with vendor performance.  By being transparent, we can divest ourselves of projects or initiatives that have not performed well or that have outlived their usefulness. In turn, we can invest in projects and initiatives that add the most value.

EL. Federal CIOs include a mix of political appointments and career CIOs? Do you intend to change that?

VK. I am not concerned how the CIO got his or her job. The important issue is to make sure we have the right person onboard. CIOs must know how to focus on business transformation so they understand how to leverage the power of technology. It is not about technology for technology's sake.

EL. What are you doing to eliminate redundant investments such as multiple networks or data centers? Do you have plans to aggregate some of these networks and data centers?

VK. Much of that work has begun to happen with our Smart Buy initiative. I am working on initiatives that are central to this administration. I have begun to push forward how we can create cloud computing within the federal government and how we can leverage the consumer cloud. These things will enable us to move toward more secure computing, and lower operational costs. We do not want to build 24,000 Web sites.

EL. Do you plan to use social media to share resources across the federal government?

VK. We need to do more of that. To date, it has been happening in a fragmented way. Let me give you a simple example about the public interaction with the federal government. Each federal agency has its own identity management system. If you wanted to participate in social media with the EPA versus the White House, you would have to log on to all of these multiple systems. When you look at social media, citizens want to be able to interact with one government, not with the multiple agencies. That is part of what we want to do. We want to create platforms that agencies can leverage through the cloud infrastructure, rather than rolling out independent solutions. We need to have an open ID platform across the entire federal government -- one that has to leverage the toolset instead of rolling out multiple ID systems.

EL. Every federal agency has a technology investment board and a capital planning board. Do you plan to put some of their information on data.gov?

VK. We are also looking to put more information on the projects themselves and the health of those projects. We need to evaluate which projects are sensitive or classified versus which ones we can put in the public domain. As with any information we share, we need to make sure that Web sites are easy to use, and do not use federal jargon. We want to expend much energy around that to make sure that information is readily available.

EL. How do you plan to leverage technology innovations either in the government or in the private sector when they may be buried deep in these organizations?

VK. I believe in the need to tap into the ingenuity not only of the American people but the federal workforce. I plan to spend much time with those people who are on the front lines because they are the closest source to the pulse of the customers. For example, I have been spending much time with the intelligence community and its Intellipedia collaboration project. I want to learn how we can scale some of these initiatives. We do not want to reinvent initiatives that are successful, but we want to scale those.

We need to look at what innovative solutions each agency has brought to bear, and how we can scale it cross the federal government. Many of these well-tested initiatives have started at the grassroots level by passionate people. We need to deal with the scaling problem, which is a problem I love to solve. I intend to spend much time with both folks who focus on policy, and those front-line people who implement these solutions.  I have already started my technology tour across the federal government to visit every single CIO and his or her staff. I want to understand all of the issues and to meet with some of the key employees who are driving change within those agencies.

EL. Will creating more transparency affect the way CIOs do their job?

VK. It will also not only affect the federal CIOs but everyone in the technology community. We are advancing a mission. It could be discovering biomedical knowledge at the National Institute of Health or the looking at how the Federal Drug Administration can protect consumers from bad drugs. Using technology to advance the core mission of government will force federal CIOs to become change agents. We know that change is a good disinfectant. Even better, it will fundamentally transform the way the federal government works. It will not happen overnight and it will not be easy. You can see that we are moving in a direction with recovery.gov. The president is committed to making this process transparent the same way he did during the administration transition. He posted documents online and collaborated with voters about what he did each day. He took questions online. These structural changes in the government's mission will make government more visible and accountable in citizens' eyes.

EL. What are you going to be doing to help the United States Postal Service keep from loosing money?

VK. The USPS's business has gone through massive transformation. Some of it has been successful, and some not so successful. Transparency and open government alone will not solve the USPS's business problems per se. We do not want to look at how transparency can ensure faster delivery of mail. Instead, we need to focus on how can we leverage technology to rethink what the 21st century post office should look like.

EL. Are you going to eliminate the practice where CIOs have to budget two years in advance?

VK. That issue is part of a larger federal budgeting policy. The issue is not limited to technology. It is much broader across the entire federal government. Whether it is procurement or the budget and the way the institutions were created, technology changes so fast and evolves so quickly that we need to relook at many of those policies. I am open to doing that.

EL. What valuable lessons have you learned from your experience working as the CTO for the District of Columbia?

VK. Having transparency and actually delivering on the promise of it can fundamentally change and transform the government. The power of innovation and a participatory democracy can really help us rethink how we look at the public, and how we treat the public and the role of government. The government does not need to look at citizens as subjects, but we can look at citizens as a public of co-creators of democracy and engage citizens to come in and help solve some of the toughest problems government faces. We do not have to do it alone and we do not have a monopoly on ideas. That was one of the most powerful lessons I learned as I engaged people in different areas. I advanced this entire notion of a digital public square where people can have access to government data, where they can see how their government is performing, where they can hold us accountable, and where they can help co-create solutions to solve big problems.

EL. Have you seen John Kao's book Innovation Nation which talks about carrying out a nationwide innovation program?

VK. I know about the book, but I have not read it. The function of some of our transformation includes channeling much of this energy around technology, engaging the public, and throwing ideas against the wall. We want to put the right resources behind solid, scalable, innovation ideas. Of course, we will use the scientific method to test many of these ideas. You will see innovation across the board, not just in one vertical whether that has to do with healthcare, energy, defense, or security. You are going to see innovation baked into the culture.

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

While it might not be the largest federal agency in the U.S. government or have the biggest budget, the U.S. General Services Administration (GSA) provides good and services to enable the other federal agencies to function. Its formal mission is "to help federal agencies better serve the public by offering, at best value, superior workplaces, expert solutions, acquisition services, and management policies.' GSA employs about 12,000 federal workers and has an annual operating budget of about $16 billion, about one percent which comes from taxpayer dollars. Meanwhile, the GSA oversees about $66 billion of procurement annually and also contributes to the management of about $500 billion in U.S. Federal property.

About a half billion of GSA's budget goes to the delivery of information technology to support the agency's acquisition services. As chief information office for GSA, Casey Coleman wants to make sure that every dollar counts. In fact, her primary role focuses on leading and carrying out the efficient acquisition and management of IT solutions across GSA. She manages the agency's IT program, overseeing management, acquisition, and integration of the agency's information services. Her oversight responsibilities include strategy planning, policy capital planning, systems development, information security, enterprise architecture, and e-government.

Enterpriseleadership.org sat recently sat down with Coleman to talk about how she is bringing about organizational change and using technology to achieve business and mission goals. Here is what she had to say:

EL. Can you describe some of GSA's key responsibilities?

CC. GSA is a worldwide organization. We provide business services to the rest of the federal government. Although we're not a high-profile agency, we provide key business services that the rest of the federal government depends on. We manage all of the federal real estate for all of the civilian agencies. We're the landlord for all of those federal buildings. In fact, we're one of the largest real estate organizations in the world. We're also one of the largest telecom providers in the world. We engage with industry to acquire telecommunications and IT services the rest of the federal government can consume at very competitive rates. We also provide services such as fleet and motor vehicles, office supplies and services, and government-wide managed services such as the travel program and the purchase card program. We do much of the behind the scenes work to help other federal agencies fulfill their mission, and most of our key programs relate to that mission.

EL. What was the most important IT initiative you handled during the past two years and why did you have to do it?

CC. Our IT is devoted to the capabilities around acquisition of goods and services, and the management of client funds to pay for those services. The consolidation of our entire infrastructure has helped us to fulfill this objective. We have 11 regions in the U.S. Each of these regions historically had managed its own infrastructure, such as networks, IT support, and help desk. Eighteen months ago we consolidated 39 contracts and 15 help desks into one program centralized under my office. We also consolidated all of those regional IT employees into this office.

EL. How much of a cost savings is this going to be?

CC. We initiated this program in 2007. We've seen at least a 15 percent cost savings. We also have been able to hold our costs steady in 2007 and 2008 from the original 15 percent savings baseline calculated from 2006 expenditures. We have seen a savings of at least $5 million. Moreover, we've been able to take on new initiatives and do more unfunded mandates with existing money.

EL. What is your definition of business impact?

CC. We try to tie our work to the impact that is has on our constituents. As a result, business impact comes from helping the business organization of our agency better perform their mission. We accomplish this either through removing obstacles to enable productivity or deploying new capabilities to help them work in a way that is more modern and more productive. As a federal agency, we deal with the public trust of safeguarding the taxpayers' dollars. To this end, we need to prevent information security breeches.

EL. How do you communicate business impact throughout the organization?

CC. I believe in using every channel available to communicate our message frequently and personally. For example, I send out a periodic newsletter to the senior leaders of the organization via our Web site. I also like to get into the field and to visit with business managers who rely on our services. I want to hear what they need from us.

EL. Have you made changes to your enterprise architecture to better align with the business architecture?

CC. Yes!  GSA is a decentralized organization, and we've managed our IT in a decentralized manner. We have had IT applications, and business applications deployed by each of the business divisions within the agency. In the past, the Office of CIO was more responsible for policy, architecture, capital planning, information security, and not so much the management of IT applications.

A great many business trends caused our agency to act in a more unified and more cohesive manner. As a consequence, we realigned our enterprise architecture to manage IT more as a holistic enterprise portfolio of services and capabilities.

For example, within the agency, we have more than 40 different applications which require a user ID and password.  As a result, employees of the agency can have dozens of passwords they need to keep track off. We recognized that this isn't a good way to manage security. It certainly isn't a holistic approach to information security. It's also a productivity impediment. We've embarked on an identity and access management initiative. It's in the early stages. We're developing an identify access management solution that all of these applications will then tie into. Through this one solution, our employees will have access to the network and access to all of their applications.

EL. Can you describe the oversight process for making IT investments?

CC. All federal agencies plan their budgets two years in advance.  We're about to embark upon the 2011 budget cycle in the Spring 2009. At that time, we'll go through a process to select the most compelling investments for our emerging business priorities. My office is responsible for prioritizing these investments and submitting them to the Office of Management and Budgets. We manage, monitor, and oversee those investments and make sure they're on track.

EL. Does planning IT investments two years in advance pose a challenge to make sure that certain things get done?

CC. No one can foresee with perfect accuracy what is going to happen two years in advance. I'll say that there is always some changes and adjustments that have to be made. We have to call upon senior leadership to be able to make those adjustments as gracefully as possible.

EL. What tools do you use to monitor that two-year planning process?

CC. The federal agency, as a whole, has to use an ANSI-standard earning value management technique. It is a formal methodology for monitoring the spending and scheduling of any investment to make sure it is on track. It requires the submission of reports. It's basically project management.  We use a tool called Electronic Capital Planning and Investment Control, which provides an automated way to submit, to track, and to manage our investment portfolio.

EL. Can you describe your governance process?

CC. We've just revised our governance process because it was several years old. We streamlined it and made it more decisive. We have a set of standing committees that focus on practice areas, such as enterprise architecture, capital planning, information security, and infrastructure. These standing committees deal with tactical-level problems, including working out standards, agreeing upon them, and scheduling tasks. Above that is an IT executive council comprised of senior executives from the primary business divisions of the agency. They're responsible for the guidance and decision making on IT investments. Above that, we have a council of the senior business executives of the agency. They're responsible for setting guidance for our investments. I'm on that committee as well.

EL. If you had to look at an IT maturity index, where would your organization rate on the scale?

CC. We have mature processes especially in the areas of governance, capital planning, investment control, and information assurance. There are things that we're trying to move further along that maturity curve, especially, in the management of our infrastructure. Here we're deploying the IT Infrastructure Library.

EL. You worked in the private sector for many years. What adjustments did you have to make to be successful as a public sector CIO?

CC. My industry experience has been invaluable in helping me in the federal sector. On the other hand, I found that moving into the public sector was a learning experience. In the public sector, you deal with public trust and with public taxpayer dollars. Everything you do comes under greater scrutiny than if you were in a company. There are more stakeholders involved in reviewing and approving the course of action. You aren't the captain of the ship setting the course and steering where you will. We are accountable to the administration through the Office of Management and Budget and to Congress. The media is also a stakeholder. The public at large is another key stakeholder. Other government organizations, such as the Government Accountability Office, are also stakeholders. You need to be able to build coalitions, to communicate clearly, and to be transparent. Being able to build teams who can support your initiatives is critical. On the other hand, the time you take to build these teams can prevent you from moving with the agility you'd like. On the flipside, this team building can keep you from doing things that haven't been thoroughly considered beforehand. There is a positive side to that.

EL. Are you involved in any professional IT organizations apart from the federal government?

CC. I'm the vice president of an organization called AFFIRM.org. It's a federation of federal IT managers. I'm also involved in the Federal CIO    Council, where I chair that committee on best practices with the CIO from the State Dept. We're trying to collect, to publicize, and to encourage the use of best practices and standard practices across the government. I'm not involved in Women in IT although I try to keep up with what they're doing. I'm also the chair of a conference called the Management of Change. It occurs every year. The American Council for Technology sponsors it.

I mentioned the importance of stakeholder groups. The IT industry is another important stakeholder group. So much of what the government accomplishes occurs in conjunction with the private industry, which provides much of the resources and the technical expertise. It is important to maintain that open relationship and open communications with the industry in a vendor neutral way. Organizations, such as AFFIRM and the American Council for Technology, give us an opportunity to talk about our initiatives, and our priorities in a vendor-neutral environment. We, in turn, get to understand objectively where the industry is making advances.

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

Emerging technologies that offer medical benefit but require substantial capital investment pose a challenge to hospitals and hospital-based health systems in the United States. Dr. Molly Coye, the former director of the $16 billion budget for the California Department of Health Services, is on a mission to make it easier for healthcare facilities to deal with this challenge. In 2001, she founded a not-for-profit research and educational consortium, called HealthTech. It focuses on stimulating the investments major healthcare facilities make in enabling technologies, and helping them to make well thought out decisions in the process. She says, "We have learned that investments in a combination of imaging devices and information technology have fueled the most important healthcare advances. These technologies have improved the quality of care, reduced the expenditures on care, and improved satisfaction for patients and providers."

HealthTech's 45 members include most of the country's largest, multi-hospital healthcare facilities in the country, such as Kaiser Permanente, Sutter Group Health, and the Veterans Administration. Other members include the Centers for Medicare and Medicaid. She says, "We have more than 25 percent of the bed capacity in the country."

Enterpriseleadership.org recently sat down with Dr. Coye to talk about how HealthTech helps its members make capital investment decisions in technology.

EL. What was the catalyst that prompted you to start HealthTech?

MC. Like many clinicians in the field, I became aware of the quality problems in healthcare that emerged in the early 2000s. In fact, I participated in the Institute of Medicine's Committee on Healthcare in America. We wrote two reports - To Err is Human and Crossing the Quality Chasm - both of which became a catalyst for re-directing the healthcare industry. In summary, the reports said that we needed to overhaul the chassis of a bad healthcare system. We identified several pieces to that change. The most important one was the need for investments in technology.

I founded HealthTech as a not-for-profit organization in order to stimulate and to advance the adoption of technology in healthcare, including biotechnology, information technology, and devices and imaging, and pharmaceuticals. Since 2000, we have been tracking emerging technologies and research to understand their potential and real impact in healthcare. We look at technology in two ways -- what's on the market today and how people are adopting and carrying it out, and what will be on the market in the next three years to five years. Our research falls into 30 categories that cut across four broad areas: biotechnology, information technology, medical devices, and pharmaceutical,

EL. Can you give me examples of how you have helped your members make capital investment decisions about technology?

MC. We work across many different areas. A big win for some of our members included how to make the decision about each generation of a Picture Archiving Computerized Storage system (PACS). We stressed the important of enterprise thinking about a PACS system because it requires a huge investment. Many facilities would buy just a PACS system for their imaging departments. A couple of years later, these facilities realized that they had to extend the system to cardiology and to other parts of the facility. We stressed the need to plan, from the beginning, for this as a platform for storage of images across the organization.

We worked with our members on handling the decision to upgrade from a 16-slice CAT scan to a 64-slice CAT scan moving into coronary CT angiography. We strongly suggested that our members should prepare for the coronary CT angiography. They would at least have the 64-slicer near the emergency room. As a result, they could begin to build a system that routinely processes a certain portion of the potential myocardial infarctions through the coronary CT angiography.

Some times, we might have to caution our members about the timing of a specific investment in technology. In the early 2000s, many clinicians became enthusiastic about the long-term prospects of robotic surgery in urology. Some facilities had this technology because a donor paid for the initial acquisition. These facilities, however, did not have a plan for the continued use of the technology. In fact, some prices of equipment sat around gathering dust. In 2003, we told our members to adopt robotic surgery slowly, and to build a plan for how to extend it beyond urology into cardiology, as well as other areas.

EL. What type of a payoff do healthcare organizations get from systems that generate metrics about care delivery, such as number of patients discharged by 3 p.m.?

MC. These systems really pay off for healthcare organizations. These systems, however, have many pieces, such as computerized physicians order entry and electronic intensive care unit. There are also executive intelligent systems or dashboards that collect information to help the executive team make investment decisions.

EL. Are healthcare organizations deficient when it comes to technology investments?

MC. Healthcare facilities do not invest enough money in technology or invest in the wrong things. This happens for several reasons. The most influential physicians on the medical staff might prefer a technology. Unfortunately, the technology might not be the best for the community, or it does not serve the long-term survival of the facility. Healthcare organizations often get caught in a gridlock where physicians, hospitals, health plans, and even consumers try to maximize their own interests. They ignore initiatives that would reduce costs and improve quality. These things would require everyone to give up a little bit. That's probably the most important reason why health reform has never succeeded.

EL. What methodology do large healthcare facilities use to measure the effectiveness of their technology investment decisions?

MC. There is no single methodology. We have seen a very wide range of opinion about whether you can use a classical ROI at all. If you do, how do you structure for multi-year investments, especially if the parts of the return include improvement, safety, quality, and financial performance. We believe that most administrators of large hospitals and multi-hospital systems have installed electronic health record systems primarily for quality and safety reasons. They have tried to do a competent job of comparison-shopping in order to understand, not just the initial cost of the system, but the on-going operating cost, and the ease of acceptance by the clinical providers. They want to make an intelligent decision about what is the best timing, what is the best product, and what are the best rollout strategies.

EL. How do you guide your members to carry out their governance process?

MC. We help our members with how to present complex technology issues to the board. Usually, board-level decisions focus on where to allocate investment dollars. Do you put a large chunk of money into an electronic health record system, a new imaging system, or a chronic disease program? We help our members to sort through those kinds of issues. For example, we show them how to rank the different strengths of risk and the positive income values of different technologies. Using an array, they can see, for example, which technologies have a relatively lower risk and a higher yield for the things the board would find important. To this end, they might want the portfolio for the next year to have a risky, but high-potential-yield investment and several lower-risk investments that will payoff.

EL. How do clinicians influence investment decisions in technology?

MC. They play an indirect role because often their decisions about technology will either accelerate or slow the adoption of the technology.  For example, an administrator of a multi-hospital facility can clearly understand that the computerized ordering entry system will save money over a two- to three year period. This system will also improve patient safety. On the other hand, clinicians might resist adopting a new process, especially if it requires them to use a computer to enter an order for a medication.

To this end, the decision-making process for investments in technology should include clinicians in some way. If the process does not include physicians, then they might threaten and might frustrate the attempt to implement technology. Some clinicians, especially, physicians, have little experience thinking about systems -- why it might be worth investing the extra time, labor, and money in put in an electronic health record system.

Many clinicians see a direct disincentive in investing in some technologies. For example, often pulmanologists view the electronic intensive care unit with much skepticism. Because they think it will decrease their income, they resist it strenuously. In some cases, they have essentially agreed to carry out a portion of the electronic intensive care unit, usually about half way. The nurses use it, but the doctors say, 'I won't let it handle any orders for me. I have to do each order or approve each order.'

EL. Do you think this physician resistance has to do with the person's age?

MC. Not really! We see across that country that it is not a one-to-one correlation. It has also to do with whether or not the physicians are organized into groups. Often in groups, physicians get a chance to start thinking about systems. We also see a very bimodal distribution where the very young physicians and the relatively older ones are interested in technology. We find that physicians in their late 30s and in their 40s tend to resist technology. Because the older physicians are within 10 years of retirement, they feel more economically comfortable, and thus they can afford to be interested and curious about technology. This isn't the case with physicians in their late 30s and in their 40s. They see technology as a lessening of their usefulness.

EL. Should technology leaders in healthcare facilities have a medical background?

MC. Not necessarily! It's great if a CIO or a CTO has a healthcare background in either nursing or pharmacy. On the other hand, many CIOs and CTOs who do not have a medical background have made important contributions to their healthcare facilities. They can bolster their knowledge of healthcare by taking continuing education sources. The most effective approach includes teaming a CIO or CTO with a chief of medical informatics or chief nursing officer. In some cases, these individuals might report directly to a CIO or a CTO. An organization should not isolate a CIO or a CTO. In fact, many healthcare organizations still do not include the CIO on the leadership team. We have seen a decrease in this trend among the large healthcare facilities.

EL. What information are you giving to your members about what to expect from the Obama administration?

MC. During the past few years, the government has become more aggressive about Medicare/Medicaid not paying for serious efficiency and serious quality problems, such as a physician cutting off a wrong limb. As a result, healthcare organizations have to file more paperwork about efficiency and quality problems. We are telling our members that they are going to see a combination of bad economic times, and the intent to make the healthcare system more rational, despite contradictory incentives. They need to think about investing in technology differently.  They need to leverage technology to improve service delivery and to increase efficiency. Efficieny also includes, not only making errors, but also not spending as much to get the outcome.

EL. What things is your organization working on now?

MC. Because we want to help seniors stay independent in their homes, we have a new initiative to disseminate information about accelerating the adoption of again technologies.

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