Articles

Global Printing Company CIO Talks About Making Technology Investments to Expand International Business

bmc-elo@bmc-elo.hosted.jivesoftware.com — Wed, 03 Feb 2010 17:57:39 GMT

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

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

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

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

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

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

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

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

EL. What distinguishes your presses from your competitors?

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

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

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

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

EL. Are any two printing presses alike?

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

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

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

EL. Can you talk about other innovative technologies?

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

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

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

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

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

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

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

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

EL. Where does the innovation come from?

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

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

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

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

EL. Have you come up with other innovative ideas?

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

EL. What marketing challenge does your business face?

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

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

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

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

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

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

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

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

Former Air Products Research Executive Talks About Establishing Successful Corporate Innovation Programs

bmc-elo@bmc-elo.hosted.jivesoftware.com — Fri, 29 Jan 2010 17:35:05 GMT

Why are some major companies good at driving corporate innovation in technology? For some answers to that question, Enterpriseleadership.org turned to Dr. Ron Pierantozzi who built his entire career on driving corporate innovation in a technology-related company and doing research in this area. Before retiring from Air Products, a $10 billion supplier of industrial gases and chemicals, Dr. Pierantozzi was the company's director of business development. He worked on new venture creation and technology transfer. He also served as Air Product's director of technology. Since retiring, Dr. Pierantozzi has been a member of the Radical Innovation Group, a consulting firm that works with global companies to develop their innovation capability. He lectures at the Wharton Business School, and was an executive-in-residence at Rensselaer Polytechnic Institute's Lally School of Business. The holder of 32 U.S. patents, Dr. Pierantozzi co-authored the article, Implementing a Learning Plan to Counter Project Uncertainty, which appeared in Sloan Management Review, January 2008.

Here is what Dr. Ron Pierantozzi had to say:

EL. Can you briefly describe the innovation programs at Air Products?

RP. We had a couple of different things going on. I worked on the business development team, structured as a separate organization. It reported to the development organization and aligned parallel to the technology organization. We focused on new market entry, new business ventures, and new business starts. We also invested in startup businesses to generate new ideas and new technologies. Likewise, the technology organization had teams focused on developing products and bringing them to market. This organization reported to the office of the CTO. It had a number of different processes in place to develop new opportunities.

EL. Did both of these organizations have people dedicated to innovation and nothing else?

RP. In the new business development group, we had between six to 14 people whose only job it was to create new business opportunities for the corporation. They looked primarily outside the existing markets and existing capabilities. They looked to new emerging markets in technology or market trends with the goal of developing ideas around how to create large business opportunities. I managed that group. It would grow depending on how the opportunities grew. We supplemented our permanent staff with consultants. The technology organization was organized the same. We had a corporate research group whose job it was to create new long-term technology options for the company. It was a corporate entity. The funding did not come directly from the business units.

EL. Can you describe Air Product's corporate innovation program?

RP. The education program began with the idea for creating new opportunities in the company. The tool sets we had were not appropriate for innovation. These tool sets focused on building incremental new products or reducing the cost or improving the efficiency and productivity of our existing capabilities. We began to bring in educators to help us develop the new tool sets we needed. The process included bringing in people from the Radical Innovation Group. They worked with us on how to identify opportunities in highly uncertain markets, and how do deal with bringing folks from the Wharton Business School to work with us on the discovery-driven planning methodology. As activity grew, we began to formalize this program under the auspices of a quasi Air Products University. Within it, we were already doing things around Six Sigma and project management, and quality. Inside of this, we created the innovation college. Within it, we began to teach classes ranging from creativity to how to develop market opportunities, and assess those opportunities, right up to the execution of new businesses and new startup opportunities. At one point, we had 35 courses in the innovation college ranging from creativity to business execution. I am still involved in teaching some of those classes.

EL. Can you describe some of the methodology that has come out of the Radical Innovation Group's seven-year innovation project?

RP. I was involved with this Group for several years. The initial aspect of this Group and its methodologies included tools around planning for uncertainty. Most large companies operate on information culled from their existing businesses or existing experiences. As you look beyond your current technologies and current markets, you see many uncertainties. There are many assumptions that come into our thought processes. With the Group, it initially developed a set of tools that enabled us to manage those uncertainties at the very earliest stages. We called that the learning plan. It has grown not only to a set of tools, but to a set of organizational competencies.

Within the innovation process, the Group can identify the required separate competencies. For example, discovery incubation acceleration is a competency. It is the discovery of new ideas, and new opportunities. The incubation focuses on formulating them and experimenting with them to get to a reasonable business proposition. Acceleration looks at growing them to a commercially successful entity or business or technology.

You also need a set of competencies that differ from anything else you have in the company. The idea of having a functional capability in innovation included both the competencies, tools, and the career paths for the individuals who work on the innovation processes.

EL. How do you feel about open innovation communities such as InnoCentive?

RP. InnoCentive and Nine Sigma are great tools for tapping the minds of the global audience. Companies need to tap into these tools as much as they can. You need to get outside of your own company. Open innovation enables you to do that. Companies not only need to do that, but they need to have their own people spending some of time outside the existing company walls. For example, although Air Products is an industrial gas company, we would have people going to conferences that dealt with IP infrastructure for machine-to-machine services. It presented an emerging market opportunity for using IP to develop decision processes and analytics. We were doing it internally to some extent to run our plant. We wanted to get out and learn how to develop businesses in those kinds of markets.

Open innovation goes beyond using InnoCentive or Nine Sigma. Those two communities are part of open innovation. You need to get the innovators and the business leaders out into new spaces. They need to get outside of their existing business comfort zone and seek more insight from sources such as universities, startup companies, conferences, and emerging markets.

EL. What is the status of innovation right now in U.S. companies given the economic downturn? Is it something we need to focus more on?

RP. Companies are focusing less on it. Instead, they are working on improving their bottom line in this economy. There is not much top-line growth going on right now. I should clarify that I have not done a rigorous statistical analysis to know the extent of this. Obviously, there are exceptions to this comment. In reducing that cost, companies have eliminated much of the longer-term focus around innovation and new products. Instead, they have focused their new products organizations around products that have more reactive market payback within 12 months to 18 months. Because of the economic downturn, companies have cut their long-range research and development. In the long term, this could potentially prove disastrous not only for companies but for innovation in this country. That is a big issue.

The question: Should they be doing more innovation? As an outsider from the Wharton Business School, I find it easy to say 'Yes' they should be doing it. Senior managers have a difficult time deciding to spend money on things that will not happen for three- to five-years, especially when the company is struggling to get in the black. Some of the forward-looking companies have started to increase their innovation efforts. I see some light at the end of this tunnel.

EL. What takeaways would you give CIOs and CTOs about innovation?

RP. If you talk to CTOs about building some functional capability around engineering or chemistry, they would know exactly what to do. They would put in place a set of guidelines, strategies, and hire the right type of people to drive the right type of programs. They need to do the same thing around innovation and around longer-term growth opportunities. We keep treating innovation as though it is something similar to what we do today. We just need to take a couple of bright people and put them in jobs to go after innovation. The reality is the way CTOs and CIOs need to think about this. Innovation is a function, but it is a different function than what we do today.

The Radical Innovation Innovation's study at Rensselaer looked at the importance of innovation as a function. This function, according to the study, needs to include a set of tools, a set of capabilities, and a group of people who see a career path in this. If you do not have these things in place, then it will be difficult to carry out innovation. You might take a one-off kind of innovation occasionally. For the most part, sustaining this type of innovation would be extremely difficult. My simple one line message to CTOs and CIOs is this: Start thinking of innovation as a function and do exactly what you have done in your other functions to build the capability.

EL. At the Wharton Business School, you teach a course in entrepreneurship and innovation. What was the 2009 response to this course?

RP. I teach on the West Coast in Silicon Valley in San Francisco. The course has always been popular. This year we have the highest number of students that we have ever had. At one point, enrollment was nearly doubled what we had in 2008. Is that due to the economy and everyone thinking they want to start their own business? Is it due to us doing a good job teaching the course? I cannot explain the reason for the spike in enrollments. My class a year ago was probably the most successful class I ever had. Six of our business plans made it to the semi-finals of the Wharton business plan competition. We see many young engineers and managers of large companies (this latter audience populates our executive MBA program) thinking they want to go off on their own. Perhaps, they do not see the growth and career opportunities in their own companies.

EL. What made the two different innovation departments at Air Products successful?

RP. It was many things. We got people out of their comfort zone. We had a group of people who went out and found new things. We had a group of managers who spent time on it. We used to meet with the senior management team monthly to talk about ideas. Senior management put an enormous amount of effort into helping and thinking about the growth opportunity. It turned into the growth board comprised of the senior-level executives who controlled 90 percent of the resources of the company. They focused on what new opportunities we looked at, and what we did. This type of thinking and support contributed much to the success. Then we taught people how to do things. We learned that you could not use the existing type of Six Sigma stage gate tools to drive long-term innovation. You needed a set of different tools, like the learning plan methodologies and discovery driven growth.

EL. Did you work with the CIO at Air Products?

RP. Yes. We launched a couple of business initiatives that dealt with IP capabilities because the company was into this type of monitoring. The CIO sat on our advisory board. He understood the needs that we had from an IP perspective. He was a manager looking outside the company. At the time, our IT organization primarily focused on infrastructure support, which is what most IT organization in large companies concentrate on. We needed to go outside and get some development capabilities. He was a strong supporter of the innovation capabilities as they related to IT.

EL. Are you seeing much innovation from U.S. companies?

RP. Emerging companies right now face the challenge of lack of capital. I am on the board of two emerging energy companies that have a fair amount of innovation going on, but they have found it difficult to raise money from the venture capital community. A decade ago, VCs had no qualms about funding companies. During 2008 and 2009, VC cut back substantially on funding new ventures.

Meanwhile, large companies face a similar dilemma around funding new ventures. They, instead, look for more sure bets rather than taking a risk. Everyone wants to put their money in a sure bet. Sure bets often do not turn into big new things. People like Andy Grove are not convinced they will see the next Google or Microsoft. I do not think there is anything like that out there now. Today's good technologies will not turn into major innovations that will drive the next generation of growth in this country.

EL. Where do you think the next information technology innovation will come from?

RP. We now have the Internet and tremendous IP capability. This entire issue of smart services will probably be the next area of innovation. Much of the runway there can create a tremendous amount of value, particularly in the energy space, as well as other industries. Many service layers need to be on top of this capability to drive not only Web 2.0 kind of stuff, and social networking, but real industrial-type analytics that allow us to drive smart services and decision-making. This one area of the IP space still has opportunity.

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

Systems Integrator and Author Talks about Striving for a Risk-Free Technology Infrastructure in Small to Medium-Size Businesses

bmc-elo@bmc-elo.hosted.jivesoftware.com — Fri, 15 Jan 2010 22:15:58 GMT

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

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

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

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

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

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

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

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

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

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

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

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

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

EL. What motivated you to write this book?

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

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

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

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

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

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

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

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

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

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

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

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

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

EL. What are you looking for in IT talent?

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

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

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

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CEO of Major Ad Agency Talks About Starting With the Answer First

bmc-elo@bmc-elo.hosted.jivesoftware.com — Mon, 04 Jan 2010 22:17:04 GMT

If you ask some C-level executives what they might do after they retire, you could hear something like, "I've thought about writing a book which chronicles what I learned running a major company." Unfortunately, few CEOs write management books after they retire. Furthermore, it's rare to find a senior executive who has written one while he or she is still actively on the job. Bob Seelert, the chairman of Saatachi & Saatchi, one of the world's largest advertising companies, is that rare kind of executive. He is one of the most insightful executives to emerge in this troubled business landscape. His new book, Start with the Answer, is a back-to-basics primer for anyone in a leadership capacity.

Seelert has been with Saatchi & Saatchi since 2003. After graduating from Harvard Business School, Seelert spent the next 23 years with General Foods Corp. where he eventually became CEO of Worldwide Coffee and International Foods. He closely observed one of the largest mega-mergers in United States' corporate history - Philip Morris's acquisition of General Foods. His career also included leading the turnaround of Topco, a grocery industry co-operative, and Kayser -Roth Corp., a leading U.S. manufacturer of leg wear.

Enterpriseleadership.org recently sat down with Seelert to talk about the management challenges CEOs, as well as other C-level executives, face dealing with the economic downturn.

EL. Why did you decide to write this book?

BS. A creative person at Saatchi & Saatchi told me that my wisdom set me apart from other executives he had known. After he said that, I got to thinking that, in fact, I dispense advice, council, and perspective. It's based on my collective experience. Perhaps, I know quite a bit about many things. I decided to put down the wisdom I have collected over a career that spans five different companies and 40 plus years.

The book consists of a series of easy-to-understand points about things that can lead to success in your career and high performance in companies. My book is drawn both from business and my life. You can pick up this book, read a few sections, and then put it down. It is biblical in that sense. That's the one comment I hear frequently.

EL. What are the three top lessons you learned as a CEO?

BS. Leadership begins at the top. Having the right person in the CEO seat can make all of the difference for a company. You can cascade that down the organization as well. Next, you always have to be open, honest, and candid and get a straight forward assessment of the facts. Some times the truth can be pretty ugly. Until you get it on the table, you are not in a position to deal with it. Unfortunately, many people do not look down the pike at the truth. It is one of the reasons they don't make progress. Throughout the book I adopted the predominant philosophy which became the book's title - Start with the Answer. Before you go off and spend much time and money, you have to assess all of the facts about where you want this to end up. In essence, if you start with the answer, then you are in a position to work your way back to the solution.

EL. According to industry consulting firms, such as Gartner Group, the average CEO tenure is about four years. Why is CEO turnaround so high?

BS. In some cases, you may have the wrong person. He or she may not have the right vision for the company. Also this person may or may not have established the right standards of the performance expectations and may or may not have delivered against what he or she had initially proposed. He or she may or may not have unleashed the energy in the company for building the right kind of rapport and relationships with all of the employees. Impatience heightens all of these things. In this short-time world, others judge executives by what have you done for me lately? You have to deliver against what you said you would do. It's a combination of factors.

EL. What challenges do CEOs face in this economic downturn?

BS. They are coming under more pressure now. This is the most challenging environment that businesses have faced in decades. A recent article I wrote about leading in tough times lists the 10 things you need to do to lead successfully. First, you need to get the truth on the table. Make sure you start with a good cold heart assessment of the facts. Second you need to establish the right kind of standards for the new reality. You can establish a performance expectation in terms of how you will perform relative to the market.

At Saatchi & Saatchi, we do not know how far off the media environment will fall. We know that we want to beat whatever happens by 50 percent. That is a relatively high expectation in an assured market sense. We want to use this as an opportunity to grow our share of the market. Others include the following: Think long term but act short term. Communicate, communicate, and communicate. Do whatever it takes to get in front of your people to reassure them that you are going to lead the company to see a better day. Tough times call for extraordinary efforts by everyone in the company. Get with your customers to see how their needs are changing and how to best respond to those needs.

EL. What companies do you most admire and why?

BS. I admire the leadership of Toyota and Procter & Gamble. Toyota has done a good job of driving innovation and making continuous improvements. Even through automobile sales have fallen, Toyota has continued to add enhancements to the third generation Prius. In fact, some auto manufacturers do not even offer a hybrid. Toyota's new Venza fills a gap this company had in the market. Toyota continues to stay true to its long-terms goals of innovation and continuous improvement. Meanwhile, Procter & Gamble has reframed the value of some products to better fit the economic environment. For example, it has introduced a low-cost version of Tide. The company reminds people that Tide will help them keep their new clothes looking that way longer. This feature and benefit appeals to consumers in this type of environment.

EL. So what type of a balancing act do CEOs need to do in this environment?

BS. Despite the rough times, you have to add some people and create some new capabilities. Whenever you add people, however, you need to look at where you can reduce. Adding a new capability also means thinking how you can eliminate something you no longer need. You need to make tradeoffs in this kind of tight environment. To pay for the additional staff and capabilities, you need to think about the reductions and the elimination.

EL. As the CEO of a major advertising company, are you seeing your business evolving more to social media?

BS. Absolutely! Our world has moved from talking to people to building connections with them. We want to create information that is useful in peoples' lives so our clients will be invited in their homes.

EL. Can you briefly describe some of the technology trends you have seen in your career?

BS. When I worked at General Foods and Philip Morris, hardware and a centralized IT environment dominated the company landscape. Today, we can disburse software applications so they are closer to meeting the needs of disparate, decentralized entities. People at Saatchi & Saatchi not only need to understand technology, but to understand how it affects the way they access information, the way they lives their lives, and the way they make decisions. We have various centers of expertise that touch all of these things. You need to embed these things in every operating unit today. You cannot have a periodic get together with some center of expertise that tells you about this that and the other thing. You need to be living these things on a day-in and day-out basis.

EL. You prefer to talk about corporate dream as opposed to operate vision. Is that something that can be applicable to any company?

BS. It can be and should be. I have a story in the book called Tape Your Strategy to Your Forehead. There is a big difference between a dream and many mission statements. You should be able to express your dream in 20 words or less. People should be able to tape it to their forehead. You see a lot of vision and mission statements that go on and on. People do not have a way to quickly state back to what is this company all about. When I did the turnaround for Kayser-Roth Corp., we said our dream was to become the best leg wear company by meeting customer needs better and faster than competition through total quality. It is 20 words. It said this is what the company is all about. At Saatchi & Saatchi we want to be revered as the top house for world changing ideas to create sustainable growth for our clients. This is a pithy, meaningful statement. We expect everyone in the company to take this forward and know what the company is about. This kind of thinking energizes every employee.

EL. When you were at General Foods, the company went from a centralized to a decentralized structure during the acquisition by Philip Morris. How did you deal with the CEO so everything was harmonious?

BS. In the book I say that centralization and decentralization can be the nitroglycerin of organizations. Individually they are fine. However, together they can create some real problems. You need to be one or the other. One company highly centralized, while the other one was highly decentralized. It just never got to be a happy marriage. There was no way to bridge that kind of gap. General Foods was a matrix organization with many centralized resources, such as IT. We had ways of cross roughing them with the line organizations to get out of the decentralized needs of the various businesses. Centralization ends up often times being a one-size-fits-all environment. It is a difficult approach when your business comprised of an entire bunch of disparate business with no relationship to each other.

EL. What is your organizational structure at Saatchi & Saatchi?

BS. We are disbursed geographically across 83 countries. In some areas we deal with affiliates. We have an entire series of company beliefs that we distribute around the globe. We start with our inspirational dream ad. Our local management and applications are highly decentralized. We will give them the beliefs, values and principals. The applications and the plans are in the hands of local managers.

EL. Can you describe the differences in the strategy process at the companies where you were CEO?

BS. General Foods had an intensive strategic planning process. In fact, it could drag on for a year and wind up being a three-inch thick book. By the time it got done, it was time to start the next strategic planning process. At Saatchi & Saatchi, we have the entire thing down to a single page that tells you everything you need to know about our strategic direction. Most companies will never get to that type of an environment because spend too much time strategizing about the future. Instead, they should spend more time thinking about it and making it happen.

We operate on two types of beliefs - 'one team, one dream' and 'nothing is impossible.' We have an entire series of beliefs and character statement. We have the challenge to become the agency of the year in every market in which we operate. Our organizational focus includes filling the world with love marks, which is a strategy to elevate brand to customer loyalty and beyond. We can put all of this stuff on one piece of paper.

The next thing we do is to put together an annual plan. We try to cascade what we call our 100-day plans throughout the company. It consists of the half dozen things you want to get done in the next 100 days. If you knock those things off, you get your next 100 days. That makes up a year.

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

Global Pharmaceutical Company CIO Talks about Driving Business Transformation With Emphasis on Technology Investments

bmc-elo@bmc-elo.hosted.jivesoftware.com — Fri, 11 Dec 2009 20:11:24 GMT

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

EL. How integrated is technology into your business?

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

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

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

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

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

EL. How has the global economy affected your business?

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

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

Newly Retired General Motors's CIO Talks About Role of IT Before and After Automaker's Bankruptcy

bmc-elo@bmc-elo.hosted.jivesoftware.com — Mon, 12 Oct 2009 12:50:56 GMT

When Ralph Szygenda joined General Motors as CIO in 1996, the automaker was one of the largest, most diversified corporations in the country. However, the IT organization was at an all time low. GM had just unleashed EDS, the IT outsourcing organization. Szygenda says, “There were about 20 of us left in the company who knew anything about IT. EDS did everything. We had to start from scratch to rebuild IT.” Thus began Szygenda’s legendary career to become the global CIOs most CIOs want to emulate. He and his team began to build what would become the world’s largest outsourced IT organization. He says, “We consolidated endless numbers of systems, applications, networks, and processes.” Under Sygenda’s leadership IT’s focus shifted from systems to cars, customers, and innovations, such as OnStar. GM emerged as a global business, especially becoming the number one automaker in emerging markets such as China. Now things are different. Szygenda retired on October 1, 2009, as GM emerges from bankruptcy to become a more focused, leaner automaker. He says, “Now the entire company can focus on getting closer to its cars and customers. ” A month before he retired, Enterpriseleadership.org had the pleasure of sitting down with Szygenda to talk about how the role of IT changed the company, how GM plans to deal with some of its operational issues outside of IT, and what changes we might see for the IT organization. Here is what he had to say:

EL. Because of the bankruptcy, how did the company's business strategy changed?

RS. Clearly, it is still in development. A couple of things happened. The bankruptcy took away many of GM 's decades old legacy problems. More management time went into legacy, healthcare cost, and Delphi, a bankrupt automotive supplier spinoff from GM. We had to give Delphi more money than anticipated to keep it alive because of its criticality to our supply chain. GMAC, the financial services business, has also gone away. Our strategy is to concentrate and make time for our customers. That is what a car company really should be doing. It gives us an opportunity to do this without many of the legacy issues we had in the past.

EL. What changes have you made or plan to make to the IT organization and how will these changes affect the outsourcing partners?

RS. Not a significant amount! I believe in the IT organization shadowing or mirroring the structure of the business. It goes for any company. As GM restructures and changes how it runs its international operations, the IT organization also changes to adapt to that particular area. Our base strategy remains the same -- to use process information officers (PIOs) as well as CIOs. These people drive the common elements of product development, manufacturing, or supply chain across the company. That strategy or that direction for an organization issue will probably stay in place.

EL. Do you still have the same number of outsourcing partners?

RS. During my past 13 years here, we have reduced the number of suppliers to less than 20 key IT suppliers. That number includes all of the product companies, such as Microsoft, Oracle, and Cisco, as well as services company, such as IBM, HP, Capgemini, and Wipro. We have mostly service providers along with both hardware and software product suppliers. From an IT viewpoint, we run our sophisticated model of buying and brokering IT. We have 1,000 people inside the company that have the responsibility to design the business direction and the acquisition of IT.

EL. How will the IT budget change and what new IT investments do you plan to make because of the restructuring?

RS. IT cost will bottom out this year. It has been difficult because of the bankruptcy and the conservation of cash. We have reduced cost every year for the past 13 years through efficiency. In other words, we have taken cost out of the operating side of the IT business and put it back into development of new capabilities and application. This year that figure has been lower than what it has been because of the bankruptcy. It will start to go up again because we cut it very severely this year. So going into next year, we will put more money into innovation as the business changes the particular processes where it wants to go.

EL. Can you describe the investments you made over the years that have really paid off?

RS. Twelve years ago, this company operated very decentralized with autonomous business units. Today the company runs the common processes for product development, supply chain, and manufacturing the exact same way throughout the world using this exact same technology, saving a significant amount of money and permitting great speed for product development. For example, 12 years ago, we had 23 computer aided design systems. Today we have one. We cut the product development cycle time by more than 50 percent. We have approximately 30,000 design engineers around the world using this same technology. People on different continents can work in parallel to design together. We move eight million vehicles throughout the world using the same supply chain systems. We purchased $90 billion dollars of services and materials using the same purchasing systems throughout the world. We deliver just in time to plants and manufacturing facilities across the company. OnStar is another example. We have five million customers using that technology in vehicles. It saves many people's lives. We can diagnose vehicles and tell our customers all through technology that they have an issue. If they have an accident, we can notify emergency resources through satellite systems linked to our call centers. We can stop stolen vehicles automatically if the police officer wants to bring the vehicle to a halt. The person driving is in trouble. All that includes technology changes that have occurred in the company over time. At the same time, we have saved significant IT dollars through efficiency. In fact, we have reduced billions of dollars. At one time, we had 7,000 IT systems. Today, we have about 1,500 systems taking out billions of dollars of costs, and moving from autonomous businesses to very common business There have been significant changes in the business.

EL. Can you describe the current governance process for making technology investments?

RS. We have CIOs for the major business units in the company. Given the company's global size, 14 years ago we created the role of process PIOs or experts in business direction. For example, we have a business PIO in change of the entire product development process, from concept to actual vehicle development. We have another PIO who handles all manufacturing processes throughout the company. Another one has the supply chain. They drive initiatives across the entire company by doing two things: trying to put together and analyze the business needs, and driving the strategic direction with the business leaders on defining the most important requirements to transform the business. Every year we do a portfolio process where we analyze those needs coming from the business PIOs, such as the PIO for product development. In this case, we would work with an IT project management officer to see what the company needs. We also do a comparative analysis or a competitive assessment of all of our competitors each year. Next, we take all of the particular IT requirements we need to do and we rank from one to 60. We go back and socialize with the business leaders, come back in, and ask senior management in the company to evaluate how we should proceed. This occurs every year through a pretty detailed portfolio process for the company. It's unclear whether we will modify this process. I don't think it will happen totally. It is business driven, kind of a ROI investment area. We look at ROI in two areas -- one is analytical based on cost savings, and the other one is intuitive based on what we think we need to do. We look at business ROI, which includes IT. We do not do independent IT, except for running the computer center, or telecommunications, I don't expect a significant difference because the process has worked successfully over time. GM's major issues revolve abound legacy cost issues of not having the right products for the marketplace. It is a global process around the company. I'm not sure anyone will say there is an issue with that. We had a 40 percent reduction in the marketplace of sales, which cash could not overcome.

EL. How do you categorize the technology investments?Do you look at what is innovation or what is explorative?

RS. I have a strategy manager who works across the entire portfolio process. Under those areas, we have clearly new process transformations, which include strategic area changes in the portfolio. Then we have, what I call, more tactical new product launches in the company that need IT investment, such as regulatory or initiatives to keep the business running. Next, we have strategic business process transformations. For example, we have different regulatory requirements in Russia and in China. We have to meet all of those. We have new product launches every year because the vehicle designs change. Here we might need more leading-edge technology. We might experiment with new IT in areas where we see how they would adapt to GM from that perspective.

EL. Are you going to make any changes to the way you measure your technology investments?

RS. It is solid ROI with a total business appropriation request. Any major changes must link with the business for measuring a business change. You can't get much better than that. On the other hand, the intuitive side is very difficult to measure. For example, how do you evaluate every new change to a new HR system? Some of that is intuitive. I am not sure we will change that. We will change the business's end goal to focus more of customers and the cars. We will drive a different perspective from more customer-oriented systems, more product information gathering, and new ways to communicate with the customer. We will drive more investment in those areas. The IT process will not change. The business needs will tend to tilt and change more toward the customer, the vehicle design, and the need to meet the market needs.

EL. Have your expectations of your internal staff changed?

RS. This organization has always been very aggressive. Most of the people on the senior IT leadership team have come from outside GM. As a result, they have had different mindsets, and difference experiences over time. The overall IT speed of the company will accelerate. We will have to deliver our requirements faster. Our IT people view this as a positive move. However, they will be under greater pressure, along with the IT suppliers, to deliver quickly on these requirements.

EL. Can you describe your growth in foreign markets?

RS. Ten years ago, we were not in China. Today, we rank as the number one automaker there. If you look at the new emerging markets, GM has done quite well there because it did not have the legacy area. People say, 'How can GM be a leader in China and still have all of legacy problems and then go bankrupt in the U.S.?' We did not have the legacy cost issues outside of the U.S. I appointed an emerging market head who makes sure we address those markets from an IT perspective very quickly.

EL. Is GM looking to move OnStar into new markets such as healthcare?

RS. Coming out of bankruptcy, we must concentrate on the core automotive businesses and nothing else. GM has a long history of being in all types of businesses, everything from heating and cooling to owning Hughes Corporation. In fact, we owned EDS when I joined the company. Diversification is not one of goals right now. OnStar plays a key role in the insurance industry. We understand, as well as provide, all of the internal analysis of the vehicle electronically. For example, an insurance company might say, 'We will sell you insurance on the miles driven.' This information automatically feeds the insurance company. It is paid per usage. We are doing some of these things. For the government, we can monitor vehicles with OnStar. We know which vehicles have evacuated from a hurricane. We can tell how many people are on the highways. We immediately work with government agencies to give them that input. We leverage the fact that the vehicle acts as another node on the IT network. This leveraging helps us to use OnStar for online navigation and information you want. Many businesses have wrapped themselves around that. One example includes directing people to restaurants. There will be more of that. The killer application will always be safety and security followed by navigation. It is hard to find applications that may be extremely successful after that. It is a new territory for innovation. Today OnStar has no direct similar competitors. We have about five million customers. Other companies install tracking devices into cars after they are built. No other competitor builds a system like OnStar directly into the vehicle. If there is something wrong with my vehicle, I get a diagnosis via email.

EL. What is IT doing to drive innovation within the company?

RS. For a long time, IT has have been transforming all of these business processes, and transforming the technology in the vehicle, though innovations such as OnStar. We are taking that process to other parts of the world. The processes in the company for product development and manufacturing are very good. They will not affect GM's ability to compete in the automotive business. This is a fashion business. You need the right car or truck to meet customers' needs. These needs could include energy efficiency, comfort, or reliability. Ten years ago, IT was fragmented or spread across the world. For example, within 10 years, we have gone to no presence in China to being number one using IT. This is a nice success story. GM also uses more social media than any other company. We have been into blogging for years. We have experience with Second Life. We will see more of that. The next generation of technology will offer more transparency to customers, letting then know everything about our products and our company. Our next move includes making sure GM has the speed it needs to transform after the bankruptcy. Our legacy issues are gone. GM had two issues -- legacy cost which was a major driver and the 40 percent drop off the marketplace. You can see right now with the Cash for Clunkers how many people are buying cars because of the stimulus. IT has never been an issue for IT. If you talk to any members of the executive team today, they will tell you the same thing. I am not sure that executive leaders in other companies would say that IT does what I need it to do.

EL. What was the genesis for GM's major outsourcing of IT?

RS. When I joined the company, IT was decentralized. It offered mediocre processes.We inherited outsourcing when GM spun off from EDS. We had to make it work. In 1996, we were the largest corporation in the world. About 20 people who knew something about IT remained with the company. EDS handled everything else. We had to make it to work. Industry analyst reports say that 70 percent of all enterprise IT includes acquired services through some form of outsourcing. It is a way of life. We did it way before our time. We have done it pretty well. It has allowed us to move quickly. We did not have to worry about having all of those internal people and assets in the company and trying to make it leaner. We could never have moved that fast with technology. The Internet also enabled us to redesign all of the interfaces, whether it is to the supplier, or dealer using the Internet. If we had to do that from a hard-coded environment, it would have taken us a decade or more. It took us three years.

EL. Can you give me some examples of IT firsts at GM?

RS. We were the first one in California to display customer info versus going through a dealership 10 years ago. We were the first one to interface with a supplier base. We had 1,000 of suppliers at that time we were buying $100 billion of materials and services. We did all of that online. Meanwhile, the rest of GM was encumbered by speed in areas such as production. Within three years, IT helped transform GM. IT will not keep GM from being successful. Instead, it will be whether or not this company can meet customers' needs with the right products fast enough. The perception quality problems have taken decades to fade away. Most people believe we have good products and want the U.S. auto industry to succeed. The entire American car industry still has a perception issue that will linger for a few more years. That will occur in the next couple of year.

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

Former Capital One Division CIO Talks About Measuring and Communicating Business Impact of IT

bmc-elo@bmc-elo.hosted.jivesoftware.com — Wed, 07 Oct 2009 10:24:35 GMT

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

John Baldoni, Book Author and Executive Coach, Talks about How CIOs Can Lead Through Influence

bmc-elo@bmc-elo.hosted.jivesoftware.com — Fri, 25 Sep 2009 12:42:07 GMT

If you have been a loyal reader of CIO magazine, you probably have come across Baldoni on Leadership. For several years, John Baldoni, an internationally recognized leadership consultant and author of six books, dispensed his management advice to CIOs. His CIO magazine columns include The CIO of Chief Communicator, Give Recognition Where Recognition Is Due, What to Do When You Are the New Boss, and Does Your Organization Provide the Space for Innovation?

In Baldoni’s new book, Lead By Example: 50 Ways Great Leaders Inspire Results, he describes the traits and abilities leaders need to know inspire others to follow. He says that a great leader does what is right for the team by supporting, developing, and defending them, in good times and in bad times. In addition to writing books, Baldoni also coaches C-level executives, including CIOs, as well as middle managers. In 2007, LeadershipGurus.net recognized him as one of the “30 Most Influential Leadership Gurus.” His articles or his comments have appeared in publications, including USA Today, Chicago Tribune, and Investor’s Business Daily.

Enterpriseleadership.org recently sat down with Baldoni to discuss how CIOs can improve their visibility and credibility in their organization. Here is what he had to say:

EL. How does the leadership role of the CIO differ from other C-level positions?

JB. CIOs come at from a little different angle than other CXOs. CIOs have a specialized area of expertise, namely, technology. They oversee the IT function. For decades, CIOs have been known as the tech guys. In some companies, the CIO position plays a strategic role within the business. Some CIOs, however, have an inferiority complex, such as ‘I really don’t belong here’ and that’s nonsense. Because IT is intimately ingrained and integral to any business function, CIOs know more about what’s going on in the corporation than most other executives at their level.

EL. If you were to develop a CIO succession plan, what key things would it have in it?

JB. The person has to be technically competent and really understand the world of IT. That is a given. I would also look for someone with exceptional people skills. This person needs to have the ability to lead others, the ability to bring folks together for common purposes, and the courage to do what is necessary for the good of the organization. I would also look for someone who has the ability to communicate effectively. Many CIOs today face the challenge of how to bring more simplicity to IT. If you keep adding to your systems what people desire, then your systems will become complex and cumbersome to operate. A good strong CIO can stand up and face the challenge of pushing for simplicity. This person has the ability to persuade others to his or her point of view, especially people he or she has no authority over. This person also needs to have a strong vision of where the business wants to grow and how IT can enable that growth. And finally, this person must have good execution skills or the ability to carry out things to completion, according to business guidelines.

EL. You recently were the keynote speaker at a Society for Information Management conference in Dallas. What did you learn from that venue?

JB. IT people hunger for good strong management and leadership information. They like to explore new ideas. They want to be perceived as a leader in the organization. They are willing students. Because many IT people have engineering backgrounds, they, by nature, like to solve problems, gather information, and make informed choices.

EL. CIOs often get criticized by not speaking the language of the business. How do they improve their skills in this area?

JB. If IT professionals are hungry for this stuff, then I would recommend they enroll at a recognized executive education program. Another alternative is to take a graduate level management course or a finance course. Better still, they should take a course in anything they perceive they don’t know.

EL. CIOs often perceive their IT organization as being a partner with the business. What does it take to be a true business partner? What are some of the key lessons CIOs need to learn in order to master this partnership?

JB. They really need to know everything about the business. IT folks are integral to what the organization does. So CIOs need to study up on the organization and its industry. They should network throughout the organization. Because CIOs are in a position to help the organization solve problems, they should not wait for people to come to them for advice and counsel. You might say, ‘I know you are wresting with this. Here is a solution for you. Here is how we can help you.’ That is how you raise your profile within the organization. In doing so, you learn how the business works.

I know this might not be the comfort zone of some CIOs. If CIOs want to be perceived as a true strategic partner, they need to get outside of their own skin and accept they are in the business of leadership. If you don’t want to do that, perhaps executive leadership might not be for you. The bottom line is this: If you want to manage others and to lead effectively, you have to extend yourself to others in an authentic way. That doesn’t mean you have to become a different person. You need to communicate, network, be proactive, and to seek out. You must be active, not passive.

EL. Not all CIOs report to the CIO or are part of the executive management team. What can an aspiring CIO do to secure a seat at the table?

JB. If a CIO can demonstrate strategic value to the corporation, then he or she should be considered someone who can sit at the C-level table. You might have to start thinking holistically, which comes naturally to IT professionals. IT people can look at the entire system and then think tactically about how to solve the problem of a network. The person at the top of the organization thinks about how all of this stuff fits together. C-level executives need to have this kind of mindset. Look for ways you can introduce that kind of thinking to others. It will not happen overnight.

EL. Any comments on the CEO leadership skills of Carly Fiorina, former CEO of Hewlett-Packard, or Rick Wagoner, former CEO of General Motors?

JB. Wagoner was with General Motors for many years. His is a very sad story. He was a very good manager and a good self-less leader. He liked to share the spotlight with other competent senior level executives. We don’t see that trait in many CEOs. The tragedy of General Motors and Wagoner’s demise focused on the organization’s failure to address some tough questions. These questions had been building up for more than 15 years. They include the following: Do we need to go to market with seven or more brands? How can we get a better hold on our labor costs? How can we reduce our fixed costs? How do we downside over time? How do we make a model mix that is more appealing to consumers? These questions demand tough answers.

GM has had a non-confrontational culture. You just don’t approach executives and ask them about the serious issues facing them or the company. Wagoner was a classic example of that. People I know who have worked for him say that he is a very wonderful, congenial person. You might call him a good guy. I was sorry to see him take the fall. Again, it’s too bad that he and his management team didn’t face those tough questions a long time ago.

Carly Fiorina was a brilliant strategist and a very capable executive. Her failure to build a network of support within the organization caused her downfall. Former employees said she put herself first ahead of the corporation and others. Many managers resented that. As an outsider, she should have done more to say, ‘I am a team player like you.’ Her team did not perceive her to be a team player. When the time came, she was hung out to dry.

EL. Which CEOs do you admire the most?

JB. I like Anne Mulcahy of Xerox who is retiring. She has turned the reins over to her number two person, Ursula Burns, a long-time operations executive. Mulcahy came through the ranks from human resources at Xerox. She cares about people. She understands the Xerox culture. She has made an effort to learn new things. For example, she tutored herself about finance so she could understand how the financial operations worked, and thus make more informed decisions about finance. She also connected very well to the organization, and could people get to buy into her vision of Xerox. She helped saved the company. In fact, she did this within the existing resources of what Xerox is like.

I also admire Al Mulally, CEO of Ford. He took over a very serious turnaround effort. While Ford is not totally out of the woods, he made a key strategic decision to ride out the storm by opening lines of credit, especially while it is inexpensive He has received much criticism for this move. He has championed the idea of one Ford by pulling together for a common vision. He has done a good job of breaking down the silos. It is very difficult for an outsider to come into a high bound culture and affect positive change. He has been able to do that. He is a very enthusiastic person. People sense he has much energy. People trust him and want to believe in him. He has been a good person for Ford at that time.

EL. Are their other CEOs you would cite as examples of good leaders?

JB. When we talk about iconic leaders, we need to remember that many organizations are led by fine men and women in the trenches. These people do a terrific job of leading with scare resources, especially an inadequate number of staff members. These folks have many challenges especially during these tough times. We don’t know their names. In fact, we might never know their names. Remember, people in the middle hold together many organizations. They affect change and positive outcomes. Leadership is alive and well within the middle ranks of corporate entities.

EL. You have come across many CIOs who want to become CEOs?

JB. I don’t see many CIOs moving up. If they prove themselves as a capable executive, why shouldn’t they be considered for a CEO spot? On the other hand, if they love what do in the IT world, they should stay put. Management culture truly doesn’t recognize this yet. We unwillingly push people into levels of incompetency for reasons of prestige and compensation. We turn good engineers into managers. If they are comfortable working in the lab or in IT or in research, don’t put them in a management job where they would have to give up what they love to do. Why should you give up your technical competency to do a job for which many organizations don’t adequately prepare you for? That is a hard decision to make.

EL. Can you describe some of the coaching you have done with CIOs?

JB. When it comes to CIOs, I do much work on leadership presence which is how to connect effectively with individuals, and how to demonstrate your earned authority. I work on how one can be a more effective leader by bringing together folks with a common purpose. It is all about leading with influence or without authority. Much of what gets done in a corporation occurs down through people of influence. If you approach a person on stature with your idea, you cannot expect them immediately to accept it, embrace it, and preach and teach it. For example, a CIO needs to sell leaders of operating units on simplifying their systems, and thus making them more efficient. They might say their systems are fine. The CIO must use a fair amount of diplomatic persuasion to convince these leaders that the system changes are better for everyone and will not disrupt current operations.

EL. What are you doing to prepare executives for social media?

JB. I am teaching them that transparency is alive whether you like it or not. If you are a leader in your organization or your function, you need to know what is going on via a variety of social networks. Social media may be an extension of the grapevine. You do not want to monitor it out of the sense of spying on people. On the other hand, we want to get a feel for what people are thinking. People will comply with an initiative from on high. Listen to your people. What is the feedback? Is there a better way to do something? You do not want to create the Dilbert-like work force comprised of totally incompetent managers and incompetent employees.

EL. With so much emphasis placed on e-type communications, what is the best way for executives to communicate during these tough times?

JB. The e-world, through things such as social media, has fueled the move to flat organizations. However, in times of crisis we want a strong leader. It’s ebb and flow time. Leaders have the challenge of staying in tune with their people. They do this by listening either through Webcasts, or better still, face-to-face video conferencing or face-to-face town hall meetings.

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

Jeanne Ross, Researcher at MIT Sloan School’s CISR Program, Talks About Latest Book – IT Savvy

tom@tomparish.com — Sun, 13 Sep 2009 16:29:34 GMT

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.

John Carrow, Former Unisys CIO, Talks About the Challenges of Delivering the Business Impact of IT

tom@tomparish.com — Mon, 31 Aug 2009 23:06:07 GMT

Most CIOs accept a new position on the premise they will create an IT organization that will bring great value to the business. Some CIOs, however, find themselves maintaining the IT status quo by keeping costs under control and systems running. Other CIOs struggle to make important improvements despite shrinking budgets and lack of executive management support. And then some CIOs manage to overcome corporate challenges to bring about a major IT organizational transformation.

John Carrow, the former global CIO of Unisys, likes to think of himself as someone who thrives on delivering the business impact of IT. In fact, during his 30-year IT career, he played a major role in four IT business transformations, including 10 years as the global CIO for Unisys, and four years as the CIO for the City of Philadelphia. Carrow’s IT experience enabled him to move out of the IT role to become Unisys’ vice president of strategic client development, where he worked on developing key accounts and client relationships for the company. He left Unisys to start Carrow Consulting, a strategic technology advisory firm to help small and mid-size companies reset their strategy, and gain alignment with their executive team or their workforce in order to execute a strategy.

Enterpriseleadership.org recently sat down with Carrow to discuss how he handled two major IT business transformations, and dealt with the politics of being a CIO. Here is what he had to say:

EL. How did you create business impact of IT as a public sector CIO?

JC. When I joined the City of Philadelphia in 1993, it was near bankruptcy, had very little automation, and a new mayor, who happens to be the current governor of Pennsylvania. His mission included changing the direction of the City so it operated as a business with a good financial foundation. When I interviewed for the job, I asked the mayor to define his expectations for IT. He replied, ‘I don’t know much about our technology, except that I don’t think it is very good. I expect you to build a monument on the side of a cliff with primitive tools and no money.’ I took the job on that premise. I measured the impact of IT during the four years I was there. We infused a tremendous amount of automation, that not only made things more efficient, but also pulled in more revenue for the City which helped turn it around. When I started as CIO, we had 1,000 computer users out of a workforce of 25,000. When I left, we had 16,000 computer users who spanned just about every department.

EL. What challenges did you face creating business impact of IT at Unisys?

JC. When I joined Unisys in 1998, it was a $7 billion traditional hardware supplier of technology to the business community. Because hardware was becoming a commodity, the new CEO decided to change the company’s direction to become a service-oriented business, and to have the entire company operate as one entity or one business unit. In the past, we had multiple business units doing their own thing. He wanted to use technology as the lever to help transform the company. We changed many things, but we centralized the IT organization. We consolidated 56 data centers around the world to one. We rolled out Oracle for ERP, Peoplesoft for HR and Seibel for sales force automation. We collapsed the number of systems we supported by 50 percent. We lowered the overall cost of IT by 40 percent. We standardized and simplified processes across the globe. During my 10-year road trip, I produced many measurements that showed the business impact of IT.

EL. How did you communicate business impact when you were at Unisys?

JC. Because we had a global workforce of more than 35,000 employees, we relied heavily on top-level communications through the management team. We had many all-hands meetings, and Web-based meetings. We had the luxury of broadcast TV capabilities.

EL. Were you at the board of directors meetings?

JC. Occasionally! When we kicked off the transformation, both the CFO and I attended several board meetings where we presented our case for the investments we needed to make. We attended periodic meetings to report our progress. After September 111, we gave the board regular updates about security issues.

EL. Was the business impact of IT ever communicated to stockholders?

JC. Yes! It was communicated to investors as part of the overall going-forward strategy of the company to become a service business. These were underlying transformation toolsets that were being put in place.

EL. Did you provide this information?

JC. Yes!

EL. How did you measure the business impact of IT? Were there certain criteria you looked for?

JC. The most important aspect of it was the financial cost savings associated with the overall transformation. We had forecasted that a sheer reduction of infrastructure, especially the number of systems, would produce a cost savings. We also said that we would put in place a central procurement activity supported by technology. There would be cost savings by reducing the spend we had with fewer suppliers. We reduced 19 different procurement systems to one. We also simplified the company’s multiple financial systems to a single instance financial system with a data warehouse reporting capability. It would reduce the cost of the accounting activities.

EL. How did you track those cost savings?

JC. We benchmarked ourselves on all of these functions over time. That gave us a pretty good indicator of the costs from the first day we started. Periodically along the way we did two or three benchmarks with the same firm to make sure we made progress in the right direction. We used the Hackett Group.

EL. Have you gotten into the politics of being a CIO? That is a subject few CIOs talk about.

JC. How do you avoid that as a CIO? You have politics starting with who you report to. Are you getting the visibility you deserve so you can make a difference trying to bring about change in the organization? For example, I was brought in as a technical expert for the City of Philadelphia. People respected that. The more people my team trained to use computers, the more the politics started to disappear.

Unisys had its own political challenges. I was a technical expert inside of a company full of technical experts. I used to joke that I had 35,000 deputy CIOs all of whom said what direction we should go in. There’s one level of politics. Another level of politics was the relationship inside of the executive committee. How do you get your voice heard? I worked directly for the CFO. I did not like that reporting relationship, but that’s the way it was. Some times it was difficult to get my voice heard especially when another person filtered it.

EL. You stayed at Unisys a long time? Apparently you found a way to make this work?

JC. We made significant progress. Whenever you make progress with difficult challenges, you feel good about that, and you feel good about what you are doing.

EL. Were you represented on the executive team or did CFO represent your point of view?

JC. It was the latter. I dealt with all of the members of the executive team individually. I would have liked more opportunities to engage with them collectively. I wasn’t unique in wanting to sit at the table. As my confidence level grew over time, I quit worrying about who I reported to, but getting the job done in the manner people expected.

EL. As far as you are concerned the CIO shouldn’t worry about who he or she reports to?

JC. I have heard some CIOs say that they would never take a position reporting to a CFO. I have even felt that way in my life. When I was the CIO at Unisys, I knew I had the support of top-level management, especially the CEO and his executive team. In that case, who you report to doesn’t make a difference. When that support starts to wax and wane, you might not continue to get the right level of support, say, from the CFO you report to. That’s when you have something to worry about.

EL. What methodology is your new consulting organization using to help companies receive a better payback from their technology investments?

JC. I have developed a paradigm based on the transformation I have carried out. I call it the SAGE factor, which stands for strategy, alignment, governance, and execution.

We talk about each of these in isolation. You need a strategy that aligns with the business. A governance process has to be associated with that strategy in order for you to achieve execution. If you don’t have the first three set up correctly, you really cannot achieve a successful execution. Technology is a piece of SAGE, but it goes beyond technology. At the end of the day, business strategy is what matters. IT is an enabler, but it is really the business focus that is important.

EL. Can you describe how you helped one particular company?

JC. We worked with a business process outsourcing company that has been a backroom provider of high quality services. The company came to us and said it wanted to change and go after a public sector market. We helped them identify the solution sets it can take to market and how it can best do that. Working together, we built those solution areas.

We worked with a small printing company that has a software development arm. It is very innovative company. This company asked us how it could get its products to market. We have been helping them layout the products, test marketing them, and develop a go-to-market program for those products.

EL. Given this economy, what are doing to get clients?

JC. At Unisys, I was on the IT audit committee. We worked with the Information Systems Audit and Control Association to implement the COBIT framework not only in IT, but in our overall governance structure. I developed a good relationship with Ernest & Young and KPMG. When I left Unisys to set up my own consulting practice, both of these organizations referred me to clients who needed my expertise.

EL. What’s next for Carrow Consulting?

JC. I am about to work on a large transformation project within the federal government. That’s all I can say about it. My other goal is to write about the transformations I have been a part of. What things make a transformation work? What barriers will you encounter? What causes them not to work well? It all starts at the top.

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

Former CEO of Principal Financial Provides Straight Talk about Effective C-Level Leadership

tom@tomparish.com — Tue, 18 Aug 2009 02:59:41 GMT

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.

Dave Abney, UPS COO, Talks About How Technology Drives Efficiencies and Creates New Businesses

tom@tomparish.com — Sat, 08 Aug 2009 19:32:29 GMT

In 1974 when Dave Abney joined UPS part-time as a college student loading and unloading packages, the brown uniformed UPS drivers and the clean brown UPS package cars represented the company's brand. Managers and executives used slide rulers and calculators to handle many office functions. Many things at UPS have changed in 35 years. Abney has held many positions throughout his UPS career, from division manager in New Jersey to his current position as chief operating officer. The brown uniformed UPS drivers and the clean UPS package cars still play a key liaison role between customers and UPS. Today, conserving vehicle fuel and driver time have been critical issues for UPS. Meanwhile, UPS' initial public offering in 1999 gave the company funds to grow from being a shipping company to becoming a $50 billion global transportation and provider of third-party logistics services. UPS has leveraged its customer data, and a customer-based network of integrated systems to offer new package delivery services, to make drivers more efficient, and to pursue new business opportunities.

Enterpriseleadership.org recently sat down with Abney to discuss the UPS' disciplined approach to operational efficiencies, technology spending, and new business development. Here is what he had to say:

EL. What are you doing to make your drivers more productive and your vehicles more energy efficient?

DA. What you mentioned has been very central to our operational excellence. We have been demonstrating it since 1907. Because fuel is a big part of our fleet and our costs, we have always focused on conservation. Any mile that we do not drive saves fuel and does not cause a carbon footprint. We have probably got as good at that as just about anyone.

Our network is very different from some of our competitors. We do not send different drivers out to take care of air, ground, and residential. We handle everything on one network. This method provides much visible efficiency. Some small initiatives also contribute to our efficiency. For example, we have received much publicity for our no-left-turn policy. In fact, some of my neighbors and friends have asked me how they can get to work without making left turns. Going right or what we call loop dispatch is an efficient way to run our network. It also saves much time especially in heavy traffic. You may think a couple of left turns would not make a difference. On the other hand, if we talk about 90,000 people driving their vehicles all day long, those fuel savings and time savings translate to meaningful numbers.

Our package flow technology allows us to dispatch in efficient ways. Before the packages ever get to an operation, we know what is coming in and can dispatch based on that. In the past without technology, we had to wait until we got the packages, split the packages up, and them assign them to the different package cars. If things did not make sense, we often had to make changes at the last minute and just move packages around. Our package flow technology alone has allowed us to save 30 million miles, three million gallons of fuels, and 32,000 tons of carbon emissions.

You may have read about our alternative fuel vehicles. By the end of this year, we will have more than 2,200. We have traveled almost 200 million miles with these vehicles. We are using all different types of technologies -- hydraulic hybrids that operate off the breaking power. We also have electric hybrid cells. I cannot say if that one particular example fits all conditions at this point. The hydraulic hybrid seems to work well in metro areas where you have many stops and starts. We look at different technologies for the different situations.

EL. What technology do you use to map no-left-turn routes for drivers?

DA. We have installed telematics technology on about 10,000 of our vehicles. Our no-left-turn technology and our package flow technology consist of knowing where the packages are going. Drivers do not use a GPS device that alerts then to the route as they drive. Instead, each driver follows a pre-designated route based on our technology. The dynamic dispatch we are working on would use GPS with factors that might happen mid-route.

EL. Are you leveraging technology to make your customers operate more efficiently?

DA. Absolutely! Until 1998, we focused on running the tightest ship in the shipping industry. We were the best at small package delivery. We still are. As the world started to change, we decided to overhaul our business strategy to enable global commerce to meet our customers' needs. World trade was starting to development, emerging countries were starting to play roles in those trade lanes, and supply chains were becoming longer and more complex.

The paperless invoice is a prime example of how technology has affected our customers. It allows them to ship packages around the world, -- across country borders -- without having to complete the complex paper invoices, or keep dozens of duplicate copies. In the past, if those copies got lost of if you did not provide complete information, your package could gets held up at the borders. The electronic capture of information eliminates many errors. Because we transmit the information so the country receives it in advance of the package, we provide a smoother transition across the country border.

EL. Is UPS getting into new businesses that will complement package delivery?

DA. Yes, that is part of our new strategy in enabling global commerce. Since 1998, many things have happened. The funds from our 1999 initial public offering have allowed us to invest in more than 40 acquisitions. Some of these acquisitions have given us brokerage capabilities, such as freight forwarding. For example, we acquired one of the largest third-party logistic providers in the world. It can start from the very beginning of the process by helping customer to manage their transportation needs. It can manage raw goods coming in-bound, and run the warehouse, taking care of distribution. It could also move all of a customer's transportation needs either through our network or via a shipping line. While we do not own any ships, we would provide all of the information along with the packages to the shipping lines.

EL. Would you assemble a product and then package it for shipping, say to retail stores?

DA. Yes, we do the packaging of computers and other product lines. We even go one step further for our customers. UPS employees repair Toshiba laptops. If your Toshiba laptop malfunctions while you are traveling, you can drop it off at a UPS facility or a UPS store. We will pack it up and send it to our hub in Louisville, Kentucky, where we will do the repairs. We will then pack it and deliver it to your hotel. No one other than a UPS employee touches your laptop during the entire process which takes anywhere from 28 hours to 48 hours, depending on the repair.

EL. What impact has the economic downturn had on some of these businesses?

DA. The economic downtown has affected our customers in some industries, such as retail, more than others. We live in a time that many of us have never seen before. We have a decline in industrial production and a reduction in consumer spending. Like many businesses, we need to make good decisions, not only about reducing costs, but also about how to grow our revenue in these tough times. Being a 103-year old company has some advantages. We know how to manage during uncertain times. We survived the depression, several world wars, and countless economic cycles. We know how to manage change. We have just to make sure we feel very comfortable about it.

We have a responsibility to maintain our financial soundness. We are in a great position to do that. We have to be prudent to hold ourselves accountable. We feel that there are opportunities out there. We know we can take advantage of those opportunities. If we see a business that would answer the needs of our customers, we can invest in it.

EL. Your company leverages much technology to be in different businesses. and to be really efficient and agile. How do you make technology investment decisions?

DA. First, we measure everything. We use this information to decide where we need to implement technology and where we need to invest in the business. We constantly monitor trade lane information, and the needs of our customers. We then look to see where we need to make investments and answer the needs of our customers. We invest about one billion dollar a year in technology. We look at what the project will cost, what type of a return we might get, and how it will take us to get a return on that investment.

EL. What is the governance process for looking at these capital investments?

DA. We have a governance process around any major investment that we would do. It starts with our management committee, which is the way we manage our business. The committee consists of the CEO, me, and about nine other people. Our people do the analysis to see if the investment would give us the return we need and if it will answer our customers' needs. We then decide whether or not to approve the investment.

EL. How often do you review your business strategy?

DA. It is absolutely an ongoing process. At one time, you could look at our strategy three to five years out. That's not good enough today because the world keeps changing. Our executive level strategy steering committee meets monthly to talk about where we are, where we need to go, how we see the markets changing, and how do we react to those changes.

EL. Have you invested additional dollars in analytics?

DA. We have invested in analytics to ensure sure that we have the capacity to analyze much information, and that we can funnel it to where we need to make our improvements. Analytics is something we have been doing since I got here 35 years old. Back then we used slide rulers and calculators.

EL. Do you have a formal methodology for looking at capital investments in technology?

DA. Yes. We have a committee that meets monthly. We have a set format for how we look at this information, especially how it shows the rate of return, the cost of the project, and how quickly we think we can get a return on that investment. Key members of the committee include the Dave Barnes, the CIO, our CFO, me, and nine other executives. Because our offices are near each other, we are constantly talking to each other. Each morning we go to breakfast together to make sure we catch up with each other. We do the same thing at lunch. We have weekly and monthly meetings.

EL. Do you have a committee that handles acquisitions?

DA. We have a group that looks at mergers and acquisitions. It has close ties to our strategy group. We first look at what the acquisition would provide. If we think it has potential, we then look at what synergies the acquisition would provide us.

EL. What is your feeling about using social media to get closer to your customers?

DA. Our way for communicating back and forth with customers has been through our drivers. They function as ambassadors to our company and our customers. As the company has grown, we started to branch out and advertise. For years, our best form of advertisement was our uniformed drivers and a clean package car vehicle that appeared in front a customer's door every day. We have tailored more and more programs for the Internet. We have expanded our interaction with customers to include social media. We are experimenting with things like twitter. We like being able to interact directly and quickly with customers. Social media will also give us much customer service intelligence about how we can do better job. Again, social media is fertile ground for us.

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

Executive Search Firm Consultant Talks about Tough Market for Senior IT Talent

tom@tomparish.com — Thu, 23 Jul 2009 19:39:39 GMT

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.

Teri Takai, State of California CIO, Talks About the State’s Largest IT Transformation

tom@tomparish.com — Sun, 12 Jul 2009 19:57:55 GMT

In 2005 when California Governor Arnold Schwarzenegger introduced his Strategic Growth Plan to rebuild the state’s crumbling infrastructure, he said that this infrastructure went beyond roads and bridges, but also included the State’s massive information technology infrastructure. On January 1, 2008 the Governor appointed Teri Takai, the former CIO for the State of Michigan, to first transform the California’s IT organization, by managing costs, despite the tough economic environment, and then to put more e-government initiatives in place.

Takai is no stranger to overhauling a state’s IT organization. While CIO for the State of Michigan, she restructured and consolidated that State’s resources by merging the IT organization into one centralized department to service 19 agencies and more than 1,700 employees. Under her leadership, Michigan ranked number one four years in a row in digital government by the Center for Digital Government. Prior to going into public service, Takai worked at Ford Motor Company for more than 30 years. At Ford, she led the development of the company’s IT strategic plan.

Enterpriseleadership.org recently sat down with Takai to talk about the challenges she faces transforming the largest IT organization in the State of California. Here is what she had to say:

EL. What is it like working for Governor Schwarzenegger?

TT. I am enjoying every minute of my work. It's never a dull moment.

EL. Can you describe the structure of your organization?

TT. We are currently in transition. To date, our organization has been highly decentralized. Each of the 130 CIOs have pretty much been able to set their own processes, establish their own way of doing things, from both a business and a technology standpoint.

This position was really the creation of a central CIO organization with reporting responsibilities directly to the governor. That is the first time the CIO has been a cabinet member. It is the first time the position has directly reported to the governor. Before today, my organization was a policy setting and financial review vehicle with about 32 people. I have close to 1,100 people. Within my organization, we plan to consolidate our large mainframe data center, our security organization, and our public safety communication organization. The central shared services to support our infrastructure will become part this larger organization.

EL. How many IT workers does the State of California have?

TT. We have been using the 10,000 number. When we consider things like desktop support and other functions, we think that the actual number is a little larger. We believe that our on-going run rate budget is about $3 billion. We run about $1 billion of project spend on top of that. As a result, our spend comes closer to $4 billion. Even that could potentially be a low estimate.

About 10 percent of the current state IT workforce will become part of my organization directly. The rest will move to a federated model. We plan to establish a dotted line working relationship where the IT policy, as well as all of the technical direction, will come from this office. The business direction will reside within each respective organization. The business organizations will also make the decisions about how much money they want to spend on IT.

EL. Since you are going to this structure, what will your governance process look like?

TT. It is changing dramatically. We plan to establish a brand new governance structure around reporting of projects. We put out a policy letter in April to get the transparency ball rolling. First, we do not want to monitor all of the little projects. Projects that met certain parameters will require reporting into this office. We plan to post the projects on the Web site so they will be available to the public, as well as to the legislature. The reporting frequency depends upon the size of the project.

EL. How do you plan to measure these projects that meet certain parameters?

TT. Initially, we will look at project performance. Our challenge is sheer performance. The first thing we plan to do will be to meet our milestones. Within those milestones, we may have measures around earned value. The first step is to just get the reporting to happen.

Keep in mind that we are not where we need to be. We are just in the beginning stages. We have the challenge of trying to do business transformation while we are trying to do IT transformation.

EL. How are you going about getting this reporting to happen?

TT. We told the departments and the agencies that we have the ability to put out our policy letter, which is the equivalent of the traditional administrative manual. Our policy letter requires certain project and portfolio management training, certain practices, and then reporting requirements. This is all brand new. The portfolio management tool we plan to secure will help us to do the reporting.

EL. What key technologies investments have you needed to make?

TT. Because the budget crisis hit when I arrived here, we have not made what I call key technology investments. We struggle to make due with our dollars. We have continued to support some of the investments that we have had underway. For our infrastructure, we are working on aligning data centers to improve disaster recovery. We have a major project going on to shut down one of our locations and create a more robust disaster recovery plan for our mainframe data centers. The investment there is not a huge amount of dollars. It has been making use of the dollars we have to make dramatic changes in our disaster recovery capabilities.

We still have a large number of application projects underway and continuing to move forward. Some of them even accelerated. We have several ERP projects underway. As you can imagine with the size and scope of California, we have had several of them happening right now in corrections and another one in transportation. We have a statewide payroll and personnel replacement system underway, that is an ERP implementation for personnel. We are in the process of preparing an RFP for an enterprise-wide ERP system for financial management.

EL. Are you folks doing much consolidation of redundant systems?

TT. We have just begun that process, but I would not say we are far along with it. In 2008, we did our first ever five-year IT capital plan. It was the first ever it was ever done for the State of California. We required everyone to come with his or her five-year plan. This process will give us visibility into the areas where we need to move towards consolidation and shared services. We will update that plan this year.

The 130 CIOs will be in 11 different groups. Before I move forward with a statewide consolidation strategy, I have asked all of these CIOs to submit a consolidation plan for their agency based on what they would do. These plans will give us a way of actually looking at what we should do from a state perspective.

EL. Is your shared service organization going to be mandated or not?

TT. Yes and no! It's an interesting situation to look at a shared services environment based on both mandating and cajoling. Because I have done this type of consolidation before, a mandate could damage could damage your ability to pull if off, especially if you do not have the ability to do it properly. Our first step requires that I have the technical team organized, and I have the ability to do consolidation properly. Call it the first step. I am focusing right now on directory and email. It is a great kind of outward invisible place to start. The second place we are starting to work in is our data centers. We have more than 400,000 square feet of data center and only about one third is what we would call tier three. Those are a couple of areas where we are going to move toward consolidation, but I have not yet going to the mandate state. I have mandated that the agencies are to prepare their consolidation plan, but I have not mandated which direction they are going to go in.

EL. Because your IT transformation or reorganization implies a change in communication style, what type of training program are you putting in place to facilitate this?

TT. Our communications director has been working very hard to develop a cohesive communications plan. This plan is not only important for our IT employees and our business partners, but we need it for dealing with our legislature and our various special interest groups in Sacramento. For example, we have a council comprised of the 130 CIOs. They all have the opportunity to participate. Our executive leadership council includes the undersecretary of each major agency. To this end, we are always talking to the business folks, as well as to IT. I then have the venue of the cabinet secretary if there is an issue I have to raise to that level. Communication is key and essential to what we doing.

EL. Are you looking at social media for the communications piece?

TT. Yes! We recognize social media tools as an effective way to reach our audience, especially those who want to follow us. We have done a Facebook page. We are experimenting with Twitter and how to push out information using those short updates for people who want to follow us. Governor Schwarzenegger is twittering. People are very interested in what he say to say. He has started to lead leading state agencies toward that style of communicating. We are looking at different things.

We are focused on using the tools to push information out. We have not yet spent enough time looking at how we use these tools as a way to gauge and to get input. We are re all struggling with this issue.

EL. Have you had much contact with Vivek Kundra, the new U.S. Federal Government CIO?

TT. Yes! We are certainly interested in what he is doing. While putting data out there is great, we are all still struggling with what people do with the data that actually will result in an outcome. We have to continue to work on this piece. On the other hand, we have much internal resistance to putting data out to the public

EL. How do you communicate to the rank and file about the importance of understanding the business impact of IT?

TT. This area is important to us. We are trying to use a business approach to the way we approve projects and the way we implement them.

EL. What are you looking for in a CIO?

TT. We want pro-active people who will stand up and be counted. They want to be leaders.

EL. What challenges would private sector CIOs if they wanted to join your organization?

TT. They have to be able to calibrate and understand the way the work gets done here. They have to be able to calibrate to the pace of government, and the bureaucracy of government. People who can do these things will derive much reward working in government.

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

Harvard Business Professor Talks about Technology Investments, Especially Enterprise 2.0

tom@tomparish.com — Sun, 05 Jul 2009 20:05:44 GMT

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.

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Global Printing Company CIO Talks About Making Technology Investments to Expand International Business

Former Air Products Research Executive Talks About Establishing Successful Corporate Innovation Programs

Systems Integrator and Author Talks about Striving for a Risk-Free Technology Infrastructure in Small to Medium-Size Businesses

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CEO of Major Ad Agency Talks About Starting With the Answer First

Global Pharmaceutical Company CIO Talks about Driving Business Transformation With Emphasis on Technology Investments

Newly Retired General Motors's CIO Talks About Role of IT Before and After Automaker's Bankruptcy

Former Capital One Division CIO Talks About Measuring and Communicating Business Impact of IT

John Baldoni, Book Author and Executive Coach, Talks about How CIOs Can Lead Through Influence

Jeanne Ross, Researcher at MIT Sloan School’s CISR Program, Talks About Latest Book – IT Savvy

John Carrow, Former Unisys CIO, Talks About the Challenges of Delivering the Business Impact of IT

Former CEO of Principal Financial Provides Straight Talk about Effective C-Level Leadership

Dave Abney, UPS COO, Talks About How Technology Drives Efficiencies and Creates New Businesses

Executive Search Firm Consultant Talks about Tough Market for Senior IT Talent

Teri Takai, State of California CIO, Talks About the State’s Largest IT Transformation

Harvard Business Professor Talks about Technology Investments, Especially Enterprise 2.0