Blog Posts From Articles Tagged With cio

Peter High, Metis Strategy Founder and Author, talks about CIOs and their role in Business Success

bmc-elo@bmc-elo.hosted.jivesoftware.com — Wed, 19 May 2010 21:34:53 GMT

Enterpriseleadership.org recently sat down with Peter High, founder of Metis Strategy and author of the book World Class IT: Why Businesses Succeed When IT Triumph. Peter talks about the changing roles and importance of CIOs within a business's infrastructure.

EL. What motivated you to write a strategy book for enterprise IT?

PH. For years, CIOs ranked as second-class citizens in the corporate structure. During the past decade, however, the best CIOs have recognized that they occupy a unique perch within that structure. Their relationship with the business units (like Marketing, Operations, Finance, Human Resources, Operations, and the like) can often times run deeper than the relationship the business units have with each other. As a result, the best CIOs can leverage this relationship to add value and to build the top and the bottom line of the corporation. Likewise, they can drive innovation, as it is prudent for them to engage the very players that are mentioned . I have seen many cases where having the right IT leader in a well-oiled organization can help to bring a diverse group of people to talk about innovation on behalf of the company and on behalf of the customer. Thus, the CIO can facilitate a level of collaboration that does not normally happen. We are on the cusp of a real boom in the power of the CIO role. In fact, more and more CIOs are taking their rightful place as true peers of the other C-level leaders in the organization.

EL. Have you come across organizations that have separate IT innovation groups?

PH. Harrah's innovation group, for example, evolved from IT into something separate. In the beginning, many of Harrah's IT people populated this innovation group. As time went on, it drew from people across the organization, in areas such as Operations and Gaming Products. Tim Stanley, Harrah's CIO, was chosen to head this group. As the story goes, during a meeting with the CEO and other executives, Stanley wrote down on a note that the company needed an innovation team. He added a P.S. that he did not want to be the head of the team, however. The CEO convinced Stanley to assume the other "CIO" role- chief innovation officer-as well. As time evolved, the group had a link to IT through Stanley. The separation from IT gave the innovation group a separate degree of visibility. Stanley spent two days a week on innovation and the other three days on IT and product development.

EL. Can you tell me what Harrah's innovation group accomplished?

PH. It developed many innovative ideas that were new to the industry. They worked on a virtual roulette project in which a dealer spins the wheel and gamblers place bets in front of a bank of screens throughout the casino rather than at a table. It's potentially a more efficient--and profitable--way of gaming. Other innovative ideas that have been written about elsewhere include server-based casino gaming machines, leveraging Microsoft's Surface tabletop computer, and computer systems to control hotel room functions through televisions. It all begins with IT's incredible gathering and synthesis of data, be it customer or company data.

EL. Do most of the companies you work with use some sort of an IT maturity index?

PH. Different organizations operate in different ways. Many organizations use CMMI and other means to determine where they are relative to best in class. The methodology described in the book World Class IT- with the five principles [people, infrastructure, project & portfolio management, IT & business partnerships, and external partnerships] and thirty sub principles, represents a maturity model of sorts. It depends on the number of principles and sub principles the organization uses to operate at a high level. We use a traffic light system to grade our clients. The higher percentage of those that are green and the fewer that are red suggest a greater level of performance and a greater level of maturity. The best organizations have some means of evaluating how they are doing relative to a broader benchmark.

EL. Have you come across many organizations that have automated the IT management process for governance, where the organization has a common language across the organization?

PH. Many organizations have invested in systems to help with the management of all of their projects, to help determine the true business value of the investments they are putting together. Since high-performing organizations tend to grow very fast, the processes and tools do not necessarily grow at the same pace. Much of our business focuses on helping organizations measure the true business value of their investments. We have worked with some organizations that have gone from collecting data on spreadsheets to more automated, globally available methods, which both IT and the business units can use.

EL. Can you give me a historical account of how some CIOs have earned a "seat at the strategy-setting table," so to speak?

PH. In the 1980s, the best IT organizations could find ways to automate manual processes, and along the way cut costs for the company. In the 1990s, we began to see a greater number of organizations, , where IT began to weave itself into the knitting of the business. These IT-developed capabilities that helped to enhance revenues, such as customer relationship management databases, also helped to develop products that the Web could deliver, such as e-commerce. Within the last decade, and I believe to a greater extent in the decade ahead, a greater number of CIOs recognized that their strategic perch within the corporate structure allowed them to impact the overall strategy of the organization. Again, the strategic insights they garnered due to their relationships with the business leads to insights that in some ways they are better positioned to point out and articulate than the business units are themselves.

EL. Can you give me an example of an organization where the power of the CIO really helped to turn things around for the business?

PH. In the book, I reference an airline coming out of Chapter 11. During the course of the proceedings, this organization thought it was cutting costs dramatically throughout the organization. It also recognized that IT was a facilitator for that cost cutting, and as a result, IT was asked to cut its costs. However, the demand for IT services kept increasing. The CIO at the time highlighted this fact, and provided the rationale to ensure that the business leaders present their needs and plans for the future in a similar manner. By creating plans that were presented in a like fashion, and by presenting them together, there were strategic advantages that went well beyond solving the demand management issues highlighted by the CIO. There was greater understanding of priorities across the company, and there was better collaboration and even the elimination of redundant efforts as a result. IT can take a good portion of the credit in solving this issue. This is just one of many examples where we see IT going from being an order taker to being a key driver of the strategic conversation.

As a result, IT can now push, pry, affect, and develop new aspects and wrinkles to the corporate strategy. They can eliminate waste by finding like needs across different divisions of the organization and attack those together. I see this capability as one of the emerging business values that IT will continue to have in the decade ahead. It is important to note that this requires a new type of IT leader.

EL. What type of a career path do you see for a CIO who can use IT to deliver greater business value to the organization?

PH. The organizations that develop these types of leaders will realize a tremendous amount of benefit. It is important to note that businesses as diverse as Walgreens, Schneider National, Ameristar Casinos, Drugstore.com, and Network Solutions have or had CEOs who were once CIOs. A 2007 article in Baseline magazine included a survey that found that 56 CIOs had advanced to more senior business positions. Many on the list became CEOs as well as chief financial officers and chief operating officers.. This should be an encouraging message for those who once joked that "CIO" stands for "career is over." Now it is just the beginning in many ways.

EL. In your dealings with CIOs, how have the best IT executives communicated business impact?

PH. Again, it gets back to this historical misunderstanding because of the differences in education, language, career path, and the like between the IT organization versus other departments. IT has always had the reputation of being the bastion of engineers who operate in a different and foreign manner. IT leaders have traditionally been more comfortable operating in "ones and zeroes" as opposed to "P&Ls." This chasm has kept IT from securing a seat at the corporate table to present business plans and business value, or the projected ROI on the investments they are planning to undertake. Today we are seeing a confluence of many different issues - everything from increased knowledge that many companies are getting more value from IT, to a younger generation of business executives who are more curious and knowledgeable about IT. This younger generation will give way to a new breed of CIOs who are well-informed technology business leaders. These are the so-called "digital natives."

Because of the economic downturn, organizations want more visibility and transparency into what they are getting from their investments. IT continues to comprise a large share of many capital investment portfolios. As the overall governance of the organization increases, IT will get its share of scrutiny, and CIOs need to be able to speak like any other business unit head as to the value that is expected from their portfolios. All of these factors are leading to a changing paradigm.

EL. How do the best CIOs communicate business impact with their peers in the business?

PH. Sometimes they have their own communications department. Many organizations are taking people from the corporate PR department and placing them in IT to develop communications programs specific to IT. Before attempting this, however, we advise that CIOs define the right metrics. Developing the dashboards of how IT is performing and then communicating them is key. Again ,the five principles and thirty sub-principles presented in World Class IT are just such a framework in which to do this. This involves everything from the performance of IT people as judged by business partners to the availability of infrastructure to the degree to which projects are delivered on-time, on budget, and on scope to the ability of IT to delivery business value to the performance of the external partners. The book introduces both introductory and advanced metrics for IT to leverage and to communicate. This constant flow of information will increase the confidence and understanding that the business has in IT.

It is also imperative that IT executives be honest about where there are issues. For example, where performance metrics are trending in the wrong direction, it is important to highlight this, but also to highlight how this will be resolved. Business leaders don't expect IT to be perfect, but they do expect them to be on top of their domain.

Dashboards are an effective communications vehicle, as they provide a good way to communicate a lot of information in fewer pages. This type of communication can help to increase the curiosity and scrutiny the business community has about the IT community. I call this the "burning of the ships event" - there is no way back to the old world once you have done this. You have to stay in the new world where the business is better informed and will have a greater desire to remain informed. Once you begin to communicate this, you begin to put positive pressure on the IT department to perform at a higher level, constantly improving. Once you begin to open the kimono on all the things the organization is undertaking -- how it is performing, and where the warts are - you will find more of an appetite for that continued conversation.

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

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Interview: Michael Davidson - Talks About Successful Early Adoption of New InformationTechnology

tom@tomparish.com — Fri, 18 Jan 2008 21:04:56 GMT

In 2002, Michael Davidson, the chief information officer at Apotex, Canada's largest pharmaceutical company, was done with wasting time and money trying to back up one-half terabyte of data residing on dozens of servers with different operating systems. Instead, he decided to go with the emerging trend of disk-to-disk backup. Davidson put in two storage area networks (SANs) and licensed software from a managed back-up service. The two SANs backed up the servers across the company's three campuses, providing better protection than ever before and eliminating the $250,000 yearly cost of tape media.

To build growth within the overall business at the privately held Apotex, Davidson practices the philosophy of researching innovative practices that best fit with the company, and buying solutions that complement those practices. Recently, Enterpriseleadership.org sat done with Davidson to discuss the way he selects products, the strategic planning and governance model at Apotex, and some of the key best practices and products he has in place. Here's what he had to say.

EL: You've had the IT Infrastructure Library in place at Apotex since 2002. What components of it have you carried out?

MD: Right now, we have change management, configuration management, and we're moving ahead with problem management and release management. We've had a service desk for more than 10 years. We gave the service desk an ITIL framework when we first migrated to ITIL. We also use the ITIL framework for service level agreements.

EL: Which service support ITIL component has helped you the most?

MD: Change management has had the biggest effect on us by reducing the number of incidences that have actually occurred. We've also been very careful about the changes we've made. To this end, we've been able to show better cost effectiveness and cost reductions by going in this direction.

Today, a lot of IT shops still haven't looked at ITIL or are just starting to put it in place. When Deloitte, the auditing firm that audits our IT structure frequently, looked at us two years ago, it said not too many companies had actually put in a change management process, let alone try to hook it to configuration management. It was an interesting part of Deloitte's financial audit.

EL: What lessons did you learn about going with configuration management?

MD: We have the federated model for configuration management database. It does reasonably well for us. We had configuration management centralized at one point, but we quickly realized that as you get more and more assets in your configuration management database, you need to roll some of those assets into other federated databases. Otherwise, you'll run into some performance problems.

EL: What lessons have you learned about deploying ITIL?

MD: You can't fix something so that it works effectively and efficiently unless you know what you're doing, what you're changing, and what effect the change is going to have. That's the reason for ITIL.

EL: What new things are you doing in storage?

MD: We have room for a couple of hundred terabytes. The service we use migrated the software to other operating systems, and we've been able to include our UNIX backups. It's interesting to see just how many people are now going to near line disk storage for backups instead of putting them on tape.

Information lifecycle management is one of the storage programs we're running right now. We're spending a lot of time on archival data.

EL: You're an early adopter of many products. How do you select them so you won't get burned?

MD: We have people who build a few small things. We do, however, primarily buy software as opposed to building systems, and we do a lot of internal research before we make any decisions. We look at the longevity of the vendor and whether we think that it can meet our requirements. We also looked at where the vendor is going to fit within our plan during the next three, to five years. Is the vendor a good acquisition candidate? We take all of these things into account during our evaluation process.

EL: How do you work with executive management to make technology decisions?

MD: I chair a steering committee comprised of senior executives. Each month, we review our strategic plans and vision. We also get input from our program management system. We have projects linked to our program management system -- the program will actually go across the different silos of the business and bring together projects that are associated with that program. From there, some of the steering committee executives provide input across inter-business or divisional silos, and we can coordinate between the different business units on our overall planning. We can prioritize the various projects associated with each program. It has worked out well for us.

EL: How are you handling the tactical side of things?

MD: For the past 10 years, we've also been doing tactical planning based on our quarterly tactical plan for one year. Each time we meet, we extend the plan by one year. Our rolling strategic plan, which is updated yearly, drives our tactical plan; the two plans exist as two concentric wheels feeding each other on a continuous cycle. The strategic plan has a three-year horizon. It establishes our environment for the continuous planning to take place, and it also becomes a reference document that is linked to the business value drivers, set by the business.

On the tactical side, we're continually pulling pieces out of the strategic plan, and updating them. This process helps Information Services (IS) make management decisions more quickly. By accepting projects a quarter out, we can change the target date, unless there is a major business process we have to do. Either way, we generally don't get any major surprises.

EL: Do you have formal vehicles for performance metrics?

MD: We aren't using a balanced scorecard now. We have a scorecard for the business and each divisional business unit. We have core strategies in various areas, such as first to market with key products, excellence in customer service, operating efficiency and effectiveness, and aligned and engaged employees and business and finance management. IS maps this vision to the business value drivers and the IS services in place. IS then maps to the goals we have in place, such as business alignment, continuous business planning, and flexible and agile organization.

Additional Reading - Sponsor Link: Can You Really Get ITIL Out of the Box?

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

Interview: Pulte Homes CIO Talks About Steering a Careful IT Course through Home-buyer Marketplace

tom@tomparish.com — Wed, 12 Dec 2007 22:18:17 GMT

When Jerry Batt was CIO at Sprint, he didn't worry about delivering the technology the company needed; Sprint used most of the network technology it developed. He worked collaboratively with the business units to provide them with the appropriate IT services.

Batt found himself in a unique position after he became CIO at Pulte Homes, the second largest residential homebuilder in the U.S.

The growth in home buying from the 1990s to 2006 caused Pulte to break into the Fortune 500 list with $15 billion in revenues. At the same time, homebuilding ranks at the bottom of industries that make investments in mechanization and automation. To this end, the business units at Pulte looked to Batt to spearhead the development of applications and technologies the company needed to ride the home-buyer boom. Pulte's investment in IT innovation helped it to pioneer several firsts in the homebuilding industry. Homebuilding is, however, is a cyclical industry. With the 2006 downturn in home buying, Batt had to shift his management style to keep up the momentum in IT innovation, and to maintain the IT staff morale.

Enterpriseleadership.org recently sat down with Batt to discuss how he has successfully directed IT through some dramatic changes in his company's marketplace. Here's what he had to say:

EL: Can you provide a little background information about what makes Pulte Homes unique?

JB: Pulte is in a national production homebuilder. This class of homebuilder emerged 10 year ago through industry consolidation. We cracked the Fortune 500 list in 2003, and our sales peaked in 2006. The company is immune to foreign competition, which has been both good and bad. It doesn't stimulate dramatic improvements or innovations as has happened in other industries.

We still build houses one stick at a time, regardless of the economic market segments. Last year, we built about 46,000 homes.

EL: With the current downturn in the marketplace, what is Pulte's direction?

JB: We want to build the highest quality product for a base price. Because of our national purchasing power, we can acquire those amenities a homebuyer might upgrade to after a few years. For example, we've upgraded our quality of our carpeting several levels, but we provide a smaller number of choices. The national program we have with our carpet supplier enables us to buy high quality carpeting for less money than we normally could. The bottom line is that we can offer a complete package, thus reducing the complexity of choice, the opportunity of mistakes, and the increased costs of maintaining all the inventory.

EL: Where was Pulte headed when it realized it really needed to innovate in IT?

JB: From 1999 to 2003, Pulte had been growing 30 percent a year and selling about 30,000 houses a year. All of the wheels seemed to propel our business's growth faster and faster. Our CEO was going around the country selling us on the idea of building 70,000 homes year.

After looking at the entire homebuilding business flow, we picked an innovation model that lent itself to an asset turnover business. We buy land and entitle that land to be subdivided into buildings lots, ranging from 100 homes to 1,000 homes. So, we build homes, sell them, and then move on to the next piece of property.

In 2003, we realized that we could no longer operate with a spreadsheet mentality. We'd put most of our product information on an Excel spreadsheet. That's how we forecasted sales and did our planning. We took the business workflows and started to automate them, one at time. Because we had no legacy systems, this process was straightforward, and we used a lot of Web-based technology. We had to hire people to build new applications and to modify existing applications. Homebuilding hadn't attracted a lot of third-party software vendors -- Microsoft and Oracle couldn't offer us much.

EL: What else did you automate, or are planning to automate?

JB: We added a scheduling application and a selection application to a basic ERP system. The selection application enables us to keep track of what colors and options -- such as carpeting or hardware floors – a customer wants in their home. We automated some parts of our supply chain, and a year later, we automated our sales-force tools based on Seibel. We were also the first in the homebuilding industry to automate our purchasing nationwide; we rolled out this application one city at a time. We're now looking to automate the tracking of our land. We also aim to create a more transaction-based Web site. E-commerce is not the norm for our industry.

EL: How did you get prepared psychologically to deal with the downturn in the home buying marketplace?

JB: I've lived through cycles like this four times in my career. You need different leadership skills for both the upside and the downside of things. Most of all, you need to know when to shift to those skills. When the market started to slow down in 2005, our IT activity also followed suit. We had to scale back on projects and on staff. That's when I knew it was time to shift gears.

Ironically, the homebuilding industry had weathered the recession of the early 2000s. During our 12-year growth spurt, our senior leaders had never seen any downturn. They'd filed away in the back of their minds the possibility that it could happen. Coming from the telecom industry, I was cynical about how long a company could hold on to a good market. I said, "What are going to do when things change?" They looked at me in disbelief. We weren't mentally prepared for a downturn.

EL: So what is your leadership style when things are going great?

JB: When you're growing, you're simply trying to add resources -- people, hardware, and software -- in a way that makes sense. It's hard to add scale without losing control of the integrity of all of your processes, including people processes. You need to discipline yourself so you won't adopt every new technology that comes along. You need to impose quality disciplines so you can maintain order in the way things get done.

EL: What is your management style through a downturn?

JB: The downturn is a different animal. It's affected by the company culture and by the prospects for it being only temporary, and not structural. I had to do massive cost reductions in places that didn't have an immediate hope of recovery.

It's a different mindset when you think you're going to be back in the game soon. When it comes to management techniques, I found that you need to earn the trust and the engagement of your people. Some will loose their jobs. I've made in a practice to tell people where the business stands. At our all hands monthly meetings, I try to make sense of the marketplace. Unfortunately, IT people have a tendency to not look up until its too late. These days, I've been describing the sub prime mortgage problems to them. This process helps them to understand why the IT project list has shrunk dramatically. I also tell them if we're going to do a layoff, they'll know well in advance. By being forthright, I realize that some people might bail out prematurely and our HR might get nervous. That's the risk I'm willing to take.

EL: How is your governance process different at Pulte than it was at Sprint?

JB: At Sprint, my job as CIO was to build consensus with the business units all of the time. In other words, we had to get everyone to agree on a compromised plan before we could move forward.

At Pulte, people look to me to provide the technology direction. They have far less knowledge, insight, and interest in participating in technology decisions, such as the software to be used and the vendor selection. They still, however, want to know the outcome or the results of a project. Because I'm still allocating resources to scale the business, my governance model is for me to understand the needs of the business. I talk to everyone. At the end of the day, I can recommend what projects will move forward and what won't. I work closely with the CFO to determine what we can afford to do, and I work with our COO to ensure that we meet our operating priorities. There is a lot of autonomy in this particular structure.

EL: Most CIOs would love to have more leeway in making recommendations -- what's the downside?

JB: If it doesn't work, you, and no one else, must take the blame. I was so used to collaborative relationships at Sprint, that I underestimated what it took to fly solo. While we were putting in an Oracle ebusiness platform in one of our light manufacturing sites, I mistakenly thought it was a joint project between IT and the manufacturing folks. I was one-third through the project when I realized that these folks expected me to drop this platform in without their help.

EL: What's the difference between IT alignment at Sprint versus Pulte?

JB: At Sprint, technology was an integral part of the business. I was responsible for the network and all the infrastructure that went into it. The IT components were highly integrated. That's not the case here. At Sprint, we had many people involved in aligning IT. Here's we have five senior executives and I driving it.

EL: How are you developing senior IT people?

JB: Because we're in the downturn, I'm mostly retaining them. Unlike their predecessors, the younger IT professionals focus a lot on self-fulfillment. The trick to holding on to them is to keep them motivated and energized according to what turns them on. For example, we did a press release for one IT professional who did an outstanding job on a project. He was excited about getting national attention and putting this recognition on this resume. I knew that we risked making him visible to a lot of search recruiters, but we gave him what he needed. Everything we said in the press release was genuine.

Now we're identifying the top 15 percent of our IT contributors and developing personal reach-put programs that will be based on what we need to do to make these contributors feel valued.

EL: What quality standards do you have in place at Pulte Homes?

JB: For about a year, I worked with a professor from Virginia Tech to develop a quality standard. One of the divisions at Sprint won a Baldridge quality award. So I decided to take a little Baldridge and a little CMMI. I'm thrilled with the outcome. Our quality standard is largely a continuous improvement one built on many of those same platforms. We're now teaching it to people.

Before I went in this direction, I assumed that everyone at Pulte had a basic understanding of things like customer-supplier model. I was wrong. Every time I asked this question during meetings, I got blank stares. I realized that we had to go back to fundamentals. Our quality standard includes the history of how software quality improvement has matured. We're designed the course around Steven Covey's Seven Habits of Highly Effective people, which serves as a cultural foundation for the standard.

Blog Posts From Articles Tagged With cio

Peter High, Metis Strategy Founder and Author, talks about CIOs and their role in Business Success

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We'd love to hear what you think. Send us your feedback.

Interview: Michael Davidson - Talks About Successful Early Adoption of New InformationTechnology

Interview: Pulte Homes CIO Talks About Steering a Careful IT Course through Home-buyer Marketplace