by Elizabeth M. Ferrarini

Robert Mitchell jumped into "fire-chief mode" three weeks after he was promoted from senior director of strategic business analysis and strategic business implementation to CIO and vice president of operations at GTSI in Chantilly, Virginia. The go-live deployment of a $10 million PeopleSoft supply chain system, integrated into the company's current PeopleSoft HR system, disrupted operations at GTSI, a $1 billion provider of IT infrastructure solutions to government agencies. Because the first three months of the troubled deployment kept GTSI from delivering products and services to customers, the revenues for the publicly held company were jeopardized. Meanwhile, the company shelled out $1 million to fix the PeopleSoft problems.

Mitchell sat down with enterpriseleadership.org to discuss candidly how he perceives his leadership role, how he was able to get his arms about a negative situation, contributing  factors to what went wrong, and what he learned from the experience.

EL: You moved up from senior director of strategic business analysis into the role you have now. How did all of this prepare you for the CIO role?

RM: The CIO role is about being a business leader who adds value to the company, not about being an IT project manager. Looking at it from this perspective, my past job at GTSI and my previous positions were critical to my success as a CIO. They were about understanding the strategy, understanding the financials, and understanding the business process. They were almost always about having good relationships throughout the business and being able to know who to go to.

Most people associate PeopleSoft with human resources. We use PeopleSoft for all of our internal business operations, everything from human resources to our entire supply chain. Even our sales people use PeopleSoft to generate sales quotes.

EL: Several trade press articles talked about the major operational problems you had with a PeopleSoft supply chain deployment. What went wrong?

RM: As CIO, I inherited the PeopleSoft supply chain deployment, which had been run as an isolated IT project, not as process improvement for the company. IT was unsuccessful at getting the business involved in the deployment. It slowed everyone down and certain departments ground almost to a halt. The problems ranged from training in general, to this specific implementation. In addition, we brought in too many contractors. We should've hired employees to fill functions that required passing knowledge on to other employees. We didn't think through some of the required test plans and business acceptance issues associated with it.

The momentum to go live with the system by a certain date meant no turning back. I knew it was going to be very problematic when we went live. However, I also had a clear idea of how we were going to fix the problems, and how I was going to minimize them. If I hadn't jumped in and did some of the things I did on the business side, it would taken longer than 90 days to fix the problems.

EL: What did you do first?

RM: I had to engage the business in what was going on. They needed to understand that IT is basically a set of mechanics and a custodian of the system. They had to take ownership of the system and to learn how it works for them.

On my second day on the job, I got representatives from every department in the company to come to our board room, to sit down in front of the CEO, and to give him an overview of what the system meant to them. We built a council of people, our version of a governance board, to make decisions about system changes.

We set up a war room where IT people would come and get answers immediately, and we could prioritize and enter change tickets right away. We really made sure we had a clean process for addressing the most critical issues first.

EL: Was this the most challenging IT initiative of your career?

RM: Absolutely. There was an interesting twist to it. While it was challenging on one level, I found it easy to resolve because I knew what to do. Think about it for a minute. If the executive team thinks they need to make big changes to gain efficiencies, you have tremendous amounts of resistance throughout the company. On the other hand, if a badly designed system doesn't allow people to do their job, then everyone supports changing the system.

Creating a forum of people who were willing to take responsibility for their  system made the situation easier to manage.

EL: What other things did you learn?

RM: You have to deal with many aspects of change management. Specifically, you have to work through a variety of communications levels -- everything from executive, down to user community -- at the same time. You have to be very clear about who own the business process and who owns the IT automation process. Many people like to start with, "What does this system do for me?" If you don't change that attitude from the start, you're going to run into problems.

EL: As result of this experience, what formal IT best practices have you put in place, and how have you improved alignment with the business?

RM: We have a well documented, disciplined software lifecycle process. As a publicly held company, we have processes compliant with Sarbanes-Oxley. We've used many different sources to document, and to develop, these very processes.

As for alignment, we've created a synergistic environment in which the skillsets overlap between business analysts and IT functional analysts. For example, in IT, I have functional analysts with extensive PeopleSoft expertise who understand functions such as purchasing. Likewise, I have people indirectly reporting to me who manage the process and who also report to the functional department head. These people work hand-in-hand with their IT counterparts to make sure the proper implementation and requirements get done.

EL: What was your relationship like with PeopleSoft during your troubled  deployment?

RM: We didn't have a good relationship with PeopleSoft at that time. Both parties were at fault. Because it was trying to fend off acquisition attempts from Oracle, PeopleSoft didn't want to have negative press about a bad deployment. I made sure we kept focused on solving the problem rather than complaining to the trade press. This strategy helped to improve our relationship and gain access to some good people within PeopleSoft.

EL: Now that PeopleSoft is part of Oracle, what is your relationship like  with Oracle?

RM: Large companies, such as PeopleSoft, don't do a good job of being held accountable for what happens. You have to find a method to protect your interests. I started building relationships and getting conduits to certain Oracle vice presidents who can smooth out any problems. In turn, we've provided Oracle with architects who served on a leadership committee to define the future of PeopleSoft.

EL: Why did you eventually go public with the trouble PeopleSoft  deployment?

RM: We were approached by a reporter who heard about the situation. Because we had just come through the toughest part of the deployment, we thought it would be a good chance to talk about how we got our hands around the problem. After all, we took a beating on this. Out customers had experienced negative delivery ramification. We also had to satisfy our shareholders.

EL: Undoubtedly, you've reflected on this deployment. What conclusions  have you come to?

RM: Because I took over the deployment a few weeks before in went live, I had no trouble taking the high road and not pointing fingers at any one. If I had been spearheading the project right along, then everyone would have been pointing fingers at me.

Our president believes in being forthright. From the start, he acknowledged that we were having a problem with the deployment and talked openly about it. I operate the same way. I've pulled all of the skeletons out of the closet so they can be fixed. That's why it's important to leverage all the relationship you have.

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by Elizabeth M. Ferrarini

CIOs in corporate America worry about how IT is going to make their organizations more competitive. In healthcare, demographics, not IT, help hospitals to, for example, expand into new markets. To this end, healthcare CIOs view IT as a critical underpinning for process improvements that can help patient care and safety.

Dennis L'Heureux has firsthand experience finding the right technology to fit a hospital's strategic initiatives, as well as its tight budgets. He wears two hats as both CIO and vice president of planning hat at Rockford Health System, a 400-bed tertiary healthcare provider and the second largest specialty health care group in Illinois. His exemplary technology leadership has earned him a place on Computerworld's list of Premier 100 IT leaders.

Enterpriseleadership recently sat down with L'Heureux to talk about some of the ways technology has improved some key functions and to discuss how he's dealt with an influx of new C-level peers.

EL: How do you deal with the challenges of spending on technology while  keeping the cost of healthcare down?

DL: I can't draw a direct line between those. There's always an incentive to keep the cost of healthcare down. We struggle with this all the time because of the new government mandate for more price transparency.

Our business is very complicated. For example, each insurance company we do business with might reimburse us differently for the same procedure. If someone wants to pay cash, the price will be different, to. This entire situation continues to vector downward as the government and insurance companies want to pay less. Meanwhile, the cash consumer wants to pay less.

We have constant pressure to provide the same types of services with better  quality and safety for less and less money.

EL: Can you talk about situations where IT has helped the hospital saved  money?

DL: A basic assumption in healthcare is that the use of IT over the long run will reduce costs. This is very hard to quantify across the board; however, I can cite some tangible cost savings. Because we've put in electronic medical records system, we've saved on file room clerks and don't have film expenses anymore.

And, I can say that technology is helping a radiologist come up with a diagnosis in less time than he or she did before, for example.

EL: What process improvements have you made at Rockford Health  System?

DL: We've eliminated the need to go looking through old film files trying to compare a patient's X-rays taken today with those taken three weeks ago.

We also centralized the scheduling of outpatient routines. Previously, physicians had to call a specific lab to make an appointment for an outpatient. The new system now allows physicians to call one number for all of these procedures. It also allows physicians to identify where any combination of those tests can be done for the patient. That's a pretty significant process improvement.

Finally, each year, our employees have to select their medical coverage for the following year. At one time, we mailed each employee a thick paper packet. Now, we have all of the information online.

EL: How automated are your medical records?

DL: We've automated a significant part of the records, including histories, physicals, all lab tests, all EKGs, all radiology tests, all surgical notes, all mammograms, and all cardiology tests. We haven't automated our nursing notes. That a big project.

EL: What are some of the best practices you have put in place for  IT?

DL: For the past 12 years, we've had a decent governance structure for how we use IT and the investments we make in it. Our Information Management Services Advisory Council consists of representatives from the physicians practice, nursing, administration, finance, and IT. This is a key best practice.

We also see our technology resource center as a best practice. If we'd had to outsource it, we wouldn't have pulled off the service levels that we now provide. We are proud of that.

EL: In some healthcare organizations, the CIO reports to the CFO. How do  you feel about that?

DL: The data suggests that if you report to a CFO, you have less flexibility and less investment in IT than if you reported to a CEO. You have the challenge of making sure you invest in the right things.

I'm fortunate to report to the CEO. In fact, I have survived five CFOs.

EL: How do you deal with the changing of the guard in C-level peer  positions?

DL: A new CFO may come in and ask questions -- why don't you do this and why didn't you do that? The answers can be simple. However, a lot of times, solutions and decisions have been made along a very complicated set of criteria. It's difficult to explain all that.

You have to retell your story constantly, not recreate history. You need to get the new CFO to understand where you are today and why. I like to sit down with the new person and go through all of my governance structure. Then, I list out all of the inventory of things we have, and talk about the investments we have made and what I think is still deficient. This tactic has worked very well for me.

You need to build good relationships with your C-level peers. These relationships help you to have an amicable conversation about crucial topics. If you don't have these good relationships, you'll cross swords every time you meet to discuss an important topic.

EL: How do you align IT with the hospital's business objectives?

DL: Because I was promoted to senior vice president, I am also in charge of strategic planning. It's easy for me to connect those dots. When we created our strategic plan for our company, we had six drivers. My schematic charts shows IT as the foundation for each one of them; IT doesn't sit as the seventh driver. We view IT as a support function, not as a way to create new markets.

New markets in healthcare come about by things such as demographics, unemployment, and employment. As we try to capture the market share for good paying customers, we try to leverage IT.

EL: What's the most pressing priority you have right now as far as a  project goes?

DL: Right now I'm working on using technology to provide better patient safety between the pharmacy and the nursing departments, which order, confirm, and dispense medications. We've mislabeled it as a "bar coding project," but it has many more components and processes than just bar coding.

At the time, the vendor we purchased the product from didn't have RFID. We're still months ahead of this implementation, so we've delegated someone to look into RFID and to see if it makes sense for us. I wrote the contract for bar coding, but if RFID is the way to do, then I'll have to reopen the contract and say I'd prefer RFID.

Prototyping often leads to two separate processes. That can be dangerous. We want to play it save and to stick with standard processes.

EL: What professional organizations help you to network with other  CIOs?

DL: I participate actively with the College for Healthcare Information Management or CHIME. About three times each time, I check with my CHIME colleagues to see how they are doing things, and what issues they are having.

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Elizabeth M. Ferrarini is a freelance technology writer based outside  of Boston, Massachusetts. Reach her at elizabethferrarini@yahoo.com.

by Elizabeth M. Ferrarini

With annual revenues exceeding $21 billion and 80,000 employees worldwide, Raytheon Company ranks as an industry leader in defense and government electronics, space, information technology, technical services, and business and special mission aircraft.

With more than 27 years of experience in the defense industry, Rebecca R. Rhoads, Raytheon's chief information officer, oversees the development and implementation of company-wide information systems, as well as the company's technical direction in IT. Because of the nature of Raytheon's business, Rhoads also has the daunting responsibility of managing  risk not only domestically, but in all of the international facilities where the company does business. She recently talked to Enterpriseleadership.org about governance, best practices, and risk management. Here's what she had to say:

EL: How is the IT organization structured at Raytheon?

RR: The IT organization has 3,000 professionals, comprised of infrastructure and data center, engineering automation, and engineering computing.

We have three different organizational models for IT. Each of the seven divisional CIOs oversees specific business units, and each business unit has IT employees who report to the divisional CIO. These employees provide unique services to their respective business unit. We have a shared service environment for functions that need to be managed across the enterprise, such as data centers, and we have IT executives who function like a ship's rudder. They make sure we have a solid strategy, a robust architecture, and an air-tight risk management.

EL: What is your governance model for how you gauge the effectiveness  of it?

RR: The IT governance model mirrors the company's overall governance model for making decisions and managing investments. As a result, our decision model and our vocabulary are consistent with how we run the business and how we run the company.

This governance model has proven to be a big advantage for us. It's one that's easy to teach, and one people are familiar with. It provides a good way to make sure we're aligned with the business and the company, and they can engage in the decisions more effectively. They understand what their role is when we get to certain gate reviews or certain decision steps. We use this for our major investments.

The other IT governance we have in place consists of a CIO cabinet of the seven divisional CIOs and me. The cabinet enables us to manage across very different businesses.

EL: What are some of the best practices you use?

RR: Our Raytheon Six Sigma program provides us with important capabilities we've used to develop IT. In fact, Six Sigma is inherent in every new system, in every new process, and in every process improvement opportunity we take on. When the company first rolled out Six Sigma, we made sure everyone in IT had some type of Six Sigma training. Some people got qualified as specialists, while others became certified experts.

EL: Given that Raytheon is a global defense contractor, how is IT  making the company more competitive?

RR: First of all, we had to figure out what the role of IT was. We've grown as a merger of different legacy companies. From an IT perspective, we had one of each type of system connected to each other. We've done a lot of work to simplify our complex environment. Mission assurance is our way of removing all doubts about the quality or the performance we deliver to our customers.

We've created an environment that makes it easier for not only the company to work quickly and with agility, but also for the businesses to collaborate and work together. Because we have so many varied capabilities in the businesses, we had to integrate the different functions through common processes and through common systems. Now, things work together seamlessly. Bringing these capabilities together enables us to have the most competitive offering.

EL: A 2003 CIO magazine article talks about the high number  of IT project failures you were having. How did you improve things?

RR: The success of project management depends on how well you succeed with risk management. Getting risk management under control helped us to lower our project failure rate and helped us to achieve our cost-performance targets.

For IT, we used two risk management tools well established at the company -- decision tree analysis and, what we call, failure reporting and corrective action. We learned that many of our IT risks were self-imposed because our processes weren't very mature and weren't common processes. Once we got these things taken care of, we were able to manage risk in a more balanced way.

EL: Can you talk about some of the risks you've taken as CIO and what  you learned from each one?

RR: A big risk consisted of moving our IT structure and organization to mirror the company's structure and processes. Because we must keep everything running around the clock, I was concerned that we might run into a snag, such as a significant degradation in performance, if we were perceived as an operating model. In other words, a lot of people might not see the value of what we did until after we did it.

In 2005, we took another risk by creating a common control environment to manage Sarbanes-Oxley risk and compliance requirements. Because we didn't have common systems, our internal auditors and our external auditors didn't understand the value of having common controls.

We now have a common set of controls as you move from business to business. These controls have improved our overall risk management model significantly. At the front end, it took a lot of managing to get that done.

EL: What risk or risks are you now facing?

RR: We're facing a very big financial risk with our commitment to SAP. Instead of having each business unit carry out SAP, we've put together a strategy to carry out one SAP environment for all financials. This type of arrangement will tightly knit the company and the businesses. This initative took longer and was harder to carry out. Now that we're at the end of the deployment, we're seeing the advantages it will provide us.

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Elizabeth M.  Ferrarini is a freelance technology writer based in Boston,  Massachusetts.

by Elizabeth M. Ferrarini

As one of the world's largest producers and distributors of flooring for residential and commercial applications, Mohawk Industries operates a large and complex business made up on 19 acquisitions since 1990. The company offers its 30,000 customers a broad line of premier carpet, ceramic tile, natural stone, and home products. In 2005, the company did more than $6 billion in revenues and acquired a Belgian company, which does about $1 billion in sales.

Mohawk is a vertically integrated company with 56 manufacturing locations, 56 warehouses and distribution locations, 256 sales centers that distribute products to the wholesale channel, and a transportation infrastructure of 2,000 trucks and trailers. Each business line is a start-to-finish production process. For example, the laminate floor process begins with wood chips and ends with the finished product. As a result, the IT organization must actively be involved at all levels of the company's business and strategies, down from the office of the chairman to workers on the plant floor.

Recently, Don Riley, CIO of Mohawk Industries since 2004, sat down with Enterpriseleadership.org to discuss the creative ways he keeps IT flexible and supportive of the company's growth.

EL: Can you describe some of your key applications and  systems?

DR: The IT organization handles everything internally, except for running the mainframe -- IBM handles that. A large component of the operation runs on fully redundant AS400s. The storage area network received an award from Storage Networking World, the major enterprise storage tradeshow, and our data centers have a good base of core technologies.

We also have best-of-breed, core legacy applications that provide a degree of sophistication for transportation, distribution, planning, and business. We standardized by line of business and created the concept of a global infrastructure model. We commoditized the infrastructure layers and regionalized the application layers as appropriate. By migrating all of our domestic locations to AT&T, we can leverage their links, which has been very successful for us.

EL: How is IT keeping the company competitive?

DR: First, we created a support structure that integrated key personnel with the business. We worked with them on what their challenges, issues, and long-term business strategies were, and we sat in on their sessions on business strategy to find out where they're headed in the next few years. Next, we told them the areas where we could help them facilitate and achieve their goals.

We've already taken on several initiatives that support the sales and marketing penetration strategy that the business has for the next several years. These initiatives will help them deliver capabilities and functionalities needed to compete in a specific channel more effectively. Along a similar line, we want to get a greater return on investment for  our sales force. So, we have initiatives that will focus on sales force productivity. Similar initiatives for manufacturing will focus on working capital or cost of goods sold.

Once we have the strategic direction, then we can carry out day-to-day processes that help track whether we are investing the appropriate amount of time to get those things accomplished.

EL:  Are you doing balanced scorecard to gauge how well IT is aligned  with the business units?

DR: We have an IT dashboard that drives and supports the business, and we map our  strategic initiatives to support that within IT. Next, we preplan our strategic business projects tied to the overall business strategy. The dashboard shows how we are performing on a reliability and quality basis for daily work. It also tells us how we are performing relative to our strategic IT initiatives and our major projects that help to move the dial forward for the company. We share this information with both the business units and IT team to keep everyone focused on improvement.

EL: Do you have other best practices besides the  dashboard?

DR: We're carrying out a full-scale project management office. It will help to audit our large initiatives to make sure they stay on track. We're taking the applications development team through level one to level three CMMI training.

EL:  What is your governance model?

DR: For each major line of business, I've created a relationship manager who functions as a CIO for that business. These managers are responsible for ensuring that we're providing the services the business units should be receiving, and the projects are being  accomplished on time and within budget. On top of that, our executive steering committee, which consists of the chairman's direct reports, meets quarterly, and I facilitate this committee. We have monthly sessions by key line of businesses or process areas where we review priorities.

EL:  Have you had any significant reductions or productivity  improvements?

DR: We've made material improvements in productivity, quality, and overall reliability. Because we've become more cost effective, I've been able to operate more efficiently with the resources I’ve had since I took this position. In terms of manpower numbers, this is the leanest shop I've worked in. I spent 12 years with EDS and eight years in the apparel industry prior to coming here.

EL: What innovative technologies are you considering for the next  year?

DR: We're excited about what cellular carriers are trying to do with hot points, WIMAX, and 802.11, and how the PC and PDA companies are trying to take advantage of that. We see developments helping us in customer services, sales, and the support side relative to taking advantage of some of that.

We're also interested in business process modeling analysis and management and its relationship to the service-oriented architecture. It can help us migrate to a more agile architecture where we can adjust processes on the fly more quickly.

We're taken advantage of blade servers and plan to take advantage of grid  computing.

EL: What role does business intelligence play in your  organization?

DR: We've made investments in front-end sales analysis and reporting. In fact, it will also become a key component of our longer-term strategy as we become more global and enter more regions. It will enable us to tie all of these regions together in a quick, efficient manner, and to report our performance to the company and to the market.

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

by Rod Amis

With the inauguration of Chile's first female President, Michelle Bachelet, on Saturday, 11 March, 2006, any business leader looking at Latin America over the past year sees a continent where change has been breath-taking and the prospects for future investment and development might appear murky, if not challenging. At the same time, in Peru, Bloomberg reported on 27 March, 2006, that Ollanta Humala, the Peruvian Nationalist Party candidate was leading in the polls prior to that nation's 9 April elections.

Does social change necessarily mean a change in economic policy? Where are the most promising sectors in which to seek business opportunities in Latin America and where are the roadblocks? Let's take a look at the picture on the ground.

"At the moment, every global investment firm that has launched an investment fund in euros and invested in Latin American stock markets is enjoying better results. In just one month, the HSBC GIF Brasil Equity fund rose 14 percent, the equivalent of a 40 percent return over three months. It is the best short-term fund. In the medium and long term, the results are much more spectacular. For example, the Merrill Lynch Latin America Equity fund (the most profitable three-year fund) has risen 241 percent since 2003. It is followed very closely by a similar product from JPMorgan, which has earned 229 percent. The 10 most profitable three-year funds on the stock market are investing in Latin America." from "Will 2006 Be a Happy Year for Latin America" Universia Knowledge@Wharton

When approaching business opportunities in Latin America, we need to take two  facts under consideration:

1. New partnership configurations, including joint public-private ventures may be called for in certain countries, such as Venezuela and Bolivia, when dealing with energy industries like natural gas and crude oil.
2. One size does not fit all. Latin America is a regional, not a single political, entity and every country's economic policies will be different despite the commonality of language.

In this article, we'll also explore the rise of populism in the political arena and how it addresses the impatience and dissatisfaction of people in the new democracies of the region, but does not change the need for minding the balance of payments equations. Thus, many signs -- such as those exhibited during new Bolivian president Evo Morales' tour of Europe -- point to a continuation of a healthy investment climate and sustained growth in Latin American markets.

Dr. Gerald McDermott of the Wharton School of Business, a recognized expert on emerging markets in Eastern Europe and Latin America, has tracked the development of the economic environment in these countries for decades. One of the things he sees in South America is a stabilization of the investment environment that has evolved since the missteps of the 1980s and 1990s.

"Look at what happened in Argentina," McDermott told Enterpriseleadership. "The problems of the 1980s -- low growth, volatile inflation -- was in part the confluence of several points of instability as well as missteps in economic policy. For instance, Argentina was grappling with democratization, subduing the military, rebuilding the social fabric after the infamous "dirty war," and resolving the massive debt crisis that virtually locked the country out of international capital market until 1991.

"While the "lost decade" damaged the role of the state and the left in managing the economy, the missteps during the Menem years in budget and regulatory management as well as the financial collapse in 2001 and 2002 damaged the legitimacy of market-based reforms.

"There are not a lot of roadblocks to foreign investment today because the major actors are institutionally constrained. Chile was first [in opening the economy to investment], but then Lula in Brazil added a little more nuance and became the hallmark for economic growth on the continent."

A Regional Prospectus

Let's begin by looking at the investment opportunities and prospects on a  country-by-country basis.

Brazil is Latin America's largest economy. By some estimates, 40 percent of all economic activity in the region originates in that country. While President Luiz Inacio Lula da Silva came to power as a "man of the people," his economic policies have been solidly centrist, resulting in an annual growth rate of 4 percent -- 5 percent. Though Lula's administration is now plagued by a corruption scandal that will likely lead to the resignation of his Minister of Finance, Brazil's anti-inflation economic policies will likely remain unchanged.

Brazil, in fact, represents an interesting case study on how pragmatic reformist social policies are recognized to be only achievable by maintaining a strong economy. Other nations in Latin America are thus watching Brazil closely and taking guidance from its example.

As Gerald McDermott pointed out during his conversation with Enterpriseleadership, the most significant achievement of Lula da Silva's rise to political power was that he single-handedly moved to reform the labor left. "He moved it [the labor left] from being a nationalist institutional structure, much like Peronism, into being a much more pragmatic system for economic growth," McDermott told Enterpriseleadership. "Lula represents a modern alternative for the left not only in Brazil but in other countries as well. That is, leftist movements in other countries, such as in Peru, Mexico, Bolivia, and Argentina, have Brazil and Chile as potential models to follow, and not simply those espoused by [Venezuela's] Chavez."

One indicator of the potency of Brazil's economic policies is the real estate boom throughout the country that began in late 2004. By 2005, three sectors in particular -- middle-income housing, tourism, and "build-to-suit" industrial warehousing were beginning to show impressive growth and return on investment. WalMart moved to Brazil during 2004 while a boom in shopping center construction was taking place in Brazil's largest cities. At about the same time, the agricultural belt of the nation was experiencing local investment due to the rise in the price of soybeans. Major American, French and Spanish hospitality chains were taking advantage of the foreign investment climate to open new hotels.

Chile's economy has been rated one of the most stable in Latin America by analysts for years. The climate for foreign investment is positive and, while widely known for its exports of wine, salmon, and copper, one of the most exciting investment sectors in the country is in information technology training and business-to-business transactional guidance.

Though Chile has the most advanced telecommunications infrastructure in Latin America, due to significant investment in the 1990s, few of its businesses have yet to move their activities to the Internet. Major businesses in neighboring Brazil and Argentina use IT for an array of their business and sales processes, but those in Chile still did not in 2004. A report from the Center for Study of the Digital Economy of the Santiago Chamber of Commerce (CCS) in 2004 stated that although 69 percent of Chilean companies were connected to the Internet, digital technology covered mainly just the fundamentals. Only 25 percent of Chilean companies had their own Web site, only 11 percent used the Web as a platform for sales, and only 16 percent used it to buy online and to connect with suppliers, the report concluded. This is despite the fact that, at the time, companies could use the Internet to pay national insurance contributions to employees and apply for bank loans.

Part of the resistance to adopting IT in Chile was, in fact, cultural, many believed, but part of it could be attributed to lack of local investment. In response, the Chilean government began a new initiative, the Digital Agenda. The Digital Agenda's stated goal is to "… convert Chile to a digital country by 2010." As part of the agenda, business incubators have been established at University of Chile and at the University of Adolfo Ibaiaez. The Association of Chilean Information Technology Companies has established the goal of raising the information technology sector to 3.8 percent of GDP from its current 1.2 percent of GDP.

Jay Bryson, an economist with Charlotte, North Carolina's, Wachovia Bank, noted at the beginning of this year that Chile had taken several major steps in the 1990s to open its economy. The country, he said, " … allowed imports to come in and exports to flow out. They also have had a fairly stable macroeconomic policy over the last few years, a relatively independent central bank and they haven't jacked up taxes. That's given foreign investors confidence, so we have seen investors increase [their holdings in Chile]."

Bolivia is Latin America's poorest nation. Nonetheless it has massive reserves of natural gas, which -- with the help of Spain's Repsol, Brazil's Petrobras, France's Total, Anglo-Dutch Shell, and British Petroleum -- it hopes to recover and export to its neighbors, Brazil, Argentina, and Chile. The Spanish financial institution La Caixa plans to invest $800 million to this project over the next five years. In addition, Bolivia is believed to have 70 percent of the world's iron and magnesium reserves. So extractive mining and traditional agricultural will remain the basis of its future economic growth.

Newly-elected President Evo Morales has been more moderate in his meetings with foreign investors, as noted above, than his rhetoric at home would have led us to believe. In that European tour, he told investors in France, Belgium (at the EU headquarters,) Spain, and Holland that "…any company that cooperates and pays its taxes can recover its investments and have the right to its profits, but under the principle of balance because the State and the people must also benefit."

It's very likely that Mr. Morales' government will meet these goals by using what some analysts call the "Venezuela Solution, " creating companies of mixed ownership from both government and private enterprise. Such creative solutions allow pragmatic government leaders to both appease their volatile constituencies while allowing profit taking to foreign investors.

Venezuela, despite the rhetoric of President Hugo Chavez and his penchant for grabbing headlines, is a major source of oil for the United States and has an ownership interest in Citgo. The relationship between foreign investment -- and particularly investment from the United States -- and national stability is unlikely to change, no matter the public pronouncements of the Chavez government or the U.S. State Department.

The pragmatic fact is that Venezuela means to remain a player in the global marketplace and can only do so because of its oil reserves. At the same time, the political stance of the government is to address the social agenda demanded by its citizens.

As the suggested in the overview of Bolivia, Venezuela is providing creative solutions, much as has Brazil, to attract foreign investment in state/private partnerships while also seemingly dealing with populist concerns.

The recent initiative on the part of the government to offer long-term oil contracts at below OPEC rates is also a positive sign of stabilization of the investment environment.

Argentina, notwithstanding the upheaval of the 1990s, has instituted economic safeguards and encouraged investment during this decade. McDermott, who has been intimately involved in development in this South American country, notes that the development of infrastructure, after the stresses of the large utilities companies were overcome, is now akin to that of Chile or Brazil.

Now that those stresses have been relieved by a change in governmental administration, the situation in Buenos Aires is promising.

The Spanish Tigers

One can look to success stories for guidance. For example, the strong influence of Spanish multinationals, the new tigers of Europe, who have established relationships in a diversity of industries from telecommunications to textiles in the region since the 1990s provide insight to the fertility of this emerging market.

A February 2006 feature in the Economist states: "…since the return of democracy, the Spanish have rediscovered the outside world, none more so than the country's businessmen, whose exuberant expansionism has led to them being dubbed the "new conquistadores.'" Among the areas in which Spanish companies have distinguished themselves are Telefónica, the world's fourth-largest telecommunications provider and the largest in Latin America; Repsol YPF, the ninth-largest oil company, and Iberdrola, an electrical utility that is the world's largest operator of wind generators.

The Spanish corporations were nimble and aggressive and, with the advantage of common language and heritage, quickly pounced in Latin America. Where a decade and a half ago, a Latin America concern might have gone to Washington, New York, or London seeking capital, today they as readily talk with financiers in Madrid. In fact, Spanish banks, like their counterparts in other countries, are now acquiring American banks. That they have bankrolled some of the major projects in Latin America over the last decade should come as no surprise.

Capitalizing on Emerging Markets

Whether one looks at the IT infrastructure and training opportunities in Chile or to the natural gas and mining needs of Bolivia, one thing is clear: the emerging democracies of Latin America present a wide array of investment and business development options.

While the political winds that have swept through the South American continent could, at first glance, seem confusing or unsettling, the astute observer will note that following pragmatic economic policies can only fulfill the social and political objectives of the new governments. Foreign investment and business growth are the underpinning of policies that will meet the expectations of their constituencies and be the benchmark for the successes of their new governments.

By following the examples of the Spanish tigers, the French energy concerns, and other businesses that have already established relationships on the continent, and by respecting the cultural nuances of South America, the return on investment to be accrued in this emerging market is promising.

As Dr. McDermott emphasizes, the key word for business leaders looking to the  emerging markets of Latin America is nuance. Each government is attempting to be economically pragmatic while dealing with an inheritance of unaddressed political demands as they move from military dominance to representative democracy. The climate for investment, in part because of populist demands, has never been stronger.

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Rod Amis is a freelance technology writer based in North Carolina. He has written for various publications on- and offline, including IT Manager's Journal, NewsForge, Silicon.com and Access Internet Magazine. He is also the author of two books and was a newspaper journalist before going completely digital.

by Elizabeth M. Ferrarini

Can an IT infrastructure help to differentiate an organization strategically from its competitors? This question, first posed in the Harvard Business  Review article (May 2003), "IT Doesn't Matter," by Nicholas G. Carr, sent IT executives everywhere whirling around on their swivel chairs. It also caused academics to do some hard thinking, and computer vendors to rally in front of their customers. But Carr, the former editor of The Harvard Business  Review, didn't stop there.

His 2004 book, Does IT Matter? -- Information Technology and Corrosion of  Competitive Advantage, expands the initial premise in Carr's article by asking corporations to think about IT and its role in business strategy. The book also looks at some significant implications of the emergence of the new, shared technological infrastructure for all companies.("Sharing" means that all business units use the same IT infrastructure resources, such as storage.)

In an interview with Nicholas G. Carr, Enterpriseleadership.org's Elizabeth  Ferrarini asked Carr to explain himself.

EL: Commodity public broadband services are great for consumers, but private companies will come under the gun for more IT compliance. To this end, will IT become more strategic to the organization?

NC: IT will start to talk more to the business units. It's a trend we're already seeing, with IT staff being required to think in more business terms than in purely technological ones. As more of the basic components of IT become commodity items and/or supplied by utility services, then it's less important for individual companies to maintain all of the specialized technical skills that they used to. Thus, IT becomes more of a translation function in bringing the right technologies to the right business processes.

EL: Is the IT role going to disappear?

NC: Most large companies will continue to have an IT role, but it's going to change and be integrated more into the mainstream of the business. It will make sense to treat the IT function the same way companies treat other departments, such as marketing and human resources, and move toward a rotational model. This model will change how IT staff is identified -- from technicians, separate from the business, to employees who serve a specific business role.

EL: Are you seeing kind of a two-tier approach to IT, in which the infrastructure is under a general manager, and a business IT unit is under a CIO reporting to the CEO?

NC: I haven't seen this type of model, but it could well be a future trend. Today, a lot of CIOs spend their time worrying about how to manage the infrastructure. They would be better off looking at how IT can help overall business operations.

EL: You have been doing a lot of speaking at conferences. What's the number one topic of debate you get into with IT professionals?

NC: The biggest issue concerns the question of innovation and whether it still pays for companies to be IT innovators. Most companies would be better off looking at IT as a cost of doing business by getting the IT capabilities they need as efficiently, inexpensively, and reliably as possible. CIOs in many companies continue to think there is a role for IT innovation, which will give the company a competitive advantage. Maybe 70, to 80 percent of their money and attention goes to basic infrastructure.

EL: Is what you just said true for IT professionals who are in an industry in which IT drives revenues, making innovation important to the company's success?

NC: Some of it is that. It's also a sense that there are many companies that may have very specialized opportunities to use IT in a very customized way that fits their processes. Most IT leaders, at this point, see a lot of the basic systems, even complex systems such as ERP, as being more and more standard, and less strategic to the business. From an innovation perspective, CIOs are looking at more highly specialized applications that fit their particular business or industry to gain an advantage from IT.

EL: Are there any companies you're really impressed with as far as IT innovation besides the Amazon.coms and GOOGLEs of the world?

NC: I'm impressed with how some big companies now are moving aggressively to adopting a utility model. Take Qantas Airlines, for example. It's closing down its data centers and moving towards hosted applications rather than maintaining its own. This strategy is driving down the cost of computing as a result, and reducing the headaches involved with maintaining all of their assets. What excites me are the companies that are really trying to capitalize on the commodity trend. Take the 70 or 80 percent of their IT activities and really streamline, consolidate, standardize them, and in many cases, offload them to utility suppliers.

EL: So, you think a lot more of IT is going to be  outsourced?

NC: I wouldn't say outsourced in a way we now define it, which is a piecemeal process using different vendors to do specific things, and then relying on the internal IT staff to integrate everything. We're going to move from today's view of outsourcing to a utility model, which enables you to buy the capabilities you need for a monthly fee from outside utilities. More of the integration of systems will be done by these utilities.

EL: Technologies such as grid computing are supposed to enable companies to turn their infrastructures into utilities. Are you saying companies would prefer to buy utility services rather than build them themselves?

NC: Grid computing is still in its infancy. Wachovia Bank is a good example of an organization that's doing grid computing internally. As this technology and others, such as virtualization, continue to improve, most companies will look to outsiders to supply these services rather than setting up their own grids.

EL: During the dot.com era, we saw many startups offering a variety of utility services, from storage to maintaining the entire IT infrastructure. Given that many of these companies failed, such as StorageNetworks, can you put credence in the utility model?

NC: If you look at the dot.com era, many new ideas were too early. And, the entire application service provider model of hosted software and serviced didn't take off. However, technologies continue to advance. We are at a point where some of the things that didn't work five years ago can work  today.

EL: Are you working on another book?

NC: I'm just starting to work on one. I plan to write about the future of the computer, looking at how computing will be done in businesses and also the way it will be done in the home. We're starting to move beyond the personal computer age to a time when computing will be distributed in and tapped into in many different ways. For example, broadband via your personal computer is becoming less expensive than wireline telephone. Even digital TV is starting to blur the line between basic consumer electronics and computing.

EL: The great IT jobs that were available 10 years ago may not be there in a few years. What advice would you give to IT professionals today or those coming up through the ranks?

NC: Here's one way to think about it. Traditionally there have been two types of IT professionals -- those who specialize in a particular technology, such as an operating system or a hardware platform, and those who are generalists. The first group will continue to shift from the user side to the supplier side. The vendor side increasingly needs these specialized skills. This generalist model of IT professionals plays a role between the technology and the business itself. There's also going to be demand for skilled, talented people who can provide this kind of bridge between IT and its application.

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Elizabeth M. Ferrarini is a  freelance writer from Boston, Massachusetts.