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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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The failure of Washington Mutual Bank, along with 100's of other U.S. banks on the verge of failure, has caused consumers to question if a similar event could happen to their bank. However, consumers who bank with Farmers & Merchants Bank (F&MB) in Long Beach, California, don't have cause for alarm. Rating services, such as Weiss Rating, Highline Data, and others, consider F&MB to be the strongest bank in California and one of the strongest in the nation. The bank has assets of $3 billion and a capital ratio four times higher than the FDIC limit and sufficient liquidity to pay every depositor in full.

 

Financial strength has formed the underpinning of F&MB from the day it was founded in 1907 by C.J. Walker, great grandfather of Henry Walker, the current CEO. For example, F&MB didn't need any government assistance. When Gus Walker, Henry's grandfather became the bank's chairmen and president in 1938, he started the important tradition of transferring much of the bank's annual earnings into capital and reserve accounts. This wise practice enabled F&MB to flourish during the inflation-riddled 1970s, the fluctuations of the 1980s, the recession of the early 1990s, and even to grow despite today's problems.

 

Today, Henry Walker, along with his brother Daniel, who is chairman and president, continues to carry out his family's legacy, but with one difference - a heavy emphasis on capital investments in technology and facilities. The goal of these investments says Walker is to provide new services and to improve the bank's quality of customer service. Enterpriseleadership.org recently sat down with Henry Walker to talk about the business processes and the investments that've helped F&MB to earn its coveted reputation for financial soundness.

 

EL. What motivates you to follow in your great grandfather's  footsteps?

HW. The bank has three executives: my brother Daniel, who is chairman and president; a chief financial officer; and me. The bank is our life. My father and my grandfather mentored both my brother and I. The bank's safety and soundness come from our founder. Every day, we carry out the bank's long history of guiding principles. That's how our job differs from other people in banking.

EL. What decisions have  you made to avoid some of the problems other banks have encountered?

HW. Our decisions reflect the safety and the soundness of our balance sheet. We have the willingness to stick to our core principles, which others in banking aren't willing to do. For example, we have a very sound and very secure investment portfolio, which has minimal risk. We have no sub-prime loans in that investment portfolio. A number of investments and its loan portfolio typically comprise a bank's balance sheet. We have a very sound loan portfolio. We continue to run with those conservative principles we've always had. My grandfather guided our bond portfolio, and my father designed our lending standards. Those core principles from both of those generations have really flowed to my brother and I. We continue to run what is considered the safest bank in California.

EL. You've had some customers for many generations. How are you leveraging the right technology to provide service for multi-generational customers, especially young people?

HW. We're providing a stratified approach to customer-to-customer service. At times, it's a challenge. The younger people want technology, but they don't comprehend the idea of relationships. Business owners appreciate the value of relationships, especially with their lending partners. Meanwhile, the elderly are accustomed to banking in a certain fashion and value relationships. The nature of forming a relationship hasn't changed in consumer banking. As the demand for technology has come about, we've stayed up to date on everything. We have top of the line software vendors that provide our online banking, our online bill paying, and our remote deposit capture. We also have a voice response unit. We complement all of these things with the highest level of security available today in the banking industry. We consistently make sure we have all of the proper safeguards, the proper firewalls, and the proper audits and validated programs.

EL. What criteria do you use for  measuring the quality of customer service you provide?

HW. We continually monitor the customer experience both in our call centers and in our branches. As executive officers, my brother and I make sure we can deliver on this promise of service. This goal isn't that noticeable with customers we've had for years because they've become comfortable with our level of service. However, when people switch from other banks to ours, they say things like 'Why didn't I use you people years ago.' Comments like this provide us with the contrast we did to really notice our level of service. Without any contrasts, we'd wind up resting on our laurels and taking our service quality for granted. We have to keep improving on it.

EL. Can you describe some of the capital investments you've made  to improve the bank's technology?

HW. Technology is continuously changing. It may be hitting a bit of a plateau as the population absorbs how the changes have affected their lives during the past decade. Data is very accessible. The changes we've made include continuing to upgrade our internal hardware, especially our scanning systems within the branch system to process deposits more efficiently. We have consistently updated all of our online banking applications, all of our bill paying applications, wire transfer applications, and anything that has to do online to test the customer. This year we moved forward again with a substantial investment in our technology infrastructure. Our $20 million data center is a completely new facility for us. This facility will enable us to bring together the core departments that touch customers so we can continue to provide them the highest level of service possible.

EL. Can you describe your process for making capital  investments in technology, such as your data center?

HW. We did a cost benefit analysis in quantified dollars in our ability to manage and to provide customer service, and in our ability to make an investment like this. After we look at all of these benefits, we bring the investment to our board of directors. We have three committees: a technology committee, an executive committee, and a board committee. We have three levels of review for that kind of infrastructure investment.

EL. How do you look at the payoff for an investment like the  data center?

HW. We track all of our expenses around the clock. Because many businesses come to us for loans, we're quite familiar with how people run their businesses. We look at how they track expenses, how they use technology, and what kind of reporting they do. Most of the time, these people can't get a balance sheet out for 30 days or 60 days or until the close of the quarter or even at the end of the year. We produce a balance sheet every day.

EL. Do you have a dashboard that shows  you how much you're spending on technology?

HW. I get monthly reports on capital expenditures from all departments. I also get a profit and loss statement on all the monthly transactions. It would be too much data to absorb daily. On the other hand, if I wanted the data daily, I could have it.

EL. Do you use  technology to track marketing campaigns and to do lead generation?

HW. Yes. We have a system where we input data on customer sales, and on customer follow up by our people. For example, we can track how long it took us to handle a new customer referral. We have good reporting from this standpoint.

EL. What is your business  technology management strategy?

HW. We want to continue to update and to provide a high level of service. As technology changes, we have to address the cost and benefits of it as it changes. Many times technology comes about and there is no immediate benefit for a couple of reasons. The customers might not know how to use it. You can have the best technology in the world, but if the customers don't harness it, than it doesn't make sense to incur an unnecessary expenditure. If customers start asking for a specific technology, that's when we seriously have to look at making the investment. We analyze technology from that standpoint to see what benefits it would provide us and will our customers use it.

For example, we decided to offer remote deposit capture or the ability to enable customers to scan their deposits at their place of business and then to forward the deposits to us via the Internet. Some customers said that they liked the idea of not going to the bank every day. However, after trying the service, these same customers said that they didn't realize how much work it took to scan their deposits. They questioned whether or not the bank should be doing the scanning for them. These customers decided to go back to coming to the bank each day or doing a nightly deposit. On the other hand, many customers said they liked the service and had desire to visit the bank each day. Technology always has its plusses and minuses.

EL. Have you had any technology failures?

HW. Not really! We've had some issues with getting new  technology to work with our business processes and our current systems. 

EL. What kind of a technology team do you have?

HW. Our chief information officer (CIO) has been with us for about 10 years. The technology committee, one of our three executive governance committees, meets regularly with the CIO. My brother deals on a daily basis with the CIO. My brother and I take a balanced approach to running this company.

EL. What are you key responsibilities?

HW. I handle most of the business strategy. I also hire the bank's officers and oversee the strategies they put in place for their time. I make sure our credit portfolio is safe and sound from a policy standpoint. My brother and I both handle branch acquisitions.

EL. Do you have a  fifth generation who will be taking over the bank?

HW. My brother's two children work in the business. One manages our Laguna Hills office and the other one works as a compliance officer and risk officer in our trust company.

EL. How aggressive have  you been with acquisitions?

HW. Although we've reviewed some potential candidates, we haven't found an acquisition we want to make. Because of the economic climate, we're seeing an increase in our branch business. In fact, we totally rebuilt one of our branches and added several ones in Orange County.

EL. Do you provide personal investment  services to your customers?

HW. We don't offer brokerage services. However, for our high net worth, long-term customers, we make it possible for them to invest in the same securities we invest in. These securities include municipal bonds, treasuries, or mortgage-backed securities. We provide this service at no cost. All of our transactions go through our CFO who buys all of our bonds. These customers receive an account statement.

 

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

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In 2003, Zurich Financial Services, one of the world's largest insurance companies, decided to transform its highly centralized IT organization to a highly decentralized managed by a small internal staff and a major outsourcing partner. After evaluating several global outsourcing companies, Zurich Financial signed a $1.3 billion outsourcing agreement with Computer Sciences Corporation or CSC.


Many large, global companies, such as Zurich Financial and Chrysler, have turned to CSC for innovation IT services in one of these areas: outsourcing, systems integration, and consulting. Founded in 1960, CSC has more than 90,000 employees in 80 countries and annual revenues exceeding $16 billion. CSC's service span most vertical industry segments and many horizontal lines of IT services, such as outsourcing and supply chain.

 

Recently, David McCue, CSCs's CIO and vice president, got named to Computerworld's 2008 Premier 200 IT leaders list, a carefully selected group of IT executives selected for their leadership capabilities in managing and executing IT strategies. enterpriseleadership.org recently said down with McCue to learn more about how he makes technology decisions that affect both the internal IT organization but also customers. Here's what he had to say:

 

EL. Can you provide an  overview of your IT organization, especially what makes it unique?

 

DM. Our IT organization combines a blend of a federated model and a centralized model to achieve the best results for the business. Each of the main revenue areas has an embedded technology staff CIO. These staff CIOs represent the requirements of that particular area, such as a vertical like manufacturing or a horizontal like applications. The aspects of our business that fall into a central shared services type of model include, email, security, content for repositories, and portals. We use SAP to handle all of our financials.

 

I treat things that we do for ourselves, such as payroll, messaging, collaboration, customer relations management, financials, and business analytics, as if we were an outsourcer account with CSC global. We have about 1,250 people assigned to the CSC IT account. We're one of the largest IT customers of CSC global, the vendor.

 

Our CIO council comprises the embedded CIOs, along with some individuals. For example, I've appointed people to global HR, supply chain, and financial functions. Each area of the business has an advocate. The council does planning, strategy, and final review of policies. Some of the subcommittees will review policies in certain areas and report any changes to the CIO council.

 

EL. Does the company's  outsourcing model complement your IT business model?

 

DM. We think of the CSC IT account as having several serious buckets of activities. The account needs these items. For example, we use SAP instead of Oracle. If I need Oracle expertise, then I'll leverage the capabilities of CSC, the outsourcing vendor. I'm the 800 gorilla customer. We have buckets of activities or commodities, which the entire business equally shared. I have a leverage capability that wouldn't be available if we didn't have our business model for IT. Every time we win an outsourcing deal, we gain a certain amount of infrastructure. We then rationalize and normalize it through the outsourcing process. We can re-deploy this excess infrastructure to other accounts that can use it. My cash expenditure doesn't actually represent the actual value of total services that I own, control, and direct. Leveraging what we've acquired changes our cash expenditure in terms of where it shows up on the balance sheet.

 

EL. Can you describe how your governance process  goes works for getting projects and investments approved?

 

DM. I sit on two sides of the tables. I report to the chairman and attend his staff meetings. My peers include group revenue-unit presidents and the corporate vice presidents for each of the major functions. Our program governance board comprises the group president and me. We decide the research and development investments for the business. We take a blended approach toward governance.

 

From an axiom viewpoint, I put forward the business case, the strategic direction, and evaluation. Our go-to-market revenue decisions don't, in themselves, dictate internal choice and direction. A decision that we make for ourselves, such as a business case to go in a certain direction, has to make sense and pass hard dollar and soft benefits hurdles on its own, independent of alliances, partnerships, and go to market revenues. If selling something is the only reason for the business case, then it fails. If I have multiple choice business case decisions to make, I'll select the ones that can stand on their own, that have good relationships, and that have revenue potential. At the end of the day, we go to market, given the nature of our business, with all of the major players.

 

EL. How do you decide  what technologies would be good fit for IT?

 

DM. Just because I run SAP, doesn't mean that I don't have a robust Oracle practice. I have to do what makes sense for our IT our account and the best practices. I can't possibly run everything. I can't run SAP for financials and Oracle for payroll. The same thing happens when we go to market. We might have multiple solutions within similar areas based upon the intellectual property needs, and the unique requirements and specifics of different verticals. For example, processing insurance claims has some similarities to handling returns in a manufacturing environment. However, the products used in each of these areas have some practical differences. Everyone would like to run every solution. That's not practical! Because we'd incur additional excessive expenses, it wouldn't be in the best interests of our stockholders to run every solution.

 

EL. How much of a say do  stakeholders have in how you make technology investment decisions?

 

DM. Stakeholders always have had the ability to voice their views. We have command and control and there's direction. Any time we make a decision between choices, we can't always achieve a win-win scenario for everyone. Having a hybrid or central and federated model helps us to ensure a dialog to talk about all of the cards on the table. Our common services have to scale globally to provide attractive economies.

 

We do the traditional set of roadmaps for a specific number of years, and we review those roadmaps routinely to look at different technologies, best practices, or changes in functional requirements.

 

Those embedded individuals represent their stakeholders' internal needs, as they're appropriate to the larger revenue customer base. We don't do business in isolation. We know what we're doing in the market. I sit on the research and development governance board. I look at the business cases for things we're developing as potential go-to-market solutions. I work closely with our general counsel and with the president of our global marketing organization. We take all of that into account and bring that into the mix.

 

EL. Have you automated your governance and your  portfolio process for investments?

 

DM. I don't run a single portfolio project management dashboard type of product. We've automated the reporting of variety aspects of that through different schedules. One schedule lists projects for each fiscal year. Each project goes through a multiple cycle process. If a project passes the business case review, we then release the funds to start that project. Each project has various reporting milestones. These milestones differ in their degree of specificity, timeliness and risk tolerance. The sponsoring business units do quarterly reviews and reporting of the overall portfolio of the projects. Monthly monitoring and reporting at the application or infrastructure level also supplement these quarterly project reviews.

 

EL. How does CSC handle  innovation?

 

DM. We have a corporate office of innovation, which expands all aspects of CSC's environment, including go-to-market strategies. It has a concentrated, managed set of projects, programs, and strategies. It runs a leading-edge forum, conducts various conferences, give innovation awards to employees, and operates centers of excellence. I belong to the office of innovation steering committee. We leverage this organization as an approach to innovation for IT.

 

EL. What  automated processes have you put in place to handle emergency communications  with your customers?

 

DM. Our emergency crisis notation system can quickly mobilize key people from around the world to act on a critical situation. They get notified through SMS, text messaging, or whatever other media they use for critical situations. As a global outsourcer, we have formal processes if a situation arises, such as a data center going off the grid or an application fails. Once we assemble the restoration team, we establish multiple audio bridges which the customer and the technical people. Our management people review these audio bridges every one or two hours for updates. Once the customer's problem has been resolved, such as data center brought online, we go through a mandatory root-cause analysis process, which my staff reviews.

 

EL. Can you provide examples of some of your converged  platforms to get closer to your customers?

 

DM. Our CSC account and our customers use some of the same applications, such as GCARS, a controlled release to production review-type application. We all use it whether the item released to production relates to the customer account's own equipment, or will run on a customer's account on our leveraged equipment. We have a variety of converged platforms like that one. Both our employees and our main customers have access to our global portals. Of course, it has areas restricted to specific accounts and customers.

 

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

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Scott Griffin enjoyed every minute of his 28-year career at The Boeing Company, the world's leading aerospace company with capabilities in both commercial jetliners and military aircraft. From 1999 until he retired in June 2007, Griffin was the global CIO and vice president of Boeing IT.  His responsibilities included overseeing a staff of more than 5,000 people, and spearheading all of the IT strategy, systems, infrastructure, and architecture, The collaboration between his team and Boeing engineers around the world played an integral part in the design and the manufacture of the first Boeing's 787 Dreamliner.  In fact, a chapter in Evan Rosen's book, the Culture of Collaboration, chronicles Griffin's real-time interactions with other Boeing executives.

 

While Griffin retired from Boeing, he has no desire to retire from IT. In fact, he is pursuing a master's degree program in not-for-profit leadership at Seattle University.  He plans to start a not-for-profit company to do pro bono IT strategy consulting for other not-for-profit organizations.  He has served on the board of the Greater Seattle Chamber of Commerce, and the Chicago Shakespeare Theater.

 

Recently, enterpriseleadership.org sat down with Scott Griffin to discuss his IT career at Boeing and his plans for the future. Here's what he had to say.

 

EL. When you talk to MBA students about IT, what leadership  qualities to your emphasize to them?

 

SG. I have a regular presentation about preparing MBA students to run organizations and to understand the power of IT to transform a business model. You can use a cookie cutter to stamp out CIOs who understand technology. They need to know how IT works and how to talk to business leaders about things that are important to the business.  That's number one. It made me successful at Boeing.

 

EL. How do  you acquire the skills that made you successful in your long career at  Boeing?

 

SG. I had three careers at Boeing. When I worked in customer service, we moved from paper to electronic media. Today Boeing delivers digital content to airlines around the world every day, as well as to the U.S. military. My second career was in avionics where I worked on classified software. When I joined the IT department, my third career, I understood the business process, the IT systems, and the data. I had the great fortune to be a business leader before I became an IT leader. I talked to people in the airlines, in the military and inside of Boeing.  I talked to each audience in language they understood. If the CIO doesn't have this, he or she is just a technical leader.

EL. Why did you decide to spend your retirement  years pursuing IT in the not-for-profit sector?

 

SG. Before I went to work for Boeing, my wife and I, both fresh out of Fresno State, moved to Seattle to work as house parents for a home for troubled teenage girls. This was my first experience dealing with a not-for-profit.  It was a truly rewarding one. The hill the home was on run down to the Boeing 747 plant. In fact, the home benefited from a Boeing fund.

 

I picked up Peter Drucker's book, Managing the Not-for-Profit Organization.  In it, Drucker talks about how not-for-profits have become the distinguished feature of American society. The book talks about how to get the most performance out an organization. The book ends with this profound question: What do you want to be remembered for?  That drew me back to my experience working at the not-for-profit.

 

EL.  How did you IT team react to your decision to retire and to go in this  direction?

 

SG. My staff wasn't surprised by my decision, just the timing of it. Recruiting a new CIO takes time.  We started the process five months before we announced my replacement, John Hinshaw. I still get a lot of questions about the initiatives my team started while I was CIO.  I left a well-run organization that had great people.

 

EL. What, if any,  reporting changes did you make to your IT organization?

 

SG. Before 2005, IT had a shared services model for the infrastructure group. The rest of the IT folks resided in various business across the company. In 2005, we brought everyone in IT together under one organization.  We even pulled the functional analysts in, engineers who sat on the boundary between being a design engineer and being an IT person. We needed those people because we build IT solutions for our customers. This move gave us a fresh start to figure out what was important to us. It was one of the strategies for Boeing IT.

 

EL. What challenges did you place driving innovation in  IT?

 

SG. When we looked at innovation, we always benchmarked against the top companies in the world, especially Toyota.  Concurrent design has a lot of complexity. You had people working on the same assembly, regardless if they are in Moscow or in Everett, Washington. We had these great pockets of innovation. Our money didn't match our strategy of innovation. Two- thirds of IT budget went to support the things already in place and one-third went to innovation. We created a strategy to fill this gap. We looked at how to have two-thirds go to the future and, one-third go to support the business. We were just embarking on that when I retired. .

 

We looked at how IT could help transform the business and innovate there, not where we thought IT was going.  This posed an interesting challenge. You need to have people thinking about how to do the business process differently. If you don't, they will become adverse to change. Unfortunately, even the best IT leaders over time can find themselves spending most of resources on improving the things already in place, not trying to create a breakthrough change the company. Collaboration became that breakthrough at Boeing.

 

We looked at the places where we had innovation. For example, we worked with our global suppliers as if they were part of the same company.  Cisco did this before Boeing.

 

We set out to work on those  areas we had ignored. I really don't want to elaborate on them. 

EL. Can you discuss the your philosophy behind your mantra to  innovate and to inspire?

 

SG. Inspire deals with who are the people looking for the change.  Is it the IT team?  No CIO is smart enough to know which inflection points are real, which are flash in the pan, and which IT company has the next great thing. You have to energize your entire team to work on these issues. When you inspire, you begin to remove the obstacles for the experts to do innovation. My leadership team spent a lot of time thinking about what people can really inspire other. We looked for a certain leadership style, which focuses on breaking down walls for your team so they can be most effective rather than leading the charge.

 

EL. What did you do to inspire  future IT leaders?

 

SG. This's one of the top roles of the CIO. It's the reason I was able to retire and to shift in providing IT to the nonprofit sector. You can judge the effectiveness of the former CIO by looking at the future leaders that CIO groomed. I can tell you the list of potential CIOs and why I selected them.
We had some great programs.  Every week the entire IT team, people located in about 60 countries, attended a virtual IT staff meeting. Our executive skills team met every week. We asked staff managers to ponder these questions: Who are our future leaders? What does the pipeline look like?  How diverse is it?

EL. How did you select candidates  for Boeing IT University?

 

SG. To look for candidates to attend the Boeing IT University, we would comb the pipeline for managers who had the potential to be executives, and staff people who had the potential to technical leaders. The program doesn't use university professors, but IT leaders teaching potential leaders. The curriculum consists of spending eight, 24-hour days discussing what  challenges face Boeing, how do these challenges translate to Boeing IT, and how these future leaders can contribute to the strategies of innovate and inspire. We give the participants a graduate-level case study, which we created. It presents the what if scenario about Boeing acquiring a company.  The participants must work through migrating the company into the existing IT structure. Using actual data and strategies from Boeing, participants, at the end of the week, have to give a present their findings to a board of directors comprised of the IT leader instructors. This experience has changed the way we relate the people in that pipeline. We get to know these future leaders. In turn, they have a safe place where they can present their ideas. They also write a business case. to do an ERP implementation.

 

EL. Do you use the center for excellence concept to fuel new  ideas?

 

SG. It's not a strategy for us. Most of my colleagues with centers of excellence didn't have a consolidated IT organization. We had the center for excellence strategy when IT was decentralized throughout the company. At that time, we said let's create and fund centrally a center of excellence for manufacturing engineering. Once we got all of the IT folks together, we still called them centers of excellence. I don't want to say that concept isn't a good strategy. Now the people who do manufacturing engineering systems now work on the same team as Boeing IT. Together, we begin to create the future process, systems, and data for those functions.

 

EL. Can  you describe how the Investment Board came about at Boeing?

 

SG. After the merger with McDonnell Douglas, we started to think about how we could move Boeing to common processes and where it makes sense for common systems. We couldn't do that if every cubicle had its own IT leader.  We had a shared services model where all of the transactional activities existed. The systems resided in the business unit.  If we wanted to move to common processes, we didn't have the right governance model. We didn't have our hands on the people that were learning today's systems and planning for tomorrow.

 

Our first move was to pull the IT people together. That was a lot of work. It presented all sorts of cultural challenges. We had shadow organizations all over the place. We had to change people's budgets so they couldn't create shadow organizations.

 

The 2B model was the IT investment portfolio. I made the decision that I shouldn't chair that. The CTO for Boeing assumed this responsibility We invited all of those businesses who owned their own IT, such as a design engineer on the 787 program on the 787 project had his/her own IT department. We pulled those people away. We offered to make the leader sit on the Investment Board.  Once we got the IT people and the functional leaders together, we could decide what investments we would make with Boeing's IT dollars. We were in the third year of it when I retired.

 

EL. What  changes did you make to the governance model because of the Investment Board.

 

SG. The governance model was slow to change. The functional leaders would come together on the front end and say, 'My program is totally unique from everyone's.' We weren't interested in having a discussion about building one ERP system. We rejected more than a $100 million dollars worth of good projects not aimed at the entire Boeing Company. When I left, that model had completely changed. We were still having an Investment Board meeting once a quarter. When people came to us, they knew that their project wouldn't be approved unless they had taken into account the entire Boeing Company.

 

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

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