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

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

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

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

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

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

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

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

EL. What distinguishes your presses from your competitors?

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

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

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

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

EL.  Are any two printing presses alike? 

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

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

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

EL. Can you talk about other innovative technologies?

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

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

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

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

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

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

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

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

EL.  Where does the innovation come from?

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

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

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

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

EL. Have you come up with other innovative ideas?

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

EL. What marketing challenge does your business face?

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

EL. Have your expectations of your internal staff changed? 

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

EL. Can you describe your growth in foreign markets?

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

EL. What is your technology platform?

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

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

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

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

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

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

EL. Do you have any clinicians on your team?

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

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

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

EL. Can you describe any other major technology investments?

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

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

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

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

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

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

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

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

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

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

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

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

EL. What is your role in the corporate strategy?

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

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

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

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

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

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

aQuantive. Capture Software. Clear Commerce. Although all of these companies offer different types of technology products, they have several things in common. They all got a head start with funding from Voyager Capital, an early stage venture capital firm, based in Seattle, Washington. All of these companies also got acquired by more established IT organizations. For example, in 2007, Microsoft paid more than $6 billion for aQuantive. In fact, many of the emerging companies Voyager Capital funds get acquired.

With funding dollars getting tighter and tighter, Voyager Capital has focused on funding companies in three technology areas: wireless, digital media, and enterprise software, and in three geographic locations: California, Oregon, and Washington, Bill McAleer, the co-founder and managing director of Voyager Capital, say that its go-to-market strategy involvement helps its portfolio companies to become very successful. He adds that a good part of this process includes the active involvement of CIOs, CEOs, and investors.

Enterpriseleadership.org recently sat down with Bill McAleer to discuss what technology areas he likes, how he works with CIOs, and how he handled technology decisions as a business executive. He has about 30 years of business experience and 20 years of senior executive and equity financing experience in the IT industry. Here is what he had to say:

EL: Can you describe your investment portfolio?

BMA: As an early state VC firm, we provide the company's first round of venture funds. We also fund growth stage companies that have about $10 million to $15 million in revenues per year. We've been in business since 1997. We like to work with our portfolio companies at the board level by setting strategy. We also help these companies pursue the typical venture model.

Our current allocated fund runs around $110 million. We have less than a half billion under management in about three funds. We come across many innovative technologies and entrepreneurs. The Seattle market, in particular, has grown dramatically over the past 10 years. It's my top ranking portfolio sector. Catalysts for growth in the Seattle area include Microsoft, RealNetworks, Nintendo, and three of the major wireless companies. We rank third in VC-backed companies that have created the most jobs in the country. The technology growth in Seattle outpaced more traditional technology areas such as in New England.

EL: Do you use technology to look at your overall success or failure of the companies in your portfolio? Do you automate that process at all?

BMA: Not too much! That's more of an art than a science. We'll generate some data summaries. As far as evaluating the portfolio, we don't use much technology other than communicating with the companies. We aren't running highly sophisticated financial modeling or analysis. We'll track our investments and do some of our reporting with a product that does some of the limited partnership accounting. We don't deal with a lot of sophisticated portfolio analysis. We have mostly early stage companies. Growth stage companies tend to track their key data. We do have access to databases. We use the Web for searching out companies and looking for deal flow and deal history.

EL: Are there reasons other than technology for why you've selected companies in your portfolio?

BMA: We tend to look, from an investment perspective, at companies that have strong fundamental technologies. Ideally, we like something that is innovative or differentiated. Most of all the deals we invest in have some technology elements in them. We look for market factors.  We also look at places where the market might shift and if a company is taking advantage of a paradigm shift. For example, we did an investment in a Portland healthcare company called Kryptiq. The marketplace for this company concerned a regulatory requirement related to HIPPA compliance. The healthcare environment wanted to connect its patients with the providers and the physicians. This company provided a connectivity layer which enables its applications to run on top of that layer, and, therefore, to connect those three pieces of healthcare. They had a good core technology. In that example, we also looked for specific market trends that could benefit us.

EL: Do you look for disruptive innovation?

BMA: Yes, we've looked at several of those. We typically look at a combination of technology and market shift. For example, we backed a Seattle company called aQuantive.  It came about as a result of the Internet and Internet advertising. It captured analytics on Internet advertising. IT had   unique technology that allowed it to apply analytics to measure the effectiveness of Internet advertising. That was a big win. Microsoft bought the company after it went public. The company went for $6 billion. We have another company in the video market. It has an innovative technology for manipulating media with an ad. Most of our innovations we've funded have been more transformational than disruptive. In hot technology areas, we tend to see many slight variations of products. To this end, we have to watch this scenario carefully.

EL: Can you describe some of the technology areas that are on your radar screen?

BMA: The Web has created a great opportunity to connect the participants of a company's value chain. Now companies can have a better understanding of both their customers and their suppliers. We've looked at a number of Web-based software applications that enable you to connect the supply chain or the value chain with the company. Typically, the various parts of the supply chain have existed as independent silos that are hard to connect. Web-enabled applications provide the opportunity now to really collaborate as a company.

EL: Do you have any type of an external advisory board, such as a CIO board?

BMA: We do. It is comprised of three types of people: CIOs, CEOs, and investors. For example, we have the former CIO of Bell South and Lehman Brothers. Our advisory boards trends to have more former or current CEOs of well-known companies than CIOs or investors. We look for people who can represent the three geographic areas we serve. We try to infuse customer insight into our investment strategy, try to update our investment strategy annually with our advisory board members, and look at certain sectors in that investment strategy.

For example, we call upon our CIOs to help us plan our annual off site investment meeting with CIOs. Speaking with CIOs gives us a perspective on what our portfolio companies will do to connect effectively with their buyers. After all, these folks and their staff look at innovative technologies. We ask CIOs about what trends they see in the marketplace, and what current critical elements they have to deal with.

We try to get outside perspectives on where certain markets are going. For example, we've had George Gilder, a futurist and author, speak at some of our venues. We also bring in some investors and bankers to hear about the things on their hot plate.

If you look at the food chain, VC's reside at the front edge of the innovation curve. CIOs reside at the end of the curve, while investment folks reside off to the side of the curve where the potential is.

EL: Because you're dealing with many early stage companies, are you interested in growing these companies or seeing that they get acquired?

BMA: Most VC firms will tell you they invest in companies to fuel their growth to become larger companies. The majority of companies that we fund get acquired.  In the enterprise market, we're seeing large IT vendors needing to augment their solutions. Of course, these large companies want to acquire companies with innovative technologies. Over time as paradigm shifts occur, you can go back and spot the trends of how companies grew through acquisition. VMware is a good example of a virtualization company that grew through acquisition.  If we hit the market right, we can create a big company. However, out of our portfolio, we have several that will make it all of the way through to become a big public company.

EL: Besides the advisory board, how do you help your portfolio companies sell their product successfully in their key markets?

BMA: One of our venture partners and advisors is the Chasm Group, a premier marketing firm in the technology industry. We spend much time with our portfolio companies on their go-to-market strategies. Before early stage companies can develop a focus, the CEOs have to experiment with the target segments or the way the solution works. To this end, it's okay for the management team to go out, to speak with potential customers, and to see what sticks and what doesn't.  They need to do this especially if they intend to sell to the enterprise and ultimately to CIOs. Our CIOs involve themselves in the application of some of the solutions from our portfolio companies. The CIOs we've meet will take risks with innovative products.

On the other hand, we've come across CIOs who are adverse to risk and who will only buy from established vendors. On the other hand, we've seen some organizations that have reduced the number of vendors in order to sample more innovative technologies from smaller companies. If an early stage company wants to go after the enterprise, you have to point them to the right target sectors. For example, the financial services sector tends to be more innovative and takes more risk on innovative companies.

EL: Of the boards you've served on, have you gotten involved with the strategy and the technology investment decisions the company made?

BMA: That's an interesting question. As a board member, I haven't been heavily involved in any technology strategies, unless it related to the company's product strategy. In the latter case, the focus was on some of the priorities for system implementation or technology implementation within the enterprise. I got involved in these discussions through audit committee meetings. A couple of the boards I was on had periodic presentations about CIO priorities, but it was rare to have the CIO at a board meeting, expect once a year. As senior leader of a company, I gave presentations to the board about technology investments and strategies.

EL: What challenge did you face in handling technology investments when you were a company executive?

BMA: I got involved in the tech business when I became an executive at a major hotel. I worked with a strategy group to figure out what technology innovations we wanted to use for that particular company. At the time, technology was an afterthought in the hospitality industry.  It has changed now. Look at what's going on with customer relations management, and customer tracking. Technology became a big enabler of frequent traveler program, which is an important industry segment. You now can understand what customers buy and what they prefer at a hotel. Back when we tried to determine this information, we looked at the customer to see what physical characteristics we could discern. Today corporate management has a higher awareness technology as a strategic asset.

EL: As a former CFO of a company, how did you CIOs to make investment decisions?

BMA: I had a period where a CIO reported to me. I worked tightly with the CIO because the financial organization as to be a partner to the business. We worked closely with some of the operating units to move some of their technology initiatives forward. We implemented CRM technology for tracking customer support. Typically, we worked the operating units and the CIO to define a proposal. Most of the funding came out of the capital budget. As a result, we worked with CIO to do an ROI analysis on major projects. We had our annual review of IT priorities and the capital required to support those priorities.

The software as a service model has changed things a bit. In some cases, the operating units fund their IT expenditures out of their expense budgets as opposed to capital budgets.

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

When Gary Cantrell became chief information officer at Textron in early 2006, the company was almost three-quarters of the way through a six-year transformation of the information technology organization. Over the years, Textron had become an $11 billion global, multi-industry organization by acquiring aircraft companies and industrial firms. Some of the Textron brand companies include Cessna Aircraft, Lycoming Engines, and Bell Helicopter.

By leveraging formal best practices and governance, Cantrell and his team have continued to streamline the IT infrastructure across all of the Textron companies. He says, "We're doing things faster, better, cheaper."

Recently, enterpriseleadership.org spoke with Cantrell about how the IT organization is structured, what initiatives were key to the transformation, and what were some of the lessons learned from this process. Here's what he had to say:

EL: You've taken a kind of matrix approach to your IT organization. Can you describe it? 

GC: We have a federated model with nine divisional CIOs. They focus on delivering application services and support, but are also accountable for the infrastructure. Our shared services model for IT comprises six Centers of Expertise (COEs) including infrastructure, security, enterprise initiatives and strategic planning, collaboration, SAP, and PeopleSoft. Each COE has a leader. For example, the CTO who reports to me oversees the infrastructure COE. The collaboration COE is working on how we handle virtual teaming across all 400 Textron locations.

EL: How does your governance structure work?

GC: We have two ways to manage the governance process. Our information management council comprises the nine CIOs, all of the COE leaders, and me. This group provides our strategic direction, the corporate business unit alignment, and then our integrated planning activities. Below this group, we have started to organize tactical review boards staffed by people who report to the COE leaders. For example, we have an architecture review board.

The Textron executive management committee has five members, including the CEO. Below that, there is the Textron Transformation Leadership Team, which consists of all the business unit presidents. All IT capital issues, such as deploying SAP, would go through the TLT. If something affects the business, I might go to the executive management committee. I don't have to go to either committee for everything that happens in IT. Neither one of these committees works on IT issues independent of my involvement.

EL: Textron has undergone a six-year transformation in process improvements. Can you talk about some of the key IT process improvements?

GC: We call our transformation process "systems modernization." Like a lot of companies, we've acquired several companies over the years, nine in our case. SAP has been a big part of our IT modernization.

We're trying to clean up the portfolio of acquisitions. Six Sigma has helped us to reduce the variation in our environment, and Lean has helped us to move a little faster. That's where Lean fits in. You still have to deliver high quality and value, but you have to find innovative ways to do it.

EL: Can you describe the specific areas of IT modernization where these best practices have helped you improve processes?

GC: Using Lean processes and with the help of an outsourcer, CSC, we restructured nine different infrastructures and architectures where we took out dozens of data centers. We also restructured our email service from 150 servers in 70 locations to 40 servers in six locations. Now we have the redundancy and backup capabilities we need on the network backbone.

We also put in a new manufacturing system across the enterprise. However, some of our business units use specific applications that complement the manufacturing system. We leverage these applications across the enterprise also.

EL: Do you use the IT Infrastructure Library, CobIT, or the Balanced Scorecard?

GC: We've tied use of the Balanced Scorecards in with our Six Sigma gold deployment that we used in the beginning of the IT modernization. We're now working on integrating CobIT into some of our process maturity initiatives with Six Sigma. We've pretty much standardized on a plan for using CobIT for the next few years. We have a little bit more work to do on our tactical action plan.

Some of the business units have become very advanced CobIT users. We used the Lean manufacturing philosophy of Shigeo Shingo for one assessment we went through. In some cases, we've gone from silver to gold; in other areas, we're at the basic level moving to bronze. We're working aggressively on having a standard implementation methodology and assessment methodology for driving our maturity. Over the next 24 months, we will get the horses all lined up and get the enterprise on the same level footing.

EL: What kind of certification levels do you have in place?

GC: Right now we have two Six Sigma black belts for every 100 people on our IT staff and on the CSC staff. The ratio of Six Sigma black belts is higher on the corporate side. This year, we're pushing to have 60 percent of the first two levels of IT professionals green-belt certified in Six Sigma. The goal for 2008 is to have 100 percent of these folks green-belt certified.

EL: You have been quoted in the trade press saying that Textron's IT strategy resembles General Electric's IT strategy. How are they similar?

GC: When I was CIO of Honeywell, I had some first-hand exposure to GE. That company has a core corporate IT function similar to our COEs. GE's IT organization also has a fairly strong presence in their business units similar to us.

On the other hand, GE is larger than us and its business units have more scale that ours. We have a more standardized, rigid infrastructure, which provides us speed and efficiency and a lot of leverage. Also, our architecture review process is more rigorous that GE's. We try to do as much enterprise standardization as we can.

EL: Do you think IT can be run as a business?

GC: We had these conversations at both Honeywell and Bank of America. As far as I'm concerned, IT is a support function, enabling the business units to generate revenue and generate support for their customer. If you're an IT provider such as CSC or IBM, then you can argue about running IT as a business. Internally, IT is a cost center. It might not be a core competency in each business unit, but it's critical to support the work of each business unit. To this end, my charter is very simple -- help give each business unit a competitive edge and to achieve customer satisfaction.

EL: What do you get out of venues such as the CIO Executive Summit?

GC: Venues such as the by-invitation-only CIO Executive Summit give me tremendous network opportunities. That's the most important thing that comes out of it. Second, I get to discuss common challenges or technologies or industry threats. The most common discussion among peers deals with the latest virus threat on the horizon. These venues also expose you to lot of new IT talent or new suppliers. If you select your venues wisely, you can spend several days looking at a lot of new technologies. This process eliminates the need to have vendors parade through your office.

EL: You spoke at the Hackett Group's 17th Annual Best Practices Conference. What did you have to tell attendees?

GC: We've used the Hackett Group to benchmark some of the processes we are doing, as well as to assess how well we are doing with some of our best practices. This year I spoke about Textron's IT transformation and the best practices we deployed. The group of 100 really wanted to know what best practices worked and what best practices didn't work in our environment and why.

EL: So what things didn't work?

GC: We had a strong business case for many of the things we planned to do. Communication seems to be fairly robust. On the other hand, we grossly underestimated employees'

resistance to change. We had to do a lot of front-end work on change management. If I had to do things over again, I would've put more emphasis on this.

EL: What best practices did you find to be ineffective?

GC: Our change management process, which is based on Six Sigma, worked very well. This seven-phase-gate approach requires you to define everything from business case to stakeholder involvement. It worked well for the high-risk, high-changes areas. When it came to routine activities, it didn't hold up for us. That's where we could've done a better job of selecting a better methodology.

EL: One of your IT teams is looking at virtual teaming. What are your thoughts about 3D virtual worlds such as Second Life?

GC: I'm not sure what to do with it. It's not based on reality in the first place. If someone can help me understand the applications for Second Life, I'd be glad to listen.

EL: You were one of the nominees for the Information Security Executive Award from this year’s Northeast division of the ISE. What initiative did you get nominated for?

GC: We've had a comprehensive push on consolidating perimeter security, along with improving other areas of security. The nine acquisitions Textron made presented IT with the challenge of how to handle disparate approaches to security. We also focused on how to extend secure wireless connectivity to all of our Textron locations. Here, we sewed up all of the areas for possible data loss. Next, we overwhelmed our disaster recovery and business continuity programs to focus on our consolidated data centers. We also carried out a program to educate employees about security.

--

Additional Reading - Sponsor Links:
Unlock the Hidden IT Opportunities in Troubled Economic Times
Pink Elephant and BMC Software Survey Results: ITIL® Best Practices in SAP Environments

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

No one can deny that Jerry McElhatton has mastered many successful IT moments. During his 10 years as CIO with MasterCard International, McElhatton spearheaded a five-year, $160 million upgrade of the company's global processing system into one unified, single messaging standard. Even more impressively, he delivered this enormous undertaking on time and within the budget. The systems support more than 15,000 customers worldwide, handle more than 40 million transactions daily worth more than $1 trillion annually, and are linked to 800,000 ATMs globally. Also during his tenure, McElhatton oversaw the building of a $135 million, 52-acre campus for MasterCard's primary IT team.

In March 2005, McElhatton retired from MasterCard, where he had anywhere from 1,600 to 3,200 IT professionals under his leadership. Enterpriseleadership.org recently spoke with McElhatton about what his experiences managing an IT organization that could make or break MasterCard's success.

EL: What are you doing now?

JM: After 10 years with MasterCard, I retired to start Virtual Resources, a company that does consulting for organizations in the payments area, and for some architectural engineering firms. I also sit on the boards of directors for several technology companies, where I set up advisory committees to provide feedback on the company's products and examine what competitors are doing. I spend my free time tinkering with a massive model training collection, which my four grandchildren love. I almost forgot: I write articles for business publications, such as CIO Decisions.

EL: Now that you've retired from MasterCard, would you advise other near-retirement CIO's to go off and keep their hands in IT?

JM: Why not? I'm enjoying helping companies understand the cost benefits of technology. I've successfully gotten people to look at their cost structures, to put some best practices in place, to help them evaluate some future cost-effective architectures, and to get them to be more responsive to business needs.

EL: Looking back at the technology overhaul you implemented at MasterCard, what things really made it happen?

JM: The credit goes to my great team. The company had some very mature systems that did a nice job, but it took too long to bring new products to market. New and better technology could simplify things and reduce our infrastructure costs. My assignment included restructuring, rewriting, and redeveloping the core systems. It took five years of changes to give those systems the scalability and flexibility they needed to meet best business practices. We completed that project within the assigned budget and ahead of schedule.

EL: What were some of the best practices that were put into place?

JM: We put reusable systems code and architectures in place. When it came to databases and data warehousing, we made sure we captured the data correctly and could easily segment it. Our key members had to analyze this data to help them build their marketshare.

At MasterCard, I had the unique position of being responsible for all technology, all IT operations, and both IT security and physical security. Fraud is a big problem in the credit card business. For example, I oversaw all of the risk systems that enabled our members to report fraud to us so we could stop it. We gave them information to make them aware of certain types of fraud that were taking place or had the potential to take place. We spent a lot of time reworking those systems. We put together things that would give us an advantage in identifying some characteristics and traits of fraud.

JM: Yes, the entire security team reported to me. I was also responsible for the access control side of physical security. The entire team that guarded our campus buildings reported to me. These folks did a lot of investigations internally to make sure employees did not access unauthorized areas.

EL: What was the business model for MasterCard when you were there?

JM: Simply, we worked very closely with the business units to help them define priorities, to help them move marketshare and generate income, and to help them reduce operational expenses. As a member of the operations and policy committee, I looked at how we could leverage technology to get the biggest payback.

EL: What was your IT model at MasterCard?

JM: MasterCard's technology generates a significant amount of revenue on what's called a "quick charge." We have charges for authorization, clearing, settlement, and also charges on our risk systems. On some of the systems, we had profit and loss residing with the operations and technology group. And on the others, we had direct chargeback to the marketing group for the cost and expense of generating that revenue.

EL: Did you folks use anything like Six Sigma?

JM: It's an interesting concept that has to do with the definition of root cause analysis and definition of quality standards. Eighty-five percent of the program we used consisted of Six Sigma and the benefits associated with it.

We measured everything, and we drove staffing and quality off those numbers. In our system, we posted implementation reviews, and whenever we had a problem, we did a root cause analysis to determine where to patch the problem. So, our systems got stronger over time. The performance of MasterCard as a company became outstanding because of the work we'd done to engineer the system.

EL: How successful were you in combating fraud?

JM: It was very good. We did a lot of proactive things to put people on notice. In the credit card business, fraud often happens at the merchant location and at some of the processors. If someone doesn't follow the rules, you might do routine audits, but an IT security audit is only good for the day you do it. Someone can make a change the next day, and thus, put a hole in the system. You might not catch it until you do another audit, or you might not catch it until you have a problem. We did a lot of proactive work to identify potential fraud. We not only used our systems, but we had cooperative efforts with others, and we used their systems, so we had a significant reduction in fraud.

EL: Do you have any comments on Oracle's recent buying spree?

JM: On the one hand, Oracle will have a strong product offering. On the other hand, as with all technology mergers/acquisitions, IT departments no longer have a lot of product choice; they'll lose their ability to negotiate on price, and service levels.

EL: Are you writing a book?

JM: I've thought about it. My working title is, 101 Easy Lessons Learned the Hard Way. IT folks today have similar sets of issues and problems as their counterparts five or 10 years ago. Yes, there might be more flexible ways to solve these problems, but every generation seems to have to touch the top of the stove to see if it's hot. I have a lot of advice to give about how to avoid some of the mistakes other IT people have made in the past.

EL: What's the biggest mistake people make in climbing the career ladder?

JM: IT people are smart people, but they don't often have a sense of how to budget for projects and how to meet the deliverables. IT people often make things harder than they really are.

At MasterCard, we learned how to eat a big marshmallow without getting sick. The answer is a bite at a time. We broke down projects into very significant deliverables that we measured and monitored.

IT people have to first learn to commit to a project, and then stick to the schedule, the budget, and the deliverables.

EL: Do you think the CIO role should be rotational?

JM: Some companies might be better off if they went in that direction. If someone has been a CIO for 10 or more years, then that person might be stuck in that role. Let me tell you what helped me at MasterCard. For example, at one time I was assigned to run the process change team. We took more than $100 million out of the systems by leveraging technology, and leveraging people's skillsets. This experience helped me to grow closer to the business units. I had some other great business opportunities.

If you want to cultivate stronger IT professionals, then assign them both business problems and technology problems. This process enables IT professionals to gain a more realistic view of how the business uses technology, and how they should use it to solve problems.

EL: Have you read Nicholas Carr's book, Does IT Matter, or his Harvard Business Review article, "IT Doesn't Matter?"

JM: I've read the book. I've been in businesses where technology has made a big difference. At MasterCard, we leveraged a lot of technology to get good business results. Carr perceives technology as a commodity -- spending a lot of money on IT doesn't necessarily translate to creating competitive differential. For example, if an IT department is late with deliverables, then the company can loose its competitive edge. At MasterCard, we won a lot of new business by being the first to deliver new, working systems, and to continue to enhance those systems. The other guys had a hard time catching up with us.

--

Additional Reading - Sponsor Link:
Managing the Business of IT: Maximizing the Power of Service Resource Planning, the Next Step in Business Service Management

Elizabeth M. Ferrarini is an IT consultant from Boston, Massachusetts. Reach her at elizabethferrarini@yahoo.com.

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.

Marketing. Information Technology. Engineering. If companies truly want to succeed, then people from different disciplines within those organizations need to work together to develop competitive strategies. Bernd Schmitt, the Robert D. Calkins Professor of International Business at Columbia Business School, says they also need to become big, bold thinkers. Schmitt has called the concept Big Think, an innovative approach to thinking, creating business models, and marketing. Schmitt says, "Big Think enables business leaders to stay relevant, infuse their companies with fresh, revolutionary ideas, leaving competitors scrambling."

Schmitt's latest book, Big Think Strategy, outlines how companies such as MySpace, IBM, Apple, Whole Foods, and General Motors have benefited from Think Big strategies. Schmitt has either authored or co-authored seven books, including the acclaimed Experiential Marketing and Customer Experience Management. He has done consulting work for Eli Lilly, Volkswagen, Siemens, and Vodafone.

Recently, enterpriseleadership.org sat down with Professor Schmitt to learn more about how IT professionals can become Big Thinkers. Here is what he had to say:

EL: Can you briefly summarize the  differences between Small Think versus Big Think?

BS: Small think sets in when middle managers become very risk adverse. They use the same old procedures, checking everything with a step-by-step analytical approach. Before they can launch a new venture, they have to double check with their superiors, and they're afraid to do anything new and innovative.

On the other hand, Big Think is about visionary leadership, thinking out of the box, and taking risks. This leadership style has certain kinds of thinking, such as looking into the future, and doing things differently from what is happening currently in your industry. Big Think is also a behavioral style. You manage projects by focusing on making a major impact on the marketplace, and looking at where you want to take things in the future.

Many companies, which start with an entrepreneurial spirit often, get  stuck doing the same procedures repeatedly.

EL: What are some of  the Big Think strategy types?

BS: Big Think has four strategy types. With integration, you add seemingly incompatible concepts, proving they're really compatible. For example, amazon.com demonstrated it could offer great customer service without the need for a human touch. Opposition assumes a contrarian viewpoint. For example, Dove's advertising campaign for real beauty celebrates older women, not the 20-something perfect models. Essence takes the essential characteristic of a strategy to an extreme. For example, Wal-Mart uses it massive distribution system to keep driving down costs. Transcendence goes beyond the established boundaries. The Blackberry is an example of transcendence.

EL: Some companies say they that innovation is built into their culture, but some of these companies can't score more than one homerun. Why?

BS: The executive team communicates corporate culture, which can be key to innovation. However, this team has to keep getting the innovative message out, even after the company has a major breakthrough. Take Motorola's very successful Razr cell phone. It had a great product launch. On the other hand, what else is happening at Motorola?  Organizations that have one innovative success don't necessarily have Big Think cultures. Many of these organizations are lucky enough to have a very energetic team behind the innovation.

EL: How do you create a  Big Think culture?

BS: To create a corporate culture to sustain Big Think, organizations need to hire people from a diverse talent pool, to provide them with the right environment, and to set up teams and to provide them with challenging projects. Organizations need to stimulate these people mentally so they'll get excited about taking the projects forward.

I've worked with many siloed organizations. When I do a project on Big Think and innovation, I always set up cross-functional teams. Research shows that innovation can benefit from cross-functional teams.  However, most companies lock cross-functional teams in siloes. Government agencies know the benefit of using cross-functional teams or multidisciplinary teams for solving problems such as global warming.

EL: Can you provide an example  of the innovative ideas developed by a cross-functional team you set up?

BS: I've done many projects with Vodafone in Europe. We put together cross-functional teams of Vodafone people from IT and marketing. These teams started with a project WOW initiative that was suppose to create innovative ideas that could delight customers. One particular project focused on developing more innovative mobile phone services, but also providing more innovative treatment of customers in the call center, on the Web site, and in the stores.

For example, Vodafone in Portugal came up the pizza delivery concept of getting a new cell phone. The goal was to get a cell phone into a customer's hand within a half hour after they called in. With a GPS, the company could track where the customer is, and have a representative get on a motorbike and deliver the phone to the customer. The representative could explain the phone's feature to the customer, as well as to synchronize information from the customer's old telephone to the new one.

EL: Can you provide another example of a company that has  benefited from your Think Big strategy?

BS: Samsung is doing very well these days with its brand.  A few years, Samsung Electronic offered poor quality projects in the U.S. That company made a major change to improve the quality of its product. In fact, in some ratings Samsung has surpassed its key competitors, such as Sony, in innovative product design and quality.

Samsung has also focused more on the consumer experience rather than just their products and technologies. How did this happen? A few years ago, the chairman of Samsung set up cross-functional teams comprised of people from marketing, product design, and information technology. These teams went around the world studying how consumers in different parts of the world live, and what kinds of products they needed for their homes and their work. We've seen a dramatic success here. Samsung has aligned its new initiative, called creative management, with Big Think. Now that Samsung has an edge on its competitors, it has to figure out how it will stay ahead through continuous innovation.

EL: What affect does timing and marketplace trends  have on Big Think ideas?

BS: Big Thinking is not just about having this big idea, but you have to take it to the marketplace. Big Think ideas very often work best if they click with some trend that's happening in the current consumer environment.  Take the wellness trend, which has caused an explosion in spa services and in spa products, which have unusual ingredients no one heard about 10 years ago. If you want to come up with an innovative skincare product line or some new spa massage services, you have to do it fast. These trends come and go. Who knows if American consumers in five to 10 years will want to go to spas. You have to cut the bureaucracy and other things that are preventing bold ideas to come about.

EL: Can you  briefly summarize the differences between Small Think versus Big  Think?

BS: Small think sets in when middle managers become very risk adverse. They use the same old procedures, checking everything with a step-by-step analytical approach. Before they can launch a new venture, they have to double check with their superiors, and they're afraid to do anything new and innovative.

On the other hand, Big Think is about visionary leadership, thinking out of the box, and taking risks. This leadership style has certain kinds of thinking, such as looking into the future, and doing things differently from what is happening currently in your industry. Big Think is also a behavioral style. You manage projects by focusing on making a major impact on the marketplace, and looking at where you want to take things in the future.

Many companies, which start with an entrepreneurial spirit often, get  stuck doing the same procedures repeatedly.

EL: What are some of  the Big Think strategy types?

BS: Big Think has four strategy types. With integration, you add seemingly incompatible concepts, proving they're really compatible. For example, amazon.com demonstrated it could offer great customer service without the need for a human touch. Opposition assumes a contrarian viewpoint. For example, Dove's advertising campaign for real beauty celebrates older women, not the 20-something perfect models. Essence takes the essential characteristic of a strategy to an extreme. For example, Wal-Mart uses it massive distribution system to keep driving down costs. Transcendence goes beyond the established boundaries. The Blackberry is an example of transcendence.

EL: Some companies say they that innovation is built into their culture, but some of these companies can't score more than one homerun.  Why?
BS: The executive team communicates corporate culture, which can be key to innovation. However, this team has to keep getting the innovative message out, even after the company has a major breakthrough. Take Motorola's very successful Razr cell phone. It had a great product launch. On the other hand, what else is happening at Motorola?  Organizations that have one innovative success don't necessarily have Big Think cultures. Many of these organizations are lucky enough to have a very energetic team behind the innovation.

EL: How do you create a Big Think  culture?

BS: To create a corporate culture to sustain Big Think, organizations need to hire people from a diverse talent pool, to provide them with the right environment, and to set up teams and to provide them with challenging projects. Organizations need to stimulate these people mentally so they'll get excited about taking the projects forward.

I've worked with many siloed organizations. When I do a project on Big Think and innovation, I always set up cross-functional teams. Research shows that innovation can benefit from cross-functional teams.  However, most companies lock cross-functional teams in siloes. Government agencies know the benefit of using cross-functional teams or multidisciplinary teams for solving problems such as global warming.

EL: Can you provide an example of the  innovative ideas developed by a cross-functional team you set up?

BS: I've done many projects with Vodafone in Europe. We put together cross-functional teams of Vodafone people from IT and marketing. These teams started with a project WOW initiative that was suppose to create innovative ideas that could delight customers. One particular project focused on developing more innovative mobile phone services, but also providing more innovative treatment of customers in the call center, on the Web site, and in the stores.

For example, Vodafone in Portugal came up the pizza delivery concept of getting a new cell phone. The goal was to get a cell phone into a customer's hand within a half hour after they called in. With a GPS, the company could track where the customer is, and have a representative get on a motorbike and deliver the phone to the customer. The representative could explain the phone's feature to the customer, as well as to synchronize information from the customer's old telephone to the new one.

EL: Can you provide another example of a company that has  benefited from your Think Big strategy?

BS: Samsung is doing very well these days with its brand.  A few years, Samsung Electronic offered poor quality projects in the U.S. That company made a major change to improve the quality of its product. In fact, in some ratings Samsung has surpassed its key competitors, such as Sony, in innovative product design and quality.

Samsung has also focused more on the consumer experience rather than just their products and technologies. How did this happen? A few years ago, the chairman of Samsung set up cross-functional teams comprised of people from marketing, product design, and information technology. These teams went around the world studying how consumers in different parts of the world live, and what kinds of products they needed for their homes and their work. We've seen a dramatic success here. Samsung has aligned its new initiative, called creative management, with Big Think. Now that Samsung has an edge on its competitors, it has to figure out how it will stay ahead through continuous innovation.

EL: What affect does timing and marketplace trends  have on Big Think ideas?

BS: Big Thinking is not just about having this big idea, but you have to take it to the marketplace. Big Think ideas very often work best if they click with some trend that's happening in the current consumer environment.  Take the wellness trend, which has caused an explosion in spa services and in spa products, which have unusual ingredients no one heard about 10 years ago. If you want to come up with an innovative skincare product line or some new spa massage services, you have to do it fast. These trends come and go. Who knows if American consumers in five to 10 years will want to go to spas. You have to cut the bureaucracy and other things that are preventing bold ideas to come about.

EL: What  personal characteristics do people need to have or to develop if they want to be  successful Big Thinkers?

BS: The key thing is to create something that's exciting and new. When I work with companies, we always do creativity exercises. It's just not the analytical side you need to appeal to. Whenever I discuss what's required to get someone to be a Big Thinker, I mention having a lot of guts because many people might perceive your ideas as risky and want to kill them. If anything needs to be killed, it's those sacred organizational cows. You need to come up with alternative current processes. That takes guts. It also takes passion and perseverance to see a project completed. As a leader, you also need to expose yourself to many different things. Most company people are very narrow-minded and are only interested in certain things. They are experts at some things, but they don't often see the bigger picture. As individuals, they don't expose themselves to different things, such as sports, museums, or travel. When you're on a business trip, just don't sit in your hotel room. Try to see what's outside. Some creative ideas might emerge.

EL: What role can IT departments  play in innovation or enhancing a company's brand if  any?

BS: I've seen IT departments that have done a tremendous job of helping call centers better understand the needs of customers.  Call center representatives need to have at their fingertips all of the relevant customers information. The challenge is how do you turn a transactional approach into a true CRM. Most call center systems have nothing to do with building relationships, they are purely transactional.  Say a call center person has access to a database service that shows, not only when the customer bought the product, but also what concerns a customer had when he or she last called, and what suggestions that customer received. An integrated database system like this can help increase brand awareness because it provides a way to connect emotionally with customers.
What personal characteristics  do people need to have or to develop if they want to be successful Big  Thinkers?

The key thing is to create something that's exciting and new. When I work with companies, we always do creativity exercises. It's just not the analytical side you need to appeal to. Whenever I discuss what's required to get someone to be a Big Thinker, I mention having a lot of guts because many people might perceive your ideas as risky and want to kill them. If anything needs to be killed, it's those sacred organizational cows. You need to come up with alternative current processes. That takes guts. It also takes passion and perseverance to see a project completed. As a leader, you also need to expose yourself to many different things. Most company people are very narrow-minded and are only interested in certain things. They are experts at some things, but they don't often see the bigger picture. As individuals, they don't expose themselves to different things, such as sports, museums, or travel. When you're on a business trip, just don't sit in your hotel room. Try to see what's outside. Some creative ideas might emerge.

EL: What role can IT  departments play in innovation or enhancing a company's brand if  any?

BS: I've seen IT departments that have done a tremendous job of helping call centers better understand the needs of customers.  Call center representatives need to have at their fingertips all of the relevant customers information. The challenge is how do you turn a transactional approach into a true CRM. Most call center systems have nothing to do with building relationships, they are purely transactional.  Say a call center person has access to a database service that shows, not only when the customer bought the product, but also what concerns a customer had when he or she last called, and what suggestions that customer received. An integrated database system like this can help increase brand awareness because it provides a way to connect emotionally with customers.

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