Launched in 1998, HCL Technologies Ltd. has quickly grown to become a $2.3 billion provider of custom-IT applications, IT infrastructure management, and business processing outsourcing. During this time, Vineet Nayar, HCL's CEO, has completely transformed the way the company's 55,000 employees in 26 countries deliver IT services to customers. His emphasis on Employee First and a strong belief in values-based leadership has earned Nayar much leadership recognition from both the London Business School and the Harvard Business School. In fact, the latter wrote a case study called the Transformation of HCL.

With strong strategic vision and a global outlook, Nayar has charted a defining growth path for HCL, which has catapulted the organization to being one of the last IT services countries in the world. In 2007, Business Week named HCL to the list of top 100 technology companies. Meanwhile, IDC recognized Nayar as having "one of the most cohesive and articulate visions" in the IT services sector.

Enterpriseleadership.org recently sat down with Nayar to learn how his management philosophy is fueling HCL's double-digit growth rate.

EL. Can you briefly describe what steps you took to transform HCL Technologies to become a provider of value-based IT services, rather than as a provider of linear- scale IT services?

VN. First, we recognized that the true value-zone exists between the employee and the customer. We asked the question, 'What business should we be in?' We answered it with, 'We should be in the business of maximizing that value' Next, we asked ourselves, 'If we are in the business of maximizing the value-zone, then how should we structure the company?' We decided to invert the organizational structure so that it faces the value-zone. We call this the inverted pyramid of the organization. Our last question was, 'What should be management's role?' We realized that management's role should be to enable, and hence, be responsible to the value-zone. We call this reverse accountability. To achieve the answers to our questions, we created a cultural transformation based on Employee First, Customer Second.

EL. Tell me about some of things that make that possible?

VN. The value-zone is in the interface of the customer and my employees. My employees need to be close to the customer. Meanwhile, I need to make sure the employees look at that value-zone rather than look up in the organization to try and to please their bosses. I call the latter trying to please the hand of God. I figure that if I could invert the organization and make managers accountable to the employees in the value-zone, then employees, in turn, would be empowered to deal directly with the customer. Next, we needed to have an effective interface between our employees and the customer. I call this the value portal. This piece of software measures ideas and measures the value we have created in that interface for the customer. Ideas that employees enter can result in a revenue increase or a cost reduction for the customer.  The customer, in turn, rates each idea on a five-star scale. Each employee gets compensated based on each customer's rating. As a result, we have changed the employee's perspective to not only focus on the here and now, but what is he or she can do to contribute to the value portal.

EL. Are you paying your employees based on this system?

VN. We pay our employees based on a personal incentive.  They earn points. The more ideas they give, the more points they earn. They can monetize their points.

EL. When did you realize that you had to make changes within the organizational structure?

VN. That is a very important question. It is like aging. Companies will slowly age and then refuse to believe that they have aged. They believe that everybody else is getting older except them. In 2005, we recognized that we needed to make the change. At that time, we were growing slower than our competitors. On the other hand, we were still growing 30 percent year over year.  We also saw the controls of the industry dramatically changing, and changing needs of the customer. We were not changing and aligning our services to our customers' needs. We also realized that if we could experience this change, then we would come out way ahead of everybody else. Now look at what happened during the recession. During 2009, we grew year over year by 21 percent, including 21 percent growth in revenue. We are one of the few global IT services, which grew positively in 2009. Our growth proves that business models are changing, and that customer needs are changing. We started to take part in the journey way ahead of the recession. During the recession, we proved that our business model could accelerate our growth.

EL. Which key values are the most important?

VN. Any large approximation has to start with people looking at their current state of affairs and saying that they are not happy with it. That's what we did. We created a very exciting vision of tomorrow and laid out the roadmap for how we could move to that vision of tomorrow. We approached the governance structure by how we could transform the outlook of the employees.

We have three key values critical to the company. The first is Employee First, Customer Second. It is employee centricity.  Our senior managers believe that their first responsibility is to their employees, and their employees' responsibility is to the customer. That value is very important. The second value is Creating Trust Through Transparency. Trust is a most misused word across the world. We believe that you can create trust by pushing the trust envelope.  Our third value is flexibility. If something bad happens, a company must have the flexibility to respond to the situation in real time.

EL. What changes did you make to the enterprise architecture?

VN. Prior to the transformation, everybody ran their own small business, completely independently of each other. We had to integrate all of the business managers owning their businesses. We were focusing on the customer being the point of consolidation. The organizational enterprise structure changed from how we turn control into influence.  It does not mean how many people report to you. What matters is how much influence you have over the value your employees create for the customer. We moved away from this unit called every business manager does his or her own thing. Instead, we integrated that exchange to focus on creating value in the zone of the customer. We created trust through transparency. Much data have been thrown at the desktops of our customers and of our employees. To this end, our employees have access to much transparency of data. We had to create an architecture where the information role was virtual, and the collaboration was virtual. Thus, we depend on virtually collaborative teams working together. So to make all this happened, we implemented the enterprise architecture all over again. We did over all of our IT systems. We re-implemented the social networking technology on top of these systems. We used Web 2.0 for data availability and collaboration at the desktop.

EL.  I read that various employees can interact with management. What did you do with management to get them to accept this feedback?

VN. I, fortunately, believe that the management of any company must seek the right direction. There is the goal about winning. Upper management wants to win, and thus be part of a winning company or a winning team. Our management team realized several things: the architecture had changed, and the company transformed itself from a traditional company to a Generation Y company. As a result, the management team realized that they could lead us to a place where no other company had gone before.

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

With more than $26 billion insurance investment sales, New York Life Insurance Company, a Fortune 100 company founded in 1845, ranks as one of the largest mutual life insurance companies in the United States and one of the largest life insurers in the world. It has the highest possible financial strength rating from all four of the major credit agencies. Headquartered in New York City, New York Life's family of companies offers life insurance, retirement income, investments, and long-term care insurance. New York Life Investment Management LLC provides institutional asset management and retirement plan services. Other New York Life affiliates provide an array of securities products and services, as well as institutional and retail mutual funds.

While the economic downturn has wreaked havoc with some major insurance companies, New York Life has held its own, if not exceeded its expectations for financial growth and stability. Much of the company's success builds on a solid IT strategy that supports both the present and future needs of the company.  Eileen Slevin, senior vice president and chief information officer for New York Life, say that the company looks seven years to ten years out to see what types of technology investments the company needs to make, what applications the business units anticipate, and what type of infrastructure needs to be built to support those applications.

Enterpriseleadership.org recently sat down with Slevin to learn more about the company's IT strategy and its approach to long-term planning for IT investments. Here is what she had to say:

EL. Can you describe your IT organization?

ES. I have a centralized group of 1,400 full-time staff members. About 1,250 of them are employees and the rest are consultants. We have an applications development group, an architecture group, an engineering group, an operations or service delivery group, a finance group, a human resources group, and a best practices group, which includes the project management office. I also have a security group. One of our senior executives manages our innovation program, which includes employees spanning the department.

EL. Can you describe a couple of the key technology initiatives that have helped to make the company more customer-centric?

ES. Over the last several years, we introduced some large systems in a couple of significant areas. In 2005, we introduced our new business system, which we have been continually updating. This mission-critical system firmly planted us on the Web. In fact, we call it the cash register for the company. For example, the customer applications the agents submit come through the system, where they get underwritten, and issued.

For the past several years, we have been updating our agency portal, which provides the agents with all of the sales support tools electronically. Since our dedicated, career force of agents provides the main interface with our customers, this portal is critical to our success. We also conduct our business through supplemental channels as well. We recently introduced a contact system as a major addition to the agency portal. Prior to that, we had delivered a collaboration platform to them.

EL. Any other key technology investments you care to mention?

ES. We have an entire program going which focuses on how we make technology investments to support the future needs of the business. We began the process about two years ago by sitting down and trying to understand what the business units would need in the future. We are talking about seven years to 10 years out. We needed to build the infrastructure in advance of the business units building applications upon it. By understanding what applications the business units would need in the future, we would have an easier job of defining the infrastructure they would ride on. We currently have approval for 14 infrastructure projects and nine business projects. The infrastructure projects are spread over seven years to eight years, and the business projects are spread over 10 years.

EL. What are some of the business projects?

ES. One project involves a new system for our sales proposals or sales illustrations that agents present to clients. It is actually part of the agency portal process. We are taking the former client server version of this system and bringing it to the Web. The basic agency portal was built around content and information the agents needed to get access to, such as forms. The contact system we just rolled out helps them to manage information about their customers. After the agents determine what they need to sell, they can use the illustration system to explain the finances around the offering. The new business system is at the end of the process. We will be developing some things that fit in the middle. We have a program for our agents to be able to turn over their business to their family members, such as children who may be taking over the business, or colleagues who may be doing so. We provide them a more effective way to do this as they are near retirement. It gives them the ability to slowly transition that business over to someone else to manage it for them, thereby providing the long-term support that our customers have come to expect from New York Life.

EL. Why have you gone out as many years looking at technology investments?

ES. In the past, we had done three-year planning.  We believe that seven years to -10 years gives us a more favorable time frame to build the infrastructure that these applications would need to run on. We need to make sure that we are building a full and robust infrastructure. The company has been doing rounds to plan and to set goals for ourselves for 2015 and 2020. Using that as a basis, we then spoke to the business unit leaders about the applications they would need to meet these goals and objectives. Preceding that, we needed to understand what infrastructure we had to build.

EL. Can you talk a little more about your strategic planning process?

ES. We have been working from the top down, including every business unit. This work has been around more of the wide-reaching scenarios, such as inflation. Because we have set our aspirational goals out that many years, we talked about breaking through some metrics that we have not yet achieved. For example, what happens if we double the number of agents, or what happens if we get to five million customers? How will our systems hold up? What will we need to be able to do to support them? The business would need to do some of these things seven years to 10 years from now. We needed to look at how we would support all of these different things based on our growth.

EL. Are there any particular tools that you used to help you through this process?

ES. We have a unit set aside for some of the strategy planning and economic scenario planning. Most of the effort has been task forces and publishing position papers.

EL. Has all of this planning changed your governance process?

ES. We set dependencies for building out these infrastructure programs and business programs. For example, if we were going to install this infrastructure, it would be needed for our customer service applications in the future. We need to make sure we tie these projects together between infrastructure and business. The importance of specific technology was one of the things we always had a difficult time explaining to the business units. As a result, the governance process is something we now look at for each of these projects. Specifically, we look at the relationships between the projects and in the interdependencies. We make sure that these relationships still hold, and we adhere to the things we said. We have brought this program to the executive management committee several times. For top management, the governance process has been around understanding and telling us what the business objectives are, then sizing how much we can absorb into our financial model and making sure all of that runs through all of our numbers going out in the future.

EL. Any specific methodology do you use for measuring the effectiveness of technology investments?

ES. We use most of the common techniques such as ROI. We did a rigorous cost benefit financial analysis. For example, we looked at what projects would drive down costs versus the projects that would promote growth. Where we had sales coming in, we did marginal value add. Where we had expense savings, we used net present value analysis.

EL. Have you driven cost out of the company?

ES. Because we just initiated this program in 2009, we have not driven out cost with it yet. Separately, we have some strategic initiatives looking at how to drive down some future costs. In doing the cost benefit analysis, we said we could see more cost savings if we could automate some of the work done by our service centers, or provide self-service capabilities. We have identified what the savings would be. We have done this very conservatively, and have made it part of our analysis.

EL. Are you looking at cloud computing for some of these applications?

ES. We are at the very early stages of looking into cloud computing. We are also looking at how we can do our own kind of cloud computing in addition to that. We think cloud computing has a definite place for us in the future. I still have some concerns around security. I am not as comfortable with the public cloud as I am with a private cloud.

EL. What are you doing in collaboration?

ES. We do have a collaboration platform right now for our agents. We built several custom applications for them to use on that platform. We introduced that three years ago. We also use Sharepoint at the team level, but we have not done anything with it across the board for our employees. We have developed some grassroots wikis. One of the 14 infrastructure projects looks at a collaboration suite and expands that. We were early in this space. Because of the large number of agents who use it, we now need to advance that collaboration platform.

EL. What was the catalyst or driving force for your strategic business technology investment program?

ES. Back in 1999 or 2000, we put together a seven-year technology strategy plan. It enabled us to rollout our initial Internet application capabilities in early 2000. We hit the end of that plan around 2007. At that point, we knew we had to start developing our next technology strategy for 2008 and beyond. As we spoke with the business unit heads about some of the infrastructure and technologies that had good business applications, we realized that they were not thinking about the future to the degree we needed them to. To this end, it made it difficult for us to understand what infrastructure we should build and what technology strategy we would devise. That is how we then went down the path of working with the businesses to understand the applications. About 18 months ago, the executive management committee, on which I sit, came up with the goals and objectives we need to aspire to going forward. Using these things, we worked with the business units to help them define the applications they would need to meet those objectives. That is what has enabled us to lay out the infrastructure plan. All and all, that is how we developed our technology strategy.

EL. Have you done anything in the meantime to help the businesses understand the significant of this technology?

ES. At the start of this process, we did several educational sessions for the business on such topics as networking, legacy modernization, and collaboration.

EL. Has the economic downturn affected your company?

ES. We did well in 2009. While we are not are immune to this type of economic environment, we had a great year. We maintained the highest ratings from the four major ratings agencies. We believe that we have seen a flight to quality. Our financial stability, which is one of our foundational pillars, served us well. Our history of conservativeness also served us well. Our agents got the right messages out to customers. Because we are a mutual company and not a publicly held company, we can plan for the future and not worry about the short term. I am glad that we have been able to invest in technology.

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

Where would we be today without the Internet? It certainly has caused a global revolution in the way we live and work. You might say that it is the catalyst for  global connectivity.  Using a mobile device, you can do everything from connect to your office email to ordering a pizza. Emily Nagle Green, CEO of Yankee Group, a Boston-based global technology research firm, calls this phenomenon ANYWHERE, a world in which all people can connect to the things they care about from anywhere and at any time. In fact, Green has written a book called ANYWHERE: How Global Connectivity is Revolutionizing the Way We Do Business. In the book, she examines the fast, unfolding changes in communications technology, and shows businesses how to harness the power of ANYWHERE to create new revenues streams and ignite dramatic business growth.

Enterpriseleadership.org recently sat down with Green to talk about the concepts she presents in her book. Here is what she had to say:

EL.  What motivated you to write this book?

ENG: For the past 40 years, Yankee Group has focused on the changes in connectivity. During the past year or two, we have seen an expansion and acceleration in making the universally connected environment a reality. It is a natural follow on to the commercialization of the Internet. We have essentially computers in our pockets. Connecting all of the devices we care about will become the next big platform in computing technology. Events such as the explosion of business people relying on devices such as the Apple iPhone motivated me to write this book. I also wanted to give people some advice about how they could benefit from the rewards from an expanding network infrastructure.

EL. Can you give me your elevator pitch for the book? 

ENG. ANYWHERE is the name for a time when all of us will be able to connect to all of the things we care about. It will become the largest technology revolution in our lifetime. Technology revolutions, like lots of other revolutions, bring risks and rewards. Much is at stake here. We will see trillions of dollars of new economic value created in aggregate from the maturation of this global ANYWHERE network. Businesses need some guidance in how to figure out to get ahead of that, such as how to identify the potential impacts of their business.

EL. How well-prepared are global CIOs for ANYWHERE? What two pieces of advice would you give to them?

ENG. Some CIOS are well prepared, but as I group, I do not think they are well prepared. The challenges of the recession, in particular, from disrupted them from thinking about how to anticipate the future. As for advice, I would tell them to first understand how quickly the unconnected world is becoming connected. The unconnected world includes the billions of people who have not been online in the last explosion of the Internet. About four billion of them will join the global network through adoption of digital mobile phones. The unconnected world also includes many assets in their own organizations. The organizations they partner with will add connectivity and transform the businesses world with those assets. In summary, they need to understand the pace of the unconnected world coming online and think about the diffusion of connectivity in their own businesses. They especially need to look at what activities have not yet benefitted from a pervasive network, and then think about how automating those activities could enhance the businesses' profitability.

EL. What changes in the enterprise architecture do they have to make in order to better prepared for ANYWHERE?

ENG. The two things one - they have to start the process of moving away from a proprietary IT infrastructure. We are moving to a world where businesses will not need to buy and manage their hardware and software. This transition will take some time for larges businesses to absorb. You need to start now. You need to plan your move away from your own investments and infrastructure. You also need to start looking at all of the employees' activities that mobile technologies do not support.  Last, you need to think about how to put technology, such as mobile apps, in the hands of your employees all of the time. This way you can recapture the lost productivity when they walk away from their desks.

EL. What are some of the key disruptive technologies beyond cloud computing that are driving ANYWHERE?

ENG. The three core technologies include the adoption of IP as a standard digital networking language, explosion of the broadband technologies, and the great economics of wireless. Today, we are building things on top of these technologies. We are most interested in how we think about information display and consumption.

For example, with maps from Mapquest, we can expect to see mapping displays for all kinds of things layered on top of them. It might include augmented reality where a camera points to a real-world environment and collects information about that environment. We will never see maps as things just having street names and points of interest. We will expect maps to identify buildings, commercial resources, and distances. We will expect them to come embedded with recent images -- if not in real time. We expect real-time congestion information to show up. Our concept of a map will require anywhere from six to 10 dimensions of information. This will happen because a network appears wherever we need it, and that network has the capacity to move massive amounts of information. We do not have to reply on text.

EL. Will things such as semantic Web technology capabilities contribute to put value to ANYWHERE?

ENG. The ANYWHERE network brings us some challenges. For CIOs, it is real-time information. How do we digest information when it comes from censored networks that can tell us the status of very complex environments? The Web is not ready for that yet. How are people going to digest petabytes of information that comes in on a regular basis? Any innovation around the semantic Web yet is not ready to deal with the volume and complexity of information that is coming from equipping the world with communications technology.

EL. Has the economic downturn hampered an organization's ability to get to ANYWHERE?

ENG. Yes and no. It had a negative impact at an aggregate level. The economic downturn delayed network operator's investment in transforming their networks.  The networks we have today are in transition to the networks of tomorrow. Today's networks have greater capacity and intelligence added to the network infrastructure. Billions of dollars of capital need to flow into existing networks to renovate them to meet our burgeoning appetites. That process slowed down quite a bit in 2009 as network operators carefully spent their capital. That delayed the maturation of the network infrastructure.

During 2009, everyone hunkered down and did not think about growth, but cost cutting and trying to keep their boat afloat. In that sense, it also had a negative impact. The phrase - necessity is the mother of invention - has much merit. People start turning to smaller solutions when they need to be resourceful. You see the explosion of mobile apps as one avenue where businesses could say to themselves: 'Gee, I want to create some capability. I have a workforce that carries iPhones or Blackberries in their pockets. How can I do this in a quick and simple way?' We do see some more inventive uses of technology emerging as people lower their technology spending level. They say, 'If I do not have the massive capital expense budget that I had in past and this will not change, then I have to get used to that idea and be more creative.' We have seen some emergence of creativity from that recession.

EL. Five years from now, will cloud computing be a pervasive utility we hear about?

ENG. I believe so. In five years, small- to medium-size businesses will depend on IT services from cloud computing. Small businesses starting now may never invest in much proprietary infrastructure because it is already so workable for them. We will see more widespread adopting of cloud computing in this space. For large companies, the move to cloud computing involves a long-term conversion process. These companies still have COBOL embedded in the guts of their IT organizations. It will take awhile for the current model for hardware and software computing to work its way out of the largest firms. Five years from now, cloud computing will be robust and widely deployed.

EL. Why did Yankee Group deliver a book now? Is this the first book written by a Yankee Group CEO in office?

ENG. This is the first book written by a Yankee Group CEO. I cannot speak for why Howard Anderson, the founder of Yankee Group, never wrote a book.  He left the company in 1995 at the beginning of the Internet explosion. Perhaps, he was preoccupied with other things and changes in ownership. Because I was not with the company then, I can only speculate.

EL. What are some of the major changes in enterprise architecture in global companies that will need to occur to make ANYWHERE possible?

ENG. They will start by integrating information from many more assets in the business. For example, the RFID space had a vision for years about how more objects in our lives could participate in the global network. RFID proponents have struggled to get the RFID tag cost down and sort out some network issues. The explosion of WiFi in business environments has brought with it the cost of activating the network and supporting tagging device. As a result, it makes RFID more affordable.

Another big enterprise network change involves alerting business assets to their status. We will see much less focus on fixed assets, such as real estate, as employees become increasingly mobile. We already see that now with working from home and remote offices. Businesses have to think more carefully about why they need offices in multiple locations, and how can they, instead, use the network as an umbilical cord to interact with their employees.

We will think more generously about what resources we need to give those employees at the other end of that cord. They need to have quality access devices at the other end of the network so that they can have a first-rate experience. We are not equipping them with an office any longer. We are not buying them coffee and Danish in the mornings. As a result, we need to make sure they have a device and a connection speed that will allow them to have a productive virtual work experience.

EL. Do you think the down the road there are going to be problems with this type of a workforce?

ENG. It is a huge shift. It is definitely disrupting in markets such as the North American and Europe. We have seen a disconnect about how employers and employees view their relationship. For examples, we are seeing a piecework model where work-at-home employees answering calls from a virtual call center. They get paid for their time on the phone. The issues we are starting to see include the following: Should an employee have one employer? If they can take calls for one employer, why can't they take calls for other employers?  If an employee has multiple employers, then who is responsible for the employee's benefits? This dilemma will cause some strange conversations for the next generation of workers.  We will see different attitudes about employment within the office bound environment.

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

During a tough economic climate, consumers tend to become very conscious about their spending and tend to go with brands they know and trust. That's the opinion of Eric Wiseman, CEO of VF Corp., a $7 billion global apparel manufacturer and retailer. While VF Corp.'s revenue dipped about five percent during 2009, the company has managed to hold its own, capping off 2008 as a banner year with $7.6 billion in revenues.

VF Corp. sells its well-known brands, such as Lee, Nautica, The North Face, Wrangler, and Vans, through more than 67,000 retailers in about 150 countries. The company owns and operates more than 700 retail stores, including about 60 outlet stores.

Prior to 1998, VF Corp. derived most of its revenues from manufacturing brands such as such as Lee, Rider, and Wrangler, and selling them wholesale to large retail stores.  In 1998, VF Corp. aggressively began acquiring well-known active wear and contemporary brands, such as Nautica, The North Face, Eagle Creek, Eastpak, lucy, Vans, and several others. The company divested itself of unprofitable brands. In 2004, VF Corp., which had revenues of $6 billion, launched a bold growth strategy to transform itself into a global lifestyle apparel manufacturer and retailer. "We Fit Your Life" became the mantra for the company's growth strategy.

Enterpriseleadership.org sat down with Wiseman to discuss the company's business transformation, and the role technology has played in it. Here is what he had to say:

EL. How did you categorize your different brands and how do they contribute to revenues?

EW. We group our brands under coalitions such as outdoor and action sports (Vans and The North Face), jeanswear (Lee, Rider, and Wrangler) , sportswear (Nautica), and contemporary and imagewear (For All Mankind and lucy). We further group the coalitions into lifestyle and heritage. Lifestyle includes outdoor and action sports, and sportswear and contemporary brands. Heritage includes jeanswear and imagewear. We acquired most of our contemporary brands during out growth period. These brands contribute to revenue as follows:  about 36 percent from outdoor and action sports, 36 percent from jeanswear, 13 percent from imagewear, about 8 sports from sportswear, and five percent from contemporary brands.

EL. What was your vision statement for the 2004 transformation?

EW. Our vision statement was to become more growth oriented by investing and building leading lifestyle clothing brands. Our transformation called for us to redirect our business from being a wholesaler to becoming more international and a more direct-to-consumer business. Our six tenets or growth drivers include the following: build more global, growing, lifestyle brands: expand our share with winning customers; stretch our brands to new geographies; expand our direct-to-consumer business; fuel the growth; and build new growth enablers.

Ten years ago, we had the reputation of being a rock-solid apparel manufacturer that built first-in-class programs for big box stores such as Wal-Mart and Kmart. That was most of our business. The good news is that we still exist. In 2007, many of those stores selected us as vendor of the year. We do a good job of marketing through mass and chain store channels. By changing our brand portfolio, we now reach more diverse customers than any other apparel company.

Up until 1995, everything we sold we made in a U.S. factory. We became the last apparel company to move offshore. You can argue that we moved too late. Because we stayed here that long, we developed a culture and a skill around incredible skills and execution. We could not survive making products in this country unless we were really good at engineering and operations plans and engineering in the factory.  It is part of our DNA. The ability to execute complex things terrifically well is part of who we are and we have not lost that.

EL. How did you know your transformation strategy would work?

EW. We were confident it would work. In 2007, we went through a robust bottom to top reconsideration of our strategy. We asked every business unit everywhere in the world to think about the six items we identified as our core strategy and to reassess their relevancy with an open mind. What came out of that was a revised growth plan we announced in 2008. The six fundamental tenets of our strategy remained unchanged. We made a minor revision to make sure we were still relevant for the environment we are in today. We still think we have the right six core tenets for our growth strategy.

EL. Can you explain your integration process?

EW. Our integration process began with our 2004 transformation. We developed a repeatable process for the 10 brands we acquired at the time. We continue to refine this process.

Here is how it works. Say we love your brand and your management team, and think your brand would help us get to a new consumer, a new geography, or to a new channel of distribution. We want to acquire you.  In essence, we would like to take your brand to the next level. We would like to have you and your team join us. You will run the front end of the business.  You and your team will design the products you want, pick the customers you want to sell to, and continue to brand development. We will give you permission to do that. It is non-negotiable. We will run your distribution centers, which is also non-negotiable. We will decide where you will source. We will put you on our IT systems. You will use our financial system and our HR practices. The kicker is that we will take your brand, you team, and your products anywhere in the world, especially where we have a platform and where we think it has opportunity. We will build a sidecar under that platform to enable your growth globally. If you would like to open retail stores, we have much expertise in that now and we will enable that.

As a result, the seller gets to keep the front end of the business with the passion and genuine pieces of the brand. All of the operating functions come to us because we get a great return for our shareholders. We reinvest some of those savings back in the company to drive growth. That's why our growth has been what it has been. It does not always work perfectly. That is the basic structure. Sometimes we leave the business standalone in its own building. Sometimes it makes sense to move it into adjacent VF buildings for business reasons. These discussions happen over time.

EL. How has the economic downturn affected you business?

EW. Our revenues decreased by about five percent. We did not anticipate much improvement in the economy during 2009. Although it has been a tough couple of years, we have taken some even tougher actions. We have been controlling expenses, investments, and lowering inventory and capital expenditures. We focused on our liquidity, our core strategy around lifestyle brands, taking in the new geographies, building our direct to consumer business, and leveraging our scale and size in the supply chain are the right strategies.

Since we changed our strategy in 2004, we have shown that it is working. Our revenues grew on a compounded basis more than 10 percent over a five-year period. Our earnings grew by 11 percent. Our gross margin had expanded by 230 basis points through 2007. We gave some back in the last quarter of 2008 as the economy shifted.

In 2008, we reported an all-time record for revenue and an all-time record for earnings per share. We delivered $679 million in cash flow, which was above the five-year average and the second highest number in five years. I was proud of this team for pulling that off in a turbulent environment.  Also, 2008 was the 36th year in a row that we increased our dividend to our shareholders. It is a good part of why we are a good investment. We ended that year with more cash than we started. We ended the year with less debt than we started.

EL. How do you allocate your capital budget expenditures?

EW. The bulk of our capital budget goes to acquisitions first, retail second, and distribution centers third. We have aligned out capital budget to support our growth strategy to invest in acquisitions, retail stores, ecommerce, and distribution centers.

EL. How did you build out the infrastructure from technology perspective as you began the transformation?

EW. Because we did 10 acquisitions in five years, the integration of the technology has been hard. Our technology has worked hard to keep up with it, which is fine. We have a suite of systems that are potentially relevant to all businesses. If we are going to put in a demand forecasting system for a brand, we will use this one if the brand needs one. Not all of our brands need all of our systems. Some of the systems have no trouble serving a brand that generates a half billion in revenues. A similar system, however, would be overkill for a $70 million brand.  Over time, everyone ultimately gets on board on our IT systems.

EL. Several years ago, you folks hired your first global CIO. Why didn't you do that sooner?

EW. Over time, we had a head of IT and a relatively stable portfolio of brands. As we began adding all of these new companies and divesting  all of the others, we said we needed to make additional investments in many areas, especially in mergers and acquisitions, corporate strategy, marketing and brand development, and global business technology. To carry out these activities, we needed a stronger IT leader.

EL. How do you work with the CIO?

EW. Martin Schneider, our CIO, is an important part of our 12-person operating committee. This committee guides the corporation. Like the other executives on the committee, Martin has an excellent point of view about how to keep the corporation moving forward. That is the best way I can describe how I work with Martin.

EL. What have you learned from your CIO that you didn't know?

EW.  Because of his Gillette background, he brought a more sophisticated global perspective than we had at that time. He had added much value. We were pursing at all-or-nothing portfolio of technology. Martin introduced the thinking of not all of it is helpful to all of these businesses. We are better off to let them select the tools that they need. As a result, we function as more of a service provider and an enabler of their success rather than as a corporate censor requiring them to use everything we have to offer.

EL. How do you run the technology organization?

EW. Each business, such as NorthFace and Wrangler, has a person who reports to Martin, but sits at the management table of the brand. That person helps the brand leaders to run that business every day.  That is our version of the hybrid matrix organization.  We use this same model for human resources, finance, distribution, and our supply chain. The majority of their incentive compensation depends on how well the business unit does.  Originally, we paid them on how the corporation did. We found that this new structure helps them to be more a part of the team. The entire team gets paid together.

EL. How do you go about making technology investment decisions?

EW. We have a typical budgeting and review process for the company. At the beginning of the year, we sit and review the global technology budget. Expenses of certain sizes require different approval levels. Martin can approve some of the investment. Some of them go to the CFO. I approve investments above a certain level. The board needs to improve capital investments.  Each quarter, Martin will give the operating committee his update on the status of everything going on in his world. We keep the fall moving forward this way.

EL. What is your methodology for looking at the success of technology investments?

EW. We look at a retail store investment differently than we do a technology investment. With technology, we look at the ROI and a payback time. We look at the rationale for the investment, such as strategic, cost reduction, or productivity. There are many metrics In fact, we are very metrics oriented.

EL.  What is the major challenge that retailers face during a tough economy?

EW.  It is consumer confidence more so than consumer spending.

EL. Where do you think your competitors are falling short?

EW.  Why are we doing better than others in this environment? We have a portfolio of relevant brands. Consumers trust brands. When consumers are being very conscious with their spending, they will go with brands they know and trust. Second, we are good at delivering innovative products that are relevant to the consumer and also offer great value. It is not just about price. We hear loud and clear from customers that are happy to pay top price for something if they perceive it has having great value. We execute very well. Because of our discipline and focus on execution, we can minimize the mistakes we make. This capability has helped us to get through this environment.

EL. Some companies, such as Procter & Gamble, spend much time on social media and collaboration trying to plug in what certain consumers say. What are doing to get closer to your customers so that you design your products?

EW. We are as good as any apparel company at marketing sciences that help us to understand consumer. We are pretty close to Procter& Gamble in what they do. In fact, some of their executives visit us to share their ideas. We understand as well as anyone how to make relevant products for consumers. We test everything we do. We use various methodologies from online testing to where you can go look at our products and tell us what you like about them. We do that with 10s of 1,000s of people. It helps get us from making 20 shirts to five we should make. We go into people's homes and talk with them. We spend millions of dollars doing these things.

Most of our research is proprietary that we built for a specific purpose. We are in so many different brands and markets. If we want to understand what Italians want in active wear, we have to narrow that down and speak to Italians about ski outerwear. Some of our other brands use social media as part of their marketing effort.

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

What does the Apple's computer mouse, Oral-B toothbrush for children and Palm V handheld organizer have in common with each other?  Each company designed its respective product with the help of engineers from IDEO, one of the most recognized global design firms.  Since 1991, IDEO has helped to design more than 3,000 new products and to reinvent many established Fortune 500 companies.

IDEO's name has become synonymous with innovation. BusinessWeek has ranked IDEO in the top 25 most innovative companies in the U.S. Meanwhile, The Wall Street Journal dubbed IDEO's office, Imagination Playground. The company has become the subject of two books: The Art of Innovation and The Ten Faces of Innovation.

Collaboration among IDEO's clients and myriad of engineers who specialize in discipline ranging from human factors to interaction designs has played a critical factor in the company's success. Doug Solomon, IDEO chief technology officer says, "Because we are not content experts about the thing the clients come to us about, we need to learn from them and their colleagues, and them share this information with our colleagues." In fact, Solomon and his design team devised a collaboration platform, called the Tube, to improve the cross-pollination of ideas across global constituencies.  Employees generated more than 1,000 pages six months after the Tube went live.

Enterpriseleadership.org sat down with Solomon to discuss what design considerations that went into the Tube and what CIOs can learn from them.

EL. What challenges did you face in designing a collaboration platform for a company such as IDEO?

DS. We have employees in eight offices on three continents. In the past, we worked in a distributed manner locally with our colleagues. We might have five or six people meeting face-to-face to discuss a project. Now our global clients expect us to collaborate around the world. We had the challenge of scaling our local work process to how best to collaborate across all of these time zones.

Experiencing something works best when it comes to innovation. As a result, we like to take our clients on observations in the field, such as on shopping visits, or looking at analogous kind of problems and other companies in the ecosystems. We had to find ways to make it easy and convenient for our clients to be part of the process without having them be physical with us the entire time.

We also work with people in the ecosystem who might be affected by some product or service or idea we work on. We use an anthropological type of methodology where we do more than interview them. In fact, we might live with them, go to work with them, or go shopping with them.  Since our projects are so diverse, we never know in advance what kinds of interests and people we want to speak with.

EL. How did apply your experience as an innovation company to the design of your collaboration platform?

DS. We treated ourselves as if we were a client of IDEO. We used our human senses design techniques and methods to observe our environment. We talked to people to understand how they would like to collaboration, but felt it is difficult to do at this point. We looked at the culture within IDEO to understand what would motivate people to share what they knew. We looked at what kinds of technologies we could experiment with and use for system prototypes. We also looked at our business constraints to make sure we could support this initiative.

EL. Can you summarize the concept of the Tube?

DS. We designed the Tube, which is our Intranet, based on the London subway system. It connects all of the people around the company, and provides them with a way to share information with each other. Some parts of our Tube consist of homemade components. We designed a consistent, human interface based on Ruby on Rails and other Web 2.0 technologies. It pulls in information from many of our legacy information systems, such as project management and time cards. We also have third-party tools we have built in. For example a screen sharing tool makes it easier for anyone here to make a presentation to a client or a colleague in another office. You just click on a link and you automatically you will have your screen starting to share with whomever you would like to invite.

EL. What are the various page types that one has available via the Tube?

DS. Our system is built around a number of page types, such as people pages similar to Facebook.  Active Directory pulls in a person's official data, such as phone number, to create the page. People can also describe themselves in anyway they like to pull their official biography. They can turn their bio into a PDF document, click on a link, and mail the bio to a client. We have project pages that have a start date and an end date. If someone enters a new project, then the system will pull in all of the people who have ever worked on that project. The information will include their bios, photos, and email address.  Our digital assets pages pull in all of the different rich media, such as videos, PowerPoint presentations, images, or documents of any sort.

EL. What tagging capabilities do you have in the Tube?

DS. We also have tagging built throughout the system. You can tag every kind of object, such as rich media. You can search on the tags, on the people, and the digital assets. You can easily search them across our entire system. All of these associations are noted. You can easily find who you should talk to about something, in addition to reading about it. We call this feature our knowledge sharing rather than knowledge management.

The data feeds pull in feeds from external sources, such as blogs. You can even push out internal information, provided it is not proprietary, to external blogs. We have very little top down control of the information. Users generate everything except for a very small piece of our home page. Here our internal communication groups tell what is going on within the company. Each project page lists what information you can share with the public and which information must stay in-house.

EL. Do you have separate pages for clients?

DS. We have a page for each client that aggregates all of the projects that we have done for that client. You can easily look and see what we have done in the past. You can even see information about discussions we had had with the client. These pages help us with business development activities.

EL. How are you handling blogs and wikis?

DS. We are on our fifth Wiki system at IDEO. It is simple to use and does much of the work most wikis ask people to do, such as create the navigation. We have more than 15,000 wiki pages. They are the first place where people want to go and to collaborate with their team members around projects and personal interests.

We give everyone a blog when they join the company. They can decide whether or not to use it. We also have many group blogs. We get 100s of postings per month to the blogs. The ethnographic research about ourselves that we learned as an email culture has helped to make our blogs popular. In the past, we have had different types of blog systems. In fact, our blogs went through a cycle of ups and downs. Some people would blogging and then stopped because no one was reading the entries. People would stop looking for the blog. We built a small tool called Feedmail which watches the blog for you. Initially, we subscribe you to all of the blogs. You can unsubscribe to the blogs and custom which ones to watch. Each day it generates a HTML email with the images and a short summary of what is in the blog posting for that day. You can click through and read the entire posting or skim the blogs. In a minute you can see what's new on all of the blogs and decide what you want to read. That is where much of the content of projects comes from.

EL.  Is there email within your collaboration system?

DS. You just click on a link within the system and it opens your email...it is integrated with our email.

EL. Do you made any provision to use the Tube as a repository for company documents?

DS. We have also a tools section within the Tube that allows us to post a variety of different tools, everything from HR forms, such as health benefits and time cards, and screen sharing tools.

EL. How often do you update the Tube?

DS. Our internal development team pushes out a new version of the Tube weekly. Each new version contains bug fixes and new features.

EL. How would the Tube help me to facilitate putting a project team together?

DS. The Tube can help you look at what manpower resources are available to work on a project. If you use a combination of data from our enterprise management system and our time card system, you can see the kind of people who are available for a project within your time frame.

EL. Have you opened up a section of the Tube to your clients and do you plan to expand it?

DS. Yes, already have a custom section of the Tube opened to our clients. They cannot get confidential information about other clients. They, however, can get access to any work that is happening on their project, such as status reports. In fact, we give them access to all of their information in one place. They don't have to search through their email to find the last update on a project or a report that IDEO showed at a presentation.  It allows us to have a very direct link with our clients and share with them the work that is in progress, such as drawings, illustrations, or storyboards. We can even share videos people we interviewed to get information about the project.  Many clients like this way of interacting, but some clients prefer a more conservative way of sharing information, such as email.  The majority of projects with our clients include some external Web-based tool for collaboration.

EL. What can CIOs learn from you folks about collaboration?

DS. Like many companies, when we started looking at collaboration, we first looked at the technology piece, especially the dozens of existing tools. Of course, we wanted to see if we could find something that could meet our needs.  We experimented with all of the Web 2.0 tools such as blogs and wikis, social networking sites, telepresence, and video; conferencing. The more we spoke with other consulting companies about their collaboration tools, such as McKinsey & Company, we found the reason why most of these systems do not  meet the expectations of those who buy them. It does not have to do much with the technology as it does with the social network within an organization that wants to drive more collaboration. You need to understand the organization's culture. What are the rules around collaboration?  Do we really encourage it or discourage? Many companies do not look at the motivations that would really provide some benefit for people to collaborate. Unless it really meets some needs people have, you understand those needs and their rewards, then it turn into a system that people will not use.

You also need to understand the kinds of concepts you want to share. People carry around much passive, not explicit, knowledge of things. That explains why we decided to create links between people. This proved to be a better alternative than creating a knowledge management to suck information out of peoples' heads, put it in a database, and then download it in their heads.

So, the trick consisted of finding the intersection between what motivates people and what is important to the organization. People need to get some benefit from collaborating with the system. Most benefits will vary company by company. It takes a custom system to provide that kind of motivation. People at IDEO really want to express their interests, to share their work, and to be known to other people in the organization. We never told people they must use the system. We designed the system so that it would appeal to people. We then unleashed it, trained people, and watched what happened.

EL. What is the key to designing intuitive interfaces?

DS. Many systems are not designed to be intuitive. We have tried to do things such as eliminate all of the little roadblocks that make it difficult for people to use the system. For example, we made is very similar to use across every part of the Intranet. We use the Active Directory system. You only log on once. You do not need different passwords for blogs or wikis. For example, special wiki language can cause people to stay away from the system. We have a simple editor in our wiki system.

You need to allow people to go where they already are rather forcing them to go to new places. We tried to understand the work processes we have in our collaboration today. We provide ways for people to use the same type of methods but do it in a better more effective. For example, Feedmail brings the blog digest to you via email. Most companies make you go to each blog and search around to find what's new. People waste time searching through dozens of blogs.

We built our system to adapt to changes in the environment. To this end, our collaboration system is a constant work in progress. We always look for new ways to improve it. We have a built in feedback system which people can click on a link and send our team a message. We want to find the functions that people want and overcome any barriers to them using it as fully as possible.

Our innovative process as a company is based on prototype early, and often. We try to get things out as early as possible as we can get feedback from users. We set the expectation that we will need to change things. I recommend that CIOs do that over time.

EL. What has been the payoff from the Tube?

DS. It has helped us to understand how we can improve collaboration and use technology to improve our innovation process. It has also helped us to improve our efficiency and our quality of work. It has helped us to generate more revenue because we have been able to attract new types of project outside of our traditional IDEO community.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

EL. What motivated you to write this book?

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

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

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

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

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

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

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

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

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

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

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

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

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

EL. What are you looking for in IT talent?

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

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

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

Why do some CIOs struggle to keep the lights on and butt heads with management every time there is another cut to the IT budget? In contrast, why do some CIOs receive all types of accolades, awards, and publicity for their IT leadership accomplishments? The latter CIOs have an easier time achieving business impact of IT than their struggling CIO counterparts for several reasons: These CIOs know how the business works and have been empowered to use IT to make things happen. What’s more, these CIOs work for CEOs who know that IT done well can make a difference in the company’s growth and profitability. These executives work together to find the right IT model for the business, make a range of IT investments to fuel current growth and to explore new ideas, and make sure the company can function in a digital global economy.  In other words, these executives are IT savvy. 

Executives who want to become IT savvy should pick up a copy a 150-page book written by Peter Weill, chairman of MIT Sloan School’s Center for Information Systems Research (CISR), and Jeanne Ross, director and principal research scientist at CISR.  In fact, the 160-page book is appropriately titled IT Savvy – What Top Executives Must Know to Go from Pain to Gain. Written in easy-to-read language, the book draws from research down by CISR, including vignettes about companies that have done a good job of transforming their IT organizations. The book’s appendix has a survey that allows you to rate how IT savvy you are.

Enterpriseleadership.org recently sat down with Jeanne Ross to dig deeper into the advice both authors provide in the book. Here is what she had to say:

EL. In the case of Aetna and BT, you talk about what the CEO did to bring about an IT transformation. What was the CIO’s role in this?

JR. We see successful cases where a CIO can take the lead and help the CEO see what it is possible. That’s not the point of this book. If you are a CXO, don’t wait for that to happen. You need to grab control and think of how you want IT to take your business forward. Meg McCarthy, Aetna’s CIO, will tell you that that Ron Williams, the CEO, was in charge. ‘He knew what he wanted, his vision was very clear, and my job was to deliver.’ She had to be extraordinarily good at that. On the other hand, she frames her role this way. It is a very different kind of leadership role. She didn’t have to convince anyone of the importance of IT to the company, as many CIO do. She just had to make sure that IT was first rate, and very professional. She also had to do the things so many CIOs assume they should do, but have trouble doing them. Why? Many CIOs lack the authority or have not been given the go ahead to take the business leadership role. Williams gives McCarthy all of the credit in the world for delivering.

EL. Okay, so what role did the CIO play in the IT transformation at BT?

JR. The BT CEO knew that IT needed to be more important than what it had been.  He brought in a CIO who could help him derive more value from IT. BT is a similar case to Southwest Airlines, which is also in the book. At Southwest, however, the CFO, who later became the CEO, spearheaded the IT transformation. These leaders realized that IT has to be really important. They also want to use IT in a way that yields the most value. They find the best CIO. Together they work hand in hand to make things happen in this company. In both cases, we saw a very tight partnership between an IT leader who helped provide much of the vision the CEO knew he wanted. The CXO was waiting for a CIO to help him see it more clearly.

EL. Is an IT transformation part of an overall corporate transformation?

JR.  Companies that base the transformation on moving more toward a global digital world will often recognize that IT has a critical element in making that happen.

EL. When selecting an IT operating model, what role does the business architecture and other architectures, such as enterprise, play in the process?

JR.  In an ideal world, you pick the operating model and then you define all of your architectures. Realistically you need to know where you are starting from. If you have had a siloed architecture, then you will get into trouble if you adopt, say, a unified operating model, where you standardize everything and integrate everything. If you grew up with siloes, you will have a long journey to unification. You would be better off taking intermediate steps that would take you to either replication or coordination.

Companies that haven’t had any discipline around technology, and that haven’t been thinking about architecture cannot just select an operating model. It just is an overwhelming change, and it is hard to do. As a result, companies in this situation might have their options limited. On the other hand, if you have always been good at architecture, you can select anyone you want and probably be able to pull it off.

EL. You say that IT savvy firms have a 20 percent higher margin than their competitors. Can you discuss your research process to arrive at this figure?

JR.  Because this is Peter Weill’s research, I need to piece this together. I should have asked him this question. Of the 600 firms in his sample, he took the top 25 percent of performers. He then went to those that were publicly held and pulled out the financial data. On the average, these companies had profit margins above 20 percent.

The methodology we used to pick these IT savvy companies would lead us to a very similar profile. My research focuses more on enterprise architecture, while Peter looks at how companies spend their IT dollars. We find a huge overlap in the companies with mature enterprise architectures and those companies that spend their IT dollars wisely.  Although Peter and I ask very different questions, we come to very similar conclusions on which companies are really deriving value from IT.

EL.  Many CIOs say that measure the success of their IT based on ROI. Is this a reliable metric? If not, what do you recommend they use?

JR.  ROI is not a bad metric. However, if that is all you are using, you will be headed down the road to more siloes. You have to be careful using an ROI. If you are going to make different kinds of investments for different reasons, you should be explicit about that. You do not want to have an ROI metric for everything you do because that it not why you are making all of your investments.  You are making some investments for ROI, and you might be making some investments to experiment on new ideas. ROI doesn’t work for experimentation or exploratory investments. You will eliminate all experiments real early if you use ROI.

In chapter 3, we say that your portfolio of financial investments has different goals so should your portfolio of IT investments. You should be very explicit about that and then match metrics to whatever you are looking for. So, most companies need to have an experiments budget for IT. Peter Weill calls them the strategic investments. As I mentioned, an ROI will absolutely destroy that effort. You need to look for a metric that helps you to evaluate what comes out of the ideas you have.  If you go back and look at the portfolio of things you did two years ago, you might look at what things had potential and what you should continue to invest in. If nothing had potential, you might say that you have the wrong approach, you are investing the wrong amount, or you are inveseting in the wrong projects. There is no single answer to that question.

We think that post implementation reviews are essential. So you put together a business case, and you ask yourself honestly what are we trying to get out of this? After it is done, you ask yourself if you did. That is how you are going to learn going forward. It is not so much what metric you use. It is about how you use those metrics. You need to follow up on them to check to see if they were realistic and you got what you expected.

EL. The federal government uses the earned value management metric for IT across all departments. Is this metric good for the private sector to use or is it just tailored to the government?

JR. I am not sure how they are doing that. I don’t think I can answer that. Our research does not extend much to the federal government IT. We have done a fair amount of presenting to government people and occasionally advising them. Our sponsors are all for-profit companies. That’s why we have had little interaction with the government.

EL. What are some of the methods IT savvy organizations use to communicate business value to their constituents?

JR. We noticed that Yury Zaytsev, CIO of Swiss Reinsurance Company, a global financial services company, always talks about IT situations in business terms. We said to him: ‘You are always talking about what the business is trying to do. It doesn’t matter if you are talking to IT people or business people, you instinctively talk about business. How do you do this and how do you train your people?’ He replied that he just does it. I get his point.

If you look at the cases in the book, such as Campbell Soup, Southwest Airlines, and Seven 11 Japan, executives at these companies do not realize they are doing something different from people who do not communicate well. They just say this is the way I talk. This is what we do in our business.

Some CIOs instinctively talk in terms of real business value, while other CIOs do not get it, but they think they have it. For example, these latter CIOs might talk about network downtime. No one cares about downtime. They might say, ‘Well, we talk about it in business terms.’ You do not talk to your business partners about downtime. You need to stop having interruptions or downtime by getting the basic operational stuff to work right. You should not have to explain what is going on with the technology, why it breaks, and why it is expensive. You have to get passed that.

You need to focus the attention of IT on how the business runs and makes money, and where does technology have an impact. If you start your own thinking process from the other end, then you will not be so concerned about how to communicate in value of IT or what metrics you use to measure IT value. You, instead, can concentrate on understanding the company’s biggest concerns and what IT can do about them. In IT savvy companies, CIOs think differently than their counterparts. IT savvy CIOs look at what is happening while everyone is in the valley tries to figure out what they are doing. These CIOs recognize that they have this unique perspective and can articulate and believe what is possible in the organization.

EL. Do you ask CIOs how they communicate with their rank and file?

JR. It is a very interesting question. George Westerman is working on that right now, and he will come back from this study with some ideas.

EL. In IT savvy organizations, what is the CIO’s role on the board of directors?  Do these boards have an IT committee or does the CIO sit on the audit committee?

JR. I will have to admit that we have not looked at that at all, especially in this book. We try to define the role the CEO and other CXOs ought to be taking. Are they savvy enough to recognize where IT fits in all of their operations and thus what they would have to report up to the board? You pose some interesting questions. I am surprised we have never studied that issue at all. On the other hand, if we go out and get a feel for the landscape, we will probably find many CIOs who have limited contact with the board of directors. We would have to search for those CIOs who engage regularly with their board.

EL. Have you looked at the types of portfolio management tools that companies use for IT?

JR. No. we have not gone into that at all. We have looked at the strategic view of how organizations think of their IT portfolio as opposed to what tools they use to manage it.

EL. About 60 percent of UPS’ one billion IT budget goes for running the business, and the rest goes for new investments. Do most CIOs have a good handle on a metric like this one?

JR. CIOs should pay much attention to that type of metric. Many of them don’t know the answer to that question. It is valuable to monitor that and to try to push money out of the operation and into the development side.

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

Jack be nimble, Jack be quick, Jack jumped over the candlestick. You might ask: "What does a children's nursery rhyme have to do with IT." It sums up what companies now look for in senior IT talent. Shawn Banerji, managing director of Russell Reynolds Associates' global technology sector, says, "Today's CIOs have to be agile enough to react to unexpected situations or challenges without getting burnt." Banerji's firm is one of the oldest executive search firms specializing in recruiting CIOs for clients such as General Motors, Hewlett-Packard, and Toyota. He says, "We have done several hundred CIO searches. In 1996, we recruited Ralph Szygenda away from Bell Atlantic to become global CIO of General Motors."

While at the MIT Sloan CIO Symposium 2009, enterpriseleadership.org sat down with Banerji, a speaker at this venue, to talk about job prospects for CIOs and their direct reports. Banerji has been with Russell Reynolds since 1999. Here is what he had to say:

EL. Can you explain how your firm works?

SB. We are one of the oldest retained (contingency) executive search firms in the country. Client companies pay us to help them identify, assess, recruit, and retain qualified talent. About two-thirds of the candidates we source currently hold executive management positions. Their employers recognize

the value they provide to the organization. We use our network to go after these candidates and then introduce them to our clients' opportunities. About one-third of the candidates we source are proactively looking for positions and have reached us through their own network. If these people meet our clients' criteria, we will engage with them about our recruitment process. Unlike some firms, we don't shop candidates' resumes around to multiple companies. We recruit for specific positions and get paid if the client company hires one of our candidates.

We operate with the C-suite. For technology, we recruit mostly CIOs, CTOs, and their direct reports, such as a vice president of applications, a vice president of infrastructure, a chief enterprise architecture, or a chief security officer. We don't touch the layer below these executives.

We deal with some of the largest companies in the world. We also recruit for privately held companies with anywhere from $100 million to $400 million in revenues.

EL. What is the corporate attitude right toward IT?

SB. We see two schools of thought evolving. Some organizations value IT more so than ever for two reasons: governance and efficiency. These companies say, 'I need to do more with automation and efficiency in my business. How do I drive my operating model to a shared service model? How do I automate all of these manual processes so I can cut some of my staff?' When it comes to governance, organizations need to have a more transparent view of what is happening inside the company, especially within the critical business lines, such as finance. It is not enough for the right hand to know what the left hand is going. The fingers on each hand must work in concert. Companies need to have strong IT leaders who know how to upgrade and will continue to invest in the existing environment.

EL. So, what kinds of IT leaders are companies looking for at this time?

SB. Companies are looking to turn people over and go after transformational leaders who can demonstrate the business impact of IT. Companies don't want IT managers of the status quo. For example, CIOs have historically measured themselves by two primary criteria: head count and budget. How many people work for me and how many dollars do I control? Those metrics determined the importance of the CIO's role and contribution to the company. Companies have turned this around by creating a new paradigm of the business information officer. This individual aligns better with the commercial interests of the business. This individual focuses on governance, as well as operational efficiency, and knows how to drive that kind of change in a meaningful, substantive measure. That individual does not look at headcount, but focuses on business contribution. He or she looks at their role in setting the company's governance policy. Creating business value by leveraging existing resources is another key area for a transformational leader focuses. How do I do a better job of selecting and managing key vendors? How do I free myself up from running the daily operational aspect of IT and contribute more to the senior leadership teams? A transformational leader strives to answer these questions.

EL. Are there reasons why a company might turnover its IT leadership for new players?

SB. I don't want to sound harsh, but some companies look for a new CIO because of return on investment. Not all companies value IT in terms of governance and efficiency. Many companies value IT as it relates to what the IT spend contributes to the organization. For example, if the largest line item on the balance sheet is technology, then the return on that technology investment better yield ways to increase revenues or to attract new customers. Some times, companies might replace a highly paid CIO with someone who makes far less. It's not worth paying something an exorbitant amount if they can't produce the kind of results the company expects.

EL. Are you dealing with many new CIO positions?

SB. We have a number of them in the pipeline. We went through a period where we did many new assignments for brand-name companies.

EL. Some CIOs leave positions with Fortune 1,000 companies to start their own consulting firms or to go work for a startup. They don't seem to rebound to where they once where. Is it hard for some CIOs to get back on the Fortune 1000 saddle again?

Some of these executives are in transition. Perhaps, they left on their own or were asked to resign. Many of these CIOs will have a hard time regaining the stature they once had for several reasons. Many of them are viewed as the archetype of that legacy paradigm of the CIO. Like the great generals of yester year, they commanded troops across large and complex global businesses. Today's organizations don't perceive these executives as nimble, fast-moving CIOs who can drive change through influence rather than by direct edict or mandate. Legacy CIOs have been empowered to drive change or to tell people in the organization what to do. Today's paradigm stresses collaboration and collegiality. CIOs need to lead by the carrot, not the stick. They have to convince and persuade business line managers and divisional CIOs who now report directly to business units, instead of the corporate CIO.

Some CIOs in transition didn't fall into the company's succession planning continuum. If someone has 30 or 40 years of IT experience, perhaps he or she did not mesh well with people coming up the ranks. On the other hand, some companies might want a well seasoned or a retired CIO who doesn't mind staying for a few years, grooming a successor, and then leaving. This happened at Chubb Insurance. Last year, a bank asked us to find a retired or a semi-retired CIO to sort out the current technology situation and create a succession plan.

EL. Do you see any consistencies with the backgrounds your CIO candidates possess?

SB. In the past 10 years, we have seen more diversified backgrounds, with a greater emphasis on business. We don't necessarily look for people who have a computational, engineering, or mathematical background. Instead, we look for people who are superlative business and process executives. These individuals know how to look at a business and understand where the opportunities exist and where to apply technology to create business value. For example, if a company manages technology more for cost than innovation, it will hire a CIO who understands finance. The CTO has become the be-all and end-all global technical executive who understands things like service-oriented architecture.

EL. Can you be specific about the competencies that companies want in a CIO today?

SB. Companies want someone who can apply technology to create more broad-based business value, but who also has expertise in another area such as sales or marketing. This individual might have an MBA or be someone who has run an operational business unit.

The majority of candidates we see have spent some time in areas outside IT of during their career. At some point, they decided to return to IT, either to head up a project management office or to do strategic planning. These roles provide a segue to take on broader IT operational responsibilities.

Ten years ago, we got more requests for consultants from McKinsey or Accenture. That has changed. Organizations want people who have owned the business processes and have accepted accountability for the results. Consultants don't operate that way. On the other hand, candidates who have been in consulting during their career usually have strong strategic planning skills, good project management skills, and good client relationship skills. We would consider candidates who have married this experience with corporate IT experience.

EL. What is your firm's formal process for screening candidates and what similar process do client companies follow?

SB. We use a very specific methodology called competency-based interviewing. It causes people to relive their professional experiences. It's analogous to drilling a well. For example, we might ask a person this question: Tell me about the time that you had to drive change across an enterprise and you got pushback from key stakeholders? Someone can easily give a theoretical answer to that question. Based on the answer, we might then ask: Who gave you the most pushback and why? How did you bring order to the governance process to win over this stakeholder? What concessions did both parties make to bring about a compromise? How were you able to demonstrate the business value of IT?

The more we drill through the answer, the more we learn about how the person handled the situation. If someone hasn't done what we ask about, then he or she is usually lost for words. You can't make this stuff up.

Our cadre of industrial and organizational psychologists helps us to evaluate candidates. Working with each client, we create an index of specific competencies, which we force rank. We interview against those specific competencies to develop a candidate assessment. The client company also interviews against the same set of criteria.

EL. Do you screen for whether or not the candidate fits the client's corporate culture?

SB. Yes, cultural assessment is very important to us. In fact, we recently rolled out a new tool called a cultural analyst. There is a rigor and a discipline in the science of assessing the competency of people to do the job. We marry these things into a very scientific rigorous process that provides a holistic view of this person. Although a candidate might have great skills, he or she might be a disaster because of the cultural fit. Conversely, a candidate might have most of the skills and competencies, but be a better culture fit than candidates with better qualifications.

EL. Is there any reason why you won't work with a qualified candidate?

SB. We've seen a number of candidates who have lied on their resumes. For example, some candidates will turn a one-week executive leadership course into an MBA.

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