Americans concerned about the state of the banking industry might just get some relief by joining a credit union. In fact, the Credit Union National Association has increased it awareness of credit unions as a viable financial alternative to banks. In the U.S., more than 92 million members belong to the 8,200 credits unions. Because credit unions are cooperatives owned by their members, they offer better rates, reduced fees, and a form of insurance similar to the FDIC.

One credit union, however, stands heads above the rest as a pioneer and leader in the field. Baxter Credit Union (BCU) began in 1981 initially to serve the financial needs of Baxter Healthcare's employees. During the 1990s, BCU expanded rapidly by merging with other credit unions, and by offering credit cards, home equity loans, prime mortgages, audio response teller, and online banking. Today, with assets of $1.5 billion and 140,000 members, BCU ranks as one of the top 100 credit unions in the U.S. BCU's key to providing first-class service to member companies, such as Cardinal Health and CDW, resides its integrated business and technology management strategy.

Enterpriseleadership.org recently sat down with Jeff Johnson, BCU's chief information officer, to talk about this credit union's business process for making and monitoring investments in technology. Here is what he had to say:

EL. How would you describe BCU's business strategy?

JJ. As a cooperative, our members own us. I am a member of this credit union. We do not have stockholders. We essentially do not report to anyone, such as a board of directors. We are not about maximizing profits to the highest degree. We aim to provide the best services and the rest rates for our membership. That sets our cultural tone.

As a Select Employee Group-based (SEG) credit union, our charter enables us to serve specific groups of employees or associations.

We seek out large, nationwide companies and try to wow their management teams into providing our services to their employees at no costs. We differ from most credit unions and certainly all of the banks. We have a very tight strategy based on servicing companies and the employees of those companies.

EL. How does your organization support the business strategy?

JJ. My department drives the message that we are not about technology, but we use it to support all aspects of the organization. We support the business strategy by having three distinct groups that focus on what key parts of the organization need to accomplish. Each group addresses a different imperative of the organization. One group supports our day-to-day operations so all of the transaction processing goes smoothly. We make sure all the members can log on to home banking and carry out their transactions. We make sure our front-line employees have access to whatever tools they need to service the membership. Another team focuses on strategy. For example, our project management office executes on the business priorities as projects and requests emerge. They do not worry about the infrastructure or worry about support. Our architecture group, which is our last group, makes sure that we make the best technology investments and that we optimize what we have bought. The technology space can spin out of control very quickly if you do not pay attention to the long-term implications of the investments you make.

EL. Do you have a physical preference or are you strictly e-commerce?

JJ. We have more than 35 service centers located across our company member sites. We determine the need for a service center based on the facility's number of employees. The majority of our transactions still come remotely whether it is through the Web, through the ATMs, through the phones, or what we call shared branching.

EL. What do you mean by shared branching?

JJ. We try to leverage what else is out there in the industry. We have something called shared branching. If you belong to a shared branching network, your members can go into other credit unions that are also a member of the shared branching network. We are very active in that. We hone things like shared branching with other technologies with the goal of pushing our own strategic direction forward.

EL. Can you describe a technology investment that helped you to differentiate yourself from your competitors?

JJ. Much cooperation exists across the credit industry. Because our strategy focuses on SEGs, we have made a couple of major technology investments. When we started expanding into new, large organizations in 2004, we created this entire branding infrastructure where we could custom brand a company as having its own credit union. Some companies do not want the Baxter Credit Union name; they want their own name. We create the Web sites, the documentation, the marketing materials, and the credit cards and debit cards. It is a great benefit for a company to provide a credit union under its name and auspices.

EL. What influence has your branded infrastructure had on the willingness of companies to join your credit union?

JJ. The first companies we signed up in 2004 would not have gone with us if we did not offer that branding capability. That was the ticket for us to get in the game. When we approach a new company, we emphasize what people want -- great service, great rates, and convenience. Technology enables all of those things. It is all about price, service, and convenience. On the other hand, our customers would have thrown us out if we did not have the right technology, but we have managed not to be in that situation.

EL. How do you measure the value of these technology investments?

JJ. We measure many of our investments on their ability to enable our strategy. If we did not have shared branching and did not build the branded infrastructure, we would have not been able to sell to most of the companies we have signed up in the past four years. We could not have done it without some of the technologies we have. Our organizational structure plays a key role here. For example, we have a team that focuses on making sure everything runs with 100 percent accuracy. No one really notices that it works. On the other hand, they certainly notice when it does not work. Just the confidence in the entire ability to deliver is important.

When it comes to measuring the effectiveness of investments, we break all of our projects into different quadrants and then we make decisions based on their quadrant. The senior management team focuses on projects in a specific quadrant. Mid-level managers will handle projects in less critical quadrants.

Before we invest too much time and money, we go through two internal review processes. We have an IT review process where we look at the architecture, and we do a total cost of ownership over the life of the asset. We do a lot of internal analysis. If we were to do this project, what would it mean from an infrastructure, cost perspective? On the business side, we go through a gated process. Once we approve the project, we go off and do a scope of the entire thing. We make sure we have a full understanding of everything the business users are asking for and then we gate it. We go back to the stakeholder and say, 'You know this project can do X. We are projecting it is going to cost Y.' They might agree or not. We then ratchet it up and cut out pieces of the scope or pairing it down. If yes, it goes on to the next level. If the answer is no, we take it back and start pairing down.

We have gone from the majority of our projects being significantly over budget to most coming in pretty close to deadline. The gating process in conjunction with the quadrant has really helped us control the overruns and the over budget part of it.                                                                                             

EL. Can you describe how you arrived at this quadrant approach to managing your investments?

JJ. Before 2006, we would look at all of our technology project requests and then try to make decisions about them holistically. We wound up having huge initiatives jumbled up with all of the mid-size initiatives. We decided to go with a four-quadrant approach, similar to what Gartner Group has.  Everything above the horizontal line is ROI positive; everything below that line is ROI negative. We put the projects either an ROI positive or an ROI negative above or below the line. On the perpendicular axis to the right, we look at things that cost more than a certain amount. The ones to the left cost less than that amount. Thus, our management team focuses on the ROI positive things in the upper right quadrant. These things will give us the biggest bang for the buck. As we move over to the left, we delegate less important ROI positive things to middle managers. These things are not large enough to make the radar screen of our senior management team.

As we go through our capital budget process, we try to break everything up into those quadrants and then we decide on our capital spend based upon that. Before investments percolate, I will bring them to the senior management team on an ad hoc basis. Having these conversations has proved to be an effective way to work through these projects before they are put on the quadrant.

EL. How would you gauge your organization's agility to respond to changes in the marketplace?

JJ. The model we have set up allows us to expand and to contract quickly. If we see many things north of the quadrant line, we can usually go out and get contractors to fulfill the projects. We also improved our agility by focusing more on project management and business analysis. We outsourced most of our applications development. The knowledge of our business and the knowledge of project management are the value elements. Applications development is a commodity.

EL. What does business impact of technology mean to you and how do you communicate it to your constituents?

JJ. Once every quarter, I look at our uptime and our transaction volumes. I also look at what our members have said about our services. That is my tactical approach to business impact. The strategic business impact is how well we are providing the services our members require. Each week, we have a meeting to discuss how well we have delivered on the business value of technology. We have not run into any problems in this area, which might sound surprising, but it is true.

EL. Do you tie technology investments to new customers or to improved processes?

JJ. As a financial institution, we have technology integrated with our day-to-day processes. If our systems go down, people cannot do their work. Technology functions as our nervous systems. It is what differentiates us. We do not break technology out that way.

EL. How has the economic downturn affected your business?

JJ. We have members who have lost their jobs or who have seen the value of their houses decline. Because we foresaw the recession, we identified many people who might have gotten into trouble. We told them that if they restructured the loan, we would reduce the fees on their loans. We have been very active to do that. I cannot tell you the number of loan workouts we have done.

EL. Are you using analytics to identify people who need to restructure their loans?

JJ. Yes. Three years ago, we had a major push to get business analytics on the fast track. Today we are doing some good analytics around credit quality. We lend people money for mortgages, not sub prime or any Alt A. We have all prime mortgages. We have not seen too many foreclosures.

EL. Have you made technology investments that turned out to be a mistake?

JJ. In 2005, we made a couple of investments that did not turn out to our satisfaction. We made the mistake of going with vendors who were first to market with their products. It was a dismal failure. Our governance process came about from these dilemmas.

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

Accenture ranks as one of the largest global management consulting, technology services, and outsourcing companies. In 2001, Accenture's IT organization supported 75,000 employees. Today, that number is 178,000 employees. Meanwhile, company revenues have gone from $11.5 billion in 2001 to $19 billion in 2007. By moving both IT service delivery and many internal business transactions to an online, self-service model and consolidating key applications, Frank Modruson, Accenture's CIO, says that his company will spend 30 percent less in real dollars in 2008. "As a percent of revenue per person, we've cut IT by 60 percent. That's a dramatic a reduction to the cost to serve."

Enterpriseleadership.org sat down with Frank Modruson, Accenture's chief information officer, to discuss how IT has cut costs but improved service delivery to internal customers. Here's what Modruson had to say in his second interview with www.enterpriseleadership.org.

EL. What improvements have you made to become more responsive to your internal customers?

FB. We've always focused on this as a priority. As the capabilities have evolved over time, we've had the opportunity to take it to the next level. All of our internal business transactions at Accenture happen online. We're a virtually paperless company. It doesn't mean we don't print paper, but all of your transactions as a business customer, whether it's changing your address or looking at your pay stub, occur online in a self-service model similar to the way you'd do any e-commerce transaction. For example, when you create a time report at Accenture, you create an online document, but you're really creating a transaction. We view that as being very customer centric.

When it comes to IT, we handle more than 40 percent of our helpdesk calls online in this self-service model. If you go to esupport, you can look up your problem, read about a solution, or escalate to a chat directly with the helpdesk via Instant messenger.

EL. Given that Accenture is an IT delivery company, what types of online services do you provide your external customers?

FB. First, we call our external customers clients. We don't do many things for them online because of the nature of our work. We have Accenture.com and other content sites about our business. We offer our clients micro sites that we'll tailor to them or to their industry. That's where it is ends. We've been racking our brains about what other online things we can do for them.

IT is trying to bridge the technology gap differently with our clients. For example, we've developed 12 telepresence sites internally. While I was speaking to a client about planning his trip to visit our facility in India, I told him that he might want to get on our telepresence link from Chicago to Bangalore and plan the trip that way. In fact, I added that he might consider conducting the visit via telepresence rather than traveling to India. This client was incredibly enthusiastic about them.

EL. What is your IT strategy and how does it to contribute to making Accenture a leaner, more efficient organization?

FB. Our IT strategy focuses on serving the business of Accenture by looking to make it more efficient and effective. To me, IT is about taking out the friction of our business and making it easier and easier to do the work of Accenture. One the key points in our strategy is to have a single instance of key applications globally. To this end, we only have one application to serve the entire organization for any particular functional area. We have one set of financials for the world. All of the transactions reside in the one system. You can drill down to any level of detail you want. You'll find one version of the truth. We don't have anyone saying this's what my report says and it doesn't agree with what your report says. Companies that have this scenario end up reconciling all the different reports to find the truth.

We also have one recruiting system and one scheduling system. If you go down the list, you'll find that we have one of anything. As a result, our data is cleaner because there are no discrepancies where this system has these fields and this other system has different fields. If you try to put these systems together, you have a problem.

EL. How do companies fall into the trap of redundant systems?

FB. Several years, we brought in a consultant to help us lead a strategic procurement project. I asked her how our technology compared with other companies she had done work for. She said that most companies begin the process by collecting all of the procurement transactions from all of the different systems, put the data altogether to try to make sense of it, and then do the analysis. We said that we skipped that step because we already had all of the data in one place. She said most companies don't understand how big a deal that is.

Here's how people fall into that trap. If everyone has their system, they do get their data faster. However, it doesn't work holistically across the company. You create a Tower of Babel where everything has a different name in each part of the world. It becomes difficult to get everyone to talk with each other. That's why we have companies with multiple ERP systems. I've heard of companies with 70 instances of their primary ERP. You wind up hosting 70 ERP systems, and you wind up reconciling all of these individual ERP systems to get total revenue. Accenture has one ERP system.

EL. What types of social networking or collaboration tools have you given your internal customers?

FB. This is a major program for us. We've launched Accenture Collaboration 2.0 to provide our internal customers with the next generation of social networking capabilities, similar to popular We-based sites such as Facebook. For example, in Accenture People Pages, employees can post their photo, a biography, a resume, and personal information, such as hobbies and interests. They can also list their areas of expertise, who they've worked with, and what things they have contributed to the Accenture Knowledge Exchange. Anyone can free text search this customized, extensible profile of our employees. IT contributed all of the base information, such as employee's name, address, phone number, and email address, but then we told employees to put in what they wanted.

We also have a media exchange similar to a Youtube for all of our media. We're doing an expert's page. We've introduced video from telepresence down to video on the desktop. We're deploying Office Communicator that will tie in Instant messenger, email, phone, and video -- all on the desktop. Since we have one Active Directory, one global email system, and one global desktop, our rollout of this Office Communicator will be straightforward.

EL. How are employees using these collaborative tools to make their job easier?

FB. We want people to cut through the company's hierarchy when they're searching for information and capabilities. People can locate expertise around the firm rather than going up and down the hierarchy of the person they report to. For example, when I did a free-text search on People Pages to find employees who have wine and beverage industry experience, I got 768 hits matching wine. I narrowed the search and found some people who had beverage, wine, and spirits brand management experience. If I go to Office Communicator, I can then check the presence indicator next to each picture. The indicator tells me if the person is online and available or not. Because I see the person's calendar, I know when he or she has a meeting or will be free. If the person is online and available, I can go ahead and contact the person via either Instant messenger, email, or telephone. This capability breaks down the barriers because we can just click on the person and reach out to them. We're trying to make it seamless for our people to get connected to the technology and then to make the experience better. We're trying to bring the power of 178,000 employees to each employee.

EL. Have you improved the way your employees search for documents on the Accenture Knowledge Exchange?

FB. We've added a new, enhanced search and preview feature. Our old search feature was similar to google.com. If your search found documents, such as PDFs, you had to search again on the term to find the page you want. With preview, you see a picture of the page in the document that has your search term. If Accenture is on page 32 of a 50-page document, then you see page 32 highlighted.

EL. What has been the most unusual experience with social networking?

FB. We put up a Wikipedia on Accenture so employees can add their entries about Accenture. Meanwhile, we launched an application, a social network experiment, call Percenture, which tells you the percentage of employees who've joined the company after you did. It also gives you a perspective about the size of the company, where you are, and how long you have been with the company. We didn't post it anywhere on any of our applications. We sent it to out to people via email. In the next 24 hours, more than 30,000 people hit it.

A couple of weeks later while I was speaking to a 100 people, someone asked me where he could find the link to Percenture. I said that because Percenture was an experiment, we didn't post it anywhere. One person raised his hand and said that the link was in the Wikipedia. Apparently, someone went into the Accenture entry and created a link to Percenture. The person who knew where the link was had been with the company for just two months. He knew to look there because of his online experience outside of the company. The best part of it is that someone created the entry for it.

EL. What unique wireless tool have you given employees who travel?

FB. We have a utility that allows employees to get connect to a wireless hot bus around the world. When I was going through Toyko Airport, I opened my laptop, and connected immediately without exchanging any credit card information. This utility just works.

EL. How do go about looking at the right technology mix for your internal customers?

FB. We do a variety of things. We have a portfolio management process for our applications. We manage those applications as products as we work with the customers they support. We do the same thing with our infrastructure. We channel initial funding requests through our IT steering committee, which I chair. The committee includes the chief operating officers of Accenture's operating groups, and the chief operating officers for internal functions for HR, strategy, and finance. Everyone gets one vote. We go through all of the project requests, and then prioritize them based on the importance to the business. Our portfolio management system tracks all of these products.

EL. What determines a successful product?

FB. Before any project gets going or funded, we put together the business case, which includes the cost to do the work and the expected business benefits both in hard dollars and in soft benefits that have some metrics attached to them. Once any project goes into production, we monitor attainment or realization of benefits against that original business case. We do this for three years. Once a year we have an internal audit to look at the process of measurement, to select business cases, and to report those findings to the IT steering committee right before we do funding for the next year.

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

In the 1990s, RFID burst on the scene and was hailed as a new technology that would help reshape the global supply chain. It promised tighter inventory controls, shorter time to market for products, and cost savings for retailers. When Wal-Mart and the U.S. Department of Defense mandated that suppliers use RFID technology, rapid adoption seemed assured. Yet, adoption has not been rapid, and the buzz about RFID has quieted. Has the early fervor for RFID cooled, or has more been going on behind the scenes? Enterpriseleadership.org recently spoke with Reik Read, of Robert W. Baird & Company, about the state of RFID: What's going on now, and what's to come. Here's what he had to say ...

EL: Can you tell us about yourself and about R. W. Baird &  Co.?

RR: Robert W. Baird & Co. is an international financial services firm. We were founded in 1919, and for many years were owned by Northwestern Mutual, a large life insurer also located in Milwaukee. In 2004, Baird actually bought itself out. We're now fully employee-owned, and we've got a nice track record in a number of areas. FORTUNE, for the last four years, has ranked Baird as one of the "100 Best Companies to Work For." The quality of our research also consistently earns Baird top rankings in a number of prestigious surveys including The Wall Street Journal and Forbes. So, we're small, but we've got lots to be proud of. I've been covering the auto-ID space for Baird for about ten years. That includes companies -- historically, Zebra, Intermec, Symbol, when they were public. We've also spent a lot of time studying the RFID space.

EL: Enterpriseleadership.org interviewed some early proponents of RFID who were very enthusiastic about that technology. But it seems that adoption of RFID has not been as fast as was predicted. Why is that?

RR: When you're referring to the Wal-Mart mandates and the associated UHF technology, I think what's happened is that standards needed to be developed. And beyond the standards, equipment needs to be developed, and people need to write software solutions. End users need to learn about the technology, and they need to share implementation plans. Certainly, you need to develop a business case so you can justify the investment in that technology, and along with that, the pricing needs to drop. All of those things together have probably created more of a headwind than people had expected with RFID. There was a belief out there, if you go back to 2003, when Wal-Mart mandated use of the technology, that if Wal-Mart was mandating it, RFID adoption would happen fast.

I  also think that Wal-Mart itself has recognized that they've not been able to put in the infrastructure as rapidly as they had hoped and probably not in quite as many stores as they had hoped. All of those things have accumulated to slow down adoption versus what we were thinking four or five years ago.

EL: Another big entity that was trying to spur adoption of RFID was the Department of Defense. How is the rate of RFID adoption in the government sector?

RR: The DOD has had to deal with many of the same issues I cited about Wal-Mart. But, a lot of those issues, by the way, are being resolved. We've had the Generation 2 standard out there since late 2004, equipment since early 2006. Equipment has been developed for the last couple of years, so now we are really on second or third iterations of Generation 2 equipment. That equipment is starting to work fairly well; the issue's no longer with tags and readers being able to communicate with each other because they communicate with each other effectively. Now, it's a matter of writing the software for certain sets of applications, the ability to tag more and more SKUs, the ability to perform all of the necessary tasks, to understand and generate a better ROI. As a result of all of those factors, I think the DOD has come to believe that RFID will provide some very good things, but, it's very hard for them right now because budget dollars are scarce. We're at war, and those dollars are being diverted elsewhere.

At some point in the future, we will scale back operations in Iraq and in Afghanistan, and at that point, there probably will be better opportunities for RFID deployment within the DOD.

EL: You mentioned that one of the big sticking points for adoption has been a lack of compatible standards for RFID. There are a number of software companies offering competing RFID solutions, but are some standards emerging, and do you see more cooperation developing on standards?

RR: Yes, absolutely. Historically, prior to Wal-Mart's and the DOD's mandates, there really wasn't much in the way of standards development. ISO had a few loose standards with respect to some of the various RFID technologies, but there wasn't a real concerted effort to create them, and the only industry body was the Auto-ID Center at MIT, an academic institution that isn't in a position to really move standards. So, when Wal-Mart and the DOD mandated use of RFID, this, in effect, created enough impetus within the industry to form a body that was specifically designed to create and develop standards: EPCglobal. EPCglobal has done a very good job of getting people within the industry together to foster the standards development process. So, when I talk about the Generation 2 standard at UHF that was developed by EPCglobal, that's now been ISO approved. And they're now trying to create an HF standard with the same protocol as the UHF Gen-2 version so that regardless of what frequency that's used, the protocol will be very similar. By the same token, EPCglobal has done a lot in the way of standardization of how readers work with a network, or different types of software standards. The RFID industry, in general, recognizes that the only way to encourage mass adoption is to have a very clear set of standards that are well developed.

EL: Do you see adoption happening more quickly in Europe or Asia than  in the States?

RR: I do think it matters a little bit by geography, because adoption's being driven by some different things. For example, in Europe, you now have Metro, a large German retailer, which has done a very good job of testing and understanding this technology, and understanding the benefits that it brings to them. They feel comfortable enough now, not only mandating it as Wal-Mart did, but also, their mandate has teeth in it. As of October 1st of this year, when you're a supplier shipping to one of Metro's 229 Cash and Carry or Real stores in Germany, if you fail to put an RFID tag on your pallet, you'll be basically charged by Metro. That's going to induce a lot of suppliers to ensure that they comply with that mandate. There's been some change in some European regulations that have helped also. The other area that's progressing well with RFID adoption outside the States is South Korea. They've embraced RFID technology.

EL: The Europeans seem to be more sensitive to privacy issues in some respects than Americans, and some people are starting to talk about privacy with regards to RFID technology in Europe. Could the Europeans begin to move towards legislation around RFID as they have in some other areas of data gathering?

RR: Yes, and I would actually argue that the United States have also been doing so as well. There's been a lot of discussion about privacy within the U.S., and there are a number of privacy groups that have raised concerns out there. And legislation around this has been passed at the state level.

For example, in Wisconsin, they've legislated that you cannot put an RFID tag in someone without their knowledge. California has some new legislation moving through its political process. Privacy is an issue that's being looked at by legislators, and I think that the industry really needs to do a better  job of is explaining what RFID is, what it can do, what it can't do, where privacy is not an issue, where it might be an issue, and the steps that they're taking to ensure that privacy exists. In many cases, the technology just doesn't transmit well enough that it could even be read at a far distance. And in a lot of cases, there are safeguards around the technology such as who is, and is not, authorized to read a certain tag. But again, the industry has to do a good job of letting people know that privacy with this type of technology is not an issue.

EL: It sounds like things are being addressed more quickly in the  state legislatures than on the federal level right now.

RR:  That's correct. There's a caucus within the U.S. senate that looks at RFID, but it seems to me that the federal government is a little bit more deliberate in making sure that they understand the issues. They don't want to dampen the technology before the technology has a chance to move forward. By the same token, everybody wants to make sure that end users can be comfortable, because at the end of the day, if end-users aren't comfortable that their privacy's being protected, they're not going to have the incentive to use the technology.

EL: Another factor that might be impeding rapid adoption of RFID is the issue of infrastructure. I mean, buying the readers, getting the systems and the processes in place, and so on. Is that an area of concern?

RR: Yes, you're looking at this from a Generation 2, passive-technology standpoint where a lot of suppliers have systems in place that are working today. They do bar coding, they do it well, and their infrastructure is designed around bar coding.

There are certainly issues around RFID that need to be resolved, but at the end of the day, what a lot of end-users are going to need is a business-case justification to put RFID in place.

Right now, they're saying, if I have all of this technology that's working pretty well, why do I need to change it out with RFID -- which, by the way, is exactly what they did 30 years ago when they started using bar coding.

A lot of little things need to go right in terms of better equipment, lower pricing, more software solutions, more people adopting the technology, more SKUs being tagged -- all of those add up to a better ROI for everyone within the supply chain. The benefits of RFID have to outweigh the costs, so there's a business-case justification. But, RFID does have certain attributes that make it very attractive in some cases: you don't need line-of-sight, so reading it can be much more automated than a bar coding process, for example, and that leads to faster read rates and, in a lot of cases, better read rates.

Also, there's additional information that you can put on these tags, such as routing instructions or identification -- however you decide you want to use that information can be very, very helpful in tracking inventory more accurately, to reduce stock-outs, and so on. These are the types of things that CIOs would be looking at as business case justification.

EL: Even with the challenges to adoption of RFID that we've talked can you give sort of a best guess/forecast about where you see things heading for RFID?

RR: Yes, I think it's appropriate to talk a lot about the supply chain and all of the uses of RFID there because it's potentially a very large market. But I think it's also useful to acknowledge that there are a lot of areas that hold potential for RFID that are not in the supply chain. Another use for RFID that's really catching on is contactless payment, for example, where MasterCard and Visa and American Express are increasingly using RFID chips within their credit cards to make payments, much as Mobil has done with their Speedpass. I think there's some good adoption outside of the supply chain.

When you look at Generation 2 RFID, I think what you're going to see is increased emphasis on a number of closed-loop asset management solutions. So, for utilities, for example, that have large transformers or other equipment that might be sitting in a yard somewhere, it's much easier and faster  for them to identify that with RFID. In closed-loop manufacturing operations where you have, say, totes running on a conveyor belt that are carrying various types of inventory, a lot of times those totes simply get lost in the process. If you can use RFID, and you're constantly rescanning that tag, you're driving the per-scan cost of that tag way down so it becomes a much better ROI proposition. When you talk to vendors out there, they're spending their time and attention in these asset-management, closed-loop areas where there is some good momentum moving forward right now -- still small, but again, good momentum. You are also seeing a good amount of active tag or Real Time Locating System deployments in the asset management area.

From a supply chain standpoint, the things that you continue to need to look forward to are what we talked about in the Metro example. They're moving forward with all pallets as of October 1st into these stores. They're talking about extending that into cases in 2008.

Wal-Mart has been pretty silent in the last six months or so. In part, that's because they've turned their RFID functions off from IT to their operational group. So, there's some digestion going on there. There's still some infrastructure that they have to get in. But I think what happens is that kind of ebb towards the end of the year. You're going to see Wal-Mart get more aggressive and probably start sending out more letters identifying those suppliers that are not in compliance. And so, those are all things will help to continue the momentum going, and you will see more in the way of solution development, and in the way of the channel getting involved. But, in terms of when we really start to see that big inflection point, that probably won't be in the near term; that is well more than a year out. What you will see are indications that things are moving forward, such as, are you seeing more RFID in contactless payment? Are you seeing more closed-loop solutions? Is the channel getting more involved in RFID? These will all indicate that the technology's moving forward.

Doris Hall has chalked up a stellar track record devising strategies and building systems for supply chain-logistics. For the past seven years, she has been vice president and chief information officer for BAX Global Systems, a $3 billion worldwide business-to-business freight-forwarding company. She has led the charge in building global operating systems networks for clients such as  Microsoft. Prior to BAX Global, she was a senior IT manager for systems development at Emery Worldwide, supporting 600 business units worldwide.

Now, Hall is taking in stride a corporate logistical change that will alter the IT organization and her reporting structure. In 2006, Deutstche Bahn AG, a $50 billion global railroad company based in Germany, acquired BAX Global, formerly owned by Brinks International. BAX Global is being merged with Schenker, Europe's largest multi-modal freight carrier, under the DB Logistics umbrella. Together, BAX Global and Schenker will have about 50,000 employees in more than 1,000 offices in 100 countries.

Recently, Enterpriseleadership.org spoke with Hall about how she is preparing the IT organization for the merger of the two companies. Here's what she had to say:

EL: Can describe your IT organizational structure and how it fits  into the Deutsche Bahn organization?

DH: IT at BAX Global is entirely centralized, and that's also true for Deutsche Bahn. We don't have any outsourcing. Because we were purchased by Deutsche Bahn, we're going through a transition; we're a global organization, but we're one of several global entities owned by Deutsche Bahn. All of these entities are gradually being integrated under the Deutsche Bahn umbrella.

In the U.S, we're still two separate organizations, BAX Global and Schenker, but we're working together as one. The organization is in a state of flux. We're changing from being the global corporate office to being the regional office for the Americas (U.S., Canada, and Latin America). I report directly to the CEO of the Americas. Deutsche Bahn has a global CIO who I have a strong dotted-line responsibility for adhering to standards. I also have to make sure we're in lockstep around the world when it comes to the selection and delivery of our IT solutions.

Within my organization, we have IT leaders in Canada, and in most of the Latin American countries. Below these people, we have a vice president of infrastructure who oversees the support of the backbone, and another vice president who has responsibility for applications. This's the traditional way the IT organization is split.

EL: Given the structure of IT, how does it work with the business  units to make sure their technology needs are being met?

DH: The IT staff sits within IT, not the business units. We have a director for strategic operations and finance and another for customer facing. Both of these individuals align with the business by helping to decide what needs to be done, and then passes the tasks over to the IT group that will execute them. That's the way we're moving.

Many of the functional groups have a "super user" whose primary focus is on technology in their group. For example, the super user in finance sits at a fairly high level in that group. This person doesn't do any coding or specification writing. However, this person understands how the finance systems work, answers any questions about them, and helps the group to use technology to do its job. By understanding what our customers do and what they need, the sales and marketing super user drives most of our Web initiatives. Super users work very closely with IT, and we depend on them a lot.

EL: What does your governance model look like and what changes are  you going to make to it on a regional level?

DH: About four times a year, all of the regional CIOs around the world, along with leaders from the corporate group, meet to discuss how well we've been adhering to the strategic direction for IT, and what might we be doing in any specific region that could influence the direction of the strategy.

In the Americas, we've been developing our governance model. The executive team, which is headed by the CEO, currently meets at least four times a year, but we are looking to increase that number. I have governance in the business through this group. I also have governance in IT through yearly face-to-face meetings. Meanwhile, governance in IT also gets carried out through bi-weekly conference calls and one-on-one meetings with staff. I travel a lot to meet with staff leaders.

EL: You've specialized in delivering global logistical supply chain solutions. What advice would you give to CIOs who are making major changes in this area?

DH: The global nature adds another layer of complexity. I'd tell new CIOs, especially, not to make it any more complex than it needs to be. It's complex enough. This is an area where you'll find users who want to be very creative, and they tend to request every feature that comes to mind. I can't tell you the number of times we've built and deliver something that was so complex and abstract, no one could use it.

People don't trust a system that's not flexible; we aren't in a precise business. I'd emphasize being careful. Don't insist on building a system that will make all the decisions for you. Everything doesn't have to be completely automated -- use technology to do the things that you know the system can handle very well. In our business, that usually translates to tracking where your goods are and gathering the info so you can report on it in a meaningful way.

EL:  You've done some pilot projects from RFID tabs. What's your  opinion about this technology?

DH: At BAX Global and Schenker, we've done a couple of RFID projects to get some synergies in managing our warehouses. We thought we might move these pilot projects into the transportation area country by country, but we haven't seen the need for that yet. We know how to do it. The pilot projects in our warehouse worked fine, but they didn't give us any more benefit than what we had with our existing technology. Deutsche Bahn has started to see a lot of benefit from using RFID in large transportation rail and passenger rail services.

EL: What formal quality best practices do you use in IT?

DH: I've used the balanced scorecard, but it hasn't worked well within IT. We tend to come together as a corporate team and decide what our direction will be. Right now, we have the strategy and direction to execute our merger plans.

The closest formal best practice we have is the IT Infrastructure Library. It provides a good framework for controls and practices for managing our IT infrastructure. We're using most of the ITIL service support functions, and we have several infrastructure managers who've gotten certified in ITIL.

We do use a bit of CobIT for security, but we don't pull these best practices out of a book and follow them to the letter. We tend to tailor things, as well as follow collections of best practices.

EL:  What are some of the key process improvements you've made as  CIO?

DH: Bringing in ITIL has been one of our major process improvements. We've made a number of improvements in our global infrastructure. Putting together an IT steering committee to help decide the right things to do is another key process improvement. We've made process improvements in communications so we could have effective all-hands meetings, as well as one-on-one meetings, with the IT management team.

EL: You've been a speaker at several IT venues. What have you gotten  out of that?

DH: I always manage to get something out of each venue. I like listening to my peers in other industries talk about how they handled situations in their organizations. These people also make great sources for networking. I get a lot out of presentations given by CEOs or consultants with expertise in leadership.

EL: Do you belong to any CIO organizations?

DH: About four years ago, I was active on the CIO Executive Board, a selected members-only organization. Participation involved spending a lot of time writing and speaking, but during the past few years, I've found it difficult to get away for some IT conferences. So, it's not fair to be involved with an organization if you can't do what's expected.

EL: Any particular IT leadership books you'd recommend to other IT  professionals?

DH: I liked the The New CIO Leader written by Ellen Kitzis, a senior vice president of the Gartner Group, and Marianne Broadbent, a senior fellow at the Gartner Group. My favorite book, however, is Larry Bossidy's Execution. I'm not really a big Peter Drucker fan. I tend to  give Pat M. Lancioni's Death By Meeting to my managers; because the book is very small and a very concise fable, the managers can get a lot out of the each reading within a few minutes.

EL: What attracted you to the supply chain logistics?

DH: It just kind of happened. I started out in manufacturing and then moved into warehouse distribution. By that time, I had the beginning of a good track record in logistics. I also found it to be a very interesting area because it's complex. IT people who like to solve puzzles will find logistics very addictive.

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

In 2003, Exelon, the $15 billion owner of two of the nation's largest electric utilities, transformed the way it did business to keep its competitive edge, and to prepare it to handle mergers and acquisitions efficiently. Dan Hill, senior vice president and CIO, spearheaded the move to change IT from decentralized organizations into one centralized group with approximately 800 employees. He says, "We saw the centralized model as a way to increase and to improve our overall effectiveness through standard processes."

Working with senior management, Hill put a management model, or playbook, in place for the new IT organization and adopted the CobIT best practice. His on-going emphasis on relationships, ranging from a mentoring program for employees to the values IT managers require, have earned him several awards including, most recently, the Computerworld Premier 100 IT Leaders award in 2007.

Recently enterpriseleadership.org spoke with Hill to talk about the unique  aspects of his IT organization.

EL: Why did you decide to go with CobIT for the new IT organization?

DH: In devising our playbook, which we call the "management model," we looked at the best way to structure all of our processes and procedures across the organization. It made sense for us to align with an industry standard that we were familiar with, which is why we chose to base our management model on CobIT. We've put a lot of organization and rigor around our management model. Our decision to incorporate CobIT has really paid off for us. In fact, we're looking at taking it to the next level by incorporating ITIL [IT Infrastructure Library] to provide a framework for our service delivery and service support areas. With ISO 20000, we are well positioned because it nicely aligns ITIL with CobIT.

EL: What has been your payback from CobIT?

DH:  Our best metrics for assessing the value CobIT has brought to our internal processes and procedures is reflected in our performance with both Sarbanes-Oxley compliance and our general audit results.

EL: Can you describe your IT management structure and your IT  governance process?

DH: There are two IT vice presidents who report to me and who are each aligned to one of the major business units -- energy delivery and generation. There are also IT vice presidents for enterprise applications and infrastructure and operations.

The governance groups for architecture and engineering, the project management office, the business office, and security and compliance also report to me.

The IT executives aligned to the major business units sit at the "table" with the business when they talk strategy. This partnership allows us to integrate the future direction of each business unit into our overall business planning processes for IT.

In addition to ongoing partnership and work with each business unit, we also have an IT council comprised of senior executives from each of the businesses. This council has multiple functions such as reviewing our annual benchmarking and overall business plan.

EL: How do you handle a business unit's unexpected  projects?

DH: When we centralized several years ago, we centralized the employees, functions, and the budget. At that time, I recognized the need for a "relief valve" for emergent work that occurs during the year and is outside of the normal planning process. As a result, each year we set aside a "project reserve pool" that is managed by the IT council. Any business unit can apply for funding from this pool to address an emergent need.

EL: Besides your governance process, what other things did you do to align the new IT organization with the needs of the business units?

DH: We built a formal client engagement process and focused heavily on interacting with clients on a daily basis and in a consistent manner. The Client Engagement Model also helped to provide clarity about the delivery and value of "back office"-type functions such as infrastructure services. In the end, we eliminated a lot of the inefficiency and redundancy found in a decentralized structure, reducing cost while improving quality and delivery.

In addition, we also worked to make sure that IT strategy remained aligned with each business unit's direction while also looking for opportunities to drive standardization. If we saw similarities in initiatives from different businesses, we viewed this as a chance to leverage standardized and common platforms and solutions.

Lastly, I looked closely at how we selected our IT leadership team. We established guiding principles that we intended to operate by and ensured all of the leaders we selected to join the team regularly demonstrated behaviors consistent with these guiding principles.

EL: How does your IT mentoring program work?

DH: We put a mentoring program in place to help IT employees own their careers and to support them in that process. The mentor helps the employee identify what skills he or she needs to work on, and also provides a broader perspective of the organization. We encourage employees to choose mentors from different parts of the organization.

Acting as an essential business contact, mentors play a critical role as an employee transitions throughout their career.

The mentoring program places a lot of importance not only on the relationship an employee has with his or her mentor, but also the relationship an employee has with his or her manager. The manager plays a role in helping the employee identify their career development needs, and provides essential feedback and coaching necessary for successful job performance. Combined with the mentor's role, the result is a comprehensive program for the employee.

EL: How do you balance the mentoring program with other forms of  employee development?

DH: The mentoring program doesn't take the place of other, broader development programs the employee might desire, such as pursuing an MBA. The mentoring program very nicely complements the wide range of development opportunities by providing a trusted advisor who will help employees identify the development opportunities that support their career and growth objectives. We've gotten a lot of positive feedback about our mentoring program both from employees in IT taking advantage of it as well as areas outside IT. In fact, the company plans to use our program as a model for a company-wide mentoring program.

On our Balanced Scorecard, we track a metric related to employee development. This metric looks at the number of training days each employee has taken, the budget we've allocated for that training, and how many employees are utilizing the mentor program. We look at how well we have delivered against those metrics. This keeps overall employee development on the leadership team's radar.

EL: What is your philosophy about outsourcing IT tasks?

DH: Outsourcing IT functions isn't unique to any one company or industry. More IT jobs within a company are being done by outside resources. When it comes to sourcing, you first need to establish a strategy by which to make your sourcing decisions.

I've put a lot of emphasis on the strategy for how we source and outsource. The outsourcing strategy we developed can be viewed as aligning with the SDLC [Software Development Lifecycle]. The model has internal employees who have detailed knowledge of our business processes and systems, who engage with our clients, gather requirements, and design solutions. Doing so ensures employees are adding value in the right areas. We then leverage outsourcers to execute the "factory" or "build" portion of the SDLC.

EL: What have you been doing to drive innovation in IT?

DH: Innovation ranks high on the list of business initiatives I've been driving over the past year. We've leveraged technology to make our power trading business very competitive. For example, we've created a central data repository and other tools that support effective decision-making on the trading floor. We have rolled out a new portal with Web 2.0 features that are tightly integrated with the power trading organization's back-end system. This initiative has been a great win-win for the business and IT.

For our electric delivery companies, we recently implemented a new outage management system. We're currently working on a large project to roll out a mobile dispatch system for field crews. Overall, IT strives to bring solutions that enable the business to succeed and reach their goals.

EL: Any other innovations?

DH: Tagging and clearance is a critical operational process in our nuclear plants. Nuclear employees working on field equipment need to tag equipment out-of-service so no one will operate it. We've implemented a self-service kiosk where a worker can wave his or her badge in front of a reader to sign onto the tagging system. The worker is authenticated into the system and immediately brought to a screen listing any equipment tagged out by them. This system has brought significant benefit to our nuclear organization.

EL: How has Exelon coped with deregulation?

DH: Some areas of the country have very little experience with industry restructuring, while others have a lot of experience. We're in the latter group. Because we have been living through the process of restructuring for several years, we have built the ability to deal with changes in our business model that deregulation, and other major disruptive forces, can require. We have created our "management model," and we know to focus on our core business, to strive for operational excellence, to benchmark aggressively, to strive for continuous improvement, and to aggressively manage costs. All of these elements are important when the industry dynamics are changing and provide us with the ability to succeed in a deregulated industry.

Because restructuring has driven more M&A activity in our industry, we've developed a flexible business process architecture and infrastructure that enables us to respond to the demands of mergers or acquisitions.

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Elizabeth M. Ferrarini is a free-lance technology and  business writer from Boston, Massachusetts. You can reach her at elizabethferrarini@yahoo.com.