Scott Dillon has earned an impressive track record, leveraging an understanding of both technology, and banking and financial operations at Wells Fargo & Company, a diversified financial services company with $540 billion in assets, 23 million customers, 6,000 stores, and a strong Web presence. Early in his Wells Fargo career, Dillon was vice president of performance reporting in cost accounting. He moved up to executive vice president and head of payment strategies.

From 2004 to 2006, Dillon made a number of key business process improvements  as a divisional chief information officer for the Wholesale, Investment, and Trust Technology group within the Technology Information group. In September 2006, he made one of the most challenging moves of his career to become the executive vice president and chief technology officer for Wells Fargo's Enterprise Hosting Services (EHS).

Often called the heartbeat of Well Fargo, EHS provides reliable and cost-effective, 24x7 data center operational support for Wells Fargo's mission-critical applications and for the vital delivery channel for Well Fargo's business partners.

Recently, enterpriseleadership.org sat down with Scott Dillon to discuss how he is transforming a monolithic data center operation into services designed to provide business partners with a higher level of value. Here's what Dillon had to say:

EL: Can you give me a quick overview of your organization's  structure?

SD: The EHS includes the entire data center infrastructure in our 40,000-square-foot structure, minus the network. We have about 1,000 professionals who collectively comprise both the data center team and the facilities team, along with as many as 300 contractors, depending on what we're doing.

We've been working hard to balance our decentralized enterprise organization, as well as our systems, with the needs of our business partners. For example, we've tried to make the distributed systems more business facing. We also have some shared functions, such as mainframe and storage groups, which are used by everyone.

EL: Why did you make the change from a business unit CIO to CTO of  Enterprise Hosting Services?

SD: It was a good personal move for me. I wanted to do it because I had a good understanding of the applications, the customers, and the infrastructure. This position has enabled me to bring a customer-centric focus to our hosting services. I have the challenge of balancing all the needs of the CIOs I used to work with, maintaining an infrastructure that makes sense to the business partners, and protecting all of the data on the floor.

EL: What process improvements did you make as a CIO that better  prepared you for your current position?

SD: As a CIO on the wholesale side of banking, I had to deliver the technology and the necessary resources to help our customers compete in the marketplace. Because we needed to have the right products coming to market faster, I worked in conjunction with the wholesale business group, which steered our innovation course. We developed pods, small groups free of the profit-and-loss corporate roadblocks. We were still very disciplined. My job was to make sure we had the right technical people; the business partners selected their team members to work with us. We could get very close to the business problems of how to deliver a treasury workstation or how to deliver a new file transport system within six, to 12 months. We were able to have many pillars-of-truth sessions with team members from the business. By breaking down all processes, we could take the product from pod concept to production very quickly.

EL: What technologies have you brought in to make better use of your  data center resources?

SD: We've started to look strategically at our data centers. Specifically, we've applied the concept of supply management and demand management as a best practice for how we want to manage our data centers. On the supply side, data center managers have to work hard to control the supply of resources as our consumption of those resources grows and their related costs go up. For example, we've done a very good job of buying things for less money. We've also done a great job of bringing in new technologies for doing end-to-end monitoring, not just component monitoring.

A lot of our energy goes into looking at pre-emptive ways to find out if we're having failures. On the open systems side, if a customer experiences a longer-than-normal response time logging on to our portal, our monitoring helps us to understand that we might have an emerging problem. We have the capability to move a tier-one application from one location to another very quickly.

On the demand side, we've started to use tools that provide information about how resources are being used. This information, in turn, has helped us to partner more with how the business partners can make better use of its resources. For example, when it comes to storage, we're using optimization tools (storage resource management tools) to get a better understanding of how our storage devices have been deployed and how much excess storage capacity we have. If a storage device was over-allocated, we can find out specifically which applications or which business partners are consuming the storage. If a group only needs 10 terabytes of its 50 assigned terabytes, then we can re-deploy the remaining capacity to other organizations that need it.

EL: Can you go into a little more detail about how you'll use your storage management tools to conserve storage more proactively?

SD: When it comes to lifecycle management, we're interested in the retention and archiving of our data and the procurement to disposal of our servers. It's our priority for 2008. The SRM agents we have on our servers will provide some metrics, which will go into our storage dashboard. We've been able to tell a business partner how much it's spending on storage and what we can do to reduce that cost. We're also able to ask ourselves whether or not we need to go with high-priced near-line storage or low-cost offline storage. The SRM tools will also help provide us with metrics to make decisions about the retention and the final destruction of data. The bottom line is that SRM will provide us with the technical metrics we need and the transparency that will enable our business partners to make decisions about their storage resources.

EL: How are you making your data centers greener?

SD: It all gets back to our demand-side partnership with the business. By creating incentives for not adding new resources, we've seen groups consolidate servers or redeploy some of them. As a result, we've been able to slow down the growth rate of the devices on the floor, as well as to cut our power usage. We're still trying to do more things on the demand size side to add functionally to the business without adding resources. For example, we're piloting configuration management so we can look holistically at our resources from data center to data center. We'll be able to do a better job of managing everything -- from the operating system to the application configurations -- on a server.

EL: What's your feeling about the IT Infrastructure Library as a  management framework for your data centers?

SD: ITIL provides a very powerful framework for how an IT organization can manage it infrastructure. However, if you don't mesh the ITIL processes into the services you want to provide the business, then you can become enslaved by the ITIL processes and drift father away from your business partners.

We're moving to a just-in-time concept for creating a service of standards on the supply side. For example, a business partner would be able to request, via a few clicks, that it needed a Weblogic blade server to be on the floor to run a Web application. Again, provisioning tools, along with configuration management, will enable to us to be more service-centric or customer-centric. That's a cultural shift for us.

EL: Are you changing the way you manage service level  agreements?

SD: We're moving away from the traditional, “five 9's” component SLA monitoring. We've put a discipline in place that we call CAPS and TOPS – Customer Acceptable Performance Standards and Technology and Operations Performance Standards. It's a balancing act between what are meaningful service levels to the business partners and what are acceptable service levels to us. If a customer clicks on our URL and can't get to our site, that's the metric we're concerned about. Behind the scenes, we're always doing component monitoring to safeguard our customer availability metrics. So, component SLAs become the underpinning to our customer-centric SLAs.

EL: Can you provide an overview of the Wells Fargo management  training program for IT leaders?

SD: Wells Fargo is a very big place. We started the program so we could grow some leaders who understood our business. The program has both internal and external candidates rotate through assignments in the key areas of IT, ranging from security to infrastructure. Towards the end of the training, the candidates focus on a set of disciplines and competencies. We're committed to tracking their progress after they complete the program. I've hired several managers who've completed the program.

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

by Tom Bishop

CIOs and their teams should be asking the same question, "What do we need to do to get the full business value from our Service Management initiatives?" The answer involves making sure the initiatives provide consistent, current, accurate, and secure information. Of course, making that happen will require some effort, but it's time well spent. The first step is to think about how to combine the benefits of IT Infrastructure Library (ITIL^®) best  practices with a configuration management database (CMDB).

Getting Control

The CMDB can offer IT a heightened level of control over what's happening in their environment. A well-configured CMDB can easily monitor configuration items (CIs) - their location, status, and relationships to each other - and consolidate disparate data sets. It can also provide a single source of accurate information about data in the IT environment. Having this control will strengthen the value of the services that IT provides to the business. For example, a CMDB can offer an accurate picture of available assets and their use. This capability ensures assets are used most effectively, which helps to reduce costs.

ITIL best practices for Service Management include Service Support and Service Delivery disciplines, which depend on the process integration and control from the CMDB. These processes, and how they are related to ITIL, are described in the table at the end of this article. ITIL offers strategic guidance for processes that depend on a CMDB. The ITIL standards recommend using a CMDB because it is a core component of mature, predictable, standard IT Service Management processes.

ITIL Goals for Configuration Management

As IT Service Management matures within an organization, a CMDB becomes even more business-critical, providing the necessary control of processes and information. ITIL has a number of goals for configuration management, which include:

• Account for all the IT assets and configurations within the organization and  its services
• Provide accurate information on configurations and their documentation to  support all other Service Management processes
• Provide a sound basis for Incident Management, Problem Management, Change  Management, and Release Management
• Provide verification of the configuration records against the  infrastructure, and correct any exceptions

CMDB Integration with ITIL and Automated Processes

As organizations add more ITIL-based automated processes, they must ensure that all components seamlessly integrate into the CMDB. If you follow the ITIL disciplines for Service Management, you will increase your chances of using more mature, repeatable processes.

CMDBs are available with ITIL-compatible, preconfigured tools that integrate with supporting applications. This capability lowers the cost to deploy services and increases their effectiveness. For instance, the Service Desk captures events from a variety of different sources. Events are filtered, standardized, and prioritized based on severity, scope of problem, or business impact. This action provides the functionality to open a trouble ticket that the support staff can prioritize, based on the goals and priorities of the ITIL business processes used to filter events. The process is automated and much more repeatable, and eliminates the manual burden typically associated with prioritizing and filtering.

Today, many organizations consider the ability to manage assets as the primary step for getting started with configuration management. Using a CMDB for asset management can significantly reduce costs. Without a CMDB, organizations run the risk of over-provisioning because they cannot track which assets are used for which purposes, or which availability and service problems relate to certain types of assets.

Enhanced Business Value

The examples below demonstrate how a CMDB provides business value through ITIL best practices. Although each ITIL discipline can be implemented as a standalone function, the CMDB extends the value of each by supplying information that extends and integrates functions.

Used effectively, the CMDB improves quality of service because all CMDB components and their relationships are clearly understood. The CMDB provides an accurate view of current IT capability, enabling you to quickly discern the status of your entire IT infrastructure and how one interaction impacts another. This ability helps you manage changes more effectively. The knowledge gained through a CMDB, combined with ITIL best practices, provides greater flexibility for the business through an improved understanding of IT Service Support, Service Delivery, and Infrastructure Management. The more information you have, the more flexible your organization can become and the better prepared you are to meet Service Management objectives.

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Tom Bishop, Chief Technology Officer of BMC Software, joined BMC in 2005 from VIEO, Inc., where he served as Chief Technology Officer and was named one of the top 25 CTOs by InfoWorld Magazine in 2004. A well-known technology innovator, he holds nine patents in fault tolerant computing and has been involved in leading the development of industry standards such as the Distributed Management Task Force (DMTF) and POSIX.

by Elizabeth M. Ferrarini

Ask some executives about their "Second Life experience," and they'll tell you about their plans for retirement. But ask the same question of Dr. Jonas Karlsson, a senior researcher at the Xerox Research Center in Webster, New York, and you'll be mesmerized by his answer. He says, "Second Life brings to life on the Web the virtual worlds created by William Gibson in Neuromancer and  Neal Stephenson in Snow Crash. Similar to multiplayer online games, the Second Life experience, developed and run by Linden Labs, enables people to build a 3D virtual reality community in which everyone creates an identity using an avatar, and interacts with people with more fluid communication, or as if they were living another life."

Many companies, such as Xerox and IBM, are looking at both internal and external applications for Second Life. Perhaps the most pervasive applications include employee collaboration, employee training, and product demonstrations.

Recently, Karlsson talked with Enterpriseleadership.org about the Second Life research he is doing at Xerox's Research Center, one of  four facilities that comprise the Xerox Innovation Group, which is charted to design Xerox's next generation products, and to test them internally.

EL: Given that you are a team leader in the Synthetic Worlds  initiative, why are you fascinated by virtual worlds?

JK: I am a computer geek who is enamored by the virtual, immersive environments described by both Gibson and Stevenson. In fact, a lot of terminology that Second Life developers are using comes from these science fiction novels. You can use your imagination to manipulate these environments in ways that you can't do in real life.

EL: Can you talk about the evolution of Second Life  technology?

JK: At the end of the 1990s, the gaming industry really started to pick up on virtual reality, developing very realistic 3D, multiplayer, role-playing games. Some people now play these games up to 30 hours a week. When you connect people to other people, something really dramatic happens.

Second Life provides the same type of environment minus the gaming. Second Life is becoming a platform that allows people to create and to share 3D virtual content with each other.

EL: Can you describe your Second Life piece of real estate, called  the Xerox Innovation Island?

JK: As part of my Second Life research project, I bought a small island to use for exploration and for others to test their ideas. Right now, it has a research building with meeting rooms and a demonstration space. The rest of the island is still undeveloped.

When we did a product launch at Fenway Park in Boston, Massachusetts, we had a parallel event on the island. We built a pavilion with an auditorium and a product display area. We streamed video so that people at Fenway Park could see it. On the island, we had people exploring the product and having a panel discussion with researchers from Xerox PARC, IBM, and other places.

EL: What are some of the business applications for Second  Life?

JK: Most companies plan to use this technology to communicate with other people. After all, Second Life is a social medium. It provides a more interesting and engaging experience than either the telephone or a Webcast. It's great for bringing together employees in remote locations to see, for example, a product demo. IBM plans to use Second Life to have all new hires participate in a new employee orientation, which will help them to adopt to the IBM culture.

Because you know at all times whom is in the Second Life environment, you are free to communicate with anyone and try out new ideas. You can't do this with some collaboration tools.

EL: What is the downside to the Second Live experience?

JK: At times it becomes difficult to distinguish between things in Second Life, or "inworld," and things outside of Second Life ("out of world"). Once you begin working in your space, you start thinking, "I shouldn't make my job sound like it is not part of the real world." We are trying to come up with other terms to use.

EL: Many of the collaboration tools don't require you to create an  avatar. What's the advantage of creating one?

JK: My avatar is Point Q. Malaproper. Every Second Life user has to create an account and to create an avatar. The avatar portrays how you want to look to others. People spend a lot of time customizing their avatar.

Google documents, Wikis, or blogs don't require an avatar. In some respect, virtual worlds, such as Second Life, are another collaboration tool. When I'm contributing to a Wiki, I don't necessarily know who else is working on it at the same time. In Second Life, you can see everyone's avatar. For example, I can go onto the Xerox Information Island and see people from different parts of Xerox. These are people who I might otherwise have had no contact with.

Creating an avatar is the first step in interacting with people. There's a real art in how you communicate in Second Life. You need to have the right tools in order to maintain the company. You need to know what makes for acceptable and understandable communications. One of our other Xerox Innovation Group labs is working on these issues.

EL: Who supplies the technology behind Second Life?

JK: We contracted with Beta Technologies, a metaverse content developer, to build the Xerox Pavillion on the Xerox Information Island. Metaverse is another term for the 3D virtual world. This company created models for our devices, programming them to do various things when we interacted with them.

Linden Labs., based in San Francisco, California, runs Second Life on huge server farms. Every user needs to download a client in order to connect to the environment. The client is available for Windows, Macintosh, and Linux Alpha.

EL: Since Linden Labs controls the Second Life environment, what kinds of content and or security problems does that present to a company?

JK: That's one of the big problems with Second Life for a company like Xerox. The company firewall will block access to the Linden servers for both security and content reasons. However, many companies are trying to figure out how to provide safe and secure access to their Second Life environment.

The good new is that Linden Labs has announced an Open Source server, which will enable companies to run their own Second Life server behind the company firewall. This will make everyone happy.

EL: What is the competition like for Second Life  products?

JK: We're starting to see new competitors every day. For example, Sun Microsystems has announced a platform that will enable companies to build and to host a virtual environment on a server. This platform is based on two of Sun's gaming platforms.

There are other systems and platforms on the horizon. The main difference right now is the ease of use. Some systems require you to be an expert in 3D creation tools. If you want to succeed in the Second Life space, you need to make it easy for users to create 3D content.

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

by Elizabeth M. Ferrarini

If you want to deploy IT for business value, then you'll need to innovate. That's the mantra of Martin Curley, global director of IT innovation for Intel Corporation, and that's the subject of his book, Deploying IT for Business  Value. Curley is responsible for stimulating, supporting, and nurturing the development of new products, services, and methodologies by Intel's 5,000 IT employees. He also oversees the worldwide Intel Innovation Centres, which enable IT employees to work with Fortune 500 customers and government agencies. He sat down with Enterpriseleadership.org recently to talk about how Intel creates an environment for IT innovators.

EL: Martin, we've interviewed dozens of IT executives from Fortune 1000 companies -- you're the first global director of IT innovation that we've interviewed. Can you tell us about your role? If we were to visit an Intel innovation center, what would we see?

MC: The primary role I have is around stimulating and creating innovation and creating an environment and set of tools to help our IT organization, and folks actually beyond the boundaries of our IT organization, innovate. My organization also does a lot of building prototypes, trying to drive new products and services across the chasm into production at Intel, so our Intel employees and our customers can get more value from IT. I'd almost say, in fact, that there's a new discipline emerging around IT innovation, which is the intersection of information technology as a discipline, and innovation as a discipline.

But if you were to walk into one of the innovation centers -- and we have a network of these worldwide now -- they're not very fancy, they're not high-cost, and you would see Intel IT employees working on some disruptive prototypes -- that might be one activity. You might see some innovation training going on, because there are some emerging tools and techniques that people are just starting to become aware of that can significantly increase the yield of innovation. You might see a customer executive workshop going on -- in our Ireland innovation center, we've hosted more than 20 workshops with various European governments around topics like transforming education or healthcare using IT. You'd certainly see a lot of showcases, and a mixture of sort of soft leadership around emerging practices or the latest Intel products and new usage models associated with those products. So, you'd see a mix of activities

EL: Are the people staffing your innovation centers full-time staff? Or, if someone in the IT group had an idea, could they submit that and be involved in developing the idea in an innovation center?

MC: We have quite a small team, actually, maintaining the infrastructure and creating the environment. There are a number of different mechanisms that enable IT employees who have a good idea to submit that idea. We have a virtual innovation center, and they can submit it there. We have the concept of an innovation assignment; if someone has a particularly good idea, they're able to take time out of their "day job" and work in the innovation center, to bring that idea to fruition. One employee in Sacramento who had a very interesting idea of using our new Viiv technology in the home for remote power monitoring and more efficient use of air conditioning took an assignment, and worked on a project with some of the local utilities there and tried some new algorithms around air conditioning; it looks like it could add significant value.

Or, employees have taken an innovation assignment to work on a specific application that would add value to a particular set of Intel engineering.

EL: So, they are rewarded for coming up with innovative ideas, and  there's a support environment for this?

MC: Exactly. For innovation to prosper, you need to create a "virtuous circle" around it. If you're trying to change a culture to support innovation, you need to have tools and methodologies in place, and you need to have metrics. Andy Grove, one of our founders, often says, if you can't measure it, you can't manage it. So, you need to have different metrics in place. And then you need incentives, to recognize and reward innovators. We'll have some awards for the person who actually discovers and develops an innovation, but we also have one award for an information catalyst, for somebody who was especially effective in creating an environment that enables or fosters innovation.

EL: It's fascinating how that happens -- you have the one guy who has the idea, and the other four who helped to make it happen.

MC: You've just hit on an important point: Innovation is a team sport. To use the soccer analogy, it's important to recognize the person who provided the assist for scoring the goal. For every one person that has the idea, perhaps there are eight or nine or more people who are needed to get that idea into production, get it into use.

EL: You were most recently Intel's director of IT, People,  Intellectual Capital, and Solutions. What exactly did you do?

MC: Five or six years ago, we developed a business plan to help transform the Intel IT organization. And one of the gaps that were identified in the plan was that we weren't managing our global people resource in an integrated fashion -- we had four or five thousand employees across 50 different sites. The role of director of IT, People, Intellectual Capital, and Solutions was created to manage our people as an integrated resource, identifying the future core competencies for the organization and putting curricula in place. We also created an intellectual capital program to encourage IT employees to submit and mention disclosures.

Because Intel created this new position and initiatives, our IT organization is probably the fastest growing contributor to intellectual property. Four or five years ago, perhaps we might've had one patent issued, and today, we're doubling the number of patents, or the number of invention disclosures, every 18 months. And I think this past quarter, we had more than 200 invention disclosures submitted and more than 20 patents approved from our IT employees.

EL: You have a rich environment that really encourages people to innovate, and I can see the relationship to what you did and what you are doing as a direct line. Well, you know Nicholas Carr, and his book, Does IT Matter? One of the points he made in the book is that so many CIOs are stuck in a situation where they're spending 70, 80 percent of their time just keeping the infrastructure running, the lights and phones and the network. And this causes executive management to wonder, well, we could outsource that function, what is it of value do you really provide? From your perspective, what would you say to a CIO trying to get out of that mode?

MC: Nick Carr's book promoted a healthy debate within the IT profession in terms of whether IT can add value. I firmly believe that IT can add competitive advantage, and in some cases, competitive necessity, and some of Nick Carr's premises are based around the view of IT as a utility.

I think it is very important that a CIO look at the IT value chain and understand where the spend is. I wouldn't contest Nick Carr's point that 70 to 80 percent of the spend is in keeping the lights on, and I think the CIO needs to work really diligently to see how that spend can be reduced. One way would be to deploy new technology; for example, remote management technology. A higher-leverage activity that the CIO could take on is using the concept of design for assembly, which is used extensively in the automobile or consumer electronics industries: As you're designing solutions or cars or whatever, you're designing for the lowest operating costs. So if the CIO can inculcate the strategy that when solutions are developed, they're developed for lowest TCO, that would ultimately help.

I think the job of the CIO is to not just to optimize the operation, and make sure service-level commits are met, but to try to take spending out of operations and move it up the value chain into solutions delivery and particularly into innovation. We've seen evidence, some internal and some external, that you'll get a higher return on your dollar if you invest in the innovation space rather than the operations space. There are some role models -- Dell for example, and WalMart -- these are companies where IT really is a competitive advantage, and I think the CIOs there have been really successful in terms of trying to minimize the operations spend and invest in innovations that add value to the business.

EL: Let's talk about using IT as a competitive advantage; how do you go about doing that, what are some ideas around that that would be useful to other CIOs?

MC: We're starting to see a pattern emerge around IT innovation as a process; we see that there are at least six things that have to be in place for an innovation to be successful. The first one is that there is actually a problem or opportunity that needs to be fixed or to be addressed and someone actually has a vision as to how that can be achieved. One example would be Westminster Wireless City -- the CEO there had a vision of how wireless technology could potentially transform the city of London, but he really didn't know how to bring his vision about. He worked with his own IT department and with some support from one of the Intel innovation centers to build a prototype that eventually ran to a working implementation.

But most innovations don't come from "blue-sky thinking"; they come from addressing a specific problem or a potential opportunity. Necessity is the mother of invention, as the saying goes. Typically then, an IT solution has to be associated with fixing a problem or seizing an opportunity, and very often, a business case has to be there. IT went from irrational optimism before the dot.com crash to irrational pessimism, and today there's a modicum of normality coming back to IT investments, but a business case is a prerequisite.

And then there are three vectors where the most difficulty are. As IT professionals, we naturally think of technical risk and the IT solutions. But with every IT investment, there's an associated business investment. There may be a business process change that needs to happen, there may be an organizational change that needs to happen, and the last vector is perhaps the most difficult -- very often a customer change is required, or even a societal change. Many of the innovations that are being introduced today are touching many parts of society, and society's willingness and ability to adopt an innovation are really crucial to the innovation being successful.

EL: So then the question might be, how do you measure the relative  value of IT innovation to profit?

MC: This is something the whole profession has wrestled with. One solution that we find quite effective is what we call the "value dials." We identify the critical business variables at Intel and maintain a list of those, and the monetary value of driving a change in each of them. When we are developing a value proposition for a particular innovation, instead of having a very "wooly" statement -- "This application might improve supply chain flexibility"-- we'll actually hard code into the value proposition that, for example, the goal of this project, which will improve supply chain flexibility, will be to reduce our days of inventory by one day and achieve a one percent market share increase in a particular market.

EL: Ah -- put some real teeth into it.

MC: Absolutely; and we then know the direct value of reducing the days of inventory by a day, or improving our market share by one percent, and that gives us the numbers that form the business case. And then the IT organization or the project team and the business team work together to do the best they can to realize that result. And by measuring that, we can see if the solution or project actually delivered what it set out to achieve?

EL: Does Intel have a budget for IT innovation, or is it parceled out  of everyone else's existing budget?

MC: We do have a budget, and just to recognize that innovation happens everywhere, we have a small part of the budget that is centrally managed, and that part of the budget is to help stimulate and capitalize and create an environment for innovation, and also to do research, we have a central research group that is working on some specific agenda. And then the remainder of the innovation budget is split out amongst our various organizations within the IT organization -- innovation is happening everywhere, and what we are trying to do is to do more innovation more effectively and increase the return on innovation by catalyzing and better supporting innovation.

EL: Tell us about some of the innovation projects that you've worked  on at Intel.

MC: One example of innovation at Intel is of a particular solution under development called Miramar. One of the challenges that companies like Intel face globally is collaborating with employees in different parts of the world and in different time zones. Miramar is an emerging application that we developed to try to provide a solution to that. We have a vision called "better than being there" -- that you could actually have a remote meeting experience that is actually better than physically being in the room with somebody through computer mediation. Miramar is in its early days, but today, we have on employees' desktops we have 3D immersive environments where they can better organize and better locate and better connect information.

EL: To what degree does IT organization carry over to the external,  product side?

MC: Quite a bit; our primary focus is internal, to help the IT organization be more innovative and develop more solutions, but we see an increasing pull on both sides working with our product divisions to give them ideas and help them build new features into the products, and we have done a lot more work with Intel's customers than we originally would've expected to, with, for example, European governments; we will very often work with our sales team and with your fortune 500 execs on exec workshops looking at specific problems and how an innovative solution might be able to help. There is a significant crossover.

EL: Do you see any disruptive innovations that could change IT within the next five years? I'm curious about your views of the use of RFID or WiMax, in particular, are people coming up with ideas on how to use that kind of technology?

MC: Yes indeed, and I think the pace of change in terms of new and disruptive technology emergence is happening much faster than any of us could potentially could have conceived of. I'm sure if you held this interview in a year's time, there are things that will be quite commonplace in our vocabulary that we don't know about today. But you mentioned two specifics, RFID and WiMax. Within Intel and the innovation centers, for example, RFID, we've been involved in projects in a hospital in Korea in neonatal care, where the mother and baby have RFID tags to avoid mixups, and in a hospital in Milan, we've been using RFID working with the hospital and a system integrator to make sure that blood transfusions don't get mixed up. So, RFID in some industries is becoming pervasive; some other industries, it's going to take more time for it to proliferate. WiMax is a hugely exciting technology; it really is the classic disruptive technology and moving very fast. I think in a year's time, if you'd have this interview, I think WiMax will start to widely diffuse, with a 10x degree of deployment of WiMax compared to today; certainly, the economics are staggering compared to putting fiber in the ground, but as happen normally with new technologies, you'll get hype. Gartner has that very famous "hype curve." I think there is a hype around WiMax. However we have been trialing it at the Ireland innovation center and innovation center in the UK, and the performance is very good. We're actually using it in production, we have construction going on of a new factory, and many of the suppliers that are working with us are connected via WiMax, and their internet access is very effective and probably a tenth of the cost of a conventional connection, so WiMax is very exciting and is actually very real.

EL: Well, Martin, thank you for taking some time to talk with us  today, and talking about your program and your people!

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Elizabeth M. Ferrarini is a consultant for the Swive Group, an IT consultancy based in Boston,  Massachusetts.

"Never compromise integrity" has become a long-standing principle of the $44 billion Chubb Group of Insurance Companies. Chubb offers both commercial lines and personal lines of insurance through its 120 offices in 29 countries.

Everything about Chubb propelled June E. Drewry, a 30-year IT veteran, to come out of retirement in 2005 and become global chief information officer of Chubb & Son, the organization that oversees the management of the Chubb Group of Insurance Companies. She has held IT leadership positions, including CIO, at Aetna Inc., Freddie Mac Corporation, and the Aon Group. She also has received numerous IT leadership awards from organizations, such as Women in Technology and SIM.

While Drewry's predecessor did a great job running the IT organization, she, nevertheless, faced several challenges: improve the IT governance model, drive innovation, and make sure her successor could fill her shoes. Enterpriseleadership.org recently spoke with Drewry to discuss how she's carrying out these tasks, along with her involvement in IT organizations and what she learned from September 11, 2001. Here's what she had to say:

EL: What's the leadership structure of your IT  organization?

JD: Our organizational model mimics Chubb's decentralized federated model, which consists of three business units. We have 1,500 IT employees who are managed by three geographical (or zone) CIOs, three business unit CIOs, one CIO for finance, and another CIO for claims. Each CIO, naturally, has a group of direct reports. A shared service manages our IT infrastructure for the U.S. Collectively, these CIOs comprise my senior IT leadership team.

EL: Can you describe how IT handles business process  improvements?

JD: We don't have a formal program for it. Our applications folks are embedded in our business units, and our IT federated model mimics the company's federated model. We do have centralized core resources that look at the leverage of things across business units, such as using a significant process or eliminating processes or workflow. If we have a particular benefit in one area, we then use the core staff to make sure we're exploiting it across the business units.

EL: After you joined Chubb, the company went to a more formal  governance model for IT. Why did you need to do this?

JD: I got used to joining companies where the relationship between IT and the business units needed improvement. Chubb presented a different scenario: IT had good alignment with the business units. Our work quality was high; projects got done on time and on budget.

My first task as CIO included getting all my CIO leaders together and finding out what our next challenges were. We agreed to work on enterprise-wide efforts. Some of our work had become captive in the business units. If we were going to get a real payback from IT, we needed to develop our enterprise architecture. It had to enhance our ability to leverage without having to re-platform. We also wanted to bring the business unit leaders together to do their strategic planning and to leverage technology. Specifically, we didn't want to find out individually what each business unit was trying to accomplish and then go off and do it in the background. This new process enabled us to bring IT governance and business governance together in the same room.

EL: How does your governance model work?

JD: We meet more often than IT organizations in other companies. In fact, my peers in other companies say it's unusual to meet as often as we do. Because it was so hard to plan, in 2006, the senior IT leadership team started to meet once every week for several hours. We meet every two weeks for a couple of hours more. Then, we meet off site once a month for two-and-a-half days. During this time, we go through the formality of governance where we review technologies and begin to push them further along. We're not allowed to discuss the day-to-day status of upgrades. That's a waste of our energy when we're off site.

EL: How do you keep track of projects for all of these  meetings?

JD: We have a dashboard. It's not a balanced scorecard. Some of our business units have their own balanced scorecard where they look at people, process, and technology. We look at a set of projects we've initiated as a group. We have a subcommittee that works on this weekly to keep things moving between those two-and-a-half days.

EL: Anything else you can say about your governance  model?

JD: Based on all of our industry reading and research, we learned that the IT governance process was the first step for getting things done right. So, if this was the case, we decided to run our service-level-agreement efforts through the governance process, along with our enterprise architecture and our creation of centers of excellence.

EL: Do you use any formal quality best practices, such as Six Sigma,  in IT at Chubb?

JD: Within IT we're not working on Six Sigma. Instead, we've identified those best practices used by each business unit or by the IT groups that support those business units. Before we can standardize on these best practices, we need to assign someone to make all of the business units aware of them. To this end, we can create a center of excellence to accomplish this task.

For external best practices, we belong to several networking groups where we have a different person represented at each one. This approach has created a broader network for us and more development opportunities for each group representative.

EL: Can you go into more detail about your center-of-excellence  concept?

JD: We've mandated functions such as risk management or payroll. Our shared services organization runs specific functions on behalf of the business units. They can't go outside the organization for these services. That's how we derived economies of scale in the U.S.

Then we have centers of excellence where we create areas that reside in a business unit or in corporate. For example, a center of excellence might support a pilot project in a business unit. We know there is a payback, but in the meantime, the group needs to educate others. We also have mature centers of excellence that set policy for the way we do things.

If what a center does becomes embedded in the way we do business, then we eliminate the center. Right now, we're looking at how we account for where all of the funding for centers of excellence should reside, even if the center is being managed by the business unit. Our goal is to make sure we capture good metrics on what business units are spending on these centers.

EL: Is the center of excellence concept the way you drive  innovation?

JD: Yes. We make sure that we don't innovate on the same issues in each business unit. We try to innovate once and replicate after that. Some people fail to see that. If we see a real payback from something a business unit has done, we need to have an evangelist get the message out to the other business units. Another part of the evangelist's job is to find the business cases and to get in front of the strategic business units. It's up to them to make good business decisions, now, or a year from now.

EL: How are you going about grooming your successor?

JD: That's easier said then done. Long-time service has become a hallmark for Chubb. My predecessor was CIO for 16 years. This company understands that people are its greatest asset, and treats them accordingly. Most companies pay lip service to this.

I came out of retirement to work at Chubb with the condition that I'd be here three to five years. During this time, I'd be grooming my successor. My predecessor had a pool of excellent candidates who were considered for this job, and I've added other candidates to this pool. This is the first time in my career where my primary responsibilities have been to find my successor and to carry out all of the day-to-day CIO responsibilities.

EL: So what have you learned from finding your  successor?

JD: Looking for a successor has been an eye-opening experience. I've totally change the way I work; I wish I had done this 10 years ago. Most IT executives spend more time doing and less time grooming. Now, I delegate probably five times more than I ever did in my life. My job is to give my prospective successors enterprise leadership experience, which differs from what either a strategic business unit CIO has or a zone CIO gets.

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

JD: It becomes a way to resolve issues with the business alignment of IT, or with business units that want to be involved with technology. Chubb is the first company I've worked at where business units had great alignment with IT. Business people here truly understand the value of technology and deriving more value out of it. So, why would we want to rotate a finance person who understands the value of technology and who accepts us as a perfect partner?

On the other hand, IT isn't going to set up financial policies, but we understand them, along with understanding underwriting and our markets. If you get the depth of knowledge right in the IT organization, then I don't know how much rotation buys you.

EL: You've participated in a number of IT venues, such as the CIO Executive Summit, and have been on the board of SIM. Why have these organizations been important to your IT career?

JD: The network has been invaluable to me. That's something I've been trying to teach our younger IT staff. All of the book knowledge in the world can't help you to deal with the reality of executing and getting things done.

The more I've move from one company to another, I've realized that the same issues exist everywhere; only the names and faces change. Organizations, such as SIM, provide a safe place for getting valuable input from IT professionals. You can use their input to resolve problems or to step back and make a decision. A lot of growth comes from this communication process.

The insurance industry, like many other industries, has its own group of organizations, such as ACORD. Because many industries are so competitive, one can no longer feel comfortable talking to peers at an industry venue. SIM, for example, provides you with a cross-industry network where you can talk about, say, your service-level agreements.

As for speaking venues, such as the CIO Executive Summit, they have been great places to make connections and to source IT candidates.

EL: As CIO of Aon, you had to deal with the tragic events of  September 11. What did you learn from this experience?

JD: I learned that it's all about people, not IT, when something like that happens. Yes, it's great to be able to transfer the work to another data center, which we did. That day, Aon lost 175 people. The entire company focused on trying to find them. The people who survived were in shock. Most people weren't psychologically prepared to go back to work. The last thing we wanted to do was to pester them about picking up a laptop so they could work from home.

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

by Elizabeth M. Ferrarini

Xerox's 50-year history has run the gamut from a that of a leader in disruptive technology, to bad product mixes; from financial turmoil, to financial and market share recovery. In 1959, the company rolled out the first plain paper copier, the 915, and also trademarked the duplicating process as "Xerography." The company's name was changed to Xerox. Other innovations have included the invention of Ethernet, the first laser printer, and the first plain paper FAX machine. During the 1980s, Xerox dabbled in everything from typewriters to personal computers.

At the start of the new millennium, however, Xerox found itself in enormous debt and near bankruptcy. It was by carrying out massive "rightsizing" programs such as Lean Six Sigma that this legacy disruptive technologist has reduced its debt from $17 billion to $7.3 billion, and has cut the workforce from 110,000 employees to 55,000 employees. Today the company owes its $15.7 billion annual revenues to a leadership role in digital printing.

Since 2002, $600 million of the $1.8 billion reduction in operating costs has come from IT. And in what may be supreme understatement, Patricia Cusick, Xerox's CIO for the past seven years, says of her first two years in the role that it was "an intense period." Enterpriseleadership.org recently sat down with Cusick to talk about the cost cuts, the role of Lean Six Sigma in IT, and the way IT works with the business units.

EL: Can you provide an overview of your IT organization?

PC: The IT worldwide organization has about 3,500 people -- 1,000 are Xerox employees and the rest, either from EDS, our primary IT supplier, or other contract sources.

Xerox IT employees handle strategic planning for IT and the linkages with the business partners. For example, relationship managers support specific territories within business units, such as sales, or manufacturing. These managers understand the business and the systems requirements, and can provide the appropriate delivery service, whether it's internal or through an outsourcer.

At the next level of IT, we have integration folks who work on how applications come together. Our project teams in this area work within different organizational models. Xerox personnel tend to work on proprietary solutions. Project management teams use people with similar skills. Project creation-to-delivery teams comprise people with a range of skills who are drawn from inside the organization and from our outsourcers.

EL: Can you talk about how you accomplished the cost cuts in IT?

PC: Because the company was near bankruptcy, we were under pressure to cure the company's financial health. Improvements in productivity, starting with the CEO on down, have became a key driver of returning Xerox to profitability. IT played both the role of participant and enabler, finding places to reduce costs through automation. We were successful at making the company lean and more efficient.

Cuts in the number of employees and the outsourcing of key functions such as manufacturing reduced the size of the operation IT had to support. Meanwhile, we started to consolidate a whole series of decentralized IT operations across the company. This consolidation and standardization across operations, and improvements in productivity enabled us to drive $600 million of cost out of IT.

EL: How does Lean Six Sigma factor into productivity improvements in  IT?

PC: Since 2003, we've been developing our Black Belts and training in Lean Six Sigma, and we've been using the Lean Six Sigma tools and the methodology to standardize IT processes. This causes us to focus on how we can reduce costs and meet our productivity goals. For example, the IT people on the business teams focus on how to simplify their processes by getting rid of waste, and automating any manual tasks.

Lean Six Sigma has helped us to put better processes around the entire application development flow -- from project requirements to final production. In fact, the applications development process flow is very similar to that of product manufacturing, where Lean Six Sigma has its roots. For example, we have an initiative going on now called "patch progression." When we get a fix from a major supplier, such as Oracle, we identify the environment, make sure it's compatible and tested for integration, and then we promote it to production. Using Lean Six Sigma, we've laid out the individual steps in this process, looking at where there was time lost and how we could simplify that process.

EL: What does your governance model for IT include?

PC: Our information management board, which I head, meets annually with the executive committee to go over upcoming projects and their budgets. Each quarter, we meet to review project status, budgets, and project deliverables. This process repeats itself down through the various working levels of the organization.

EL: How do you ensure that IT delivers on what is promised to the business  units?

PC: Our overall lifecycle management process, which we call "time to market," is key to IT's delivery of services. It uses the same type of process we have for our product delivery. The process has all of the same disciplined phases, starting with the business engagement and examining all of the requirements. Each project has a decision team -- a partner from IT and a business owner -- which report to a governance board. For example, the decision team goes through phased exits at each point in the lifecycle. At each point, the team must account for the business case to the board. These steps exist to ensure that we've met our objectives. The entire lifecycle process helps us to keep the alignment with the business units, as well as with the IT project teams.

EL: What kinds of training programs do you have to keep IT people on the  ball?

PC: We have development efforts across all levels of the organization. We set a specific number of hours each year for each IT employee. We also do extensive e-learning, both within the company and externally. And we do a lot of creative things such as the Lunch and Learn program. Each week, we'll have a program for IT people, such as an overview of Microsoft security updates.

EL: What initiatives have IT undertaken to drive product  innovation?

PC: We created a remote capability that enables customers' machines to link to us for things such as ordering supplies, doing meter readings, and alerting technical support to a problem. This communication is accomplished entirely over the network; interactive communication with our products has helped to strengthen Xerox's competitive advantage.

EL: How do you promote technology careers outside of the company?

PC: I'm a member of the Rochester CIO Roundtable, which works with local colleges to promote IT careers. We'll take a few days and go around and talk to students about our roles in IT and the kinds of people we're looking for.

EL: What were some of the most challenging assignments you've had as a  CIO?

PC: Supporting the CEO, Ann Mulcahey, in her efforts to turn Xerox around and return it to greatness has been both the most challenging task, and most rewarding, of my career. We had to have absolute focus on managing our expense base, changing the profile of the campus, and concentrating on our customers and technology. As for IT, my challenge was to make IT a shared service, while driving cost reduction and being sensitive to the minds and hearts of the people.

Another challenge has been to build the credibility of IT people among business partners inside the company. I feel passionate about getting IT people to be involved in how every aspect of the company works together.

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

by Elizabeth M. Ferrarini

When a major corporation files for bankruptcy, senior executives can take one of two paths: stay and help build the company to be better than ever, or bail out in search of greener pastures. Dan Wagner, the CIO of Global Crossing, the fourth top U.S. telecom company, as ranked by InformationWeek, is a  builder, a survivor, and a you-can-achieve-anything optimist.

Two months before Wagner was appointed to the CIO role at Global Crossing in 2002 , the company filed for bankruptcy. John Legere, Global Crossing's CEO, immediately enlisted Wagner, who had been running the company's European operation, to be part of the turnaround team. Global Crossing, a darling of the dot.com days, had racked up $12.4 billion in debt as a result of building a 100,000-mile fiber optic network.

Today, Global Crossing, which sells telecommunications products and services to organizations in 50 countries, is a leaner, more efficient and customer-oriented machine with improved IT business processes. In fact, the company's headcount has gone from 16,000 employees to 3,400 employees.

During the past four years, Wagner has diligently rebuilt IT, reducing spending from $300 million a year to $60 million a year, and cutting the IT workforce from 1,600 to 350 employees. He is involved in integrating the company's recent acquisition of Impsat, a Latin American-based telecom company, which will give Global Crossing, 1,200 new employees and 4,500 new customers.

Enterpriseleadership.org recently spoke with Wagner about some of the things he did to help turn the company around, especially in IT operations.

EL: Can you sum up some of the initial things you had to do as part  of your turnaround work?

DW: It has taken a massive, five-year effort to get to where we are today. We had no choice but to change and improve operations. Initially, we focused on reducing costs. For example, we reduced our IT cost by 80 percent from what it was in 2001. We also realized we had to increase our IT capabilities to the business.

We reduced our IT spending from $300 million to $60 million. Our operational expenditures were reduced by 50 percent or more. Our cash burden in 2001 was $400 million a month, and we are now cash-flow positive. This is a better place to be than the place we were in before.

EL: Can you talk about some of the key restructuring actions you  took?

DW: Before the restructuring, we had dozens of competing projects and lots of capital going out of the door. The first phase of restructuring included consolidating applications, servers, data centers and infrastructure, as well as closing down millions of square feet of real estate. We focused on the key applications that were good for our customers, good for our products, and good for revenue growth. For example, we reduced 17 billing systems to two, and took provisioning and order management systems from 25 to seven.

The next phase consisted of building an intelligent front office to make all of our employees more productive. Built on the Microsoft.net platform, the intelligent front office, for example, enables our sales force and our customers to see, and to manage, their services directly. This platform powers our external portals, enabling us to focus today on what's important to Global Crossing -- customers!

EL: Can you go into more detail about how the intelligent front  office works?

DW: We incorporated many things into our intelligent front office to improve the way our employees collaborate with each other as they do their work. We deployed a pretty extensive next-generation platform based on Microsoft Communicator. In fact, we built some of these capabilities into many of our applications, as well.

Take the org chart: you can look at it and see whether people are online or not. You can immediately click and talk to them, click and send them email, or chat with them. This presence-enabled infrastructure and functionality carries over to most of our applications. You can click and communicate in real time, while you're in a corporate application, such as order entry.

More than 90 percent of our employees use IP telephony, which is part of this integrated intelligent front office. Wherever I am in the world, I can pop on calls that have been flowed into my laptop and can communicate with anyone on our network or outside of our network.

EL: What have you learned from the traumatic experience of Global  Crossing's bankruptcy?

DW: I've learned that you can do anything you want if you set your mind to it. Of course, you need to have the right people with the right attitude. I have an irritating go, go, go model. However, it exemplifies what Global Crossing is about. Because of what we've gone through, we've created a culture of people hungry to serve customers passionately.

EL: What does your IT governance model look like?

DW: Reporting to the president, we have an executive team  that sets strategies and priorities. I'm part of this team.

Below that, we have a portfolio action committee consisting of the IT executives in the company, along with members of product marketing and finance. This committee manages all of the major projects and capital expenditures. Every two weeks, we look at the status of the priorities for product development, for operational efficiencies, and for IT spending.

We also have a steering committee made up of people who represent different functions in the company. They meet weekly to look at the progress being made in about 55 active projects. The goal here is to make sure everything is on track. If there is an issue, they come back to our action committee for resolution.

The good news is that there are no disconnects between these groups.

EL: You have 350 IT people reporting to you today. How have you  allocated these resources?

DW: About half of them include operations people who man the data center or the help desk. The other half of the workforce resides in strategic product development. We've decided to increase the number of people doing this software development. Our IP products, along with the intelligent front office, require a lot of software development. On occasion, we'll hire a team of developers -- perhaps a dozen -- to work on specific projects.

EL: What are you doing to keep customers excited about Global  Crossing's future?

DW: We're a huge carrier of VoIP, providing more than 5 billion minutes of it each month to about 600 carriers. We're also a big consumer of VoIP services internally, It's important for an IT shop to sell what it consumes, especially since it has saved us huge amounts of money. I spend about 50 percent of my time selling to customers.

In 2006, I went on 100 sales calls. Members on my IT team made 500 sales calls in 2006. Making sales close differentiates us from our competitors. Customers like that we pay attention to them and provide the products and services they're looking for.

The IT team has a lot of credibility because we can talk about our experience using our products. I go out as a testimonial to our product capabilities and technology know how. When I talk to a customer's CIO, I know there is an innate trust between us. We've become our own success story about why customers should do business with us.

At the start of 2006, I said, let's go from restructuring to revenue growth by helping the sales force as much as we can. IT people know more about the business than anyone else, especially how everything works across functional areas.

We've put IT at the center of our company's strategy, and it's been working for us. Perhaps the passion in our IT team's voice while talking to customers helped to drive revenue growth by 17 percent in 2005.

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