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

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

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

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

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

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

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

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

EL. What distinguishes your presses from your competitors?

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

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

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

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

EL.  Are any two printing presses alike? 

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

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

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

EL. Can you talk about other innovative technologies?

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

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

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

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

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

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

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

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

EL.  Where does the innovation come from?

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

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

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

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

EL. Have you come up with other innovative ideas?

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

EL. What marketing challenge does your business face?

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

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

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

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

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

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

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

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

If you ask some C-level executives what they might do after they retire, you could hear something like, "I've thought about writing a book which chronicles what I learned running a major company." Unfortunately, few CEOs write management books after they retire. Furthermore, it's rare to find a senior executive who has written one while he or she is still actively on the job. Bob Seelert, the chairman of Saatachi & Saatchi, one of the world's largest advertising companies, is that rare kind of executive. He is one of the most insightful executives to emerge in this troubled business landscape. His new book, Start with the Answer, is a back-to-basics primer for anyone in a leadership capacity.

Seelert has been with Saatchi & Saatchi since 2003. After graduating from Harvard Business School, Seelert spent the next 23 years with General Foods Corp. where he eventually became CEO of Worldwide Coffee and International Foods. He closely observed one of the largest mega-mergers in United States' corporate history - Philip Morris's acquisition of General Foods. His career also included leading the turnaround of Topco, a grocery industry co-operative, and Kayser -Roth Corp., a leading U.S. manufacturer of leg wear.

Enterpriseleadership.org recently sat down with Seelert to talk about the management challenges CEOs, as well as other C-level executives, face dealing with the economic downturn.

EL. Why did you decide to write this book?

BS. A creative person at Saatchi & Saatchi told me that my wisdom set me apart from other executives he had known. After he said that, I got to thinking that, in fact, I dispense advice, council, and perspective. It's based on my collective experience. Perhaps, I know quite a bit about many things. I decided to put down the wisdom I have collected over a career that spans five different companies and 40 plus years.

The book consists of a series of easy-to-understand points about things that can lead to success in your career and high performance in companies. My book is drawn both from business and my life. You can pick up this book, read a few sections, and then put it down. It is biblical in that sense. That's the one comment I hear frequently.

EL. What are the three top lessons you learned as a CEO?

BS. Leadership begins at the top. Having the right person in the CEO seat can make all of the difference for a company. You can cascade that down the organization as well. Next, you always have to be open, honest, and candid and get a straight forward assessment of the facts. Some times the truth can be pretty ugly. Until you get it on the table, you are not in a position to deal with it. Unfortunately, many people do not look down the pike at the truth. It is one of the reasons they don't make progress. Throughout the book I adopted the predominant philosophy which became the book's title - Start with the Answer.  Before you go off and spend much time and money, you have to assess all of the facts about where you want this to end up. In essence, if you start with the answer, then you are in a position to work your way back to the solution.

EL. According to industry consulting firms, such as Gartner Group, the average CEO tenure is about four years. Why is CEO turnaround so high?

BS. In some cases, you may have the wrong person. He or she may not have the right vision for the company. Also this person may or may not have established the right standards of the performance expectations and may or may not have delivered against what he or she had initially proposed. He or she may or may not have unleashed the energy in the company for building the right kind of rapport and relationships with all of the employees. Impatience heightens all of these things. In this short-time world, others judge executives by what have you done for me lately? You have to deliver against what you said you would do. It's a combination of factors.

EL. What challenges do CEOs face in this economic downturn?

BS. They are coming under more pressure now. This is the most challenging environment that businesses have faced in decades. A recent article I wrote about leading in tough times lists the 10 things you need to do to lead successfully. First, you need to get the truth on the table. Make sure you start with a good cold heart assessment of the facts. Second you need to establish the right kind of standards for the new reality. You can establish a performance expectation in terms of how you will perform relative to the market.

At Saatchi & Saatchi, we do not know how far off the media environment will fall. We know that we want to beat whatever happens by 50 percent. That is a relatively high expectation in an assured market sense. We want to use this as an opportunity to grow our share of the market. Others include the following: Think long term but act short term. Communicate, communicate, and communicate. Do whatever it takes to get in front of your people to reassure them that you are going to lead the company to see a better day. Tough times call for extraordinary efforts by everyone in the company. Get with your customers to see how their needs are changing and how to best respond to those needs.

EL. What companies do you most admire and why?

BS. I admire the leadership of Toyota and Procter & Gamble. Toyota has done a good job of driving innovation and making continuous improvements. Even through automobile sales have fallen, Toyota has continued to add enhancements to the third generation Prius. In fact, some auto manufacturers do not even offer a hybrid. Toyota's new Venza fills a gap this company had in the market. Toyota continues to stay true to its long-terms goals of innovation and continuous improvement. Meanwhile, Procter & Gamble has reframed the value of some products to better fit the economic environment. For example, it has introduced a low-cost version of Tide. The company reminds people that Tide will help them keep their new clothes looking that way longer. This feature and benefit appeals to consumers in this type of environment.

EL. So what type of a balancing act do CEOs need to do in this environment?

BS. Despite the rough times, you have to add some people and create some new capabilities. Whenever you add people, however, you need to look at where you can reduce. Adding a new capability also means thinking how you can eliminate something you no longer need. You need to make tradeoffs in this kind of tight environment. To pay for the additional staff and capabilities, you need to think about the reductions and the elimination.

EL. As the CEO of a major advertising company, are you seeing your business evolving more to social media?

BS. Absolutely! Our world has moved from talking to people to building connections with them. We want to create information that is useful in peoples' lives so our clients will be invited in their homes.

EL. Can you briefly describe some of the technology trends you have seen in your career?

BS. When I worked at General Foods and Philip Morris, hardware and a centralized IT environment dominated the company landscape. Today, we can disburse software applications so they are closer to meeting the needs of disparate, decentralized entities. People at Saatchi & Saatchi not only need to understand technology, but to understand how it affects the way they access information, the way they lives their lives, and the way they make decisions. We have various centers of expertise that touch all of these things. You need to embed these things in every operating unit today. You cannot have a periodic get together with some center of expertise that tells you about this that and the other thing. You need to be living these things on a day-in and day-out basis.

EL. You prefer to talk about corporate dream as opposed to operate vision. Is that something that can be applicable to any company?

BS. It can be and should be. I have a story in the book called Tape Your Strategy to Your Forehead. There is a big difference between a dream and many mission statements. You should be able to express your dream in 20 words or less. People should be able to tape it to their forehead. You see a lot of vision and mission statements that go on and on. People do not have a way to quickly state back to what is this company all about. When I did the turnaround for Kayser-Roth Corp., we said our dream was to become the best leg wear company by meeting customer needs better and faster than competition through total quality. It is 20 words. It said this is what the company is all about. At Saatchi & Saatchi we want to be revered as the top house for world changing ideas to create sustainable growth for our clients. This is a pithy, meaningful statement. We expect everyone in the company to take this forward and know what the company is about. This kind of thinking energizes every employee.

EL. When you were at General Foods, the company went from a centralized to a decentralized structure during the acquisition by Philip Morris. How did you deal with the CEO so everything was harmonious?

BS. In the book I say that centralization and decentralization can be the nitroglycerin of organizations. Individually they are fine. However, together they can create some real problems. You need to be one or the other. One company highly centralized, while the other one was highly decentralized. It just never got to be a happy marriage. There was no way to bridge that kind of gap. General Foods was a matrix organization with many centralized resources, such as IT. We had ways of cross roughing them with the line organizations to get out of the decentralized needs of the various businesses. Centralization ends up often times being a one-size-fits-all environment. It is a difficult approach when your business comprised of an entire bunch of disparate business with no relationship to each other.

EL. What is your organizational structure at Saatchi & Saatchi?

BS.  We are disbursed geographically across 83 countries. In some areas we deal with affiliates. We have an entire series of company beliefs that we distribute around the globe. We start with our inspirational dream ad. Our local management and applications are highly decentralized. We will give them the beliefs, values and principals. The applications and the plans are in the hands of local managers.

EL. Can you describe the differences in the strategy process at the companies where you were CEO?

BS. General Foods had an intensive strategic planning process. In fact, it could drag on for a year and wind up being a three-inch thick book.  By the time it got done, it was time to start the next strategic planning process. At Saatchi & Saatchi, we have the entire thing down to a single page that tells you everything you need to know about our strategic direction. Most companies will never get to that type of an environment because spend too much time strategizing about the future. Instead, they should spend more time thinking about it and making it happen.

We operate on two types of beliefs - 'one team, one dream' and 'nothing is impossible.' We have an entire series of beliefs and character statement. We have the challenge to become the agency of the year in every market in which we operate. Our organizational focus includes filling the world with love marks, which is a strategy to elevate brand to customer loyalty and beyond.  We can put all of this stuff on one piece of paper.

The next thing we do is to put together an annual plan. We try to cascade what we call our 100-day plans throughout the company. It consists of the half dozen things you want to get done in the next 100 days. If you knock those things off, you get your next 100 days. That makes up a year.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

EL. Have your expectations of your internal staff changed? 

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

EL. Can you describe your growth in foreign markets?

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

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

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

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

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

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

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

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

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

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

Most CIOs accept a new position on the premise they will create an IT organization that will bring great value to the business. Some CIOs, however, find themselves maintaining the IT status quo by keeping costs under control and systems running.  Other CIOs struggle to make important improvements despite shrinking budgets and lack of executive management support. And then some CIOs manage to overcome corporate challenges to bring about a major IT organizational transformation.

John Carrow, the former global CIO of Unisys, likes to think of himself as someone who thrives on delivering the business impact of IT. In fact, during his 30-year IT career, he played a major role in four IT business transformations, including  10 years as the global CIO for Unisys, and four years as the CIO for the City of Philadelphia. Carrow’s IT experience enabled him to move out of the IT role to become Unisys’ vice president of strategic client development, where he worked on developing key accounts and client relationships for the company. He left Unisys to start Carrow Consulting, a strategic technology advisory firm to help small and mid-size companies reset their strategy, and gain alignment with their executive team or their workforce in order to execute a strategy.

Enterpriseleadership.org recently sat down with Carrow to discuss how he handled two major IT business transformations, and dealt with the politics of being a CIO. Here is what he had to say:

EL. How did you create business impact of IT as a public sector CIO?

JC. When I joined the City of Philadelphia in 1993, it was near bankruptcy, had very little automation, and a new mayor, who happens to be the current governor of Pennsylvania. His mission included changing the direction of the City so it operated as a business with a good financial foundation. When I interviewed for the job, I asked the mayor to define his expectations for IT. He replied, ‘I don’t know much about our technology, except that I don’t think it is very good. I expect you to build a monument on the side of a cliff with primitive tools and no money.’ I took the job on that premise. I measured the impact of IT during the four years I was there. We infused a tremendous amount of automation, that not only made things more efficient, but also pulled in more revenue for the City which helped turn it around.  When I started as CIO, we had 1,000 computer users out of a workforce of 25,000. When I left, we had 16,000 computer users who spanned just about every department.

EL. What challenges did you face creating business impact of IT at Unisys?

JC. When I joined Unisys in 1998, it was a $7 billion traditional hardware supplier of technology to the business community. Because hardware was becoming a commodity, the new CEO decided to change the company’s direction to become a service-oriented business, and to have the entire company operate as one entity or one business unit. In the past, we had multiple business units doing their own thing.  He wanted to use technology as the lever to help transform the company. We changed many things, but we centralized the IT organization. We consolidated 56 data centers around the world to one. We rolled out Oracle for ERP, Peoplesoft for HR and Seibel for sales force automation. We collapsed the number of systems we supported by 50 percent. We lowered the overall cost of IT by 40 percent. We standardized and simplified processes across the globe. During my 10-year road trip, I produced many measurements that showed the business impact of IT.

EL. How did you communicate business impact when you were at Unisys?

JC. Because we had a global workforce of more than 35,000 employees, we relied heavily on top-level communications through the management team. We had many all-hands meetings, and Web-based meetings. We had the luxury of broadcast TV capabilities.

EL. Were you at the board of directors meetings?

JC. Occasionally! When we kicked off the transformation, both the CFO and I attended several board meetings where we presented our case for the investments we needed to make. We attended periodic meetings to report our progress. After September 111, we gave the board regular updates about security issues.

EL. Was the business impact of IT ever communicated to stockholders?

JC. Yes! It was communicated to investors as part of the overall going-forward strategy of the company to become a service business. These were underlying transformation toolsets that were being put in place.

EL. Did you provide this information?

JC. Yes!

EL. How did you measure the business impact of IT? Were there certain criteria you looked for?

JC. The most important aspect of it was the financial cost savings associated with the overall transformation. We had forecasted that a sheer reduction of infrastructure, especially the number of systems, would produce a cost savings. We also said that we would put in place a central procurement activity supported by technology. There would be cost savings by reducing the spend we had with fewer suppliers. We reduced 19 different procurement systems to one. We also simplified the company’s multiple financial systems to a single instance financial system with a data warehouse reporting capability. It would reduce the cost of the accounting activities.

EL. How did you track those cost savings?

JC. We benchmarked ourselves on all of these functions over time. That gave us a pretty good indicator of the costs from the first day we started. Periodically along the way we did two or three benchmarks with the same firm to make sure we made progress in the right direction. We used the Hackett Group.

EL. Have you gotten into the politics of being a CIO? That is a subject few CIOs talk about.

JC. How do you avoid that as a CIO? You have politics starting with who you report to. Are you getting the visibility you deserve so you can make a difference trying to bring about change in the organization? For example, I was brought in as a technical expert for the City of Philadelphia. People respected that. The more people my team trained to use computers, the more the politics started to disappear.

Unisys had its own political challenges. I was a technical expert inside of a company full of technical experts. I used to joke that I had 35,000 deputy CIOs all of whom said what direction we should go in. There’s one level of politics. Another level of politics was the relationship inside of the executive committee. How do you get your voice heard? I worked directly for the CFO. I did not like that reporting relationship, but that’s the way it was. Some times it was difficult to get my voice heard especially when another person filtered it. 

EL. You stayed at Unisys a long time? Apparently you found a way to make this work?

JC. We made significant progress. Whenever you make progress with difficult challenges, you feel good about that, and you feel good about what you are doing.

EL. Were you represented on the executive team or did CFO represent your point of view?

JC. It was the latter. I dealt with all of the members of the executive team individually. I would have liked more opportunities to engage with them collectively. I wasn’t unique in wanting to sit at the table. As my confidence level grew over time, I quit worrying about who I reported to, but getting the job done in the manner people expected.

EL. As far as you are concerned the CIO shouldn’t worry about who he or she reports to?

JC. I have heard some CIOs say that they would never take a position reporting to a CFO. I have even felt that way in my life. When I was the CIO at Unisys, I knew I had the support of top-level management, especially the CEO and his executive team. In that case, who you report to doesn’t make a difference. When that support starts to wax and wane, you might not continue to get the right level of support, say, from the CFO you report to. That’s when you have something to worry about.

EL. What methodology is your new consulting organization using to help companies receive a better payback from their technology investments?

JC. I have developed a paradigm based on the transformation I have carried out. I call it the SAGE factor, which stands for strategy, alignment, governance, and execution.

We talk about each of these in isolation. You need a strategy that aligns with the business.  A governance process has to be associated with that strategy in order for you to achieve execution. If you don’t have the first three set up correctly, you really cannot achieve a successful execution. Technology is a piece of SAGE, but it goes beyond technology. At the end of the day, business strategy is what matters.  IT is an enabler, but it is really the business focus that is important.

EL. Can you describe how you helped one particular company?

JC. We worked with a business process outsourcing company that has been a backroom provider of high quality services. The company came to us and said it wanted to change and go after a public sector market. We helped them identify the solution sets it can take to market and how it can best do that. Working together, we built those solution areas.

We worked with a small printing company that has a software development arm. It is very innovative company. This company asked us how it could get its products to market. We have been helping them layout the products, test marketing them, and develop a go-to-market program for those products. 

EL. Given this economy, what are doing to get clients?

JC. At Unisys, I was on the IT audit committee. We worked with the Information Systems Audit and Control Association to implement the COBIT framework not only in IT, but in our overall governance structure.  I developed a good relationship with Ernest & Young and KPMG. When I left Unisys to set up my own consulting practice, both of these organizations referred me to clients who needed my expertise.

EL. What’s next for Carrow Consulting?

JC. I am about to work on a large transformation project within the federal government. That’s all I can say about it. My other goal is to write about the transformations I have been a part of.  What things make a transformation work? What barriers will you encounter? What causes them not to work well? It all starts at the top.

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

In 1974 when Dave Abney joined UPS part-time as a college student loading and unloading packages, the brown uniformed UPS drivers and the clean brown UPS package cars represented the company's brand.  Managers and executives used slide rulers and calculators to handle many office functions. Many things at UPS have changed in 35 years. Abney has held many positions throughout his UPS career, from division manager in New Jersey to his current position as chief operating officer. The brown uniformed UPS drivers and the clean UPS package cars still play a key liaison role between customers and UPS. Today, conserving vehicle fuel and driver time have been critical issues for UPS. Meanwhile, UPS' initial public offering in 1999 gave the company funds to grow from being a shipping company to becoming a $50 billion global transportation and provider of third-party logistics services. UPS has leveraged its customer data, and a customer-based network of integrated systems to offer new package delivery services, to make drivers more efficient, and to pursue new business opportunities.

Enterpriseleadership.org recently sat down with Abney to discuss the UPS' disciplined approach to operational efficiencies, technology spending, and new business development.  Here is what he had to say:

EL. What are you doing to make your drivers more productive and your vehicles more energy efficient?

DA. What you mentioned has been very central to our operational excellence. We have been demonstrating it since 1907. Because fuel is a big part of our fleet and our costs, we have always focused on conservation. Any mile that we do not drive saves fuel and does not cause a carbon footprint. We have probably got as good at that as just about anyone.

Our network is very different from some of our competitors. We do not send different drivers out to take care of air, ground, and residential. We handle everything on one network. This method provides much visible efficiency. Some small initiatives also contribute to our efficiency. For example, we have received much publicity for our no-left-turn policy. In fact, some of my neighbors and friends have asked me how they can get to work without making left turns. Going right or what we call loop dispatch is an efficient way to run our network. It also saves much time especially in heavy traffic. You may think a couple of left turns would not make a difference. On the other hand, if we talk about 90,000 people driving their vehicles all day long, those fuel savings and time savings translate to meaningful numbers.

Our package flow technology allows us to dispatch in efficient ways. Before the packages ever get to an operation, we know what is coming in and can dispatch based on that. In the past without technology, we had to wait until we got the packages, split the packages up, and them assign them to the different package cars. If things did not make sense, we often had to make changes at the last minute and just move packages around. Our package flow technology alone has allowed us to save 30 million miles, three million gallons of fuels, and 32,000 tons of carbon emissions.

You may have read about our alternative fuel vehicles. By the end of this year, we will have more than 2,200. We have traveled almost 200 million miles with these vehicles. We are using all different types of technologies -- hydraulic hybrids that operate off the breaking power. We also have electric hybrid cells. I cannot say if that one particular example fits all conditions at this point. The hydraulic hybrid seems to work well in metro areas where you have many stops and starts. We look at different technologies for the different situations.

EL. What technology do you use to map no-left-turn routes for drivers?

DA. We have installed telematics technology on about 10,000 of our vehicles. Our no-left-turn technology and our package flow technology consist of knowing where the packages are going. Drivers do not use a GPS device that alerts then to the route as they drive. Instead, each driver follows a pre-designated route based on our technology. The dynamic dispatch we are working on would use GPS with factors that might happen mid-route.

EL. Are you leveraging technology to make your customers operate more efficiently?

DA. Absolutely! Until 1998, we focused on running the tightest ship in the shipping industry. We were the best at small package delivery. We still are. As the world started to change, we decided to overhaul our business strategy to enable global commerce to meet our customers' needs. World trade was starting to development, emerging countries were starting to play roles in those trade lanes, and supply chains were becoming longer and more complex.

The paperless invoice is a prime example of how technology has affected our customers. It allows them to ship packages around the world, -- across country borders  -- without having to complete the complex paper invoices, or keep dozens of duplicate copies. In the past, if those copies got lost of if you did not provide complete information, your package could gets held up at the borders. The electronic capture of information eliminates many errors. Because we transmit the information so the country receives it in advance of the package, we provide a smoother transition across the country border.

EL. Is UPS getting into new businesses that will complement package delivery?

DA. Yes, that is part of our new strategy in enabling global commerce.  Since 1998, many things have happened. The funds from our 1999 initial public offering have allowed us to invest in more than 40 acquisitions. Some of these acquisitions have given us brokerage capabilities, such as freight forwarding. For example, we acquired one of the largest third-party logistic providers in the world. It can start from the very beginning of the process by helping customer to manage their transportation needs. It can manage raw goods coming in-bound, and run the warehouse, taking care of distribution.  It could also move all of a customer's transportation needs either through our network or via a shipping line. While we do not own any ships, we would provide all of the information along with the packages to the shipping lines.

EL. Would you assemble a product and then package it for shipping, say to retail stores?

DA. Yes, we do the packaging of computers and other product lines. We even go one step further for our customers. UPS employees repair Toshiba laptops. If your Toshiba laptop malfunctions while you are traveling, you can drop it off at a UPS facility or a UPS store. We will pack it up and send it to our hub in Louisville, Kentucky, where we will do the repairs. We will then pack it and deliver it to your hotel. No one other than a UPS employee touches your laptop during the entire process which takes anywhere from 28 hours to 48 hours, depending on the repair.

EL. What impact has the economic downturn had on some of these businesses?

DA. The economic downtown has affected our customers in some industries, such as retail, more than others. We live in a time that many of us have never seen before. We have a decline in industrial production and a reduction in consumer spending. Like many businesses, we need to make good decisions, not only about reducing costs, but also about how to grow our revenue in these tough times. Being a 103-year old company has some advantages. We know how to manage during uncertain times. We survived the depression, several world wars, and countless economic cycles. We know how to manage change. We have just to make sure we feel very comfortable about it.

We have a responsibility to maintain our financial soundness. We are in a great position to do that. We have to be prudent to hold ourselves accountable. We feel that there are opportunities out there. We know we can take advantage of those opportunities. If we see a business that would answer the needs of our customers, we can invest in it.

EL. Your company leverages much technology to be in different businesses.  and to be really efficient and agile. How do you make technology investment decisions?

DA. First, we measure everything. We use this information to decide where we need to implement technology and where we need to invest in the business. We constantly monitor trade lane information, and the needs of our customers. We then look to see where we need to make investments and answer the needs of our customers. We invest about one billion dollar a year in technology. We look at what the project will cost, what type of a return we might get, and how it will take us to get a return on that investment.

EL. What is the governance process for looking at these capital investments?

DA. We have a governance process around any major investment that we would do. It starts with our management committee, which is the way we manage our business. The committee consists of the CEO, me, and about nine other people. Our people do the analysis to see if the investment would give us the return we need and if it will answer our customers' needs. We then decide whether or not to approve the investment.

EL. How often do you review your business strategy?

DA. It is absolutely an ongoing process. At one time, you could look at our strategy three to five years out. That's not good enough today because the world keeps changing. Our executive level strategy steering committee meets monthly to talk about where we are, where we need to go, how we see the markets changing, and how do we react to those changes.

EL. Have you invested additional dollars in analytics?

DA. We have invested in analytics to ensure sure that we have the capacity to analyze much information, and that we can funnel it to where we need to make our improvements. Analytics is something we have been doing since I got here 35 years old. Back then we used slide rulers and calculators.

EL. Do you have a formal methodology for looking at capital investments in technology?

DA. Yes. We have a committee that meets monthly. We have a set format for how we look at this information, especially how it shows the rate of return, the cost of the project, and how quickly we think we can get a return on that investment. Key members of the committee include the Dave Barnes, the CIO, our CFO, me, and nine other executives. Because our offices are near each other, we are constantly talking to each other. Each morning we go to breakfast together to make sure we catch up with each other. We do the same thing at lunch. We have weekly and monthly meetings.

EL. Do you have a committee that handles acquisitions?

DA. We have a group that looks at mergers and acquisitions. It has close ties to our strategy group. We first look at what the acquisition would provide. If we think it has potential, we then look at what synergies the acquisition would provide us.

EL. What is your feeling about using social media to get closer to your customers?

DA. Our way for communicating back and forth with customers has been through our drivers. They function as ambassadors to our company and our customers. As the company has grown, we started to branch out and advertise. For years, our best form of advertisement was our uniformed drivers and a clean package car vehicle that appeared in front a customer's door every day. We have tailored more and more programs for the Internet. We have expanded our interaction with customers to include social media. We are experimenting with things like twitter. We like being able to interact directly and quickly with customers. Social media will also give us much customer service intelligence about how we can do better job. Again, social media is fertile ground for us.

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

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

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

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

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

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

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

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

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

EL. What is your technology platform?

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

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

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

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

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

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

EL. Do you have any clinicians on your team?

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

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

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

EL. Can you describe any other major technology investments?

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

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

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

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

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

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

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

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

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

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

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

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

EL. What is your role in the corporate strategy?

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

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

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

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

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

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

While it might not be the largest federal agency in the U.S. government or have the biggest budget, the U.S. General Services Administration (GSA) provides good and services to enable the other federal agencies to function. Its formal mission is "to help federal agencies better serve the public by offering, at best value, superior workplaces, expert solutions, acquisition services, and management policies.' GSA employs about 12,000 federal workers and has an annual operating budget of about $16 billion, about one percent which comes from taxpayer dollars. Meanwhile, the GSA oversees about $66 billion of procurement annually and also contributes to the management of about $500 billion in U.S. Federal property.

About a half billion of GSA's budget goes to the delivery of information technology to support the agency's acquisition services. As chief information office for GSA, Casey Coleman wants to make sure that every dollar counts. In fact, her primary role focuses on leading and carrying out the efficient acquisition and management of IT solutions across GSA. She manages the agency's IT program, overseeing management, acquisition, and integration of the agency's information services. Her oversight responsibilities include strategy planning, policy capital planning, systems development, information security, enterprise architecture, and e-government.

Enterpriseleadership.org sat recently sat down with Coleman to talk about how she is bringing about organizational change and using technology to achieve business and mission goals. Here is what she had to say:

EL. Can you describe some of GSA's key responsibilities?

CC. GSA is a worldwide organization. We provide business services to the rest of the federal government. Although we're not a high-profile agency, we provide key business services that the rest of the federal government depends on. We manage all of the federal real estate for all of the civilian agencies. We're the landlord for all of those federal buildings. In fact, we're one of the largest real estate organizations in the world. We're also one of the largest telecom providers in the world. We engage with industry to acquire telecommunications and IT services the rest of the federal government can consume at very competitive rates. We also provide services such as fleet and motor vehicles, office supplies and services, and government-wide managed services such as the travel program and the purchase card program. We do much of the behind the scenes work to help other federal agencies fulfill their mission, and most of our key programs relate to that mission.

EL. What was the most important IT initiative you handled during the past two years and why did you have to do it?

CC. Our IT is devoted to the capabilities around acquisition of goods and services, and the management of client funds to pay for those services. The consolidation of our entire infrastructure has helped us to fulfill this objective. We have 11 regions in the U.S. Each of these regions historically had managed its own infrastructure, such as networks, IT support, and help desk. Eighteen months ago we consolidated 39 contracts and 15 help desks into one program centralized under my office. We also consolidated all of those regional IT employees into this office.

EL. How much of a cost savings is this going to be?

CC. We initiated this program in 2007. We've seen at least a 15 percent cost savings. We also have been able to hold our costs steady in 2007 and 2008 from the original 15 percent savings baseline calculated from 2006 expenditures. We have seen a savings of at least $5 million. Moreover, we've been able to take on new initiatives and do more unfunded mandates with existing money.

EL. What is your definition of business impact?

CC. We try to tie our work to the impact that is has on our constituents. As a result, business impact comes from helping the business organization of our agency better perform their mission. We accomplish this either through removing obstacles to enable productivity or deploying new capabilities to help them work in a way that is more modern and more productive. As a federal agency, we deal with the public trust of safeguarding the taxpayers' dollars. To this end, we need to prevent information security breeches.

EL. How do you communicate business impact throughout the organization?

CC. I believe in using every channel available to communicate our message frequently and personally. For example, I send out a periodic newsletter to the senior leaders of the organization via our Web site. I also like to get into the field and to visit with business managers who rely on our services. I want to hear what they need from us.

EL. Have you made changes to your enterprise architecture to better align with the business architecture?

CC. Yes!  GSA is a decentralized organization, and we've managed our IT in a decentralized manner. We have had IT applications, and business applications deployed by each of the business divisions within the agency. In the past, the Office of CIO was more responsible for policy, architecture, capital planning, information security, and not so much the management of IT applications.

A great many business trends caused our agency to act in a more unified and more cohesive manner. As a consequence, we realigned our enterprise architecture to manage IT more as a holistic enterprise portfolio of services and capabilities.

For example, within the agency, we have more than 40 different applications which require a user ID and password.  As a result, employees of the agency can have dozens of passwords they need to keep track off. We recognized that this isn't a good way to manage security. It certainly isn't a holistic approach to information security. It's also a productivity impediment. We've embarked on an identity and access management initiative. It's in the early stages. We're developing an identify access management solution that all of these applications will then tie into. Through this one solution, our employees will have access to the network and access to all of their applications.

EL. Can you describe the oversight process for making IT investments?

CC. All federal agencies plan their budgets two years in advance.  We're about to embark upon the 2011 budget cycle in the Spring 2009. At that time, we'll go through a process to select the most compelling investments for our emerging business priorities. My office is responsible for prioritizing these investments and submitting them to the Office of Management and Budgets. We manage, monitor, and oversee those investments and make sure they're on track.

EL. Does planning IT investments two years in advance pose a challenge to make sure that certain things get done?

CC. No one can foresee with perfect accuracy what is going to happen two years in advance. I'll say that there is always some changes and adjustments that have to be made. We have to call upon senior leadership to be able to make those adjustments as gracefully as possible.

EL. What tools do you use to monitor that two-year planning process?

CC. The federal agency, as a whole, has to use an ANSI-standard earning value management technique. It is a formal methodology for monitoring the spending and scheduling of any investment to make sure it is on track. It requires the submission of reports. It's basically project management.  We use a tool called Electronic Capital Planning and Investment Control, which provides an automated way to submit, to track, and to manage our investment portfolio.

EL. Can you describe your governance process?

CC. We've just revised our governance process because it was several years old. We streamlined it and made it more decisive. We have a set of standing committees that focus on practice areas, such as enterprise architecture, capital planning, information security, and infrastructure. These standing committees deal with tactical-level problems, including working out standards, agreeing upon them, and scheduling tasks. Above that is an IT executive council comprised of senior executives from the primary business divisions of the agency. They're responsible for the guidance and decision making on IT investments. Above that, we have a council of the senior business executives of the agency. They're responsible for setting guidance for our investments. I'm on that committee as well.

EL. If you had to look at an IT maturity index, where would your organization rate on the scale?

CC. We have mature processes especially in the areas of governance, capital planning, investment control, and information assurance. There are things that we're trying to move further along that maturity curve, especially, in the management of our infrastructure. Here we're deploying the IT Infrastructure Library.

EL. You worked in the private sector for many years. What adjustments did you have to make to be successful as a public sector CIO?

CC. My industry experience has been invaluable in helping me in the federal sector. On the other hand, I found that moving into the public sector was a learning experience. In the public sector, you deal with public trust and with public taxpayer dollars. Everything you do comes under greater scrutiny than if you were in a company. There are more stakeholders involved in reviewing and approving the course of action. You aren't the captain of the ship setting the course and steering where you will. We are accountable to the administration through the Office of Management and Budget and to Congress. The media is also a stakeholder. The public at large is another key stakeholder. Other government organizations, such as the Government Accountability Office, are also stakeholders. You need to be able to build coalitions, to communicate clearly, and to be transparent. Being able to build teams who can support your initiatives is critical. On the other hand, the time you take to build these teams can prevent you from moving with the agility you'd like. On the flipside, this team building can keep you from doing things that haven't been thoroughly considered beforehand. There is a positive side to that.

EL. Are you involved in any professional IT organizations apart from the federal government?

CC. I'm the vice president of an organization called AFFIRM.org. It's a federation of federal IT managers. I'm also involved in the Federal CIO    Council, where I chair that committee on best practices with the CIO from the State Dept. We're trying to collect, to publicize, and to encourage the use of best practices and standard practices across the government. I'm not involved in Women in IT although I try to keep up with what they're doing. I'm also the chair of a conference called the Management of Change. It occurs every year. The American Council for Technology sponsors it.

I mentioned the importance of stakeholder groups. The IT industry is another important stakeholder group. So much of what the government accomplishes occurs in conjunction with the private industry, which provides much of the resources and the technical expertise. It is important to maintain that open relationship and open communications with the industry in a vendor neutral way. Organizations, such as AFFIRM and the American Council for Technology, give us an opportunity to talk about our initiatives, and our priorities in a vendor-neutral environment. We, in turn, get to understand objectively where the industry is making advances.

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

With roots dating back to the World War I, Brady Corporation manufactures and markets a comprehensive line of identity and protection products, including labels, signs, safety devices, and printing systems. The company operates in more than 26 countries and has 500,000 customers in construction, education, electronics, healthcare, manufacturing, telecommunications, and other industries.

When Frank M. Jaehnert became president and CEO of Brady in 2003, the company's half billion in annual sales had stalled, profits had declined, and employee turnover had increased. Jaehnert gladly stepped up to the plate and accepted the challenges before him. He immediately began a major restructuring effort focused on controlling costs and asking his leadership team to set higher goals for the company to achieve. Jaehnert's vision was for the company to become an international market leader in the maintenance, repair, and operations space. Within three years, the company achieved its growth targets by expanding global operations, acquiring companies that could broaden Brady's product line, and making on-going capital investments in technology. In 2007, Brady got named to Forbes' Platinum 400 List of American's Best Big Companies.

Brady closed out its 2008 fiscal year with more than $1.5 billion in revenues. Jaehnart says, "Our first quarterly results for the 2009 fiscal year had the highest sales and the highest profit in our corporate history."

Enterpriseleadership.org recently sat down with Jaehnart to talk about his strategy for creating shareholder value by investing in technology, empowering his staff to fuel organic growth, and taking belt-tightening steps whenever necessary.

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

FMJ. In 2004, when we were at $500 million in revenues, we invested about $30 million to move our enterprise resource planning system to the SAP platform. That was a huge investment. Today, about 70 percent of the company uses this platform. We have one system for the entire company. We recently made sizable investments in three cloud-based computing systems.  These systems include the following: Salesforce.com, a customer relationship management system; GetPaid, a framework for processing online payments; and Workday, a human resources management system.

EL. How did you go about making these investment decisions?  Did you follow a formal process?

FMJ. Improvements in our productivity and in our competitive environment drive the company's overall goal to keep getting better at what it does. As a result, we challenge all of our teams in all of the functional areas, such as finance, human resources, and technology, to look for ways to improve how they run their businesses or their functions. They seek out solutions from vendors that offer the best-in-class products. Before we make any type of an investment decision, we do financial calculations based on the Economic Value Added (EVA) metric or economic profit developed by Stern Stewart. We look for good returns on our investments.

EL. Can you be more specific about how you measure shareholder value creation?

FMJ. That's an interesting question. It doesn't matter if it's a technology investment, an acquisition, a new product development investment, or the purchase of manufacturing equipment. We run every investment through an EVA calculation.  For example, you determine your cost of capital and then it becomes a component of the cost of equity and the cost of debt. You might want to create 10 percent more profit than your cost of capital. If your cost of capital is $100 million, you want to make sure that your return is more than $100 million to cover your cost of capital.
 
The ultimate shareholder value creation is if the stock price goes up or the dividend amount goes up. In this economy, the share price could go down because of external influences. The company might still see an increase in EVA, but real shareholder value comes from the share price plus dividends.

EL. What was the executive governance process for the SAP investment?

FMJ. Before we moved to SAP, we had a third-party company managing our many legacy systems for ERP. Unfortunately, this company had its own share of problems and was up for sale. We knew we wouldn't get the support we needed. We had to move right away to another system. On the other hand, an ERP system implementation is a big deal. We spent much time trying to justify this capital investment.  For example, we looked at how much money this system could save us, what additional information it could give us, and what reductions in administrative costs and sales costs we could expect. We presented our proposal to the board of directors. We went back and forth answering questions the different board members had. Eventually, the board approved the proposal.

EL. Do you have an executive committee that looks at technology investments across the company as part of the governance process?

FMJ. We don't have one committee. We have different committees. The executive committee includes all of my direct reports. They have a say on every major decision. We have an engineering committee, a new product development committee, and a technology committee. We don't have a manufacturing committee. Each manufacturing site makes decisions about its routine machinery and equipment. If a manufacturing site needs to move to a more advanced technology, then the engineering committee works with the machine manufacturer to make the business case for developing the new manufacturing technology. The business case then goes before the executive committee. I look to my CFO's expertise to determine if this investment will benefit the company financially.

EL. What do you expect from your chief information officer (CIO)?

FMJ. I consider my CIO, who is one of my direct reports, to be a business leader. He'll also tell you he's one, too. In fact, I expect all of my direct reports to be entrepreneurs who have ideas that can benefit the business. Our priorities include helping the company to grow sales and profits and to create shareholder value. I'm not looking for a CIO to be just a technologist. My CIO knows how to apply his technological expertise to make the company grow and to become more successful. The same goes for my human resources person, and my CFO. For example, if my CIO might see an opportunity for us to save millions by having a call center in the Philippines, then he'd do his homework to make sure we could support it and we could integrate it seamlessly into the company. As a result, it all comes down to what each business leader can do to improve the company.

EL. How has the economic climate affected your business?

FMJ. At the same time we announced out best first quarterly results ever, we also announced   a 10 percent cut in the workforce going forward. We have a freeze on salaries. We perceive a long and a deep recession. It felt good to have the best quarter ever. On the other hand, it felt like we contradicted ourselves when, we at the same time, announced some cutbacks. Up until a few months ago, some of our businesses were working three shifts just to keep up with customer demand. We've started to see a decline in our work volume.

EL. Can you give examples of how you've leveraged technology to get closer to your customers?

FMJ. By providing more information about the customer, Salesforce.com, for example, will enable our sales people to be more responsive to customers’ needs. This system isn't a response to the recession. Rolling this system out in the middle of a recession will help us to save money by making our people more productive.

In many ways, we connect to our customers through our SAP system online. Sometimes we even provide software for our customers to run. For example, Grainger, one of our largest distributors, uses our software so customers can create signs. If you go to www.grainger.com and click on signs, you can design your own sign online. You can see how it looks. You can change color and letter size. You can pay for the sign by credit card. All of the information gets transmitted to us and we produce the sign.  That's one way how we work with a large customer. It isn't all about SAP.

EL. What is your business strategy and where role does technology play in it?

FMJ. Our business strategy is very simple. We want to be number one or number two in all of our businesses. We have to define which businesses we're in. The role of technology is to help us to get to wherever we need to head. For example, to keep our sales people better informed about customers, we decided to go with Salesforce.com and BlackBerries.

EL. Do you have a formal process to set your business strategy?

FMJ. We talk about strategy every month. I don't believe in having one big annual meeting to establish what we're doing for the next two years, and then going off an executing against this one plan.  Because things move so quickly, we constantly have to keep on top of our strategy. When I became CEO in 2003, we did a three-day strategy session. I announced that we'd have a strategy session the following month. The next month, I announced the same thing. That's how our monthly strategy session came about.

You can't go off to a three-day, off-site meeting somewhere in Florida and expect to come back with your business strategy. Albert Einstein didn't go off to an off-site meeting with the hope of inventing the theory of relativity. He refined what he developed over time. The same thought process should go into developing a company's a business strategy. At first, everyone had some angst about the monthly strategy meeting, but today we can't live without it.

EL. How does the monthly strategy meeting process help your team to make better decisions and to deal more effectively with the board of directors?

FMJ. The meetings consist mostly of my direct reports. On occasion, we'll invite people who can help us to make better decisions. For example, when we talked about the adjacent markets we'd like to pursue, we had two middle managers present their findings about these markets. These experts went out and investigated these markets for several months. They know more about this subject area than we'll ever know.

During a session, we might look at how we can improve a particular business. Can we take it in a different direction or in another geographical area? Has the marketplace or the customers changed? We might try to answer questions like those.

During a two-day strategy session we had with board in May 2008, we gave a presentation on what we plan to do for the next five years. Our monthly strategy sessions helped us to put everything together and to make sure we understood what questions the board might have. For example, if we were going to talk about a possible acquisition, we might prepare our respond to questions about debt level and leveraging.

EL. How has the belt tightening affected your direct reports? Are they working harder on how to create business impact?

FMJ. During the past five years, we've acquired more than 30 small companies. We've focused on how and what we could improve and took the appropriate action. We consolidated factories and sales forces to become more productive.  We cut back on discretionary spending for things such as seminars and travel. In some cases, we took out a management layer.  We now have a heightened sense of urgency, but it's not like we weren't doing anything before the downturn in the economy.  Our management team has much experience dealing with ups and down in the economy. We've just taken it to another level.

EL. What quality practices do you use the most?

FMJ. Some companies transform themselves into a Six Sigma or a Lean shop. They even wrap their culture around Six Sigma or Lean. In contrast, our culture has always and will always be dedicated to creating shareholder value. To this end, we use techniques such as Lean, Six Sigma, Kaizen, and Value Stream Mapping for how we can create this shareholder values.

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