role of the cio 4/4/02 presentation by: kate gross, justin lucy, supriadi legino

ROLE OF THE CIO

4/4/02

Presentation by:

Kate Gross, Justin Lucy, Supriadi Legino

Introduction: Evolution of the CIO

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Introduction

• Evolution of IT and IT leadership

• Role of the CIO today

• Interviews with Mathew Kraner and Dan McGuire, St. Louis Post-Dispatch

• Profile of Ralph Szygenda, CIO, GM

• Role of the CIO in the future

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The Evolution of IT and IT Leadership

• The role of IT and IT leadership during the 1960’s and 1970’s– Increased ability to store and retrieve data drives the

focus of IT during this period

– The focus of the IT group becomes process automation

– IT leadership is focused on ensuring technology functions on a daily basis

– IT leaders are isolated from other executives in experience and participation in the business

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The Evolution of IT and IT Leadership, continued…

• The role of IT and IT leadership during the 1980’s– Personal computers facilitate ability to access and

analyze data quickly and efficiently – The focus of the IT group and IT leadership becomes

efficiency– Mergers and acquisitions and globalization during the

period increase need for IT involvement in reengineering efforts

– As a matter of course, IT leaders begin to work more closely with other executives and become more exposed to the business

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• The role of IT and IT leadership during the 1990’s– Mergers and acquisitions and globalization continue

– The development of the Internet and the concept of e-commerce force the IT executive into the spotlight

– The increasing reliance of business on IT is becoming evident as executives look to IT leadership for solutions to business problems

– IT leaders primary goals become very business centered during this period

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• The Computer Sciences Corporation (CSC) survey for 2000 cited the top five concerns of IT leaders as follows:– Connecting to customer, suppliers and partners electronically– Optimizing organizational effectiveness– Optimizing enterprise wide IT services– Developing an electronic business strategy– Organizing and utilizing data

Computer Sciences Corporation, “13th Annual Critical Issues of Information Systems Management”, 2001

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• CSC survey facts:– Responses from over 800 IT executives in a variety of

industries– 70% of respondents were the most senior IT executive

in their company– Respondents were from 26 countries– Fortune 500 companies were well represented in the

survey results


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• Given that business is becoming increasingly reliant on IT, and is impacted significantly by the success or failure of IT initiatives, it has become evident that the successful IT leader will possess the proper authority required to drive change and a broad base of skills and abilities which reach far beyond basic technology oriented competencies.

Role of the CIO Today

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IS Leadership and the nine core IT capabilities 1)

-Implements structures, processes, and staffing to fill other 8 roles

-Alignment of IS strategy and business-Fosters relationships with senior management

Who is the appropriate IS leader ?CEO, GM, CFO, COO, CIO, CTO? Who is in charge of your organization’s CRM implementation?2)

- CIO,VP, Head of IT: 29% - Director/IT: 19%- VP/Head of commerce: 18% - CEO: 8%- CFO: 7% -VP/Head sales 3%- Steering committee: 3% -VP/Head marketing: 2%

- COO: 2% - Other : 10%

1) Mary Lacity, Nine core IT capability, MIS 480 hand out2) CIO.com, Dec 2001, monthly research about CRM

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Where is the CIO position in the organization?

• According to “The 2002 State of the CIO” survey involving 500 CIO: 1)

- 74% of CIOs admit they don’t delegate

- 51 % now report to the CEO• Nigel Rayner, Research Director at Gartner inc:

“ CFOs were at the height of their power about 5 years ago, it was not unusual for the CIO to report to the CFO. Thanks to the rise of e business , this has changed” 2)

1) Edward Prewitt Lorraine CW; The state of the CIO; CIO; Framingham Mar 1, 2002, Vol 15 page 44-49

2) Geoffrey Downey, Computing Canada, Willowdale, Nov 16, 2001, Vol 27 page 1-3

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CIO

CEO

IT staff

CEO(Acting as CIO)

IT staff

CIO(Acting as CTO)

CEO

IT staff

CTO

CIO

IT staff

CEO

Data Processing Automation

IT Reliance in Business process

Global network

Business Sizes

Small Scale

Large scale

Typical model of - IS Leadership Within Organization

COO/VP/CFO….

More complex organization

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Typical IS leader in a more complex organization(Ex: Holding company)

President Director

Director/VP/……

CEO SBUCEO SBU

Second Manager

CTO

CTO

IT staff

CEO SBU

CIO

CTO

IT staff

IT staff

IT staff

CEO SBU

CIO

Example:

-Deer &co has a corporate CIO and

divisional CIO ( CIO.com,view 3/21/02)

-PT PLN has mixed of the above structure

PT PLN Business Area

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PT PLN Case Company overview

(http://www.pln.co.id)

PT PLN is the biggest state owned company in Indonesia in term of asset equivalent of US $ 7.6 billion and about US$ 2.25 billion sales

PT PLN has 4 subsidiary company, supporting SBU, 3 operating SBU and 15 regional SBU employs 50,310 permanent employees

PT PLN has more than 150 service branches serve 28.6 million customer

PT PLN construct, operate and maintain its own power station, transmission and distribution

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PT PLN Case IT function in the Organization

Before restructuring• IT function managed by

division manager, 3 level below President.Dir, Acting as head office CTO

• IT function in business unit operate by CTO, 2 level below unit manager

After restructuring• Highest position of IT

function is VP, 1 level below Pres. Dir. Acting as business thinker

• Some of SBU has IT manager acting as SBU CIO and CTO, 1 level below SBU CEO

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Chiefs of Sub Section and 1400 PLN head office employees

Chiefs of Sub Section and 1400 PLN head office employees

IT Div.Manager

President Director

Board of Directors (5)Board of Directors (5)

Functional Teams Functional Teams

Vice President 11Vice President 11

Project Teams

Project Teams

After Restructuring

VP IT

Before Restructuring

PT PLN Case Head Office Migration

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PLN Case IS/IT condition

• PLN develop IT since 1978—HR data processing, centralized billing, head office payroll, reporting

• No integrated system data base

• Various level of utility system

• Variety of equipment and operating system

• Variety of IT sourcing

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PLN CaseUn-integrated system -- Insufficient of IT service

• Delay of reporting poor decision quality• Delay of updating HR data insufficient HR

development and career planning• Delay of response and decision poor customer

services• Inaccurate billing system revenue losses• Neither clear IS strategy nor standard IT

procedure lack of accountability of IT function

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PLN Case Main Problems of PLN IT Development

• Culture : bureaucratic, paternalistic• Power and organizational politic

Generic strategy

Corporate restructuring, culture change, unbundling, go public

Functional strategy

Implement IS leadership and 9 core IT capabilities

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Skills needed

Capabilities and Skills in Emerging IT Function.

• Medium technical skills• High Business skills• High Interpersonal skills

(Mary Lacity, Core IT capabilities,, MIS 480 hand out)

2002 The state of CIOs survey

• Communication skills (70%)• Business understanding (58%)• Strategic planning (46%) Only 10% pick technical skills

Edward Prewitt; Lorraine Cosgrove Ware CIO; Framingham; Mar 1; 2002;; vol 15, issue 10; page 78-82)

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Skills Needed(CIO Magazine March 1, 2002, page 45)

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What the CIOs say about skills?

• Margaret Myers (1)

“ You can have the most wonderful ideas in the world, but if you can’t communicate them, it won’t make a difference”

• Glean Headley (2)

“ Take advantage of oportunities to answer your friends, questions about their home PC’s, above all experience is the best teacher”

• Principal Director to the Deputy CIO of US Department of defense• CIO of the Republic group of Insurance companies

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Challenges

IT Cost/Service trade off• For each product and

service should we focus on low cost or service excellent

• Most IT managers face different expectation from different stake holders

(Mary Lacity, MIS 480 hand out)

What the CIOs say about challenges

• Staffing problem service concern

• Inadequate budget cost concern

• Shortage of timeservice concern

( CIO; Framingham; Mar 1; 2002; Edward P; Lorraine C W; vol 15, issue 10; page 44-49)

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Challenges (CIO Magazine, March 1, 2002 page 44)

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Challenges Emerging opportunity ( Be innovative)• Thinking IT economic(1)

Begin to work with demand side

• Branding IT(2)

CIO is internal Public Relations for IT

• Working with HR management(3)

Maintain skilled employee and get rid off the useless

• Should CIOs be certified?4)

People and stake holder will be more respect

1) IT Economis, Susan H. Craham, www.CIO.com ,viewed March 12, 20022) Branding IT, CIO.com3) Challenges, CIO magazines, March 1, 20024) Joe Ggliaredi, Certify the CIO, www.CIO.com, viewed Feb 20, 2002

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ResponsibilitiesWhat does the CIO say?Peter Lopez(1)

“ I can talk about new ideas if the stuff I deliver is broken and I’m not servicing (the business well)”

Susan Love(2)

“ Reorganized the IS group soon after starting to align it more closely with the business needs”

Bingham(3)

“ Security was everyone’s and consequently no one’s responsibility

• CIO with Cleveland based GE Lighting (3) CIO at Johnson Outdoors• CIO of the Medical Center

Role of the CIO:St. Louis Post-Dispatch

http://www.pulitzer.net/

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St. Louis Post-Dispatch:Company Information

• Owned by Pulitzer Inc.

• About 25 different newspapers nationwide

• St. Louis Post-Dispatch employs about 2000 people at three different locations

• Circulation of about 300,000 daily and 500,000 Sunday

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St. Louis Post-Dispatch:History of IT

• Prior to 1995– No concerted effort in the way of IT

• 1995-Present– New leadership recognizes need for IT

• Dan McGuire– Promoted to VP of IT in 1996 (First VP of IT in

St. Louis Post-Dispatch History

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IT Department

5 W orkers

Information SystemsM anager

10 W orkers

Tele-CommunicationsM anager

15 W orkers

Technical ServicesM anager

5 W orkers

TechnologyM anager

Dan M cGuireVP & Director of Information Technology

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St. Louis Post-Dispatch:Mathew Kraner

• General Manager of the Post-Dispatch

• Experience at Kansas City Star– 3 Different experiences with “view of IT”

• Branding

• Bureaucratic

• Entrepreneurial

• View of Dan McGuire’s role

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Mathew Kraner:Views of IT

• Factors he considers when looking at IT – ROI– Time and money– Need and benefit, short and long term

• One of the key decision makers?

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St. Louis Post-Dispatch:Dan McGuire

• History at the St. Louis Post-Dispatch– 34 years at Post-Dispatch– All 34 years in technology– Almost all in management– 7 Years as Director of Technology– 4th year as VP of Information Technology

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• Change is a good thing, really

• Views on senior management’s view of IT– Prior to 1998 viewed as the outsider– Promotion and trial by fire– Earning the respect of other senior management– Living in the “Show Me State”

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• IT capabilities– Not nine separate roles– Four overlapping roles dependent on teamwork– Too much for one man?

• Efficiency– 40 man team v. 70+ at most other large

newspapers– Almost everything done in house

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Dan McGuire:Discus Project

• The hunt for a fix

• What is Discus?– Circulation/Billing/Accounting database– Replacing several old systems that were not

integrated

• Prior to Dan McGuire– 10 rounds, last one standing wins– Too many hands in the cookie jar?

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• Role of the CIO– “Ball of string”

• Discus Turnaround– Before Dan McGuire was assigned the project,

different departments had been working with it for over three years, with no end in sight

– In 1999, 200 problems were identified and “fixed” within 10 months

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• Current state of Discus– Entered phase one of July, 1 2000– Went “live” (phase two) January 7, 2001– All departments are currently using– Still not up to potential

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Dan McGuire:Goals

• Ideal department– Teamwork, teamwork, teamwork

• The future of IT at the St. Louis Post-Dispatch– Bigger and better?

• Outsourcing?– Nothing to gain

Role of the CIO:General Motors

http://www.gm.com/

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General Motors:Company Information

• Founded in 1908, largest vehicle manufacturer in the world

• Revenue $1.5B, net sales $177.3B• 362,000 employees worldwide• Facilities in over 30 countries, 200 in N.A. • Vehicle sales in more than 200 countries• 15.1% of world vehicle market• 2000 IT budget of approximately $3.2B

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Ralph Szygenda: CIO and Group Vice President of Information

Systems and Services, GM

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Ralph Szygenda: Background

• First introduced to telecommunication, computing, and engineering in the U.S Air Force

• 21 years at Texas Instruments (TI) culminates in designation as Vice President of Information Systems and Services, CIO, and Vice President and General Manager of TI Enterprise Systems Business Unit; renowned for his business process reengineering efforts during his tenure at TI

• 3 years at Bell Atlantic as Vice President and CIO; hired specifically to reengineer business processes

Mission:

Facilitate GM’s Transformation Into a Digital Enterprise

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Challenges of the Mission

• Change the mindset of senior management

• Implement the 9 core capabilities model to ensure strategic IT capabilities are retained in-house

• Reduce GM reliance on EDS by engaging other IT suppliers

• Reduce annual IT spend

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Changing the Mindset of Senior Management

• The realization that use of computers is a foreign concept to many GM executives

• Face-to-face meetings with senior executives (including the CEO) to educate them about IT and its significance to business

• Relationship building to gain an understanding of the the automobile industry and GM

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Implementing the 9 Core Capabilities Model

Key to implementing the 9 core capabilitiesmodel was the creation of a top notch staff.Ralph’s requirements:

“When I brought people in, they had to have two competencies. They had to know how to run a business, and they had to know information technology.”

Teresko, John, “Transforming GM”, Industry Week, Dec 2001/Jan 2002

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Implementing the 9 Core Capabilities Model, cont…

• 6 months of personally interviewing nearly 300 candidates from all over the world yields a core group of 30 who core roles

• The elite group is comprised of top notch information officers and experts in business processes

• Nearly 150 additional IT professionals initially hired from the outside, size of current IT group is over 300


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Reducing GM Reliance on EDS

• Rationalization and consolidation of processes was critical to improving efficiency and reducing costs before tackling outsourcing issues– In excess of 7,000 information systems most of which

were stand alone

– In excess of 40 call centers and 19 information warehouses


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Reducing GM Reliance on EDS

• GM’s IT department became the liaison between EDS and GM employees

• Additions to the IT staff to support the effort were brought in from the outside

• IT engaged other vendors such as Computer Sciences Corporation, Lockheed and IBM to provide IT services in addition to EDS

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Reducing Annual IT Spend

• By 1996 GM was spending 25% more on IT, as a percent of revenues, than Ford or Chrysler. By the end of 2001, GM’s annual IT spend had decreased $600M.

• Savings resulted primarily from:– Rationalization and consolidation of processes– Restructuring of outsourced IT services


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Notable Achievements During Tenure at GM

• Instrumental in:– Reducing the product development process from four

years to eighteen months– Reduction of order-to-delivery from 76 days to 40– Reducing the number of information systems by half– Integrating call centers, from 40 to a total of 3– Consolidating data warehouses, from 19 to a total of 3– Creation of GMBuyPower.com– Creation of GM Onstar


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Notable Achievements During Tenure at GM, cont…

This 2001Technology Leader of the Year cites thefollowing as his proudest accomplishment:

“One, we’ve transformed the mindset of GM senior management to understand how to put technology and business together..the IT model and the team we brought in from the outside have been very successful..we have changed the speed of GM.”


Role of the CIO:The Future

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Executive Turnover

• A 1996 survey by CIO and Human Resource Executive Magazine revealed the following:– Senior IT executives in office at the time of the study held

their current positions for 5 years versus 5.5 years for other senior executives

– Of the 500 companies studied only 76 bestowed the title of CIO on their senior IT executive

– The average tenure for current office holders of the CIO position was 3 years versus that of IT executives with lesser titles

Baatz, E.B., “The Truth About Turnover”, CIO Magazine, Nov 1996

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Executive Turnover, cont…

• Survey details:– Over 500 Human Resources executives were consulted

– Majority of companies were large U.S. companies with over 8,500 employees and average annual revenues of 2.3B

– Respondents indicated the CIO title itself was fairly new at that time

Baatz, E.B., “The Truth About Turnover”, CIO Magazine, Nov 1996

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Executive Turnover, cont…

• The IT management survey conducted by Computer Sciences Corporation in 2000 revealed the following with regard to tenure of IT executives:– 70% of respondents indicated the current executive had

served in the role for two years or less, with over half of those executives hiring into the company from the outside


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What does the future hold for the CIO?

• The division of technical operations and strategic responsibilities

• Non-IT executives assume additional responsibilities

• The Chief Knowledge Officer (CKO)

• The Customer Relations Manager (CRM)

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The Division of Technical and Strategic Responsibilities

• The CIO position is complemented by the addition of a CTO or comparable position

• One focuses on day-to-day operations while the other focuses on more strategic pursuits

• The position holders work to maintain a clear division of responsibility

• This method is still fairly uncommon as success tends to be heavily dependent on the dynamic between the position holders

• Senior IT executives hold differing opinions

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The Division of Technical and Strategic Responsibilities, cont…

A proponent of the structure, Bob Ridout, CIO andVice President of IS at Dupont, notes:

“As we run IT more like a business, we really need to think about the structures business has. This (a second-in-command) is a step in the right direction.”

Traylor, Polly Schneider, “IT Takes Two”, CIO Magazine, Nov 15, 2001

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The Division of Technical and Strategic Responsibilities, cont…

A critic of the structure, Scott Ritchie, CIO ofAdvanced Internet Technologies, notes:

“I think to some degree there is an advantage in being active both strategically and technically. There is something lost if you don’t stay involved (operationally) at some level.”

Traylor, Polly Schneider, “IT Takes Two”, CIO Magazine, Nov 15, 2001

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Non-IT Executives Assume Additional Responsibilities

• Non-IT executives, including the CEO, are become increasingly knowledgeable about and comfortable with technology

• These senior executives, already endowed with expertise in certain aspects of the business, assume varying aspects of the strategic responsibilities of today’s CIO

• The CIO role evolves into that of technical consultant versus business strategy partner

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The CKO and the CRM

• Other theories about the future of the role assert that the CFO and the CIO positions will evolve into that of the Chief Knowledge Officer

• Still others assert that as businesses conduct more business over the Internet, a significant amount of the CIO’s energy will be devoted to successful customer interaction and effective customer relationship management.

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Final Remarks

• Evolution of IT and IT leadership

• Role of the CIO today

• Interviews with Dan McGuire and Matthew Kraner, St. Louis Post-Dispatch

• Profile of Ralph Szygenda, CIO, GM

• Role of the CIO in the future

Questions?

role of the cio 4/4/02 presentation by: kate gross, justin lucy, supriadi legino

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