Executive Summary The Chief Information Officer is a growing centerpiece for the success of a company. Technology is growing more and more important to industries everyday; industries that base their success on providing ease of service for their customers, such as insurance, banking, and financial services. These service industries are requiring new technologies every day to incorporate programs to provide up to the minute information for their consumers. Additionally, companies in industries such as construction are using technology to make the jobs easier to allow the project to be completed quicker, and to provide a great portion of customer satisfaction to the end consumer of the service.
The Chief Information Officer makes these technology changes happen. The CIO is sometimes the initiator of change, other times he or she is in charge of facilitating a change that was decided by the upper level C-Officers. Which ever phase the CIO becomes involved in the project, they are the individual that can make or break the success based on their motivation and networking ability. Examples of how CIO’s have successfully or unsuccessfully implemented change will be discussed as four CIO’s from local St. Louis companies are discussed.
To provide an understanding of Chief Information Officers’ roles and challenges, four CIO’s were interviewed. This information coupled with research based on recent publications in top technology journals and periodicals provide a rich background in understanding today’s technology challenges and success stories for our usually underrated C-level officer.
The CIO’s that were evaluated come from service industries: financial services, retail, and construction – each focuses on providing a service to an end user. McCarthy Building Companies represents the construction company; the corporate CIO was interviewed. Edward Jones represents the financial services organization in which the top corporate CIO was examined. Cooper Industries provides a multitude of functions, but is best described as retail related. Here both the top corporate Cooper CIO and divisional Bussman CIO are examined. This provided a great compare and contrast between challenges at every level. Each company has its own top challenges and success stories based on its size, industry, and CIO’s scope of responsibilities.
Understanding who a CIO is, what they do, and the challenges they face are important for all managers in the business world for a variety of reasons. Most CIO’s come from a non-technology background (13). Many managers who read this may be posed with an option later in their career to move into the CIO role, regardless of their current background. Anyone in management today is usually faced with technology related problem solving; this can give guidance on how to work with upper level technology management. Understanding the role of CIO will also give a greater scope and appreciation for everyone’s own corporation and technology issues.
In comparing the four CIO’s backgrounds, issues, etc. some similarities were discovered. The top three issues for the CIO’s were security, networking, and consolidation (consolidation rested solely for Cooper but was a top issue for both information executives). Additionally, when reviewing what is most important to be a successful CIO, top business skills were the most important. Business skills incorporated a variety of areas ranging from strategic planning to leadership ability and relationship building ability.
Chief Information Officer
Who, What, When, Where, & Why?
The Chief Information Officer (CIO) has gone through much change over the past ten to fifteen years. The CIO role started out as grooming a “techie” to top management to watch over technological issues throughout the company. The CIO’s role has been consistently changing in a positive way over the past few years. Their roles have changed from a pure technology focus to more of a strategic planner. Based on a survey of 150 CIO’s in 1998, 65% of them believed their job to be changing from a technological architecture focus to a strategic planning focus (2). This change is continuing still today.
Due to the changing of attitudes toward the CIO, more and more CIO’s are developing stronger relationships with other C-level officers. As noted in the graph below, the large majority of CIO’s report directly to the CEO. Secondly, the next most common C-level executive is the CFO. The trend is actually moving the reporting relationship from the CEO to the CFO. In a different 2003 survey, 22% of CIO’s reported to the CFO compared to one year earlier when the figure was 11% reporting to the CFO (12). Some believe that this change is occurring due to the CEO’s doing a poor job of managing CIO’s (12). Others believe this is due to the increased need for CIO’s to prove the technology’s value & value in changing technology to the organization’s top executives.
Percentages of CIO’s reporting to other C-level Executives (11)
Fun facts Below is an array of charts that describe some interesting facts about the typical CIO population in 2004 (chart – 5).
As you can see from the above chart, the majority of CIO’s are men. This continues with the generally excepted fact that most executives are men.
When examining the average salary of a CIO you will notice that the majority are making a six figure income; however, this is typically much less than the average CEO or CFO. Only 37 CIO’s of the Fortune 500 companies ranked among the highest paid officers of the organization (7).
Average Salary of CIO based on Industry (11)
Essential skills of a CIO
More and more CIO’s are coming up from the management ranks rather than IT. Today it’s most important for a good CIO for have a broad base of knowledge in areas such as leadership, budgeting, marketing, resource management, IT governance, and/or accounting (6). Three examples of CIO’s that started from an area other than IT are: David Bernauer, John Leggate, and Jan Franklin. David Bernauer is the current CEO and former CIO of Walgreens. David started as a store manager and moved up through finance and marketing to reach the CIO position. John Leggate is the current CIO of BP. John started with BP managing the oil fields he moved up the corporate ladder through the human resource division which led to his current role as CIO. Lastly, Jan Franklin, CIO of Farmers Insurance, was promoted to her current position from an underwriting center manager post (13).
These current CIO’s were able to achieve their current status due to a variety of reasons and skills. Much research has been done to identify the essential skills to be a successful CIO. Below is a list of the top 10 essential skills:
Expertise in aligning strategies
Relationship building skills
Strong management skills
Strong communication skills
Ability to create and manage change
Ability to hire, develop, and retain top talent
International/global experience (growing more important as companies outsource and go overseas with their products & services)
Expertise in a (your) particular industry
In conclusion the CIO….”must lead like a CEO, analyze like a CFO, and execute like a COO…” (10).
Current CIO issues Each year at the CIO position changes, so do the top concerns for these officers. The top five concerns for CIO’s in the 2004 fiscal year were:
The top three will be examined. The bottom two are quite self-explanatory.
Many CIO’s worry each year that their budget will be cut. This worry comes from the continual need to prove that IT has value, one of the major issues as well. As you can see from the below chart, in 2004 most CIO’s budgets did not experience a change. Surprisingly, a third of the CIO’s in the U.S. received budget increases. (text & chart – 5).
Aligning IT Strategy
As discussed in the classroom, if IT is not linked to the strategic business plan for a company, there is no value placed on IT. Thus, technology is seen more as a commodity. To provide for the development of this strategy, the CIO’s need to spend more time outside of their office meeting with clients, suppliers, buyers, etc. They need to appear and react more as a business manager (13).
Proving IT has Value
Aligning IT strategy and proving IT has value are linked in the fact that both rely on the other to be successful. For the CIO to show that their IT plan has value it’s important to create a competitive advantage for the organization through IT, streamline the business processes by adding new technology, create new business from use of new technologies, or produce change in the industry (as discussed in the management information systems class by Dr. Lacity).
A best practice that businesses can use to help link these changes in to tie strategy to value is to use a chargeback system to monitor where IT costs are going. This also motivates behavior to minimize or be thought conscious of costs expended in the technology area of the organization. Examining the below chart, the cost center is the most commonly used method to budget IT, but not necessarily the best. The cost center system allows each department a lump sum of IT money usually based on the department’s percentage of overall company-wide budget. The IT budget amount can also be based on the number of employees within that department. This is not the best method because the person allocating the budget is not taking into account truly how much the department needs to spend on IT. The investment center method of cost allocation supports showing the value of IT. For every dollar that is spent on IT the result is linked to the cost. Thus, the positive and negative changes related to IT can be linked back to the costs spent to acquire those changes by using the investment center system of budgeting ( text & chart – 8).
Where are the CIO’s going? A trend with the CIO position is the short duration of term with executives in this role. At the company Ecolab, they have experienced 13 CIO’s in the past 26 years. This is compared to having the same CEO for 45 years and the tenure of the CFO and other VP’s lasting seven plus years. Why is this turnover so unbelievable? A variety of reasons related to the current CIO challenges create the turnover. Mergers and acquisitions cause some turnover as well as the CIO not fitting within the company and executive board culture. CIO’s also endure much stress from the complaints of too much spending on IT and undefined results from the money that was budgeted for IT advancements. This inability to overcome the challenges create an environment that seasoned CIO’s do not want to be a part of and low profile CIO’s do not have the experience to turn around. Thus it’s a Catch 22 for some companies to maintain a stable CIO role (14).
Below is chart comparing the average tenure of a CIO to a CEO. As the CIO role continues to change and then stabilizes, the tenure will grow and stabilize as well. As long as the role continues to develop, the growing pains will reflect in the ability for some CIO’s to maintain a long-term presence in one organization.
CIO v. CEO – Tenure in Position(1,3)
McCarthy Building Companies
Technology Innovator in the
McCarthy is a national construction company that is headquartered in Saint Louis, MO and has regional offices in Phoenix, Dallas, San Francisco, and San Diego. McCarthy’s construction projects are not confined to areas where they have offices; currently there are over 100 jobsites in 24 states currently with over 3000 employees. McCarthy is the 26th largest contractor based on a revenue of 1.5 billion for 2003(15) and is one of the largest privately held construction companies in the US. As a private employee owned company the stock is not publicly traded but at the end of each year the stock price is evaluated by an independent auditor to determine the fair market value of the stock as if it were traded. The current stock price is $196 and has steadily increased in the last 5 years even when the construction industry as a whole has been on a downslide in recent years. (17)
The Chief Information Officer Mike Oster is the Vice President of Information Technology at McCarthy and is the highest ranking IT professional in the organization. Mike came to McCarthy in 1999 as the VP of IT and is looking forward to finishing his career with McCarthy. (17)
Life before the dude – Mike’s history Mike graduated from Maryville University in 1976 with a degree in business administration. His first “real job” after college was working the graveyard shift for Capital records as a computer programmer. One of the main perks of this job was the free records he received from working for Capital. Mike bounced around a few programming jobs until he received a job offer to work for Anheuser-Bush Co as a Data Processing dept manager in 1984. While at AB he was able to take advantage of their excellent tuition reimbursement employee benefit and obtain his Masters in Information Management from Washington University. In 1998 Mike was the SAP solution center manager for AB when he was approached about heading up the IT department for McCarthy. He quickly accepted the position even though he knew little about the industry. (17)
Most important skills
According to Mike and the IT leaders in the other case studies understanding the business was the most critical skill for a CIO. According to Mike if you do not understand what drives a business and what the profit centers are you can not implement an IT system to help those objectives. Communication was the next most important as a CIO will have to communicate with people from both ends of the IT understanding continuum. Technical skills are the least important because you can hire people to assist you in the deep technical matters but a basic understanding is required so that you can communicate with those experts and understand them. (17)
Relationship with the COO In McCarthy’s corporate structure the VP of IT reports directly to the COO Mike Hurst (See above chart). This is an appropriate reporting structure since operations generate the revenue and profits and IT just enables operations to do that more efficiently. Mike formally meets with his boss on a monthly basis to discuss strategies, current IT project status, and new projects. The COO of McCarthy is very proactive and pushes new IT initiatives. (17)
How much can he spend? McCarthy’s IT budget is typically between one-third and one-half a percent of the total revenue of the company. While this value is quite a bit lower than the four to five percent range that was found to be an average of all companies, Mike is quick to point out that the company is in line with the IT spending in the construction industry. McCarthy was listed in the Top 50 in IT spending in the construction industry based on percentage of revenue (16). McCarthy operates IT as a cost center by charging costs to jobs based on number of users. This allows the company to recoup some of these costs as a large portion of the companies work is performed in a construction manager role where the owner pays for all the costs (usually up to a certain limit or cap) plus a fee. (17)
Special projects McCarthy after Mike – Success Story
When Mike joined McCarthy in 1999 only a select group of employees had computers and internet access, and there was not a company email system of any kind. One of Mike’s most successful projects was enabling internet access for salaried employees and a company wide email service for all employees. This process was completed very quickly after Mike was brought on board and was a success. This brought the company up to speed with our competitors and served as a platform for bigger and better IT projects. (17)
Another very successful IT project was the implementation of the Citrix servers. Citrix allows users remote access to applications. Before Citrix, every computer had to have all the applications being used physically installed on that computer The costs associated with that become very substantial when carried out over 1000’s of users. Now most of the applications that everyone uses on a daily basis installed on the Citrix server and can be accessed from anywhere via the web, with proper passwords. This saves the company a large amount of money on licensing costs each year. (17)
Problems with Citrix
The installation and operation of Citrix is considered a success by everyone; however, it also generated many problems for the IT department. When the system is not operating at peak level the productivity of the entire company is reduced, and when the system crashes no one can access the programs they need. In one instance the helpdesk was receiving a very large number of calls reporting a slow or non-responsive Citrix system. After a little investigating they discovered the Citrix servers had been the victim of a virus attack. The attacks continued for a series of two weeks during which time the system remained slow. When the IT department was finally able to maintain virus free servers they expected the system to return to its previous operating levels, but the calls continued to pour in. Mike’s group did not understand why the system was slow to the users because it seemed to run very fast when applications were ran directly off the servers. A team member of the IT department suggested logging the internet traffic to see if there could be a traffic jam on the information superhighway. After only a few days of monitoring/logging it was apparent that the real problem was not the viruses but the abuse of the internet. Employees were downloading movie trailers, music, gambling, porn, etc. all of which was taking up bandwidth that was needed for work functions. Internet filtering was installed and Citrix performance immediately improved. The lesson of the story is to always investigate all possibilities because the solution is not always obvious, especially with IT systems. (17)
Challenges that motivate The biggest challenge for the IT department at McCarthy is connecting all the jobsites to the main servers. Jobsites are located all over the country and they all require a connection to the main server for email, project management software, accounting, and payroll information. It is impossible to standardize communications because the availability of high speed internet access is extremely variable. Jobsites can be connected with anything from a 56k dial up to frame connection and everything in between. (17)
Another large challenge for Mike and the IT department is running the helpdesk. The helpdesk averages 800 calls a month which averages 35 calls per workday. As computers become more and more a part of the construction industry there is a greater number of employees using them who have very little experience with the technology. A recent hiring boom of new-hire project engineers, who are very computer savvy, makes for a very wide range of helpdesk calls. Calls range from people forgetting their password and needing to reset it to obscure error messages on project management or accounting applications. (17)
McCarthy & outsourcing
Currently McCarthy outsources only a very small portion of the IT responsibilities. Hardware and software support is outsourced at smaller satellite offices and very large jobs that are not near a regional office. Mike thinks that outsourcing will be a bigger part of the future of IT at McCarthy and an opportunity for financial improvement. Mike would like to outsource more of the hardware and software support for all jobs away from regional offices but, currently there is not a single vendor that services the entire geographically area that represents the territory of our projects. It is not feasible or desirable to have several suppliers with different contracts and service levels. Managing the suppliers as jobs move from vendor to vendor would be very difficult. (17)
Top three IT issues There are several issues that the IT department at McCarthy is currently dealing with but the top three are security, spam, and spyware. As more and more information about our projects and files are stored electronically and accessible via the internet the need for security also increases. Sensitive information regarding our profitability on a job, costs for a job, etc are currently on-line. The biggest problem in Mike’s mind to security is the end user. Mike is certain there are a very large number of people who either give their passwords out freely or have it written down in a very visible place. (17)
Another issue that is affecting anyone who has an email account is spam. Spam is unsolicited email sent to users that if left unchecked fills up user accounts and server space very quickly. McCarthy installed a spam blocking software package to reduce the load on the email servers and is currently blocking 61% of all emails to the system. (17)
The final issue that Mike talked about was spyware. Spyware is software that usually comes bundled with other software that the user installs on the machine that can track your computer usage and even record your keystrokes in the most extreme cases. Mike estimates that 90% of all McCarthy computers are infected with some form of spyware. They are currently evaluating different software solutions to the spyware problem and plan to implement next year. (17)
The future of information technology at McCarthy looks bright. As with all of the IT projects of the past the future projects are aimed at making operations more efficient to increase the bottom line. The main focus is integration of the core systems at McCarthy, specifically getting the program management, accounting, and payroll systems to communicate with each other. This would greatly increase overall efficiency as it would reduce double entries that are not required because the system does not communicate with each other. (17)
There are two initiatives aimed at increasing the productivity of our equipment and material yard. They are radio frequency identification (RFID) and global positioning systems (GPS). The RFID system will place radio tags on each piece of material in the yard to allow for quick check in and check out of materials and greatly increase inventory control. The current system uses people to count the items as they come off of the truck to record what has been returned which leads to many errors in the system. GPS would be used on our delivery and dump trucks to get real time information on locations. This would allow more flexibility to re-route trucks in the case of heavy congestion or to an emergency job that needs a truck ASAP. Both of these systems are under investigation but are likely several years off. (17)
“Your number one obligation is to keep things running. The only profit center we have is our branches, so our network basically is the enabler of the business.” Rich Malone,
CIO, Edward Jones
Challenged with the Issue of Security and Confidential Customer Information
Founded in 1871, Edward Jones is a privately owned (it is owned by the employees of Edward Jones themselves), full-service brokerage firm that is based out of Saint Louis, Missouri that focuses on one type of customer: Those interested in relatively high-quality, low-risk investments held for the long term. Edward D. Jones Sr. and his son Edward D. “Ted” Jones founded the firm. The firm’s first branch was located in Mexico, Missouri. The firm now has over nine thousand branch offices worldwide throughout the United States, Canada, and the United Kingdom. The Edward Jones branch office network is unique to the financial services industry. Offices are located in the communities where people live and work – rather than downtown office high rises or major financial centers. Each office employs one broker, known as an Investment Representative (IR) and his or her assistant, known as a Branch Office Administrator (BOA). (21)
Why we’re special Edward Jones has received numerous accolades over the years. Fortune Magazine has named Edward Jones as one of the “Best Companies to Work for in America” for six consecutive years on its annual list. In fact, Fortune named Edward Jones as the number one company to work for in both 2002 & 2003. Also, Registered Rep Magazine in their annual survey of the nation’s seven largest financial services firms has ranked Edward Jones number one for the eleventh consecutive year. (21)
Edward Jones offers a very wide array of products and services to its many customers. Some of these include but are not limited to: Annuities, Insurance, Checking, Loans & Savings, College Savings Programs, Mutual Funds, Online Services, Retirement Services, Stocks, Unit Investment Trusts, Fixed Income, Estate Planning options, and numerous types of general services. (22)
The Chief Information Officer
Rich Malone is the company’s Chief Information Officer. Unlike most CIO’s, Mr. Malone has been with Edward Jones for over twenty-five years (19). Although he did take some college classes, he never received a college degree (18). He began his career in information systems as a programmer at a bank in Kansas City, Missouri. He later went on to manage a network of over a thousand branches for a savings and loan in Iowa. Rich began his career at Edward Jones in 1979 and worked his way up to become the company’s CIO (18). He was named as one of the top five CIO’s in the securities and investment industry in the 2001 Wall Street & Technology magazine CIO Elite Survey. He is currently a member of the BITS Advisory group, the Xerox Executive Advisory Forum, the board of F5 Networks, Inc., and resides on the Technology Advisory Committee at Arizona State University. He is past chairman of the Securities Industry Association’s Telecommunications and Information Management Committee, and former board member of the Securities Industry Automation Corporation (19). He is also the creator of the Saint Louis CIO forum. To ensure the success of IT, Malone and two other CIO’s in the region created the forum. This is an informal affiliation of ten major companies in the region. Three or four times a year all ten CIO’s meet at a member site to exchange ideas (20).
Strong relationship with CEO Rich reports directly to Doug Hill, the company’s Chief Executive Officer (see above chart). Unlike many Chief Information Officers, he is an equal partner with other C level executives. He is also a member of the firm’s Management Committee. When asked about his relationship with Doug Hill, he stated that the two formally meet every Monday morning and informally every week at the Management Committee meeting. On average, he speaks to Doug two to three times per week (except when one of them is traveling). Luckily, according to Rich, Mr. Hill is a very proactive CEO in terms of information systems. (18)
Rich’s viewpoint is that Information Systems are essential for Edward Jones. Because the firm’s branches are so spread out across the country, and the world for that matter, the firm’s business model would not work without IT. IT is the enabler of the transactions that are done every day at the branches and at the company’s headquarters in Saint Louis. (18)
How much can he spend? When asked whether the budget was a major concern and found that he is not given a specified budget to work with. Projects are approved (or disapproved) on an as needed basis. However, it was noted that Edward Jones spends on average about eleven percent of its revenue on IT. (18)
Malone currently heads up an information technology division with over a thousand employees, responsible for linking over nine thousand “Main Street” branches across the United States., Canada, and the United Kingdom. Throw in connections with dozens of mutual fund companies, various stock exchanges, and news services, and Edward Jones’s network is easily one of the most sophisticated in the entire country, if the not world. (20)
Rich claims that his most successful project, as CIO at Edward Jones is the implementation of a satellite system. The system was put into place in 1986 and opened the door to video in the branches. This stabilized telecommunications costs and allowed the firm to use video for a variety of purposes.
His least successful project was a project that he referred to as the “People Project”. This was a human resources project that was a precursor to PeopleSoft. It was abandoned due to what he referred to as “Scope Creep”. In the beginning, this project had a very narrowly defined scope and defined purpose. As they tried to increase the scope of the project in order to satisfy more users, the project skyrocketed out of control in terms of costs. The lesson that was learned was to keep projects within the scope for which they were designed. (18)
Challenges that motivate When asked, Rich claimed that his biggest challenges as CIO are managing a hectic schedule, prioritizing activities with limited resources (knowing things that he would like to do are not getting done is a difficult part of the job), and keeping up with a field that involves constant change. His schedule demands constant travel and meetings. As stated earlier, he is a member of the Management Committee as well as several other committees. He also reviews and approves multiple projects each and every day. (18)
Top two IT issues
When asked what keeps him up at night, he said without hesitation that his number one concern is security. This includes concerns about viruses, hackers, spyware, etc. Because of the nature of the business and the high confidentiality of client and firm information, security is a major concern. His number two concern was how to keep up with constant change. (18)
- Facing Issues of Consolidation…Cooper Bussmann is one of eight divisions of Cooper Industries, Ltd (“Cooper”), which has its administrative headquarters in Houston, Texas. Cooper is a Fortune 500 company with 2003 revenues of approximately $4.061 billion (23). The Company is a diversified, global manufacturer of Electrical Products and Tools & Hardware, has more than 27,000 employees serving more than 100 locations around the world, and sells products to customers in more than 50 countries (24). The company is internationally diversified with manufacturing facilities in 21 countries. (24) Cooper’s stock has been valued at approximately $60 a share for 2004. Cooper only discloses financial information to the public on Cooper as a whole, not any of the individual divisions. Cooper is lead by H. John Riley Jr., who is the Chairman and CEO of Cooper. Cooper Bussmann is headquartered in St. Louis, Missouri and houses only about 150 office employees.
The Chief Information Officer Cooper Corporate IT
Cooper Industries Technology Shared Services was created in St. Louis in 2002 and this department has been led by Byron Escobar in St. Louis. Byron has been with Cooper for 29 years. Although he does not hold the title of Chief Information Officer (CIO) he is Cooper’s top IT employee and currently reports to Terry Klebe, Chief Financial Officer (CFO) & Senior Vice President of Cooper Industries. (26) (Note the below chart)
Terry is located in Houston and thus inaccessible for a face to face interview. As Cooper has begun to streamline their eight autonomous divisions to become more centralized, a slight blur has occurred between Cooper IT employees versus Bussmann IT employees at the St. Louis office.
Life prior to CIO Byron felt that his previous position as Director, Bussmann IT had prepared him for his more challenging current position. As Bussmann’s Director, Byron successfully cut $3.5 million from the budget when he “rightsized” the mainframe applications to AS/400 using BPCS (26). He has taken that a step further in his current role by consolidating all data processing to one central database in Peachtree City, Georgia. The new location was strategically chosen because it serves as the headquarters for our largest Cooper Division: Cooper Lighting. Byron feels the move to the new Enterprise Business System will save millions in IT in the long run simply because it is a better way to leverage the breadth of the technological resources and advanced data center (26). In addition, Byron explained that the facility is run by Hewlitt Packard, and Cooper would not be able to afford this technology on its own. He also sees the new location as a better physical location for our Data Center; the current Bussmann local data center is next to the manufacturing plant. (26)
How much can he spend?
Byron’s annual IT budget is approximately 6% of Cooper revenues totaling in a $250 Million Budget for 2003. Traditionally, Cooper allotted only 2% of revenues towards IT but with the SAP implementation, more funds were set aside for IT. About 30% of the total IT Budget provides for IT salaries. Of course once the consolidation is complete, Byron expects this to decrease dramatically. Early in October, massive IT layoffs were announced. Some IT employees were given a choice to relocate to Atlanta, but most will be gone by 2005. More specifically Byron pointed out that he currently has 437 IT professionals, but only about 33% will remain once the project is completed in 2006. The projected cost of the SAP implementation equaled $75 Million. Annual software maintenance to support SAP is expected to cost $3.4 Million. (26)
Special projects Byron has been instrumental in consolidating all eight Cooper IT divisions with the goal of providing “one face” to the customer. It will take the company several months to “clean up” the division IT computer programs to streamline invoices, shipments, inventory, etc. Originally Cooper intended to create a Cooper Shared Services (CSS) to support CSS applications, but it made sense to expand their support to other enterprise wide applications like Pension, corporate financials, Cooper Connection, Help Desk, Web Hosting, CSS Savings, CBE Services, eProcurement, and eSource. (26)
Once it was decided to create this all encompassing IT team, things moved rather quickly. In July 2002, Byron’s team reviewed the Enterprise Resource Plan and in November 2002, the team signed a letter of intent with SAP. In April 2003 UNITY was implemented and Bussmann is expected to go live December 2005. (26)
Byron emphasized how important it was for the terms of the contract with SAP to be as specific as possible (26). He also reiterated how crucial it was to implement this project in incremental steps. He has planned to stagger each division to go live throughout the next two years. Currently, the EBS business transaction functionality has been implemented at three different divisions in seven different countries and Cooper now conducts business in multiple languages and currencies (26).
Although the SAP project has been his main concern, Byron summarized his job activities in order of devoted time: Project Planning, Management Issues, Resource Planning, Corporate Strategy, HR Issues, and lastly Travel (approximately 20%). (26)
Unified Messaging System
In addition to the SAP implementation, Byron has also been busy with the Cooper Unified Messaging System which will cost about $800,000 (26). The plan is to link all divisions and our corporate office in Houston with state-of-the-art communication. This project is also to be implemented incrementally. The final phase will allow employees to link MS Outlook with their voicemail!
So how does Byron communicate the cost/benefit tradeoff of his IT Initiatives to other managers? Byron is very organized in this department with the use of IT Scorecards and Management Dashboards. (See below figure.) As you can see, the scorecards are designed to measure each division’s IT Headcount versus their Total IT Expense on a quarterly basis. Byron also writes Authorization for Expenditures (AFE’s) that are presented in the quarterly capital budget meetings for approval. (26)
In today’s business world, especially IT, Bryon must be open to constant change and continuous improvement. It is unbelievable the daily responsibilities that ultimately rest on the shoulders of Byron’s position. He did mention how excited he was to retire after 29 years with Cooper! (26)
Chief Information Officer Cooper Divisional IT Chris Lake, the top IT employee for the Cooper Bussmann division located in St. Louis, was also interviewed. Chris has been with Bussmann for two and a half years and reports to Frank Dwyer, VP Bussmann Finance. (See the chart above.) (27)
Relationship with other officers Chris earned his AS in Computer Science and has most recently been working towards his BS in Management. He has served in roles of increasing responsibility beginning as a computer operator and currently as a Director. He will have worked for Bussmann for 3 years but has been with Cooper Industries for 20 years. Even though Chris reports to Frank Dwyer, VP Finance but attends the quarterly budget meetings with all Bussmann VP’s as well as the President. (27)
Responsibility as a Divisional CIO
How does Chris spend his day? Operational Activities account for 40% of his time. These duties include the support of IT Operations, application maintenance, end-user support and training, and project and cost accounting. 30% of his time is devoted to Investment Activities, or more specifically infrastructure development and application development. The remaining 30% of time is spent on Decision Support Activities including: risk management, standards and tools development and administration, supplier management, and planning and decision support. (27)
Chris’ routine activities are as follows:
1) Providing IT oversight to 14 domestic and international Bussmann locations
5) Removing obstacles so managers and staff can accomplish their responsibilities (27)
Chris’ travel time is primarily to Bussmann locations to
1) Monitor progress in adoption of worldwide standards and policies
2) Review and develop capital programs for replacing IT equipment
3) Understand unique business requirements (27)
How much can he spend?
Chris’ budget is determined by the amount of support required for Cooper’s strategic business plan. Approximately 30% of the IT Budget accounts for IT salaries (27). The largest budget accounts behind salaries is 1) Hardware maintenance 2) Software maintenance 3) Voice and data networks and 4) Equipment depreciation expense. (27)
How does he communicate the cost/benefit tradeoff of IT initiatives to other managers?
Chris explained that projects are prioritized based on IT Steering Committee Policy, which states strict cost/benefit requirements and whether or not a project helps meet strategic business requirements. (27)
Top three Divisional IT challenges First of all, Chris is concerned with the degree of globalization (27). He realizes that the company may soon decided to follow other companies in moving IT business offshore and he must also support the company’s decision to move non-IT jobs offshore. Chris is also faced with rationalization of IT resources as a result of corporate-wide initiatives to consolidate Cooper Division IT teams.
Chris also acknowledged why Cooper has not taken any IT offshore. He believes the reason is simply because it is not cost-effective to do so with so little time left on the present systems and the probably impact to the IT organization related to the IT consolidation that is in progress. (27)
Although Chris faces numerous challenges, he worries most about the reliability of datanetworks (27). More recently he has had to come to terms with the possibility of his department’s disappearance once the Cooper IT consolidation is finalized.
Corporate & Divisional Cooper IT Leaders Compared Most important Skills
In conclusion, both Chris and Byron agreed that the order of importance in skills to job performance is as follows:
1) Business skills
2) People skills
3) Technical skills (27)
Knowledge of the business (its opportunities and challenges) and providing a competitive advantage and solutions to problems are the way they provide real value to the organization. Secondly, they admitted that people skills are important but Chris likes to refer to these as leadership skills. Chris feels these skills are extremely important to be an effective leader. He went on to say,
“These will determine 1) whether or not your staff will have confidence in
your ability to lead and follow your lead… and 2) whether or not business
Lastly, both IT executives realized any employee can easily be taught necessary technical skills
Conclusion Based on the research and case studies, it’s evident that the CIO comes from a variety of backgrounds and faces a multitude of challenges everyday. Below is chart that compares our case studies and research in a few key areas that were examined.
Regardless of their background, education, or industry, the top challenge that CIO’s face everyday is that of managing change, the change of technology and the change of their role in the business world.
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