Leaders Employ Governance
It All Comes Down to Relationships
They listen, delegate, communicate, collaborate and lead by example. Their businesses want to expand into new markets, respond faster to customers and take out cost. And they have been able to use IT to those ends.
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Meet the winners of the 2006 CIO Decisions Midmarket Leadership Awards, recognized for their extraordinary achievements in resourceful, business-focused use of information technology. Our judging panel of IT executives and industry observers selected these 25 leaders from a pool of more than 175 nominees based on these and other criteria (see the awards methodology).
Yet as disparate as the winners are as professionals and as people, there were two themes that jumped off the page of every winning application: governance and relationships. The importance of these two components of leading IT organizations quickly became clear as nominees described their work improving organizations that were malfunctioning, underperforming or just not bringing commensurate value to the business. So turn the page and meet our winners. We hope you'll be one of them next year.@pb
Leaders Employ Governance
Our 2006 Award winners create structure for business buy-in and IT goals.
Two years ago, Shelly D. Barnes joined Arizona Tile, a family-owned chain whose business was riding high from the home construction boom. Since then, head count has jumped from 600 to 1,000; and this year, the company is opening seven new stores.
As the firm's first vice president of technology and process, Barnes found the IT department at the Tempe, Ariz.-based company in chaos. There was no governing structure. Everything was handled in an ad hoc fashion. Systems crashed daily. Local mom-and-pop contractors came in to glue things back together.
Barnes decided that the first thing she needed to do was shore up the infrastructure and start developing her own staff. Then it was time to institute a governance program. "Governance depends on where you are as a company, whether you're in a growth or stability mode," she says. "At this company, we're in a growth mode and on the immaturity side of best practices."
As Barnes and other CIO Decisions Midmarket Leadership Award winners know, good governance is the hallmark of a well-run IT shop--a sure sign that when it comes to technology, they are managing with the business in mind. Governance encompasses everything from measuring the impact of IT investments to managing executives' expectations to making sound decisions that align with the business. Building these processes was a key component of how our 2006 award winners demonstrated leadership at their companies.@pb
Leaders Employ Governance
At Arizona Tile, Barnes implemented an IT service delivery model, which measured the department's capability and shortcomings. She charted 25 areas of IT responsibilities and color-coded each segment: Red for weak or nonexistent, yellow for needs improvement, green for adequate. There was a lot of red and not much green on the chart.
"Before Shelly joined our team at Arizona Tile, we were struggling to manage several individual and somewhat unconnected IT projects," recalls President Bob Traxler. "The company itself was just entering a very intense period of growth, necessitating a more forward-thinking approach to our technology effort. Shelly came to us with a very solid business background, and she understood that the technology was there to support and help grow the business, not the other way around."
Part of the problem lay in service-level agreements (SLAs) --or the lack thereof. "SLAs were automatic in the bigger companies I had worked for," Barnes says. "No one here knew what an SLA was."
For Barnes, part of governance means educating the company's executives about IT best practices. Her chart gave company executives a way to see what sort of shape the department was in and where investments should be made. Once weaknesses were assessed and prioritized, Barnes used project management methodologies to set goals and timelines for improvements.
Meeting those targets won support from users and executives. Outsourcing billing, for example, resulted in a 25% reduction in costs. "We've probably improved to 75% in the green," she says. "It was close to the reverse before."
Showing what companies are doing in other industries, such as what percentage of revenue they spend on IT, helps. "You have to tell a story," she says. "There's a family way of doing business. A lot of these people have never worked for any other company. They don't know what they don't know."
"Technology and process are now and forever married in our company," agrees Traxler. "They used to just date whenever it suited them. Shelly saw early on that some of our business processes, even some of those within our core distribution activities, had been engineered around our technology. She and her team now look at each challenge not from the perspective of 'What technology can I use to solve this?' but from the perspective of 'How can we become better as a company at serving our customer?' It is really simple, but I believe it is pretty profound."@pb
Leaders Employ Governance
The Upside of Being Average
Barnes isn't alone in her love affair with numbers. Tony Young, the CIO of Informatica Corp. in Redwood City, Calif., is an advocate of using metrics to align technology with business. Twice a year, the $300-million data integration software maker hires a market research firm to gather data about other midmarket software firms.
The other companies cooperate with Informatica, which spends $15,000 a year on the survey, because the market research firm shares its data with them for free. "You continuously need to demonstrate value back to the business for what you're doing," Young says. "If you can't, you need to make changes. Benchmarking is very important."
Benchmarking can uncover merely average results. But in fact, that's what Young hopes for. A typical question on the survey, for instance, might be, "How many people support your financial enterprise resource planning system?" Young compares the survey information with internal data and then looks at in-house customer satisfaction surveys to see if his team is performing at least as well as his peers.
"The industry average is six people to support a financial application," he says. "I have three. And my customer satisfaction rating is a four out of five. Other people do it with six, and I do it with half that many at a very good level of customer satisfaction. I can show the executives the kind of value they're receiving from my group." On the other hand, when research showed that his company's number of systems analysts was higher than the industry average, Young started to reduce staffing levels to meet the norm.
Young also believes in setting realistic customer satisfaction levels. Last year the department score averaged 4.2 out of 5. Young's goal is to score between 3.8 and 4.2. His premise is that scoring higher than 4.2 means that the company is probably investing too many resources in a project, leading to high customer satisfaction but poor shareholder value. "If I score 5 across the board, I'm overdelivering to the group," he says. "The group might be extremely happy, but I also need to deliver to our shareholders. It's a fine balance."
Young audits IT projects and priorities every six months to ensure that business and technology are aligned. Each new project is given a roadmap created by IT and business, which is reviewed by the CEO and executive team twice a year. "These aren't IT systems; they're business systems," says Young. "Some people can embellish their cases. There has to be some control."@pb
Leaders Employ Governance
Getting Down to Business
At AARP (formerly the American Association of Retired Persons), an $878-million nonprofit based in Washington, D.C., governance includes having IT staff serve on key business committees to build close relationships with the executive team. That aligns every technology investment with a specific business strategy, which provides a clear picture of what IT contributes to the organization. "Knowing the issues and cycles, we can serve as consultants to the business," says Tony F. Habash, the director of IT strategy and acting CIO.
Habash also developed an IT Infrastructure Library (ITIL) program to standardize change management, which has improved communication with the business and made SLAs more robust. In two years, the department doubled the number of projects with the same number of staff.
AARP's technology team includes a dozen solution managers who work in specific business units, dividing their time between the areas of the organization they are assigned to and the IT department. "They understand the business and the industry; they're a bridge and an advocate to IT," he says. "The challenge is getting the right people. You can't find them on the street. They have to know that business. And they are the IT point of contact for anything that touches that area."@pb
It All Comes Down to Relationships
To better align with the business, award winners get to know their colleagues--even the stubborn ones.
John "Jack" Ondeck, the CIO at Bristol West Holdings Inc., a midmarket auto insurance company in Davie, Fla., has learned that nothing builds a good relationship like a common enemy.
Ondeck had a problem: One of his C-level business colleagues didn't like IT. He viewed it as a black hole that sucked up resources and gave back little. Ondeck thought that if he could embed IT more deeply into the executive's domain, he might foster cooperation instead of conflict.
He lobbied to reorganize the way the company employed its IT personnel, moving from a centralized model to a federated one. That gave IT staff dual dotted-line reporting to Ondeck and his executive colleague. "Before, it was all lobbying. Whoever complained the loudest got what they wanted," Ondeck says. "That's changed a lot. Now there's buy-in. They're in it together, from the beginning to the end."
Suddenly both executives were under the gun to produce. They went from being adversaries to teammates, jointly setting goals. "We used to sit on opposite sides of the fence, but now I've become more of a trusted adviser," Ondeck says.
Like other CIO Decisions Midmarket Leadership Award winners, Ondeck knows that strong relationships with business executives are as vital as technology when it comes to success. Not to mention the fact that you can't be a true leader unless you can communicate fluently with colleagues and, in the process, earn their respect and become allies. In short, the best IT leaders know as much about business networking as they do about computer networking.@pb
It All Comes Down to Relationships
James L. Craig Jr., the CIO at Cooper Communities Inc. in Rogers, Ariz., says it pays to develop a good relationship with one's top bosses. And the best way to do so is to give them what they want--even when they don't know what that is.
One day, Craig knocked on the door of the CEO at the Cooper Realty Investments unit and asked if there was any way IT could help him do his job better. The CEO was lugging around a huge day planner stuffed with charts and graphs. Craig suggested he try a Treo smart phone, which could give the executive instant mobile access to business information.
"Anything you could do on a desktop you could do on one of these smart phones with a Web browser," Craig says. "Our executives are always moving around. What if we could deploy key business metrics?"
Craig had already supplied another business unit's CEO with a Treo that gave him access to real-time sales data from the company's enterprise resource planning (ERP) system. But Craig knew that to gain further acceptance, he would have to demonstrate the device's power to some of the company's more tech-averse executives.
The CEO did start using a Treo, although he still hauls around his day planner. But he encouraged other executives to use the device. As a result, Craig created a dedicated four-person unit in the IT department to develop mobile apps. Someday Craig hopes to wean the CEO off his day planner, although he admits it's going to take time. "The day planner gets out of date pretty quickly," Craig says. But as the CEO says, "the batteries never wear out."
A good relationship doesn't mean everyone is in complete agreement. In some cases, conflicting personalities and ideas can be beneficial. Michael J. Lehman, CIO at $160-million Batteries Plus, in Hartland, Wis., meets almost daily with his CFO. Lehman tends to be more of a risk taker, while the CFO is more cautious. They usually meet in the middle, often playing off each other.
But their meetings are often formal and include an agenda--a good practice when dealing with opposite personalities. "Like many CFOs, he's got a controller, detail-oriented personality," Lehman says. "There's not enough time in the day for everything, so an agenda keeps us focused."@pb
It All Comes Down to Relationships
The Power of Peers
For John F. Schindler, the CIO at Kichler Lighting, one of his most important professional relationships is outside his own firm, with a colleague at another company.
When Schindler became the first CIO at Kichler, a lower-midmarket private company, he reconnected with an old peer in the Cleveland, Ohio, area: a CIO of a multibillion-dollar public company. At first Schindler was nervous that as the new CIO of a midmarket company, he wouldn't have a lot to offer his peer. But the two started talking at least weekly, and they meet in person every six weeks or so to compare notes.
As it turned out, both CIOs were working on similar issues: how to retool an IT department. "We've both been up and down in different companies," Schindler says.
"This was the first time I had been a CIO, [and] the shop was struggling tremendously. He was two years ahead of me as a change agent at a much bigger company. As a team, we developed a checklist. I also took notes on the things not to do. My first 100 days, I had a mentor and a sounding board."
The relationship helped Schindler reshape Kichler's IT department and bring the company into the 21st century. Prior to 2004, for example, the company had no functional Web presence or internal skills to deliver one. With advice from his friend, Schindler launched a business-to-business portal that gave more than 5,000 locations access to product availability, order status and entry.
The portal was a very difficult project to sell to a privately held, conservative company. It took 24-plus months to educate the business on what a portal was and how it would benefit the customer experience. The project was a success, cutting customer calls by 100 a day and saving as much as $7,500 a month in sales and customer service expenses.
Schindler found open conversations and support from his CIO friend reassuring when he confronted unfamiliar management issues or needed to make technology decisions. In some cases, he just wanted a second opinion.
"I was downsizing ideas from [his] big-company experience," Schindler says. "I was able to cherry-pick the process of change management. A lot of our ideas we bounced off each other, [such as] how far could I push and still keep the business relationships with the people I needed."
The two still meet regularly, sharing metrics, strategy and ideas. But today the roles are reversed: Schindler's friend left the multibillion-dollar company to be the first CIO at a $100-million company. "We're going to meet for breakfast as he tries to do the same thing I did at an even smaller company than mine," Schindler says. "Now we're switching roles. It'll be fun."@pb
Leadership Spotlight: Bill Danuloff
Pumping Up E-Commerce
CIO Bill Danuloff boasts that he hasn't done a "technology project" in his three-plus decades at the Gorman-Rupp Co.--and that's the secret to his success. Business projects with a technology twist, on the other hand, keep the engines running at the $234-million manufacturer of pumping equipment in Mansfield, Ohio.
Danuloff isn't doing a BI project, for instance, but is empowering his salesforce to better serve customers. Nor is he integrating his ERP system with an extranet, but is acting on a request from global distributors to have an electronic relationship. This steady focus on customers' needs has earned Danuloff a CIO Decisions Midmarket Leadership Award.
"Our focus has always been, 'How can we make doing business with Gorman-Rupp easier for customers than [doing business with] our competition?'" Danuloff says. In fact, he's asked himself that since he joined the company in 1971. Ten years later, he moved into management and "had the luxury of being involved in strategic business decisions." In 1990, Danuloff earned the top technology post (which at the time was vice president of technology) and oversaw an ERP implementation six years later. He became CIO last year.
Two years ago, the company polled its distributors to find ways to improve customer service. They wanted to place orders, track shipments and receive support electronically, but they also wanted to be able to phone and fax orders. In other words, they wanted an electronic option, not a mandate. This meant adding e-commerce capabilities to the company's Web site and linking them with the company's ERP system. Danuloff began by gathering employees from various departments, such as sales, marketing and manufacturing, to brainstorm about site design and capabilities. Once the requirements were fleshed out, the IT team built the system.
The e-commerce site for distributors launched last year. More than 800 out of 1,000 distributors registered, as well as internal salespeople. Some 15,000 orders have passed through the system so far. And plans to launch a similar site for Canadian distributors are under way. New functionality, such as the ability to purchase repair parts, is coming soon.
While Gorman-Rupp achieved cost savings via electronic order entry, Danuloff says this wasn't the goal. "We didn't do this as a means to increase revenue," he says. "We are a very, very high customer service-oriented company."@pb
Leadership Spotlight: Aline Ward
The Ultimate Test: Katrina
When Hurricane Katrina roared through the Gulf Coast in 2005, Mississippi Power Co. CIO Aline M. Ward rode out the storm with CEO Anthony Topazi and other executives in the $970-million utility's emergency center.
The 39-person IT department had an extensive disaster recovery plan, but the storm damage was off the charts. A major generating plant was lost, miles of transmission lines fell, the corporate office took a beating and all 194,000 customers were left without power.
"We thought we always planned for the worst case," Ward says. "This was worse than that. It was total devastation. A hundred percent of our customers were out of power."
It was Ward's disaster preparation and on-the-scene leadership that helped Mississippi Power restore electricity 12 days later, and that led to Ward's selection as one of our 25 CIO Decisions Midmarket Leadership Award winners. Judges also noted her strong relationship with her CEO as well as with members of her staff, who had to outperform during the crisis even as their homes (like Ward's) were destroyed.
When the power went out, Mississippi Power needed to work fast. Luckily, many of Ward's recent disaster recovery initiatives paid off. A redundant fiber ring proved critical for minimizing outages at the backbone of the network. Prearrangements for microwave systems provided radio communications, which turned out to be the primary method of contact for all storm personnel.
But perhaps the best defense was Ward's dedicated, hardworking IT employees, whom she readily credits. They literally held the door shut to the company's telecommunications room while the wind tried to blow it open. As the water started to rise, they feverishly swept out water and stacked sandbags around the room. Other IT folks carried four 250-pound servers down seven flights of stairs to a makeshift headquarters in order to restore network access.
Along with assisting in efforts to restore electricity to customers, IT provided data and voice networks to various facilities for several hundred displaced employees. "If you've not been through a disaster, it's hard to relate," Ward says. "Everybody pitches in. Roles and responsibility don't matter. That's what got us through it."@pb
Leadership Spotlight: Bob Wittstein
Metrics That Matter
When Bob Wittstein became CIO of Sappi Fine Paper North America almost four years ago, he could tell immediately that the IT department needed a shakeup.
The $1.4-billion Boston-based division of Sappi Ltd. makes paper for magazines and books. The IT shop was highly technical but poorly aligned with business. "They believed in methodology and filling out forms," Wittstein says. "The metrics weren't taken seriously."
Refocusing the department would be a major priority, and one that yielded immediate results. That's what put Wittstein in the award winners' circle: the partnership he built with the business and its results.
Coming from a background as a manufacturing engineer in the aircraft industry, Wittstein wasn't an expert in IT. Rather, he saw himself as a bridge between the technology and business sides. Wittstein made sure that everyone in IT at Sappi understood the business. He established goals to support the business and used balanced scorecards to drive home the company's focus on customers and profitability. He promoted the best staff into management and steered the shop toward customer alignment. "We created a firm base of support for the business instead of [doing] what IT wanted to do. People were chomping on the bit to be more process oriented."
Wittstein has launched several technology initiatives over the past year. An ERP rollout eliminated numerous legacy systems, enabling a decrease in head count from 140 to 80. A new link between the SAP system and the process control systems in the mills now allows Sappi to integrate financial data with data from the factory floor, enabling optimization efforts. And an integration system for electronic data interchange (EDI) between Sappi and its customers and suppliers has allowed the company to improve responsiveness: The company now processes 52% of orders from inventory with EDI, compared with 5% two years ago.
One reason the retooling worked, Wittstein says, is that he partnered closely with each vice president and explained how the ERP deployment would be messy but ultimately worth it. "I was very clear on how difficult this was going to be and how customer service was going to suffer because of the ERP system's steep learning curve," he says. "People like the opportunity to deal with [bad news] up front. And as a result, they did."@pb
| Jesus Arriaga
COMPANY: Keystone Automotive Industries
LOCATION: Pomona, Calif.
ANNUAL REVENUE: $700 million
IT STAFF: 65
TOP BUSINESS GOAL: Establish standard metrics in company
MATCHING IT PROJECT: Implement data warehouse and business intelligence (BI) dashboard
LEADERSHIP STYLE/ADVICE: Manage like a great coach
COLLEAGUE WITH WHOM HAS MOST SUCCESSFUL RELATIONSHIP: CFO
BIGGEST CHALLENGE FOR 2006: Adapting to a new, more IT-savvy CEO
METHODOLOGY: CIO Decisions launched the Midmarket Leadership Awards program in December 2005 and promoted the program through e-mail to subscribers. The nomination process included a short Web-based questionnaire filled out by the nominator and a longer questionnaire completed by the nominee, with a total of 176 nominees. This form included five essay questions on the following topics: leadership style; most successful relationship with a business colleague; initiatives they had launched in the past year that successfully aligned IT with business goals; the measurable results of those initiatives; and how they would resolve upcoming challenges. A judging panel (see below) then scored the nominations, rating each essay question equally.
CO-CHAIRS, JUDGING COMMITTEE: Maryfran Johnson, Editorial Director, CIO Decisions; Stefanie McCann, Editor at Large/Conference Director, CIO Decisions.
JUDGES: Damien Bean, Co-Founder, Career Currency; Suzanne Gordon, CIO and VP of IT, SAS Institute; Anne McCrory, Editor in Chief, CIO Decisions; Kavin Moody, Executive Director, Center for Information Management Studies, Babson College; Curtis Robb, Former CIO, Delta Airlines; Nanci Schimizzi, Vice President, Technology Services and Operations, NASD.