MADISON, Wis. -- In the mid-1990s, IT was perceived as a cost center at Robert W. Baird & Co. Inc., said Chairman...
and CEO Paul Purcell. But that was then, when Milwaukee-based Baird was a $180 million financial services firm with 1,300 associates and a Midwest footprint. Maybe 5% of employees, at most, understood what IT was or could do for the company, said Purcell, a keynote speaker at last week's Fusion 2008 CEO-CIO Symposium here.
"There is no perception issue here; it's a reality issue that technology is extraordinarily important in our success today," said Purcell, who teamed up with his CTO, Brian Brylow, to talk about the evolving relationship between IT and the business at Baird.
"IT just can't fail" at Baird, Purcell said. The employee-owned company trades 2.3 billion shares per year that must traverse global digital networks in milliseconds or incur "huge liability," he said. Timely and accurate communications with clients on three continents is critical. Moreover, as the banking behemoths continue to commoditize the business of financial services, he said, the firms that aren't as large must stay a step ahead, and "we can't do it without IT." Add to that the enormous complexity of the regulatory environment for financial services, and "we wouldn't have a prayer with just human capital," Purcell said.
Indeed, as technology becomes pervasive for many businesses, the perception of IT as "no more than a cost center" is fading, but it is not gone, said Mike Klein, founder of Wisconsin Technology Network Media, which organizes the annual Fusion conference for CIOs and CEOs. A WTN survey of 434 upper-level executives conducted between Dec. 19, 2007, and Jan. 7, 2008, found that IT as a cost center is still a reality for about 25% of the respondents. And, although nearly 70% of respondents said they participate in forming business strategy, more than half (54.2%) said they still spend more time on operations and functionality than on business transformation or strategy, compared with about 25% who cited business transformation as their chief activity, and 22% who get to focus exclusively on strategy.
At Baird, Purcell and Brylow work closely to develop company strategy and the IT department is pervasive. IT personnel work as strategic partners at each of Baird's five businesses, Brylow said, where they participate in the budget process. In particular, they drive prioritization of IT projects because they know which are most critical.
Rogue IT, cool toys
The evolution of IT from cost center to strategy driver started about five years ago, Brylow said. After living through the pain of shadow IT in the business units, Brylow said he realized that Baird was not going to thrive unless IT had "relevant conversations with the business units about how IT could contribute their success," he said. IT had to prove it could offer business solutions, "not toys and technology that we thought were cool."
The Baird Technology Committee of business and IT people, which Brylow chairs, was formed. The committee devotes a "considerable amount of time" to plotting what the company wants to do in the coming year. Rather than waiting for the green light on individual projects, IT and the business dig in immediately to do market research on the potential projects and likely partners. When the go-ahead comes, IT is ready to move rather than relegating that project to the next budget cycle, while everyone does their homework, Brylow said.
"My job is much easier, because IT is invited to the table," to help set direction, Brylow said, and not just to take orders.
Phil Loftus, CIO of Aurora Health Care, a Milwaukee-based health organization with 25,000 employees that serves 3.5 million patients, was among the 250 business and IT executives at the two-day Fusion symposium. As a health care CIO, he looks to the IT-forward financial services sector for ideas on how to balance the need for speed and quality -- not to mention compliance.
"Listening to Paul [Purcell's] comments, you have to do things faster, but you also have to be right," Loftus said to Brylow. How does IT respond to that "dual pressure"?
Brylow said it is important to set realistic expectations, "but, that said, it is important to get to market fast." He said his IT department has improved its "analysis to build" phase for IT projects, getting it close to 50-50 between analysis and build, he said. "We know that the iterative process doesn't work -- tell me what you want and I'll come back and you tell me what you want and don't want," he said. "We've gotten a lot better on design and build."
While Purcell and Brylow may think of IT and the business as joined at the hip, Purcell's view hinted of the traditional divide between the barrel-ahead chief executive and the more conservative CIO.
To be successful in a global economy, countered Purcell, Baird will have to relinquish its "orientation to do it all ourselves," as it moves forward. "The big issue is the mix inside and outside" of IT expertise, said Purcell, who said he believes the firm will have to "go outside more" to deal with the enormous volatility in the financial services market. Even the best planning can't account for a change in the market that requires upsizing or downsizing in IT personnel, he noted, and no one enjoys having to lay off people. "The cultural changes are not to be underestimated."
Let us know what you think about the story; email: Linda Tucci, Senior News Writer.