Sept. 11, 2000

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IT: The View From The Top

CIOs discuss their priorities

year ago, the uncertainty of the year 2000 problem consumed a big portion of CIOs' time and IT budgets. Indeed, the success of their companies' Y2K remediation was a primary accomplishment cited by scores of IT executives applying for InformationWeek 500 honors. Hindsight shows the problem never reached the levels many people feared.

With Y2K concerns a fading memory, InformationWeek asked senior IT executives to address the top business and technology objectives their companies face this year. Developing systems to better know and serve customers are common goals expressed by these leaders. Implementing E-business initiatives, including electronic marketplaces and procurement, is high on many of their lists, too.

At the same time, traditional IT projects abound. In some companies, migration to Windows 2000 is a major objective this year. Attracting qualified IT personnel is another big goal on these IT leaders' to-do lists. Creating an even closer alignment among top company executives, line-of-business units, and IT is another achievement some executives aim for.

Index of CIOs
Steve Bandrowczak Senior VP & CIO, Avnet	John A. Jahraus Principal VP & Chief Technology Officer, Bechtel Group
Jack Cooper VP & CIO, Bristol-Myers Squibb	James R. Shanks CIO, CDW Computer Centers
Susan J. Unger Senior VP & CIO, DaimlerChrysler	Allan Woods Vice Chairman & CIO, Mellon Financial
David Drennan Director, Corporate Information Resources Customer Care, Georgia-Pacific	Jack Leifel Senior Director of IT Business Planning and Strategy, Motorola
Richard Ross VP & CIO, Amerada Hess	Alan T. Biland VP & CIO, Snap-on
Diane Duggan CIO, WorldCom

Steve Bandrowczak
Senior VP & CIO, Avnet

Avnet Inc.'s technology priorities for the upcoming year are closely aligned with our key business priorities and strategies, particularly the expansion of our global products and services to make Avnet a clicks-and-mortar company.

The highlight of our upcoming global efforts is our joint effort with the Chinese government, ChinaECNet. ChinaECNet will become the first official electronic com-ponents exchange within China, providing the rapidly expanding Chinese electronics industry with direct Web-enabled procurement for components and other technology products.

The technology behind ChinaECNet includes SAP 4.0, which was recently implemented throughout Avnet's offices in Europe and Asia. SAP provides a universal system by which all Avnet offices can access prices, delivery dates, and other information in a localized format.

Our other E-business efforts include eConnections, a high-tech sector marketplace that's a spin-off from last year's acquisition of $1.7 billion electronics distributor Marshall Industries.

The seamless integration of Marshall Industries into Avnet's core enterprise resource planning system, business WAN, and company E-business infrastructure--all within 45 days--is a prototype for the rapid integration of future mergers and acquisitions as we pursue our plans for international expansion.

Avnet's global integration process generally includes development of a cohesive E-business offering, Web integration, data migration, infrastructure development, testing, and training to fully submerge each acquired company into Avnet's infrastructure. Our focus is on rapid integration with no business interruptions, resulting in increased sales and decreased redundant expenses.

In the upcoming year, Avnet will become 'clicks-and-mortar,' says senior VP and CIO Bandrowczak.

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John A. Jahraus
Principal VP & Chief Technology Officer, Bechtel Group

To ensure compatibility with new versions of third-party applications, Bechtel Group Inc. over the next 12 months will begin migrating more than 16,000 computers to Windows 2000 from Windows NT and Windows 95. The migration will also make it easier to integrate new computers, which increasingly will be bundled with Windows 2000.

Deploying new networking technologies, such as virtual private networks, will help us provide secure communications links without the prohibitive cost of installing dedicated lines to the increasing number of small, temporary construction projects we manage worldwide.

The use of voice-over-IP protocols will expand as we move toward a converged data-and voice-network environment. This technology promises savings on long-distance charges.

More important, however, voice over IP helps us support project sites in remote locations such as jungles and deserts, where there's no existing communications infrastructure. Installing a satellite or microwave dish and voice-over-IP technology lets us provide voice and data communications to remote sites.

Another goal this year is to identify next-generation applications from different suppliers so we can accelerate information flow among engineering, construction, procurement, and project-management activities.

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Jack Cooper
VP & CIO, Bristol-Myers Squibb

At Bristol-Myers Squibb Co., a strong partnership among business leadership and multiple technology-delivery units helps the pharmaceutical-and consumer-products company prosper.

To meet the needs of large customers and to fuel sales growth, Bristol-Myers consolidated multiple sales organizations within the consumer-products market sector. With the sales force consolidated, it became critically important to have a single order-management system capable of supporting complex pricing arrangements and just-in-time distribution. A sales-data warehouse was also required to quickly identify new opportunities for growth.

As if this project wasn't large enough on its own, a parallel initiative sponsored by the CFO was launched to centralize financial shared services and drive down costs. The response by the IT organization was swift. A task force I led mobilized the necessary internal and external resources that resulted in the successful installation of SAP across the Americas and Europe. Today, Bristol-Myers has the largest single-instance implementation of SAP in the world.

With the business-IT partnership in place and a consistent architecture established, new E-business services are being added. This year, electronic procurement based on products from Ariba Inc. and commodity-specific exchanges have been coupled with our SAP installation, along with a new data warehouse. This powerful combination empowers each employee to purchase online at lower unit and transactional costs. The new internally developed data warehouse provides a mechanism to ensure that purchases are in line with established policies and also provides information that's useful in vendor negotiations. Benefits exceeding $100 million will be derived this year on top of the substantial savings, more than $1 billion annually, we've already realized from our original SAP project.

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James R. Shanks
CIO, CDW Computer Centers

Company initiatives to improve the customer experience, decrease operational expenditures, and automate systems drives CDW Computer Centers Inc.'s priorities. To identify new business development opportunities ranging from evolving E-marketplaces to the wireless world, we have appointed a team of E-commerce and marketing professionals.

We continually prioritize initiatives based on their potential to increase sales and reduce expenses. Current IT projects include a migration to Windows 2000 at the desktop and server levels, and enhanced intranet features and usage to streamline internal communication and reinforce our branding principles.

We also plan to produce quarterly releases of many mission-critical applications, including order processing and warehousing. Quarterly releases, which are produced using a team approach, help ensure quality and reliability.

During the coming year, we'll evaluate and improve the ways we communicate via E-mail and fax with our customers. For example, we'll work to enhance CDW Buyers' Edge, our opt-in E-mail newsletter, as well as E-mail sent to our customers to communicate order status.

During the next year, we plan to double the size of our warehouse to 468,000 square feet and add a sales facility to accommodate 1,100 account managers. To support the added distribution and sales capacities, we'll expand our automated conveyor systems; upgrade our network backbone; and add desktops, servers, and radio-frequency devices.

We'll continue to focus on business-to-business E-commerce innovation by expanding our extranet program, CDW@work, for our business customers. The program lets users access a downloadable version of their purchase histories as well as photos, names, phone numbers, and E-mail addresses of team members who service their account. In addition, companies can assign purchasing restrictions to specific people or groups of people through CDW@work's Purchase Authorization System.

Projects that enhance our account-and contact-management capabilities also will receive key priority and resources. We're combining our IBM AS/400 and data warehouse technology as well as giving account managers access to an inquiry program that shows which contacts on their accounts are influencing the purchase of specific product categories.

To be a top IT organization, we offer a $2,000 referral fee to employees who refer new IT team members, as well as flexible work hours and opportunities for additional training.

In addition, CDW provides stock options; on-site day care, gym, and cafeteria; and dry-cleaning pickup and drop-off services. These benefits helped us attain the No. 11 rank on Fortune magazine's list of the top100 companies to work for in the United States. CDW prioritizes initiatives based on their potential to increase sales and cut costs, says CIO Shanks.

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Susan J. Unger
Senior VP & CIO, DaimlerChrysler

During the next year, DaimlerChrysler Corp.'s IT management organization will focus on strengthening the company's position in the E-business arena. With more than 15,000 projects in our worldwide applications portfolio, we forecast that in the next year, approximately 20% of the money spent on IT apps will fall into the E-business category.

We plan to work closely with our business units to redesign existing applications or implement ones that take advantage of E-business concepts. For example, we'll begin tapping into applications that involve wireless communications appliances, such as Palm devices and cellular phones, in particular, given the European preference for using cell phones for many functions.

We're particularly interested in ensuring that our customers' online transactions don't stall anywhere along the way as they're being processed, and that our computing power and network allocation are dynamic and robust enough to shift as demands dictate. To that end, we intend to streamline our half-dozen communications protocols to one--TCP/IP--and expand our network infrastructure to support increased E-business activity while paring our handful of networking technologies to two--namely asynchronous transfer mode and Ethernet. This will produce a nimble, standardized technical environment that will serve as a springboard for all of our efforts in the E-business arena.

Being E-ready now and in the future means DaimlerChrysler must remain vigilant about improving business practices within the company and with its external partners, from creating new ways of doing business with online suppliers to developing new delivery processes. For example, IT has been active in the layout, design, and development of Covisint, the automotive Internet exchange formed by DaimlerChrysler, Ford, General Motors, Nissan, and Renault. After Covisint launches, we'll find ways to link it to our internal systems, which may involve rethinking our procurement processes, supply methods, and even manufacturing issues.

About 20% of the money DaimlerChrysler spends on IT apps will be related to E-business, says Unger.

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Allan Woods
Vice Chairman & CIO, Mellon Financial

Mellon Financial Corp. is experiencing aggressive business growth at a time when our commitment to Web technology is paying dividends. Somewhat uniquely, Mellon committed to invest in an enterprise E-commerce infrastructure that includes an application framework and an integrated architecture. The application framework consists of sharable business objects, a set of development tools, and common interfaces to the legacy world. The architecture provides a consistent hardware and software platform, shared services, messaging, and a directory structure for secured access.

Our goal is to continue delivering releases of these components through 2001, so that our developers can use the prebuilt tools and services. These efforts should reduce overall development effort and allow for faster delivery of business-specific applications.

Mellon's global-investment and wealth-management businesses exhibit tremendous growth. This is fueled by exciting business-to-business projects such as an online foreign-exchange product that lets fund managers at client sites conduct trades electronically and link to their internal applications. This product complements our asset-management and investment-custody business, for which an online customer asset-reporting application is also in place. These robust business-to-business projects extend our product and service reach inside and outside the domestic market.

Web-enabling our service capabilities also fuels further efficiencies and increased growth. Projects in this area automate our customers' securities tradesfrom initiation to completion. Mellon's investment in innovative technology will provide significant competitive advantage during the imminent move to Trade-date+1 settlement markets, which changes the settle-ment period of stock transactions from three days to one.

In the private sector, we also deliver unique Web capabilities, such as applications to complement the portfolio adviser role and enhance our advisory and personal asset-management products.

Our goals are challenging and can only be achieved with top-rate employees. To attract and retain the best people, we've created compensation, job environment, and personal development programs. Examples include incentive-based performance management, comprehensive stock-option programs, alternative work arrangements, and a training curriculum. These programs give us one of the lowest attrition rates of software engineers in the industry--less than 10% so far this year, compared with the industry average of about 20%.

More challenges are ahead, but we have a well-aligned business and technology team that's positioned to continue understanding and exceeding our customers' needs.

Mellon is aiming for faster delivery of business-specific apps, says vice chairman and CIO Woods.

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David Drennan
Director, Corporate Information Resources Customer Care, Georgia-Pacific

At Georgia-Pacific Corp., our focus is always on the customer: The better our service, the more customers we'll gain. A priority for our information resources staff is the completion later this year of our acquisition of tissue manufacturer Fort James Corp., prompting some exciting challenges for the IT groups at Georgia-Pacific during the next 18 months. While some of us wrestle with how best to integrate our systems with those of Fort James, others will be immersed in the continuing effort to link our systems with those of Unisource Worldwide Inc., the largest North American distributor of printing and imaging products, which we acquired in 1999.

Simultaneously, a similar integration endeavor is under way within Georgia-Pacific itself. From a manufacturing and operating standpoint, we have long supported an enterprise resource planning type of mentality with regard to time to order, inventory, shipping, and sales applications. We're now investigating ways to increase the value of this information by integrating our mill process-control systems with our broader business systems to create a consolidated view. In this way, we hope to enhance the effectiveness and timeliness of our business decisions.

Over the next year and a half, we'll continue to benefit from customer-relationship management, data mining, and data warehousing technologies that offer a way to leverage access to information as a means of reducing costs and expanding the productivity of our employees.

These technologies also are central to our plans to have an impact in the dot-com marketplace and in on- line exchanges such as ForestExpress.com, the virtual marketplace for the vertical components within the pa-per industry. Georgia-Pacific spearheaded ForestExpress.com--one of our employees is its chief technology officer--and helped fund it, along with International Paper Co. and Weyerhaeuser Co. We expect ForestExpress.com to be up and running by the fourth quarter.

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Jack Leifel
Senior Director of IT Business Planning and Strategy, Motorola

During the past two years, Motorola Inc. has executed a series of companywide process redesign and renewal initiatives aimed at intensifying our customer focus and streamlining and implementing common cross-company processes and architectures.

Motorola's IT team has made critical progress toward achieving the company's One IT vision of establishing a global, long-term leadership position in systems, data, processes, and people. By building collaboration across our worldwide team to leverage technology, we'll be able to improve customer service, facilitate outsourcing of our manufacturing process, improve velocity and accuracy of our supply chain, and reduce our order-to-cash cycle time

One of our most important initiatives this year is deploying global management of technology. This involves choosing areas of focus and managing those areas globally. For example, we've assembled teams to analyze our current and future needs in ERP and design engineering and then chose the tools to deploy using a common architecture.

Through supply-chain strategies and redesigned order-to-cash processes, we'll achieve significant improvements in our return on capital while improving our response to market changes, customer needs, and competitor actions. Many of these processes have been redesigned, tools have been selected, and we are in various stages of implementation.

Motorola will continue to leverage technology to improve business results and focus increased resources on E-business and knowledge-management programs.

The underlying architecture in these efforts will give Motorola employees the tools they need to let the company act even more quickly, effectively, and efficiently.

By building collaboration worldwide, Motorola can improve customer service says senior director Leifel.

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Richard Ross
VP & CIO, Amerada Hess

The energy industry is undergoing a "Negroponte Shift," in which the value of the information underlying an asset is becoming far greater than the asset itself. As a result, Amerada Hess Corp. has a huge array of front-office applications in the works, basically aimed at moving information to make money.

Many of these applications look like E-businesses. Various forms of customer-relationship management go into our businesses so we can capture and analyze customer data, let customers interact with us over the Web, and deliver a whole new generation of value-added energy services. An example might be dynamic demand management, where we can link directly to the thermostats in an office and optimize the ambient temperature against the forward curve of energy prices. Underlying these services are the basic transactional systems that will give us a single view of the customer across all our product lines, risk management, and online transactional processing.

Business-to-business transactions will be huge across our entire value chain. We're looking at and preparing initiatives in four key areas--purchased goods and services, product exchanges, asset exchanges, and trading exchanges. Each of these will have a profound effect on our cost structure and create increased liquidity in the underlying traded goods, eventually creating new markets for risk management and derivatives.

Upstream, where we find and produce oil, each advance in processing power brings us closer to 4-D visualization of seismic information--this lets us view the full spectrum of collected information in three dimensions over time, which would have an obvious positive effect on our exploration activities.

And downstream, where we refine and market oil-derived products, employing IT to run our refineries just 1% better can have a disproportionately large-- as much as 20%--positive impact on our bottom line.

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Alan T. Biland
VP & CIO, Snap-on

Snap-on Inc. is poised to build on its relationships, brand strength, and technology leadership to produce solid growth through strengthening of existing businesses and, longer term, continued acquisition of new capabilities and businesses.

We view E-business as a key enabler going forward. First and foremost, we'll use E-business tools to enhance the way we transact business with our strategic business partner, the Snap-on dealer. Moving from a batch of communication based on electronic data interchange to a Web-enabled portal will permit us to gain additional sales and communicate more effectively with our dealers.

From an acquisition standpoint, IT will continue to add new businesses to the frame relay network fabric, enable standard tools such as E-mail and scheduling, and ensure that businesses can roll out financials to the corporate level.

From a technology perspective, we're spending significant time and energy exploring portal technology and the Wireless Application Protocol. WAP could revolutionize the way we deal with our mobile workers. In addition, we're investigating more robust warehouse-management systems as well as customer-relationship management systems to expand our significant existing customer base.

E-business tools will alter the way Snap-on does business with its tool dealers, says CIO Biland.

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Diane Duggan
CIO, WorldCom

WorldCom Inc. is fundamentally shifting its strategy to expand beyond data and Internet network and transport services. Our recently announced "generation d" initiative includes a broad range of value-added services, such as Web application hosting and design, to facilitate E-commerce and E-business for our customers.

Our IT organization's job is to develop the systems that will turn a basic commodity--network access and transport--into customized generation d services. You can see this transformation most clearly in

E-commerce projects such as our Interact product, which lets customers manage their telecommunications over the Internet using applications that provide network management, order entry, and detailed analysis of call charges.

But just as important are our other high-priority efforts, such as eliminating duplication and standardizing systems. This will automate the movement of customer data, minimizing manual input and speeding service delivery.

Our data mining and data warehousing initiatives, combining data from order entry through billing and customer history, will help us get a total picture of the customer. This will let us identify customers' needs and offer them additional generation d services. IW

Data mining and data warehousing initiatives will let WorldCom identify customer's needs, says CIO Duggan.

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