InformationWeek

October 16, 2000

IT Management
Who's In Charge Of IT?

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As more executives witness technology's competitive advantage, it's hard to find Luddites occupying the corner office. "CEOs now see IT proj-ects more as business projects," says Lori Mitchell-Keller, a VP of technology strategy at Manugistics Group Inc., a developer of supply-chain management software. "When the software can help their companies with suppliers or develop marketplaces or help with pricing, nine times out of 10 the CEO is involved in the IT purchasing process."

Fueling the involvement for software purchasing by non-IT executives: E-business application categories such as E-procurement, channel management, and supply-chain planning. Tech-savvy execs realize those applications can help improve their business lines--and significantly enhance their careers.

One advocate of involving IT and business leaders in vendor discussions is Dave Self, VP of sales and marketing for both Regence BlueShield of Idaho and Regence BlueCross BlueShield of Utah. Earlier this year, he chaired a workgroup to select a vendor for a sales-force automation system made up of 20 members--half from IT and half from areas such as marketing, benefits, administration, and corporate communications. The team met with 40 vendors over the course of several months. Those meetings provided Self with a better understanding of the company's technology needs. During one meeting, an IT executive drew numerous dots on a sheet of paper, with each dot representing a new system. He then began connecting the dots to illustrate the difficulties of dealing with legacy systems and new systems--referring to the outcome as a "plate of spaghetti." Lessons like that helped Self recognize that without input from IT, sales could have made a bad decision. "I realize now that there's no easy implementation," he says. The group selected Onyx Software Corp. for the project, and Self's next task is to help write business rules as part of the implementation.

When vendors sidestep IT, problems can occur that have nothing to do with technology--and everything to do with business relationships. Joe Federer, VP of IS at McKesson HBOC Inc., a health-care IT company in San Francisco, recalls a hardware vendor that made that mistake. In connection with an internal hardware purchase, Federer met with a particular vendor but decided on another. Soon after, Federer met with McKesson's VP of sales, who was pushing for the first vendor. That vendor had proposed reselling its hardware with McKesson's software and offered the sales VP discounts that hadn't been mentioned during the meeting with IS. The deal made sense to Federer after he had all the information--he had no objections to the product, but did object to the vendor's lack of communication about working with sales. Vendors' hidden agendas can cause problems, he says. "At the risk of alienating the IS team, they'll get an executive to carry something as a critical business requirement--at the cost of other projects."

Reinforcing technology's move outside the confines of IT management is the influx of nontechnologists populating CIO positions. Jim Yost and Roger Mowen are two examples. Yost, VP and CIO at Ford Motor Co., has an undergraduate degree in engineering and spent most of his 26 years at Ford in finance. Mowen, Eastman Chemical's VP and CIO, initiated the company's E-business plan; he's a self-taught techie who's spent most of his 30-year tenure at Eastman in manufacturing and sales. What both executives have in common--besides their titles--is in-depth knowledge of the inner workings of their companies, acquired through decades of experience--something that has enormous appeal to their employers.

Yost's appointment in June represented two firsts at Ford: The CIO reporting to the CEO, and the CIO holding the title of VP. That stems from CEO Jacques Nasser's desire to have IT help lead Ford's transformation, Yost says. "Jacques wanted somebody in the job who understood the business well enough to be able to make sure that the kind of IT support we needed for transformation was going to be delivered," he says. "If you don't understand the business extremely well, it's hard to deliver the right capability to the businesses."

Eastman Chemical chairman and CEO Earnest Deavenport appointed Mowen as CIO after Mowen planted the seeds for the company's E-business strategy early last year. Mowen took notice of E-marketplace startups such as ChemConnect and convinced the executive team that Eastman needed to act swiftly on an E-business strategy. The result: The company expects to do nearly 20% of its purchasing via E-procurement by year's end (see story, p. 58).

Mowen also heads Eastman's CustomerFirst group, which encompasses E-business strategy and business research, customer interface, and distributor sales. Mowen plans to keep the CIO title for another year, then he'll find someone with a traditional technology background to fill that position. Because he's well-known throughout the company and has gained the trust of executives, Mowen says, a major part of his role is to help gain traction for a project during its early stage--which can be a critical time: "It's about people getting comfortable with the change," he says.

In terms of IT titles, chief technology officer has the biggest New Economy cachet these days. CTOs get better raises than CIOs, according to InformationWeek Research's annual salary survey. The April survey of 507 CIOs indicates an annual median base salary increase of 8.4% and a total cash compensation increase of 9.3% for CTOs. In a broader view of the survey, which tracks raises for 3,638 IT executives, chief technology officers report annual median base salary and total compensation increases of 9.8% and 11.1%, respectively. "CTOs are driving the technology pieces forward, and there's a high price for those in-depth tech skills," says Maria Schafer, a Meta Group analyst.

In large companies with both CIO and CTO positions, the CTO usually serves as the visionary--the one who anticipates technology needs such as E-business capabilities, Schafer says. That's the case with Tony Scott, General Motors Corp.'s CTO, whose focus includes emerging technology. Scott and his team of 13 work closely with the labs of their major technology vendors to learn more about next-generation projects and the expected time frame for product delivery. "We spend more than $3 billion on technology each year, so it's not something to be treated lightly," he says.

Scott also oversees technology standards, including projects such as GM's Web Center of Excellence. The center provides starter kits that help project teams determine what technology is appropriate for Web initiatives. When the project teams use the templates, they know all pieces will work well together, Scott says.

IT Management
Tony Scott, General Motors	Roger Mowen, Eastman Chemical
Tom Thomas, Ajuba Solutions	Irving Miller, Toyota
Stephen Reiter, Turner Construction