InformationWeek

October 16, 2000

IT Management
Who's In Charge Of IT?

continued.... page 3 of 3

When EDS hired its first CTO this year, it turned to its CIO, Terry Milholland. Although EDS has been in the technology services business since the early 1960s, the need to globally deploy rapidly changing technology such as online marketplaces and applications for increasingly mobile workforces led the company to create the position of CTO--and Milholland fit the bill for both jobs. As CIO, Milholland's primary focus is determining what technology EDS deploys to its employees. As CTO, "I can use that thinking to decide which technology we offer our customers," he says.

The title of the top IT executive often relates to the type of company, says Mary Jane Range, president of executive-search company BTS Recruiting in Stamford, Conn. "Traditional companies that are users of technology, not creators, use the CIO title," says Range. "E-business organizations want to call their top IT execs CTOs."

But CTOs may also be taking on more than technology responsibilities. LiveMind Inc. combines traditional CIO responsibilities with the CTO's role--and then some. Iain Scholnick, CTO at the San Francisco developer of wireless E-commerce technology, manages more than 30 IT and business-development employees, oversees the company's networking and systems operations, and determines the IT budget and purchasing. Scholnick, who reports to the CEO, heads product development, strategic marketing, and partnership alliances, in addition to determining and implementing emerging technology. Scholnick recently hired a VP of engineering to oversee day-to-day operations, because sales calls, venture capital, and partnership meetings consume most of his time. "VCs joke that as a CTO, you're really chief sales officer."

Like LiveMind's Scholnick, PeopleSupport Inc. CTO Steve Kowalski spends plenty of time on sales calls--something he never expected to do. Kowalski, a PeopleSupport co-founder, says his role is becoming less technical and more business-oriented. "Not until recently did I need to know how to read a financial balance sheet and understand how a sales organization runs," he says.

When the Los Angeles company was formed more than two years ago, Kowalski took on the CTO title as the sole member of the company's IT management. As the company grew, Kowalski needed management help, prompting him to hire CIO Abby Hossein last November. Taking over responsibilities for the company's technical infrastructure, Hossein oversees daily operations, freeing Kowalski to focus on product development, emerging technology, and establishing business partnerships. "We're the only entity at the company that has two representatives at the executive board meetings," Kowalski says.

The revenue and cost-saving opportunities of E-business aren't lost on CEOs, whether they've seen them firsthand or watched competitors benefit. As a result, E-business compels CEOs to increase their role in establishing IT strategies.

GM's Rick Wagoner is a prime example of today's breed of tech-savvy CEO. Addressing a group of about 120 graduates from GM's internal IT university in late August, Wagoner explained how technology transformed his role--especially in the eyes of his own children. "[His children] also think that what he does at work, to some degree, is run the IT organization," says CTO Scott. "They expect him to be the technology guy in the household."

Soon after taking the reins, Wagoner created something Scott calls the "E-org chart," which made the leaders of each major business-process area and the corresponding IT executives responsible for drawing up E-business plans. Since then, Wagoner has had monthly follow-up meetings regarding the E-org chart.

That hands-on approach can be problematic, however, when CEOs lacks a thorough understanding of IT's complexities, says Boise Cascade's Egan. In the late '90s, software companies had great success marketing enterprise resource planning packages directly to CEOs, who wanted to achieve consistent and efficient processes across their businesses. The projects sometimes turned out to be more difficult, disruptive, and expensive than promised, however, and many failed to achieve the promised return on investment.

Boise Cascade didn't encounter such problems with its PeopleSoft ERP rollout last year, says Egan. "That's because our CEO stayed involved in the project throughout the implementation phase and made sure the operating units and the project team worked under the same vision." Today, Egan says, top executives have a greater appreciation for the difficulty of installing large software packages. "Superficial involvement of a CEO is detrimental, but committed and knowledgeable involvement is quite valuable."

While some CIOs, such as Eastman Chemical's Mowen, spearhead E-business, others, such as TRW's Mehrabani, don't share that desire. Either way, as the CEO, the VP of marketing, and other executives make more decisions regarding vendors, budgets, and strategies, a consistent IT strategy becomes increasingly critical. Non-IT executives must be cognizant of the repercussions their independent projects can have--and successful companies will ensure IT executives have the vision to convey that.

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