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January 29, 2001

We're All In IT Together

As technology comes under scrutiny, top business execs are playing a bigger role in IT policy.

ONLINE EXCLUSIVE:

Working With The CTO And The CIO

No Hold On IT Spending

More on corporate executives:

BMG's Man On The Move (1/1/01)

Generation Dot-Com Gets Its Wings (1/1/01)

A New-Generation Avon Lady (1/1/01)

sidebar: Chief Marketing Officers Maintain Close Ties To IT

sidebar: New Breed Of Chief Tackles Corporate Privacy Issues

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harles Lucier is the king of "C" titles. The official corporate biography of the Booz-Allen & Hamilton Inc. senior VP lists him as the management consulting firm's chief marketing officer and chief knowledge officer. Ask him what he really does, and Lucier says he's chief growth officer: "I'm Booz-Allen's growth champion; that's my job."

Growth at the McLean, Va., firm requires deploying technology, and Lucier is the senior corporate manager sponsoring many key IT projects. Along with the company's CFO, chief administrative officer, chief human resources officers, and two executives overseeing U.S. and European operations, Lucier sits on the newly formed IT steering committee that determines which technology initiatives Booz-Allen will fund. "We have to make judgment calls and decide how much technical risk we want to take," Lucier says (see story, Chief Marketing Officers Maintain Close Ties To IT).

Booz-Allen isn't the only company giving top corporate executives the influence to make key IT and E-business decisions. Just as CIOs are more business savvy, top managers have become more knowledgeable about technology. That's thanks in part to three late 20th-century developments: the Y2K threat, which drove home the point to executives that IT is the nervous system of their companies; the growth of the Internet, which changed the way businesspeople interact with others inside and outside the corporate walls; and the growing deployment of enterprise resource planning systems and other enterprise applications, which have changed the processes companies use to conduct business.

"These executives might not be on the cutting edge, but they know enough to make informed judgments," says Lawrence Gales, associate professor of organizational theory and behavior at the University of Cincinnati's College of Business Administration. "IT is no longer the realm of just technology experts."

A growing number of companies are expanding the roles of many top corporate executives to include IT-related responsibilities. As the economy slows, management is getting a firmer grasp on one of its most expensive and strategic line items, ensuring that technology and business decisions work together. "In the past, IT may have been seen more as a luxury item; when things got tough, you cut back on the 'toys.' IT is no longer a toy; it's an essential thing. Everyone understands that," says Michael Cummins, chief marketing officer at Equifax Inc.

When Brady Corp. implemented its first ERP system, involvement by senior corporate executives was limited. "IT's request for input was perfunctory," recalls graphics group VP Dave Hawke. "They wanted to involve us, but not deeply." Today, top business-unit executives are leading the rollout of Brady's next-generation ERP system, based on SAP R/3 release 4.6B, with IT performing a critical but supportive role.

The $541 million maker of identification systems, specialty tapes, and lettering systems in Milwaukee has established an IT steering committee led by group VP Dave Schroeder and stocked with other top business executives: Hawke, Brady's CIO, CFO, VP of human resources, and the general managers of three business units. The group decides how and when Brady uses information technology.

Dave Schroeder and company Photo by Black-Toby At other companies, top executives also are taking note. "Y2K's focus on the technological implications to business created a metamorphosis through the whole corporation," says Michele Burns, CFO of Delta Air Lines Inc. Delta revamped its corporate governance plans, redefining the roles of top executives and spreading responsibility for IT among several people. Burns serves as board chair of Delta Technology, the Atlanta airline's IT subsidiary, and as the company's top executive overseeing E-business initiatives.

Technical competence is a skill many companies seek when they hire business executives, says Peter McAteer, VP of organizational and workplace planning at Giga Information Group. He points to Newell Rubbermaid Inc., which last month named former VerticalNet Inc. CEO Joseph Galli Jr., once chief operating officer at Amazon.com Inc., as its chief executive. Top execs need to be technology-literate, even at old-line companies, McAteer says.

At legal publisher West Group in Eagan, Minn., the officer responsible for overseeing the rollout of a new ERP system is the executive accountable for corporate customer relations, Ron Boller. His staff will use many of the applications in the SAP R/3 system slated to go live later this year. "Everything business does impacts systems, and everything systems do impacts the business," says Boller, a senior VP at the $1.4 billion subsidiary of Thompson Corp. "Systems are an integral part of the day-to-day business process."

Equifax's Cummins is about as tech savvy as a non-IT business executive can get. He served as director of the Georgia Institute of Technology's Georgia Center for Advanced Telecommunications Technology for 3-1/2 years before the $1.8 billion credit-reporting agency in Atlanta wooed him away. Among the CMO's assignments: developing consumer credit-rating products that employ Internet technology and customer-relationship management systems. Cummins says the rapid pace of business brought on by companies' increased reliance on IT and the Internet means top execs must be more flexible. "It's almost impossible to be successful and stay in those tightly demarcated silos," he says. "Everyone is chief bottle washer. No one has the time to play well-defined roles."

Photo by Larry Ladig Eli Lilly & Co., the $10 billion Indianapolis pharmaceutical company, recently asked its top financial officer, Charles Golden, to champion IT and Web initiatives. He sees technology's influence throughout the company as creating an interdependency among top executives. "We can't really have a corporate structure that consists of a bunch of functional chimneys," he says. "The pieces of business are dependent on each other." For example, CIO Roy Dunbar met shortly before Christmas with top executives from across the company, including Golden, the company's chief physician, and the VPs of clinical development, regulatory affairs, and E-business. They discussed developing a Web platform to acquire, aggregate, and analyze clinical data about potential drugs, so the right information can be made available to the right people from inception through development, regulatory approval, and marketing. In the past, systems would be deployed to handle just one phase of product development, and they weren't always created with the later stages in mind. "Our mind-set is now to build the whole value chain," Dunbar says.

At Brady, technology serves to bring down the walls that once separated senior corporate executives, not only from the head of IT, but from each other. Brady's founder, the late William Brady, would sometimes pit one business unit against another in the belief that internal competition would help boost sales. "He let them duke it out for the customer's business," says CIO Dave Winter. That culture changed with the arrival six years ago of CEO Katherine Hudson, a former CIO at Eastman Kodak Co., who encouraged cooperation among business units, including identifying and implementing strategic IT projects. "We went from no to yo," Winter says. "We have all our oars in the water, and we're rowing together."

Soon after Hudson's arrival, Winter proposed a three-tiered IT framework, with an executive-led IT steering committee at the top of the structure, the CIO and his managers in the middle, and the IT staff at the bottom. The IT steering committee meets for two hours on the first Friday of each month. Hudson chose group VP Schroeder to chair the committee in part because the business unit he heads--identification solutions and specialty tapes--produces about 40% of Brady's $541 million annual revenue, the most of any unit.