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January 29, 2001

We're All In IT Together

continued...page 2 of 2

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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Why have someone other than the CIO chair the steering committee? "It demonstrates to the organization that information technology isn't just an IT thing," Hudson says. "It's a business tool, and a strategic one. We're very much taken by the model that a good leadership structure is business-oriented. It benefits the business units; they're held accountable."

Despite the CEO's hard-core IT background, Hudson keeps her distance from day-to-day technology decision-making. If the IT steering council can't agree, which Hudson and others say is rare, the CEO plays tie breaker. She makes final decisions on big-ticket items, such as sanctioning the steering committee's choice of SAP as the company's ERP software vendor.

Observers say that when business executives make key IT decisions, they start to care more about the company as a whole than they do about their specific units--and that's usually good for their companies. Before the steering committee existed, Schroeder says, "people felt their problems and solutions were unique. Getting the managers together, everybody understands our problems are the same and the technology solutions can be the same. We get to walk in each other's shoes." CIO Winter says a team approach helps standardize platforms and systems across the organization. New capabilities can be used by all employees, saving the company money. "Any sane CIO would kill to have agreement among his or her constituents," he says.

Such an approach was evident last month when nine key managers crowded around a Formica-topped table designed for six people in a gray-walled conference room on the second floor of Brady's headquarters. A month earlier, the company decided to delay a global CRM initiative until its ERP rollout is complete, in about two years. The group decided to either make do with existing CRM programs or modify the existing ERP system to handle CRM functions.

But IT advisory board member Elizabeth Belmonte, a former general manager of Brady's Seton division and now a member of the team deploying the SAP system, questioned that approach. She proposed instituting a new CRM system for Brady's domestic direct-marketing business when the company deploys the SAP system in that unit later this year. Belmonte, who had the backing of Dick Fisk, VP for the direct marketing group, said a new CRM system would provide much-needed functionality. Besides, she argued, why invest in ad hoc CRM modifications to the ERP system when the company plans to implement a full-blown CRM system in a few years?

Other executives raised concerns about Belmonte's proposal. Keith Kaczanowski, VP of process improvement and the executive charged with managing the SAP rollout, pointed out that the company could lose its focus on the ERP implementation and increase overall risk if Brady undertook another major implementation at the same time. Winter noted that the company didn't have the money or personnel to tackle both projects simultaneously. After two hours of discussion, the group decided, for a second time, to hold off on any major CRM implementation.

"Elizabeth's reasoning was legitimate and well-thought-out, but it was balanced against other equally legitimate business issues," says Hawke, who attended the meeting.

Getting top corporate executives involved in companywide IT discussions also pays dividends within individual units. Take Delta Air Lines and its Delta Technology unit, which is run by a board made up of all senior corporate executives except the CEO. When chief marketing officer Fred Reid learned that Vicki Escarra, executive VP for customer service, had initiated a program to replace paper boarding passes with digitized, wallet-size plastic cards, he suggested using the frequent-flier SkyMiles card as a boarding pass, creating potential marketing alliances with partners such as credit-card issuers. Delta is studying his proposal.

Photo by Tova Baruch "A few years ago, [Fred] wouldn't have had a clue about what was going on in the rest of the airline," says Robert DeRodes, Delta Technology's president and CEO, who's also Delta's CIO. Attending Delta Technology board meetings "gives these executives a broader understanding of what technology is available." In companies such as Delta, the organizational charts look like spider webs run amok, with reporting responsibilities designed along a matrix, rather than a hierarchy. CIO DeRodes reports to CEO Leo Mullen, although CFO Burns chairs the Delta Technology board. Meanwhile, senior VP for E-business Vince Caminiti reports to Burns but works closely with five other top Delta executives, including CMO Reid; Bob Colman, the chief human-relations officer; and the executive VPs of customer service and operations. And Caminiti teamed with Colman to implement Delta's Wired Workplace initiative, a program that gives the airline's 74,000 employees home PCs and Internet connections for $12 a month. "Bob and I are two peas in a pod," Caminiti says of his professional relationship with the human-resources chief. The matrix extends to Delta Technology and corporate functional units as well, each of which has a senior IT executive assigned to it. For instance, Delta VP Brian Lineback is assigned to Caminiti's E-business unit, though he reports to CIO DeRodes. "Brian's my face to the CIO," Caminiti says.

Other reporting structures are constantly in flux. When Brady launched its Web site, corporate E-business director Steve Hasbrook reported to the VP of corporate communications. Then, because of the Web's intense technology requirements, Hasbrook reported to CIO Winter for about 18 months. Two years ago, oversight of Web initiatives shifted to a user-led Internet council, headed by group VP Hawke, now Hasbrook's boss.

Eli Lilly's reporting structure looks a bit outdated in comparison, with CIO Dunbar reporting to CFO Golden. But the thinking behind the structure is very 21st century, since Golden is charged with championing and sponsoring major IT initiatives, such as the rollout of an SAP ERP system. "We CFOs used to be more rear-view-mirror people, reporting results, trying to indicate the implications of those numbers," Golden says. "Now, our responsibilities have shifted--we're more involved in the forward look."

However, Golden insists that he gives Dunbar free rein as CIO. "My role is to hold him accountable and help him knock down barriers that might arise," he says. Golden and Dunbar say it's logical for the CIO to report to the CFO since the company doesn't have a chief operating officer among its seven top corporate executives. As a result, the CFO and CIO are the only corporate officers with purviews that span every business unit. "We have outposts everywhere and try to support each other," Golden says. "We're soul mates."

As more business executives tackle IT decisions, some may wonder just where the CIO fits in. The answer may be as the leader of the executive pack. Delta's DeRodes isn't only in charge of the airline's strategic IT initiatives, but acts as its chief facilitator as well. "My job is to help integrate the concepts that come out of the functional silos"--the various units that make up Delta, DeRodes says. "I help bring thoughts from the other executive officers together."