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Chrysler CIO talks about major IT transformation involving key partners

Jan Bertsch.As gas prices slowly crept up to the $4.00 mark this year, sales of new trucks and SUVs hit a record low sending some automobile makers on a hunt for ways to keep the bottom line from taking a nose drive. Three years ago, the $64 billion Chrysler LLC took take steps to deal with an impending downturn in the market by launching a recovery and transformation plan. In early 2007, the company began the corporate journey toward financial health and operational well-being. The plan includes changes throughout the entire enterprise and throughout all of the organizations with IT being one of them.

Jan Bertsch, Chrysler's senior vice president, and global CIO, says, "Our IT goal is operate more efficiently and more effectively. The business case specifically for IT was very clear. Because the competition continues to get stronger, IT really needed to focus on several things, one of them being the need to leverage global resources to support our growth initiatives."

Enterpriseleadership.org recently sat down with Bertsch, who is a also Chrysler's treasurer, to talk about the strategic changes and partnerships that will make IT more responsive to the global needs of all its constituents. Here is what she had to say:

EL. What can briefly describe your key responsibilities as CIO at Chrysler?

JB. I'm responsible for the direction of our global systems' hardware strategy and planning. This comprises all of the company's systems application development, our data center operations, telecommunications, and network operations on a global basis. IT has the dual role of keeping our global operations running, but also being a key partner with our business. We try to use IT to help the enterprise respond to changing customer and business partner needs, as well as to help fuel our international growth. Our structure today combines centralized services as well as shared services.

EL. Can you describe how the current structure of IT supports all of global business operations?

JB. Our applications group aligns with the main businesses of Chrysler, which includes our sales and our marketing systems, our after sales systems, our product development, our procurement and quality systems, as well as manufacturing and supply systems, and human resources, finance, tax, and legal. Our shared services group provides these standardized services and support to all of our applications across the organization. These applications include our applications architecture, and our IT compliance of our processes, such as Sarbanes Oxley. Databases and business intelligence belong to our shared services organization.

Our infrastructure group provides the foundation for all of the work, the hardware, the software, the data center, and the networks across the company. We operate and support all of our partners across the business, in all of the plants across the countries with all of our data centers. We interface with all of our suppliers and parts depots as well and our dealerships. That's our organization today.

EL. How is the structure of your IT organization going to change because of the IT transformation?

JB. Going forward, we want to focus on continuing to support the design, and the manufacturer, and the sales and the service of our vehicles. At the same time, we want to improve the business intelligence and operational excellence that goes along with that. We'll continue to focus on critical company initiatives. For example, we'll support the strategies of our business partners by carrying out the following strategic initiatives: determining the prioritization and the source of funding to speed delivery, and to enhance the quality of our services across the company; and also helping the company to improve its efficiencies, and to achieve its revenue goals through more innovative and more efficient use of technology.

EL. What's your enterprise architecture and does it align with the overall business model?

JB. Our technology architecture goal is to provide the capability for the interoperability between our diverse platforms we have. We achieve this with a number of efforts, including a common development in infrastructure platform, a product strategy that includes simplification and a drive towards common IT services. Our applications architecture focuses on a consistent consistency of design.

We want to enable common processes and common business services, which span all of the areas, with a service oriented architecture approach to the development. We'll focus on service enabling many of our legacy systems, which have coding for a significant amount of business processes. We have the goal to improve upon the simplification of that and work with some of external service providers that we recently announced. These external partners will help us to combine those solutions in divergent areas to become agile solutions. There's a big focus on that aspect.

EL. What were some of the signs that prompted the IT transformation?

JB. Because of the rapidly changing industry, changing marketing demand, and changing customer demand, we thought the need for IT capability could flex better with business demand if we had an alternative solution to how we work today. Of course, we all need the ever-increasing demand for innovation and technology improvement. Our IT transformation was one part of the corporate plan, but I see it as the next step in our continuous efforts to operate more efficiently and effectively. An IT transformation gave us the tools and the flexibility to drive business growth, not just to react to the situation.

EL. Who are the IT partners and what do they bring to the table?

JB. We decided to look at those areas within IT that had the biggest opportunity for improvement. We took time to assess where we felt we were market leaders and where we weren't. For example, we've operated our mainframe and server support areas efficiently with third-party resources. However, we manufacture automobiles, not provide IT services to major corporations. We knew that other technology companies in the industry could probably service us better in those areas because of their scale of business.

We first identified some areas where we felt we could drive improvement in the organization. We went out and market tested those areas. We also market tested some global players that had the capability to handle a company Chrysler's size, and that we felt would be good business partners with us. Based on our market test, we found that where we thought we had opportunities, we did have opportunities. At that point in time, we did due diligence and settled on suppliers. We awarded business on the applications side of our services to Tata Consultancy Services, and also to Covancys, a part of Computer Sciences Corp. We awarded our infrastructure business to Computer Sciences Corp. We're now in the process of transferring our internal business processes to our new business partners.

EL. What is involved in the handoff of business processes from IT to the partners?

JB. For example, Tata will handle some of the applications maintenance work. We identified what work will go to them, and then we'll work with them on transferring business processes and the know-how. Because we're in the middle of this, I don't want to go into too much detail. On the applications side, some of the work will take place in other locations and might not require as many people. Tata might provide offers to some people to work locally. On the infrastructure side, Computer Sciences Corp. has provided interviews to our on-roll people and has made offers to some of those people to work either on the Chrysler account and perhaps later on to work on another account. We also have contract houses who've elected to work with our business partners.

EL. How will the transformation change your governance process?

JB. There will be a reasonably large change in that area when we transfer the business. This transformation allows us to better focus on identifying internally the strategic business processes we could benefit from, and we could improve some of our innovative solutions. We'll be less involved with the day-to-day operations, and we'll be more involved in the strategic processes going forward. We'll further collaborate with our business partners. We'll gain a better understanding of their pain points, their desires, and the way the business moves. As a result, we'll be able to better leverage our global service providers' wealth of experiences in these new technologies, and to identify quickly projects that will have the greatest payback and the surest ROI. We'll have more time and more ability to improve our governance process, to improve the prioritization of our projects, and to improve the quality of the innovative solutions we can bring to our business partners.

EL. Do you have any strategic business processes where IT can make big improvements?

JB. Sales and marketing is an area where there is some capability to improve our volume planning operations. This is area also works very closely with our logistics and purchasing operations to improve our forecasting techniques for what we should be building and, therefore, what we should be buying. We always seem to have many good ideas. However, we're somewhat precluded from being able to participate all of them because of capital requirements. Because we're going to be working with partners that have the capacity to invest in those new technologies, our revised governance structure will enable us to better prioritize these business processes.

EL. Does your financial background enable you to see things differently than a CIO who has grown up in IT?

JB. Having a finance background helps me to dive into the business case to analyze each of the improvements or projects we're looking at. I've always professed that changing IT or anything for the sake of changing it doesn't make any sense. You need to have a sound business case to justify it or else we shouldn't be doing it.

I don't imagine that being in finance really differs from the experiences of most CIOs today. I see more CIOs with a strategic background, usually in finance or in business management. To be successful in a CIO role, you have to know the entire business, and you can't be a successful CIO just being a good technology person. You have to understand the strategy. You have to have a good financial sense about you. I see more people with those some skills taking on this role in many industries.

EL. What process improvements you are making to become more responsive to customers' needs?

JB. We're in the process redefining our IT landscape for the new delivery model we're talking about in the future. Both IT facing and the customer facing processes will focus more on becoming customer friendly. At Chrysler, we know that the perception of the customer is everything. We spend a lot of time with our dealers, with our systems, and with our processes to try to enhance the customer's experience with the dealership -- either online or in person. I think one of the key changes will be in the level of participation that we to target in the alignment of our IT strategy with the business strategy. We don't like reacting to business requests. Instead, we like to be an integral part of the solution to our issues and our goals. We'll measure our contribution in the future, not only in terms of our IT delivery metrics, but also as an innovative and cross-functional partner of our business.

EL. Have done any previous outsourcing?

JB. In the past, we told the partner what we wanted them to do. Now we're saying: 'Listen, we have something to deliver. Let's work with you to figure out the best way to deliver it. We're open to suggestions.' We're doing this a much larger scale now. We're also looking at doing that with certain functions within our organization. However, we're still maintaining relationships with the suppliers, and maintaining the governance, the compliance, and much of product planning up front in house. I know that many people who outsourced in the past might've outsourced too much and now they're bringing a portion of it inside. We tried to be cautious about that as we go to our next steps -- making sure that we transfer those parts of the business that our partner is best at and maintaining those parts we know we are the best at managing.

EL. What is your timeline for the IT transformation?

JB. Last year we started in earnest right after the separation of Daimler and Chrysler. We determined what we were going to do to by year end. We selected our partners early in 2008. We should be completely done with this portion of the transformation by late summer. It's a quick timeline, but we felt it was important both for the respect of the people and to maintain our business knowledge transfer as much as possible. Our new business partners agreed with that.

It's not going to stop there. We're relying on our relationship with our new business partners to continue to identify opportunities. Already in the process, our partners are now coming to us, identifying some things that we had either not thought of, or hoped would happen shortly after the transformation. Some of those are based on best practices that the business partners see. Other ones may be based on pure scale -- where we might be able to reduce the requirements for hardware because we're now dealing with companies that have a larger base that we had. Together we'll pursue more good opportunities as we continue down this path.

Author: Elizabeth M. Ferrarini - She is a technology writer from Boston, Massachusetts. Reach her at elizabethferrarini@yahoo.com.

Computer Sciences Corp.'s other CIO, Lem Lasher, talks about creating a comprehensive innovation program to benefit all constituents

VC Firm Specializing in IT Welcomes Relationship with CIOs: Podcast interview with Robert Abbott, General Partner, Norwest Venture Partners

Play Podcast (Right click to download)

Robert Abott.PeopleSoft. Brocade. and Forte. All of these IT companies got their start with funding from Norwest Venture Partners. Since its inception more than 45 years ago, Norwest has funded more than 400 IT companies in areas ranging from infrastructure to security. Today, the $2.5 billion fund concentrates on early-stage IT companies in areas such as semiconductors and components. enterprise software and service, communications systems and Internet infrastructure.

So what technologies does a VC firm like Norwest find particularly attractive these days? Robert Abbott, general partner at Norwest, says, "CIOs want to buy things that are easy to deploy and to manage over time. To this end, we like managed infrastructure services, such as outsourced security, and enterprise applications based on software as a service. We also like enterprise applications based on an appliance model. With so much emphasis on virtualization, we're looking for things that will take the challenge out of managing all those virtual machines. We still continue to fund things that make it easier to manage all the systems in a data center.

Like many venture capital firms, Norwest values its strong relationships with CIOs and other people in the IT industry. Abbott says, "We're always looking to expand our network of CIOs. We like hearing about the IT problems they're trying to solve. Likewise, we like to show CIOs portfolio companies with solutions that could potentially help them. If any CIO is interested in networking with Norwest Venture Partners, please contact Elizabeth Ferrarini at elizabethferrarini@yahoo.com.

Bio
Since joining Norwest Venture Partners in 1998, Robert Abbott has focused primarily on infrastructure, systems and components. He sits on the board of ClariPhy, KACE, mBlox, Mozes, Occam Networks, Stream Processors and Xilient. He has also worked with such companies as Embark, Escalate (acquired by GERS), mPower (acquired by Morningstar), Quantum Effect Devices (acquired by PMC-Sierra), and Summit Microelectronics.

Abbott has nine years of operational experience in various roles, from engineering to marketing and product management. Before joining Norwest, Abbott was at Silicon Graphics. Prior to Silicon Graphics, he worked at IBM-ROLM Systems. He holds a bachelor of science and a master of science in electrical engineering and an MBA, all from Stanford University.

Resources
Spectator Business - Brits Go to Silicon Valley
VC Circle - Norwest Venture Partners Plans to Launch a $1 Billion Fund
Hindu Business Line - VC Firm Sees Huge Opportunity

Production Credits
Elizabeth Ferrarini, Executive Producer
Tom Parish, Host and Audio Producer
AlarmMusic.com Production Music Library for Broadcast, Film, Video & Post Production

Thanks for listening - if you have any questions, ideas or insights you want to share with us feel free to send an email at feedback@enterpriseleader.org - we look forward to hearing from you.

Computer Sciences Corp.'s CIO, David McCune talks about business model for Information Technology

How IT makes government work better and more economically viable for people of Michigan: Podcast interview with Ken Theis, director of Michigan Department of Information

Created: Fri, 15 Aug 2008

Podcast Interview with Molly O'Neill, CIO of the U. S. Environmental Protection Agency - How IT Drives a Federal Agency's Collaboration Efforts With Global and Local Constituents

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Molly O'Neill.Molly O'Neill has both a technology role and a policy role at the U. S. Environmental Protection Agency.  As an assistant administrator for the EPA's Office of Environmental Information, she oversees the life cycle of information to support the agency's mission of protecting health and the environment. O'Neill's role as CIO includes overseeing the agency's strategic information planning, investment and information policies, enterprise architecture, and information security program.
In both of her roles, O'Neill is working toward the same goal - helping the EPA to use technology to collaborate and exchange information with the widest possible network of bright minds around the world. The EPA employs about five percent of the U.S. environmental workforce.  The majority of this workforce consists of people who work in state government, in consulting firms, in private industry, and in academic institutions.  She says, "Environmental issues are huge. People work at the EPA because they believe in its mission. We want to reach everyone who has a thirst for knowledge about environmental issues."

In this podcast, O'Neill talks about the EPA's Web 2.0 initiatives, as she puts it, "to reach out and grab the world globally, as well as locally." She also explains how the EPA's formal process for making IT investment decisions works, and how the EPA has been at the forefront of the green data center movement.

Bio
In December 2006, the U.S. Senate appointed Molly O'Neill as chief information officer for the U.S. Environmental Protection agency and as assistant administrator for the EPA's Office of Environmental Information. She is a member of the Federal CIO Council, where she serves as the co-chair of the Architecture and Infrastructure Committee. Before going to work at the EPA, O'Neill was state director for the National Environmental Information Exchange at the Environmental Council of the States. In recognition for her leadership as the executive coordinator of the Exchange Network, she received a 2004 Federal 100 award as one of the top executives influencing government technology. She graduated from Virginia Tech.

Resources
Government Computer News - The EPA the Web 2.0 Way
FedTech - Interview with Molly O'Neill, CIO of EPA
CIOToday - CIOs Tout Collaboration Tools as the Font of Today

Production Credits
Elizabeth Ferrarini, Executive Producer
Tom Parish, Host and Audio Producer
AlarmMusic.com Production Music Library for Broadcast, Film, Video & Post Production

Professor of Strategy at the University of Michigan's Ross School of Business, C. K. Prahalad talks about how changing business models in the new age of innovation will impact IT

Part 2 - Conversation with William Hurley, Chief Architect of Open Source Strategy at BMC Software, Inc.

Created: Sat, 19 Jul 2008

Why we are smarter than me and what businesses need to do to harness the power of the crowd: Podcast with Barry Libert, author and chairman of the board of Mzinga

Created: Mon, 28 Jul 2008