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Seventy-six percent of executives surveyed at the MIT Sloan CIO Symposium in May 2008 said they didn't have a committed budget for a greening policy, even though 90 percent said that greening their data centers is crucial to meeting their companies' business objectives. This wasn't the case for Avnet Inc., $14 billion worldwide distributor of electronic components, computer products, and technology services. In fact, Avnet received Computerworld's Best Practices in Green IT Award for a three-year project to create a more energy-efficient data center.

Avnet's 13,000-square-foot data center houses 1,200 logical servers, more than 200 terabytes of disk storage, a central tape backup system and redundant UPSs, generators, and switch gear. For Brad Kenney, vice president of infrastructure at Avnet, the greening of the company's data center wasn't another IT project, but an on-going process that has saved the company thousands of dollars in unnecessary power consumption, under-utilized servers, and inefficient UPSs. He says, "Most of all it's saved us the millions of dollars it would cost to build out our data center to house more servers we didn't need."

Kenney began the process by looking at every piece of equipment on the data center floor. Two important factors included the age of the device and its energy efficiency. Because manufacturers have become more concerned about energy consumption, Kenney found it more cost-effective to replace older air conditioners and older UPSs with new devices that were at least 20 percent more energy efficient. He even looked at replacing floor tiles, lighting, and making adjustments in air handling. He says that little things like these can save up to 30 percent in energy consumption.

Server virtualization enabled Kenney to liquidate about 300 severs. Twenty-four physical ESX hosts now represent 378 virtual servers, and 39 AIX servers have more than 200 servers on them. Other consolidated efforts include moving to a centralized tape backup system and a storage area network.

Kenney is also amazed by the improved energy consumption that has resulted from virtualization, as well as from the other system consolidations. He says, "We went down by 44 percent in kWs per server. We've freed up more than 5,000 square feet on the data center floor."

Bio

Since 2004, Brad Kenney has been vice president of IT infrastructure at Avnet Inc., where he oversees the data center facility, computer operations, desktops, data storage, networks, messaging, and mainframes. Kenney started his career with Avnet in 1987 and has served in a variety of positions, including supervisor, manager, and director of data center operations. He received a B.S. in Computer Information Systems from Arizona State University.

Resources

Blade.org Establishes Venture Capital Advisory Board to Guide Blade Standard and Future Solutions The Data Center Journal


Avnet Gets Green Certification Purchasing.com


Avnet Adds Virtualization to Growing Services Portflio ChannelWeb


Production Credits

Elizabeth Ferrarini, Executive Producer

Tom Parish,  Host and Audio Producer

 

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When Don Hopkins retired as chief information officer at NCR, he decided to join SunGard Availability Services, a business unit of the $5 billion SunGard  Corp. SunGard Availability Services provides the company's more than 10,000 customers in North American and in Europe with solutions that ensure uninterrupted access to mission-critical data and systems. By reporting to SunGard's CEO, Hopkins has insight into the company's strategic initiatives and, as a result, has the opportunity to understand what technologies would be good enablers to those strategic decisions.
 
In 1979, Hopkins joined NCR where he moved up the IT ranks from the director of general-purpose products to vice president of technology and infrastructure in NCR's IT services group, and to his last position as chief information officer. In fact, he played a leadership role in NCR's transformation and performance turnaround. In 2007, he successfully completed the very complex IT spin-off of Teradata as a separate company. Although this event happened during a very aggressive timeframe, Hopkins and the management team did it under planned budgets, both before and after the spin-off.
 
In this podcast, Hopkins talks about how he has translated his IT experiences at NCR and applied them as CIO at SunGard Availability Services. He also talks about NCR's strategy to cut its IT infrastructure costs and increase the company's profitability, its process for making investment decisions in technology, and its methodology for measuring the value of those investments.

BIO

Don Hopkins is vice president and chief information officer at SunGard Availability Services. Before joining this business unit of the $5 billion SunGard Corp., he was CIO at NCR Corporation and the vice president of technology and infrastructure in the company's IT services unit. He joined NCR in 1979. He holds master’s degrees in mathematics, school administration, computer science and business administration from the University of Dayton, and a Bachelor of Arts degree in mathematics/physics from Miami (Ohio) University.

Resources

Specialists Share Transformation Models with Tech Providers, Industry Peers - Manufacturing Business Technology

E-vaulting Clears Hurdles to Vital Data - IDG Accelerate

CIO of NCR Is Retiring - Dayton Business Journal

 
Production Credits

Elizabeth Ferrarini, Executive Producer

Tom Parish, Host and Audio Producer

Doug Marcis - Audio and Music Editing

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Despite the downturn in the economy, some financial services companies are holding their own and hiring people, especially in areas such as IT. Genworth Financial is one of those companies. Genworth Financial has more than $103 billion in assets and 15 million customers worldwide. Genworth has earned the highest company ratings in its industry. It is a leader in long-term care insurance and annuities.

Christina Hollingsworth will be the first one to tell you that IT resides at the core of Genworth Financial's business operations. As corporate IT director at Genworth Financial, she oversees the strategy, planning, and execution of the company's enterprise finance technology acquisition and integration. Hollingsworth has earned a stellar reputation for leading global teams and initiatives and partnering with multiple suppliers.

Like many IT executives, Hollingsworth has to be sure that she has a well-stocked pool of qualified personnel who are not only technically savvy but can lead IT projects. She says, "In the past, IT professionals have been very good about executing on initiatives, or basically carrying out what they were told to do. Today, things have changed. Given the speed at which technology is evolving, we need people who can develop strategy based upon trends in the industry, can translate those trends into action, and then can execute on those initiatives."

In fact, Genworth Financial has deployed new technologies such as desktop video and software as a service, which manages travel expenses and investment portfolio expenses. The company also has a social networking pilot underway that is similar to Facebook. In fact, they call it Spacebook. Hollingsworth says, "As a global company, we have both employees and contractors working at a variety of locations. The best way to get good ideas is to have many ideas coming from our global talent pool. Our Spacebook will make it very easy for people to tap into these resources."

In this podcast, Hollingsworth talks about what skills people in IT need today, how recent IT graduates can chart a course for leveraging their skills, and what unemployed IT professionals need to think about when looking for a job. In addition, she also talks about Genworth Financial's career development program and the company's green initiatives. 

BIO

Christina Hollingsworth is the corporate information technology director at Genworth Financial, where she has worked for seven years. The company recognized Hollingsworth's leadership skills by awarding her the 2005 Platinum Compass Award for excellence in performance execution. Before coming to Genworth Financial, she held technology leadership positions at Minerals Technology and GE Financial, before it became Genworth Financial. She has a Masters in the Management of Technology from the University of Pennsylvania Wharton Business School and Penn Engineering.

Resources

Genworth soars on possible spinoff

CNN

Kognitio and Genworth Financial migrate 12 million policies

Banking Technology

Uniting process and tech at Genworth

Insurance & Technology

 
Production Credits

Elizabeth Ferrarini, Executive Producer

Tom Parish, Host and Audio Producer

Doug Marcis - Audio and Music Editing

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What is the chief concern of chief information officers? According to a recent annual survey by the Society for Information Management, the number one concern of CIOs is attracting, developing, and retaining good IT professionals. So, if you’re looking to move up the corporate IT ladder or you’re a first-time IT job-seeker, consider sharpening your enterprise software skills at SAP, or working for a SAP partner, or getting SAP training and then going to work for an SAP customer. With revenues of about $10.5 billion and 50,000 employees, SAP ranks as the world’s second largest business software company and the third largest independent software provider in revenues. SAP ERP deployments can be found in more than 41,000 companies, in more than 25 industries, and in about 120 countries. Unlike Oracle, which has grown through 30 acquisitions, SAP has grown organically by hiring people.

No one knows more about the SAP hiring picture, as well as the hiring needs of the IT industry, than Mark Steinke, vice president of global recruiting at SAP. He oversees SAP’s recruiting and staffing for professionals, senior executives, university graduates, interns, and contingent staff. According to Steinke, the demand for IT professionals with SAP knowledge has never been greater than today. He says, “The quantity of IT candidates has dropped off because of the demands of skills in our space.” While Steinke strongly suggests that IT candidates at all levels consider SAP training, he says that technical skills might get you in the door, but won’t give you staying power. He says that today’s business needs demand that IT employees at all levels know how to manage change, to think strategically, and to communicate effectively. He says, “Universities do a good job of incorporating the IT skills in the curriculum, but fall short in those other areas."

In this podcast, Mark Steinke, vice president of global recruiting at SAP, talks about the global challenge of finding qualified IT talent, provides tips for IT job seekers at all levels, and gives an overview of hiring and training opportunities at SAP.

Bio

During his more than five years with SAP, Mark Steinke’s experience has grown from business ownership of recruitment to vice president of global recruiting. His 20 years of recruitment experience includes positions at several Fortune 500 companies.

Resources

SAP e-recruiting Webcast

Yoh Talent Solutions Chosen by SAP Americas for Contingent Workforce Management Services

Bloomberg.com - Expansion Leaves Workers Behind, Creates Fed Friction

Production Credits
Elizabeth Ferrarini, Executive Producer
Tom Parish, Host and Audio Producer
Doug Marcis - Audio Editing

The failure of Washington Mutual Bank, along with 100's of other U.S. banks on the verge of failure, has caused consumers to question if a similar event could happen to their bank. However, consumers who bank with Farmers & Merchants Bank (F&MB) in Long Beach, California, don't have cause for alarm. Rating services, such as Weiss Rating, Highline Data, and others, consider F&MB to be the strongest bank in California and one of the strongest in the nation. The bank has assets of $3 billion and a capital ratio four times higher than the FDIC limit and sufficient liquidity to pay every depositor in full.

Financial strength has formed the underpinning of F&MB from the day it was founded in 1907 by C.J. Walker, great grandfather of Henry Walker, the current CEO. For example, F&MB didn't need any government assistance. When Gus Walker, Henry's grandfather became the bank's chairmen and president in 1938, he started the important tradition of transferring much of the bank's annual earnings into capital and reserve accounts. This wise practice enabled F&MB to flourish during the inflation-riddled 1970s, the fluctuations of the 1980s, the recession of the early 1990s, and even to grow despite today's problems.

Today, Henry Walker, along with his brother Daniel, who is chairman and president, continues to carry out his family's legacy, but with one difference - a heavy emphasis on capital investments in technology and facilities. The goal of these investments says Walker is to provide new services and to improve the bank's quality of customer service. Enterpriseleadership.org recently sat down with Henry Walker to talk about the business processes and the investments that've helped F&MB to earn its coveted reputation for financial soundness.

EL. What motivates you to follow in your great grandfather's footsteps?

HW. The bank has three executives: my brother Daniel, who is chairman and president; a chief financial officer; and me. The bank is our life. My father and my grandfather mentored both my brother and I. The bank's safety and soundness come from our founder. Every day, we carry out the bank's long history of guiding principles. That's how our job differs from other people in banking.

EL. What decisions have you made to avoid some of the problems other banks have encountered?

HW. Our decisions reflect the safety and the soundness of our balance sheet. We have the willingness to stick to our core principles, which others in banking aren't willing to do. For example, we have a very sound and very secure investment portfolio, which has minimal risk. We have no sub-prime loans in that investment portfolio. A number of investments and its loan portfolio typically comprise a bank's balance sheet. We have a very sound loan portfolio. We continue to run with those conservative principles we've always had. My grandfather guided our bond portfolio, and my father designed our lending standards. Those core principles from both of those generations have really flowed to my brother and I. We continue to run what is considered the safest bank in California.

EL. You've had some customers for many generations. How are you leveraging the right technology to provide service for multi-generational customers, especially young people?

HW. We're providing a stratified approach to customer-to-customer service. At times, it's a challenge. The younger people want technology, but they don't comprehend the idea of relationships. Business owners appreciate the value of relationships, especially with their lending partners. Meanwhile, the elderly are accustomed to banking in a certain fashion and value relationships. The nature of forming a relationship hasn't changed in consumer banking. As the demand for technology has come about, we've stayed up to date on everything. We have top of the line software vendors that provide our online banking, our online bill paying, and our remote deposit capture. We also have a voice response unit. We complement all of these things with the highest level of security available today in the banking industry. We consistently make sure we have all of the proper safeguards, the proper firewalls, and the proper audits and validated programs.

EL. What criteria do you use for measuring the quality of customer service you provide?

HW. We continually monitor the customer experience both in our call centers and in our branches. As executive officers, my brother and I make sure we can deliver on this promise of service. This goal isn't that noticeable with customers we've had for years because they've become comfortable with our level of service. However, when people switch from other banks to ours, they say things like 'Why didn't I use you people years ago.' Comments like this provide us with the contrast we did to really notice our level of service. Without any contrasts, we'd wind up resting on our laurels and taking our service quality for granted. We have to keep improving on it.

EL. Can you describe some of the capital investments you've made to improve the bank's technology?

HW. Technology is continuously changing. It may be hitting a bit of a plateau as the population absorbs how the changes have affected their lives during the past decade. Data is very accessible. The changes we've made include continuing to upgrade our internal hardware, especially our scanning systems within the branch system to process deposits more efficiently. We have consistently updated all of our online banking applications, all of our bill paying applications, wire transfer applications, and anything that has to do online to test the customer. This year we moved forward again with a substantial investment in our technology infrastructure. Our $20 million data center is a completely new facility for us. This facility will enable us to bring together the core departments that touch customers so we can continue to provide them the highest level of service possible.

EL. Can you describe your process for making capital investments in technology, such as your data center?

HW. We did a cost benefit analysis in quantified dollars in our ability to manage and to provide customer service, and in our ability to make an investment like this. After we look at all of these benefits, we bring the investment to our board of directors. We have three committees: a technology committee, an executive committee, and a board committee. We have three levels of review for that kind of infrastructure investment.

EL. How do you look at the payoff for an investment like the data center?

HW. We track all of our expenses around the clock. Because many businesses come to us for loans, we're quite familiar with how people run their businesses. We look at how they track expenses, how they use technology, and what kind of reporting they do. Most of the time, these people can't get a balance sheet out for 30 days or 60 days or until the close of the quarter or even at the end of the year. We produce a balance sheet every day.

EL. Do you have a dashboard that shows you how much you're spending on technology?

HW. I get monthly reports on capital expenditures from all departments. I also get a profit and loss statement on all the monthly transactions. It would be too much data to absorb daily. On the other hand, if I wanted the data daily, I could have it.

EL. Do you use technology to track marketing campaigns and to do lead generation?

HW. Yes. We have a system where we input data on customer sales, and on customer follow up by our people. For example, we can track how long it took us to handle a new customer referral. We have good reporting from this standpoint.

EL. What is your business technology management strategy?

HW. We want to continue to update and to provide a high level of service. As technology changes, we have to address the cost and benefits of it as it changes. Many times technology comes about and there is no immediate benefit for a couple of reasons. The customers might not know how to use it. You can have the best technology in the world, but if the customers don't harness it, than it doesn't make sense to incur an unnecessary expenditure. If customers start asking for a specific technology, that's when we seriously have to look at making the investment. We analyze technology from that standpoint to see what benefits it would provide us and will our customers use it.

For example, we decided to offer remote deposit capture or the ability to enable customers to scan their deposits at their place of business and then to forward the deposits to us via the Internet. Some customers said that they liked the idea of not going to the bank every day. However, after trying the service, these same customers said that they didn't realize how much work it took to scan their deposits. They questioned whether or not the bank should be doing the scanning for them. These customers decided to go back to coming to the bank each day or doing a nightly deposit. On the other hand, many customers said they liked the service and had desire to visit the bank each day. Technology always has its plusses and minuses.

EL. Have you had any technology failures?

HW. Not really! We've had some issues with getting new technology to work with our business processes and our current systems.

EL. What kind of a technology team do you have?

HW. Our chief information officer (CIO) has been with us for about 10 years. The technology committee, one of our three executive governance committees, meets regularly with the CIO. My brother deals on a daily basis with the CIO. My brother and I take a balanced approach to running this company.

EL. What are you key responsibilities?

HW. I handle most of the business strategy. I also hire the bank's officers and oversee the strategies they put in place for their time. I make sure our credit portfolio is safe and sound from a policy standpoint. My brother and I both handle branch acquisitions.

EL. Do you have a fifth generation who will be taking over the bank?

HW. My brother's two children work in the business. One manages our Laguna Hills office and the other one works as a compliance officer and risk officer in our trust company.

EL. How aggressive have you been with acquisitions?

HW. Although we've reviewed some potential candidates, we haven't found an acquisition we want to make. Because of the economic climate, we're seeing an increase in our branch business. In fact, we totally rebuilt one of our branches and added several ones in Orange County.

EL. Do you provide personal investment services to your customers?

HW. We don't offer brokerage services. However, for our high net worth, long-term customers, we make it possible for them to invest in the same securities we invest in. These securities include municipal bonds, treasuries, or mortgage-backed securities. We provide this service at no cost. All of our transactions go through our CFO who buys all of our bonds. These customers receive an account statement.

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

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Ace is the place, especially if you're looking for home hardware in the U.S. or in Saudi Arabia. And no one knows this better than Paul Ingevaldson. After a 25-year with Ace Hardware, Ingevaldson retired as CIO and senior vice president of international and technology for the $3 billion dollar global hardware wholesaler. Its more than 5,000 retail hardware stores do $12 billion in annual sales. Ingevaldson was responsible for Ace's IT needs for the entire corporation, including the retail stores in more than 70 countries. Of his many accomplishments, Ingevaldson is most proud of having become an officer of the company, heavily automating all aspects of the retail operation, and having the full corporation of executive management to align IT with the business. He attributes much of his success in these areas to a stint where he moved out of IT and handled distribution for Ace Hardware. He says, "The experience enabled me to see IT from the user's perspective. I realized that we had to spend more time training people how to interact with IT."

Since his retirement, Ingevaldson has written a variety of tutorial IT management articles for both CIO and Computerworld. His topics have covered everything from improving governance to delegating authority. He also has cranked out many articles about how CIOs should report to CEOs. In fact, his article, IT Cheat Sheet for CEOs, helps a CIO to explain the mechanics of IT to a new CEO.

Ingevaldson says that there are many reasons why it's important for CIOs to report directly to CEOs, than CFOs, and to be on the executive leadership team as a peer with CFOs. He says, "When it comes to corporate funds, CFOs take a risk adverse position. If you want to move the company forward through automation, then IT has to assume certain risks. If IT isn't willing to take a chance, then it will be a follower. If you work for a CFO, you have to go into much detail about every aspect of IT. Most of all, you aren't a peer with the rest of the leadership team. I'd never take a CIO position reporting to a CFO."

In this podcast, Ingevaldson talks more about why it's important for CIOs to sit at the corporate leadership table, and how they can maintain their place at this table.

Bio

In 1979, Paul Ingevaldson began his 25-year career at Ace Hardware as director of management information systems. He moved up the ranks to become Ace Hardware's chief information officer and senior vice president of international and technology. In 2004, he retired from the $3 billion corporation, but he didn't retire from IT. Ingevaldson writes IT management articles for both Computerworld and CIO magazine.

Resources

Computerworld - IT Survival Guide

CIO - How Do You Know You Delegate Enough?

CIO - Five Things I Learned After I Retired

Production Credits
Elizabeth Ferrarini, Executive Producer
Tom Parish, Host and Audio Producer
Doug Marcis - Audio Editing

The proliferation of the Internet, the pressure of a global economy, and the need to remain competitive have transformed businesses all of sizes into extended enterprises. As a result, many companies have a complex network of matrix relationships with permanent employees, with contract staff, with customers, with partners, and with suppliers. Because customers and suppliers might need to have access to information, such as sales forecasts and inventory projections, companies also need to extend enterprise applications to these constituents, thus creating an interconnected network of information.

John Baschab, the president of TechniSource, says that the key to managing an extended enterprise is good collaboration. Baschab's company provides outsourced IT talent, ranging from CIOs to CISCO networking specialists, to privately held companies with revenues between $50 million and $600 million. Baschab, who also teaches part time at Southern Methodist University, and Jonathan Piot, his TechniSource partner, have written two editions of the 600-page book, The Executive Guide's to Information Technology.

Enterpriseleadership.org recently sat down with Baschab to discuss what companies must do to better manage their extended enterprises and what role collaboration plays in this process. Here is what he had to say:

EL: What types of investments are you seeing in collaboration to extend the enterprise?

JB: We're seeing much IT investment going into extending the enterprise through collaboration. When it comes to internal collaboration, we're seeing improvements in the various ways people interact with each other. External collaboration looks at ways to leverage technology to bring suppliers and or customers closer together. The big difference here is who are your customers? If you're customers are consumers, then you can deploy social networking to drive more collaboration. On the other hand, if have business customers, then you have to look at how you can create a platform to bring each other's systems together to drive better collaboration?

EL: Why are we starting to see so much emphasis on IT investing in collaboration?

JB: To understand what appears to be the sudden interest in collaboration, you need to take a historical look at things in IT. In the late 1990s and early 2000s, many companies experienced a wave of system adoption especially with the rapid use of the Internet. This system adoption became a pre-requisite for any type of collaboration. Why? You need to have all of your information, such as transactions, in one place before you can even begin to communicate either externally or internally. Unfortunately, the market took a downturn in 2003 and many companies cut their IT spending. To this end, companies weren't willing to invest in collaboration tools.

Since 2004, we've seen a lot of IT capital spending going into infrastructure build out or audit-related initiatives, such as Sarbanes Oxley. We're finally cycling back around to developing some of the collaboration tools that would've been a natural progression in 2003 if the economy hadn't gone down and companies didn't need to focus on compliance issues.

EL: Besides collaboration, what are companies doing to extend their enterprise to meet the global economy?

JB: Companies have started to do the things the trade press talked about seven years ago. These things include exchanging forecasts and tracking inventory items. For example, some companies are using RFID to track their inventory. Meanwhile, some companies have started using something as simple as XML to have a common language for people to use to exchange information. Many companies have eliminated internal inefficiencies or improved external efficiencies that hampered working with their customers and suppliers.

EL: Can you give examples of how companies are taking advantage of the global distributed pool or knowledge resources and technology resources?

JB: It's easier than ever before to take advantage of global resources in both areas. If' you're a small business owner and you need some specific and discrete technology task done, then you can turn to elance.com or craigslist.com or a host of other sites to find the talent resources you need. The continued decline in the cost of computers and bandwidth and the proliferation of educated people into IT makes it easy for companies to find well-versed talent in every aspect of technology. We've seen a good example of this trend with large companies taking well-defined discrete IT tasks offshore or outsourcing a good chunk of the IT infrastructure.

The largest pool of technology resources is still in the open source movement. Look at all of the open source projects on a site such as Sourceforge.net. It has an amazing pool of thinkers and interesting technologies that people are doing through collaboration across the world.

EL: Is there any downside to using some of these global talent resources?

JB: Open source collaborators might not be able to tell when it's the best time to launch a new product. Even elance.com professionals won't be a good source of advice for this. No one can do that thinking for you because it isn't discrete enough. That's why you need in-house technologies and in-house thinkers who can figure out your big issues. In other words, you need someone on your payroll, either an employee or a consultant who understands your business very well, and who can drive collaboration.

EL: What adjustments do organizations need to make to structure and to streamline decision-making in a matrix or an extended enterprise?

JB: The answer is collaboration. You see more and more companies going by design and by intent to a matrix decision-making structure, and you see them going through an extended environment by force. The most difficult thing about a matrix environment is how rapidly can you make decisions and what does it take for them to stick.

Any global company, even if it's a small or midsize company, must deal with people who are work across all time zones and all geographies. This's true for even national companies. If companies use collaboration tools the right way, they can improve the flow of information in a matrix environment. The information people need, however, has to be easily accessible and always available. It can't be in peoples' heads or on their laptops. The free flow of information can help to facilitate decision-making.

EL: As an IT outsourcer, what have you done to extend your enterprise to your on-site employees?

JB: Many of the people in my group never come into our office because their full-time assignment is to work on-site for a specific client. To improve communications with our on-site employees, we created a collaboration portal to make them more aware of what's going on in the company, and to get them involved in decisions that affect the company.

The portal comprises Microsoft SharePoint for file sharing, a wiki, a blog, and a bulletin board. We experimented with a mix of both Open Source, as well as proprietary technologies to get this done. Some of these features worked, while some of them didn't. We thought the blog would be the portal's centerpiece. We also considered the blog as the carrot we'd use to draw employees to the portal and to get them to stop using email and voice mail. We asked members of the management team to provide daily blog entries about business-related issues, such as how we solved a customer problem.

I spent much time worrying whether or not employees would read the blog. They came in droves everyday to read all of the blog entries. Eventually, the management blog writers stopped providing daily content. They didn't have the time to devote to the task. To this end, I ran into a content problem, not an interest problem.

Because we didn't get the response we wanted the first time with our collaboration portal, we continued to work on making the tool more compelling and easier to use. If you don't do this, then people will go back to what they've always been using. While we gave them a carrot, we also gave them a stick. We told them to stop emailing people large files. If they wanted to trade files, they had to put them on SharePoint. That's was a tall order for people to handle. Eventually, people saw the benefits of using the portal.

EL: What steps can organizations take to make better informed decisions about outsourcing?

JB: Regardless of how effectively you apply technology, you always fall back to the need to have a good personal relationship with the customer and to make sure the customer trusts you. During our initial negotiations with customers, we can usually convince them that we have great talent, that we have better access to information, and that we can provide good economies of scale. The real test of our customer relationship comes down to this: Can the customer depend on us to do the right thing when something goes wrong? To this end, we provide customers with much transparency into how we operate. We've carved off a portion of our collaboration portal to give customers some visibility into what we're doing. For example, we put up their metrics about how we're operating their help desk or how we're meeting their service level agreements.

Informed decisions about outsourcing depend on how well you understand which pieces of IT are good to outsource. The more measurable they are, the easier they are to outsource. A problem management area, such as the help desk, has become the most widely IT piece to outsource. It's easy to quantify because you're constantly getting feedback on how it is doing.

We advise customers to look at their IT organization in discrete components. How easily they can measure each component can determine the degree of outsourcing expertise they'll need. Also, looking across the spectrum of IT components will help them to answer questions about measuring the results. Managing the results should naturally consist of the outsourcer providing quantifiable metrics, such as service level agreements. The outsourcer should also have the burden of doing due diligence to report on how they are doing.

EL: Do you clients include you in their governance process?

JB: We typically run the governance process for them, especially for making strategic IT decisions. We usually establish an IT steering committee that consists of one of our people who is functioning as the CIO and then their senior management team.

EL: What types of processes need to be in place to better manage an extended enterprise both for IT and for the business?

JB: If you're going to be exchanging inventory forecasts between a supplier and yourself, for example, your systems needs to have specific characteristics, such as reliability, robust processes, and the proper middleware for handshaking between systems. If people can't get into the system, their productivity will go down and so will their incentive to use the system. You need to have all sorts of processes built into the system so if something breaks and the red flag goes up, someone can jump on the problem.

EL: To what degree should you extend the enterprise to say suppliers?

JB: If you have a good, trusting relationship with your suppliers, then I'm in favor of giving them access to more information than less information. Sharing corporate information about the most common things, such as usually sales forecasts, and inventory positions, can help your suppliers and you make better decisions.

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

Mark D. Lutchen knows what it takes to unleash the full potential of IT so that organizations can derive the maximum benefit from it. As the former global CIO at PricewaterhouseCoopers (PwC), one of the largest professional business services firms in the world, Lutchen oversaw an IT organization of more than 2,500 professionals serving more than 120,000 employees in 144 countries. Today, Lutchen is a senior practices partner in PwC's IT Effectiveness Practice, where he helps clients get more value from their IT investments and their IT strategies. In 2004, he wrote Managing IT as a Business - A Survival Guide for CEO's. Many graduate school professors have used his book in MBA courses on IT management. Lutchen says that the basics IT management principles in his book haven't changed much since it was published.

Enterpriseleadership.org recently spoke with Lutchen, for the second time, to discuss what disciplines CIOs must put in place if they want to run IT like a successful company. This is what he had to say:

EL: Why did you write the book in the first place?

ML: I wrote the book because the IT clients I worked with seemed to have similar issues. It became clear that technology wasn't the problem. Instead, it was about managing IT and being disciplined about doing it. If you look at the failures that have occurred, you start to see some of the patterns. People have not instilled within IT the disciplines we use in other parts of the business. If you're a CIO running a billion dollar IT organization or even a half billion IT organization, that's the equivalent of running a business. To this end, you need all of the kinds of things in place for running a business. The book was to put this idea into context.

EL: Why did you decide to title the book as A Survival Guide for CEOs and not CIOs?

ML: The book is really for the C-level executives. I wrote it from a business orientation. If you look at the role of the CIO five years to 10 years from now, you'll find the CIO of a major corporation acting more like a CEO of a business around IT.

Many of the IT books that have come out in the past two years have redefined the CIOs role. That's what I did, except I redefined the CIO role as that of a CEO. I also wanted other people in the business, such as the CFO and the COO, to understand what happens in an IT organization from both the IT and the business side.

EL: Since your book came out, have CIOs become better at developing IT strategies that meld with the overall corporate strategy, as well as the needs of the business units? If not, how can they be doing a better job.

ML: Some of them have been trying to do that. Upfront in the book I address the issue that IT doesn't provide the one process or the one tool to take care of everything. Instead, if you want to do things right, you always need to be working on about 13 or 14 competency areas. All of competencies have to be at the right level for your organization. If you have the world's greatest technology but you don't have the ability to motivate your skilled people, then you're going to have an imbalance, and the technology won't perform the way you want it to. On the other hand, you have the technology spirit and the people with the right skills but you don't interact with the business units effectively. In other words, you don't set goals, prioritize things, or make sure you're linked to the business strategy. If this's the case, the technology you have, the way you put it in, and the skills you use to support it might be completely off target for the business units.

EL: So how do you get all of this to balance?

ML: People have had a desire to do it, but they have to work hard at it. In some cases, it requires ripping up what's there, and dramatically changing the culture. It also requires having a good base of quality and credible data, visibility, and transparency around what's going in the IT organization. You really need to look at the how the IT spend and IT performance support the business. People tend to work on parts of the problem. They really need a program to work on all the parts. It never ends. People have tried to make progress. It's been expensive.

The tighter money becomes, people begin to say that they don't need the disciplines they put in place, and thus start to cut costs here. For example, they might say no to rolling out an IT dashboard because they have the perception that it won't add value. Of course, an IT dashboard will add value much the same way, as you need a CFO to run a billion dollar business.

EL: What are some of the effective criteria processes C-level executives, including CIOs, and other business leaders or other constituents should consider in deciding on the mix of IT investments?

ML: People can't look at these as just IT investments or just IT spend. The companies making good progress have begun to understand that other than certain specific things, such as infrastructure, these aren't IT projects any more, but business projects with strong IT components. You need to approach things differently by saying that we, as an organization, need to decide on the mix of the total investments. Before you start making any decisions, you need a set of criteria for determining if the investment is a mandatory item, or if it is a regulatory item. Once you get that criteria agreed with by the business unit, then you can start to define the IT components, and to lay them in place. You also need to have a business measurement.

If the project has many business components and one IT component, then the business should unit own the entire project. Once you have structured the process and have agreed upon the criteria, you can start to have an intelligent discussion about which business projects must take priority over others. This discussion drives the platform of the portfolio of business projects you're going to do, and defines the IT components needed to support each project.

When the project gets going, you need to have a way to assess the results and to measure the benefits. At certain intervals, you need to stop and to make sure you can meet the targeted benefits. You can't wait a year or two years to see if there is any benefit. If you can't reach the first set of benefits in the first time interval, why would you let the project go forward?

EL: Where are companies falling short in finding IT dollars to invest in areas such as innovation?

ML: Companies that understand the activities what drive their costs, and make the effort to reduce unnecessary costs are more prone to have a mix of IT investments. On the other hand, if a company understands that 90 percent of its spend is tied up in legacy systems, then it's playing a zero sum game by having to spend money on maintaining these systems. If the company doesn't shift gears, it's costs will increase. You can't stand still. The older your systems get, the more they cost to maintain. People view this spend as a water faucet that they can turn off and turn on as needed. This saw tooth approach adds to the capital expenditure.

You need to understand how you spend capital to reduce costs to keep rolling forward. That translates to how do I free up cash if I'm not going to get any more money to be able to fund innovation? It gets back to perception. Do you have a group that just focuses on innovative things or innovative uses of technology for the rest of the organization or within anyone business unit? Many people view that has a luxury. It's a necessity. You don't always have to be on the leading edge, but you have to be on the edge of certain things, and to understand how these things would help the business to do something better, or to help the IT organization lowers its costs.

EL: What are the hot IT areas your clients are investing?

ML: This's an area where I'm going to tread lightly on. If you think back over the last couple of years, everyone was pushing service-oriented architecture. It was perceived as a major breakthrough in Web-based delivery of IT services. I haven't seen much about that lately. I lot of it was hype as opposed to the basic set of blocking and tackling you need when a new technology comes out.

Several years ago, we saw many companies heavily investing in customer relationship management systems. CRM had the same problems ERP had. People charged ahead and put in very large, global standardized systems to accomplish some objective. Many of these systems failed because of other factors. Some people, still to this day. haven't dealt with certain infrastructure issues that could remove large pockets of costs and make things more efficient. Using a tool as simple as virtual asset management, you can cut costs and improve efficiencies. If you don't understand your asset base, how are you going to understand how to move within a different direction?

Within the business itself, the use of things on the Internet and the Web have reached a certain plateau. We're doing more wireless activities. To this end, we need to have better wireless security and a better way to keep these wireless systems running.

EL: How should a company go about seeing if it can benefit from a new technology?

ML: You need to work with parties that help you to experiment with new technologies so you can evaluate how you can apply them in your organization.

Let me turn back the clock to 1995 when PriceWaterhouseCoopers had 100,000 of PCs and 1,000s of employees traveling all over the world each day. These people used to connect to the office via phone lines to get their Lotus Notes email. Broadband didn't exist at the time. Their calls would go from a server to a modem bank in the office. This service was expensive and the security wasn't where it should've been.

We decided to look at how we could provide connectivity that wouldn't drop calls, would require just a local call or a local connection, and would provide more security. We essentially laid the groundwork for our virtual private network. We asked MCI if it would work with us to develop the VPN. We needed a partner to help us to keep our costs in line. Our need to reduce the costs and to improve the security drove this innovation.

Today VPN is a staple. There are many other things like that out there. We couldn't have done that ourselves. The communications companies didn't understand what we were talking about when we first started speaking with them. You have to work collaboratively with other parties to get some of that innovation going.

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