The Role of The CIO

Kara Westrich

Leslie LaBounty

Dan O’Neal

Greg Leiendecker
Who do CIO’s Work With?
13%
4%
CEO
39%
14%
CFO
Other
COO
Corporate CIO
30%
Source:
State of the CIO 2004. www.cio.com/archive/100104/survey.html
Base:
544 heads of IT surveyed from a broad base of industries
CIO Demographics
CIO Comparison
11%
men
women
89%
Source:
Keefe, Mari. “100 premier IT Leaders 2003.” Computerworld 6 January 2003.
Base:
100 IT Leaders survey by Computerworld in June/July 2002
CIO Demographics
Average CIO Age
10
8
# in age 6
bracket 4
2
0
age age age age age age age
27 35 40 45 50 55 61
Source:
Keefe, Mari. “100 premier IT Leaders 2003.” Computerworld 6 January 2003.
Base:
100 IT Leaders survey by Computerworld in June/July 2002
CIO Demographics
7%
19%
21%
under 40
40's
50's
53%
Source:
Keefe, Mari. “100 premier IT Leaders 2003.” Computerworld 6 January 2003.
Base:
100 IT Leaders survey by Computerworld in June/July 2002
60's
CIO Average Salaries
Education
93000
Government
Medical
Manufacturing
Insurance
Finance
Retail
Source:
State of the CIO 2004. www.cio.com/archive/100104/survey.html
Base:
544 heads of IT surveyed from a broad base of industries
118000
170000
190000
198000
210000
240000
Essential Skills of a CIO
CIO’s come from a variety of
backgrounds – more & more from
management discipline rather
than IT
Source:
Lieberman, Beverly, Gerry McNamara, and Mark Polansky. “Follow the Money; If you want to be a CIO, it doesn’t hurt to have a little CFO in
you.” CIO 15 November 2003.
CIO Backgrounds

David Bernauer – CEO of Walgreens
• Asst. Store Manager, Finance, Mktg, CIO

John Leggate – CIO of BP
• Human Resources & managing oil fields

Jan Franklin – CIO of Farmers Insur.
• Underwriting center manager
Source:
Varon, Elana. “The Future of the CIO..” CIO 15 December 2003
.
Essential Skills of a CIO


Leadership
Expertise in aligning
strategies

Business Savvy

Relationship Skills





Management Skills

Source:
Polansky, Mark. “The CIO Top 10.” CIO 15 September 2001.
Communication Skills
Ability to create & mang.
change
Expertise in a particular
industry
International/Global
experience
Ability to hire, develop, &
retain top talent
Essential Skills of a CIO
“…must lead like a CEO,
analyze like a CFO, and
execute like a COO…”
Source:
Simhan, Raja. “Which hat, for today?” Businessline 15 October 2003.
Current CIO Issues

Cost Cutting

Aligning IT strategy with business strategy*

Proving IT has value*

Unrealistic/unknown expectations

Lack of time for strategic thinking/planning*
Source:
Hoffman, Thomas. “Gartner Survey Finds Continued CIO Focus on Cutting Costs.” Computerworld 17 March 2003
Source:
State of the CIO 2004. www.cio.com/archive/100104/survey.html
Base:
544 heads of IT surveyed from a broad base of industries
CIO Cost Cutting
CIO Budget Changes
7%
33%
60%
Source:
Keefe, Mari. “100 premier IT Leaders 2003.” Computerworld 6 January 2003.
Base:
100 IT Leaders survey by Computerworld in June/July 2002
No Change
Increase
Decrease
Aligning IT & Business Strategy


If IT is not linked to strategic plan no
value is placed on IT & viewed as a
commodity
CIO needs to show how IT….




Creates a competitive advantage
Streamlines business processes
Creates new revenue/business
Change an industry through innovation
Important to Prove Value
Best Practice – motivate resp. for IT spending
How IT is Budgeted
Investment center
Cost Center
0
20
40
60
% of companies
Source:
Overby, Stephanie. “The Incredible Shrinking CIO..” CIO 15 October 2003.
Base:
State of the CIO Survey from www.cio.com
539 heads of IT surveyed from a broad base of industries
80
100
CIO Turnover

Ecolab Example
• On 13th CIO in 26
yrs
• CEO for 45 yrs
• CFO, VP’s of HR &
VP’s of Global Ops
for 7 + yrs
Source:
Worthen, Ben. “How to Become a Fixture..” CIO 1 April 2004.

Catch 22
• High profile CIO’s
don’t want these
co’s
• Low profile CIO’s –
no experience or
respect to have
success
CIO V. CEO
CIO
3.5
CEO
9.8
0
2
4
6
8
# years of service
Source:
Bates, Steve. “CEO Tenure Increases, But Retirements Rise as Well.” HRMagazine March 2004.
Source:
Hoffman, Thomas. “CIO’s Holding on to Their Jobs Longer.” Computerworld 6 October 2003
10
12
McCarthy Building
Companies

National General Contractor
 26th

Largest Contractor in 2004
3000 Employees
1Engineering
News Record - http://enr.construction.com/people/topLists/topContractor/topCont_J-P.asp
1
Revenues
1600
Revenue
(Millions $)
1400
1200
1000
800
600
400
200
0
1999
2000
2001
2002
Year
2002A
2003
Stock Price
250
Price ($)
200
150
100
50
0
1999
2000
2001
Year
2002
2003
Jobsite Locations
McCarthy IT


Mike Oster – VP of Information
Technology
Interviewed in person by Dan O’Neal
on September 21, 2004
Background

Education
• BA in Business Admin from Maryville
University
• MS in Information Management from
Washington University
Background

Career
• Computer operations at Capital Records
–1976
• Various positions at AB 1984 to 1998
• Joined McCarthy in 1999 as VP of IT
McCarthy
Partial Organizational Chart
Mike Bolen
CEO
Mike Hurst
COO
Mike Oster
VP of IT
Network Operations
Application Development
Customer Support/Training
Relationship with COO


Operations makes the money, IT
supports operations
Formal monthly meetings with COO
• Strategy
• New projects


Very proactive COO in terms of IT
Meet with VP OPs every other month
Skills of Effective IT Managers

Business skills – By far the most
important

People skills – Communication

Technical skills
Budget



Top 50 in IT
spending in
construction1
Annual budget
<0.5% of revenue
Charge costs to
jobsites
1. ConstructTech 150+1 – http://www.constructech.com/resources/lists.asp?SearchValue=M&LISTING_TYPE_ID=3&process=yes
Challenges

Connecting with Jobsites
• 100s of different locations
• Currently working in 24 states
• All different types of communication

DSL, ISDN, Frame, Cable, etc
• Security

PPTP, Citrix
Challenges

Helpdesk
• 800 Calls a month
• Calls range from computer illiterate to
computer geek
• Problems from forgot my password to
AS400 error messages
Outsourcing


Minor outsourcer
Outsource support and hardware
• Smaller offices
• Very large jobs away from Saint Louis

Opportunity for improvement in this
area
Success Stories

April of 1999 – Roll out
of email and internet for
all employees


Brought company “up to
date”
Citrix


Put common software on one
box instead of 1000’s.
Huge money save
Problems – Citrix not
Performing



Series of virus attacks for 2 weeks
Servers cleaned yet widespread
complaints of slow system continued
Productivity being reduced across the
board
Citrix Solution

Internet monitoring revealed
widespread abuse
• Porn, gambling, music, movies, etc
• Creating traffic jam on superhighway

Installed web filtering
• Immediate decrease in complaints
Worries

Citrix – Crash effects entire company

Security
• Viruses
• Spyware
Current Issues




Security
Spam – Blocking 61% of all emails
Spyware – Estimate 90% of McC
computers infected
Records retention
Future of IT at McCarthy

Integration of Systems
• RISE (Reengineer, Integrate, Standardize,
Eliminate)

GPS
• Vehicle tracking, equipment
tracking/monitoring

CADD
• 4D CADD

RFID
• Inventory control at yard
IT Awards


1
Constructech – Bronze award
Information Week – Top 500 innovative
2
companies 3 yrs in a row
1 http://www.constructech.com/awards/2003winners.asp
2
– Category – contractors with revenue greater than $500 million
http://www.informationweek.com/iw500/2004/viewList/?sortby=Company&qNum=6
Edward D. Jones & Co.





Based out of Saint Louis, MO
Privately Owned (owned by the employees
themselves)
Founded in 1871
Founder was Edward D. Jones Sr.
The first branch office was opened by
Edward D. “Ted” Jones, Jr., located in
Mexico, Mo.
Edward D. Jones & Co. (cont.)



Offices throughout the United States,
Canada, & the United Kingdom
Over 9,000 branch offices worldwide
Each office employs one broker
(known as an Investment
Representative, or IR) and one
assistant (known as a Branch Office
Assistant, or BOA)
Company Accolades



Fortune Magazine has named Edward
Jones as one of the “Best Companies
to work for” for 6 years in a row
Fortune named Edward Jones as the
#1 company to work for in 2002 &
2003
For the 11th consecutive year,
Registered Rep Magazine has ranked
Edward Jones #1 in their annual
survey of the nation’s seven largest
financial services firms.
Products & Services






Annuities
Insurance
Checking, Loans &
Savings
College Savings
Programs
Mutual Funds
Online Services






Retirement
Services
Stocks
Unit Investment
Trusts
Fixed Income
Estate Planning
Options
General Services
Edward Jones IT
Rich Malone, CIO
CIO at Edward Jones for 26
years
Background



Did not receive a
college degree
Former Programmer
for a KC Bank
Ran a network of over
1000 branches for a
Savings and Loan in
Iowa
Role of IT in business


IT is essential to business because
the branches are spread out across
the country (and the world). IT
enables transactions.
Business model would not work
without IT
IT Organization
Doug Hill
CEO
Rich Malone
CIO
Department Leaders
Over 1,000 IT Employees
Rich’s Biggest Challenges


Prioritizing activities with limited
resources. Knowing things that he
would like to do are not getting done
Keeping up with constant change
Projects

Most Successful
Project
• Satellite System



Put in place in 1986
Opened the door to
video in the
branches
Stabilized
telecommunications
costs

Most Troublesome
Project
• People Project


Human resources
project that was a
precursor to
“PeopleSoft”
Abandoned due to
“Scope Creep”
Typical Day for Rich




Lots & Lots of Meetings!
Member of the Management
Committee as well as several other
committees
Reviews/Approves multiple projects
every day
Lots of Travel!
Relationship with CEO






Rich is an equal partner with other C level
executives
Member of the Management Committee
Meets with CEO every Monday morning
Speaks with CEO every week at the Management
Committee meeting
Speaks to CEO, on average, 2-3 times per week
(except when one of them is traveling)
Very proactive CEO in terms of IT
What Keeps Rich up at Night?


When asked what kept him up at night,
without hesitation he said that his #1
concern is security.
• Viruses
• Hackers
• Spyware
Another concern is how to keep up with
constant change
COOPER INDUSTRIES
Cooper Industries

2 Business Segments
• Tools & Hardware
• Electrical Products

9 Divisions: Lighting, Bussmann, BLine, Crouse-Hinds, Wiring Devices,
Power Systems, Menvier, Hand Tools,
Power Tools
5 YEAR STOCK HISTORY
Market Data by Turbo Feed
Cooper Financials
Cooper Industries 2003 Annual Report
Cooper Commercial Markets
Cooper Industrial Markets
Cooper Residential Markets
Cooper Utility Markets
Cooper vs. Electronic Instruments
& Controls Sector
Cooper Industries


Employs 27,200 people
2003 Revenues of $4.1 Billion
Manufacturing Facilities in 21
countries
Cooper Industries Revenues
Revenues (millions $)

5,000
4,000
3,000
2,000
1,000
0
1998
1999
2000
2001
Year
2002
2003
Top Officers & Salaries

H. John Riley Jr.
• Chairman, CEO
• $3.7 M

Kirk Hachigan
• Pres, COO, Director
• $1.22 M

Terry Klebe
• CFO, Sr. VP
• $1.04 M
Byron Escobar VP,
Cooper Industries
Technology Shared
Services
Interviewed by Leslie
LaBounty
September 5, 2004
Background

Education
• EM, Universidad de San Carlos 1971
• A.S. Engineering St. Gregory’s College

Experience
• 29 years with Cooper

Developer, Technical Mgt, Database
Administration, Technical Support,
Managerial Data Processing, Corporate
Support
Cooper Budget

$250 M Budget
• Approx. 2% revenues
• Division plans created to support
Corporate strategic plans, extremely
centralized
• Approx. 30% of Budget is Salary


437 IT employees
Will continue to decrease – only 1/3 left in
2006
• $1.5 M Antigen Software (Anti-virus)
Cooper IT Shared Services
Vice President, IT Shared Services
Executive Admin. Assistant
Manager
Applications
Development
Project Manager
Oracle Database
Administrator
Manager
Technical Support
Unix Systems
Administrator
Lead Network
Administrator
Oracle/Java Developer
Help Desk Support
Supervisor
Programmer Analyst III
Java Developer
Help Desk Support
Specialist - I
Cooper
Connection
Administrator
Web Development
Manager
Transition to Shared IT Services



Replacing Division IT Dept’s w/ 1
central Shared IT Service Dept. in
Atlanta, GA
New HP Data Center located in
Atlanta
Currently 437 IT Employees
• Est. only 1/3 remaining in 1 yr
Current Projects

$75M SAP Implementation
• $3.4M Annual Software Maintenance
Cost

$800K Unified Messaging System
Implementation
• Integrated w/ MS Outlook
• Allows all 9 Divisions to communicate
quickly
SAP Timeline




July 2002 – Review ERP
November 2002 – Sign letter of
intent
March 2003 – Begin implementation
2006 – All 9 divisions united
Scorecard Performance
Measurement
Total IT Headcount
Last Year
CITSS/Corporate/EBS
Crouse-Hinds
Bussmann
Lighting
Wiring Devices
Cooper B-Line
Menvier
Power Systems
Hand Tools
Power Tools
Total IT Headcount
1Q 2004
Actual
0
B/(W)
0
2Q 2004
Actual
Last Year
0
0
B/(W)
0
3Q 2004
Last Year Actual
3Q 2004
Actual
B/(W)
4Q 2004
Last Year Actual
YTD
B/(W)
Last Year
B/(W)
Last Year
4Q 2004
Actual
B/(W)
Last Year
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
0
Total IT Expense
CITSS/Corporate/EBS
Crouse-Hinds
Bussmann
Lighting
Wiring Devices
Cooper B-Line
Menvier
Power Systems
Hand Tools
Power Tools
Total IT Expense
Last Year
1Q 2004
Actual
B/(W)
$0
$0
$0
Last Year
$0
2Q 2004
Actual
B/(W)
$0
Last Year
$0
YTD
Chris Lake: BUSS Director, IT
Interviewed Sept. 22, 2004

Education: AS Computer Science
• 90 hrs. towards BS in Mgt.

Experience:
• 4 yrs. Of Computer Op’s Mgt.
• 20 yrs. Programming as App. Develop.
Mgt.
• 9 yrs. Sr. Director IT

Been with Cooper for 20 yrs
Cooper Bussmann



Provides circuit protection & power
mgt. products designed to protect
electrical & electronic systems
Celebrated our 90 yr. anniversary in
2004
Headquartered in STL, MO
BUSSMANN DIVISION
INFORMATION TECHNOLOGY TEAM
DIRECTOR, IT
ADMIN ASST
MGR APPS DEV - MFG
PROG ANALYST III
PROG ANALYST III
MGR APPS DEV - FIN
Consultants (2)
MGR APPS DEV - COMM
MGR COMPUTER OPS
LAN ADMIN SPVR
PROG ANALYST III
SR COMP OPER
PC SPECIALIST
PROG ANALYST III
SR COMP OPER
PC SUPPORT ADMIN
VISUAL BASIC DEV
SR COMP OPER
PROG ANALYST I
SR COMP OPER
Chris Lake: Director, IT
Breakdown of Daily IT Activities
Operational Activities
30%
40%
Investment Activities
Decision Support
Activities
30%
• 40% Operational: Support of IT Op’s, App.
Maintenance, end-user support & training,
project cost acct’g
• 30% Investment: Infrastructure & App.
Development
• 30% Decision Support: Risk Mgt, Standards &
Tools Develop. & Administration, Supplier Mgt,
Planning & Decision Support
Chris Lake, Director IT

Routine Activities:
• Providing IT Tech. oversight to all 14
BUSS locations (domestic & int’l)
• Project Mgt./conducting project Steer
Committee Mtg’s
• Budget Prep. & Mgt.
• Problem Resolution/Mgt.
• Removing obstacles for mgr’s & staff
Chris Lake: Director, IT

Budget:
• Determined by support req’d for
strategic biz plan

Budget Breakdown:
• 30% Salary
• HW Maintenance
• Software Maint.
• Voice & Data Networks
• Equip. Depreciation Expense
Chris Lake: Director, IT

How often do you meet with
President?
• Qtl’y Op’s Review

Cover progress & strategic project initiatives
for cost reduction & biz improvement
• Called upon informally on occasion

Especially as biz plans change
Chris Lake, Director IT

Biggest Challenges
• Globalization: both increasing biz
offshore & supporting the move of nonIT jobs offshore
• Rationalization of IT resources resulting
from transition to COOPER Shared
Services


Keeps Chris up @ nite
Constantly worries about DATA
NETWORKS: LAN & WAN still not
100% reliable
Chris Lake: Director, IT

Most troublesome IT Project
• Attempt to implement highly automated
distribution center



Vague contract- named 1 of 5 software
vendors to be “Systems Integrator” but
responsibilities weren’t defined
Major miscommunications b/w vendor’s data
specifications & automated distribution
center
3 months to fix problems
Comparisons
Name
Mike Oster - MCC
Rich Malone - EDJ
Chris Lake - CB
Byron Escobar - CI
Research
Reports to
COO
CEO
CFO
CFO
CEO
Tenure
5
26
9
3
3.5
Education
MIS
No degree
No degree
Graduate
Budget
0.40%
n/a
2%
2%
4%
Comparisons

Top Concerns
• Security – EDJ and MCC
• LAN/WAN – Cooper
• Consolidation - Cooper

Top essential skills
• Business skills – MCC and Cooper
Lessons Learned




Strategic Planning
Specific Contracts
Keep Team Spirit Up
Sr. Mgnt. Needs to be involved!
Q&A