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The Role of the CIO

IS 6800: Management Information Systems, Fall 2005. The Role of the CIO. Debbie Jaeger Ray Phariss Yakun Liu Farwah Gardezi. Presentation Overview. Introduction and Background of CIO - Debbie Jaeger Presentation by CIO, Smurfit-Stone - Ray Phariss

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The Role of the CIO

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  1. IS 6800: Management Information Systems, Fall 2005 The Role of the CIO Debbie Jaeger Ray Phariss Yakun Liu Farwah Gardezi

  2. Presentation Overview • Introduction and Background of CIO - Debbie Jaeger • Presentation by CIO, Smurfit-Stone - Ray Phariss • Interview of CIO, FACRI Corp. (China): Yakun Liu • Interview of CIO, UMSL: Farwah Gardezi • Conclusions

  3. Lessons Learned • Turnover • Definition of Success • IT Budgets • Executive Relationships • Dilemmas of CIOs • The CIO Position • Gender & Age • Background • Career • Salary • Compensation

  4. Lessons Learned • CIOs Face Similar Issues • Security • Budget (Depends on company) • Attract, retain, train IT staff • Similarities in Background • Time in job (4 yrs., 4yrs., <1 yr.) • Previous experience • Reporting Structure Has Improved • 1997…5% reported to CEO; 2005…55% report to CEO/Pres.

  5. Gender & Age Demographics • 91% male • 9% women • Average age = 47 years old * Out of 405 CIOs polled Source: Alter, Allan. "The Role of the CIO; Meet the Hybrid CIO: Well-Paid & Powerful." CIO Insight, 5 April 2005, pp.65.

  6. Background Demographics • 65% have IT background • 9% have business background • 26% have both IT and business background Source: Alter, Allan. "The Role of the CIO; Meet the Hybride CIO: Well-Paid & Powerful." CIO Insight, 5 April 2005, pp.65.

  7. Career Demographics • 26% spent ½ their career in IT and ½ outside of IT • 55% say contributing to corporate strategy is one of their 3 top responsibilities • 34% manage another corporate function while running IT • 16% spend most of their time dealing with emergencies • 55% report to CEO or president of the company Source: Alter, Allan. "The Role of the CIO; Meet the Hybrid CIO: Well-Paid & Powerful." CIO Insight, 5 April 2005, pp. 65.

  8. Salary Demographics • 2003 average annual salary = $137,793 • 2004 average annual salary = $140,200 • 2003 average bonus = $28,283 • 2004 average bonus = $31,178 Source: Alter, Allan. "The Role of the CIO; Meet the Hybrid CIO: Well-Paid & Powerful." CIO Insight, 5 April 2005, pp. 65.

  9. Compensation • Businesses want IT Departments to contribute to revenue growth, expand market share, and improve customer satisfaction • 72% of CIOs are involved in revenue-boosting plans • Ernest & Julio Gallo Winery Source: Brown, Patricia. "Defining the CIO: An Optimize Reserach Report - CIOs Shift to Playing Offense in 2005." Optimize, 1 June 2005, pp. 29.

  10. Turnover Statistics • Average number of years as CIO of current company = 5.4 years • Some companies have 3 CIOs within the last 5 years • 35% of CIOs are actively looking to change jobs within a year • Average number of years as CIO of any company = 9.7 years • Average hours of work per week = 53 hours Source: Alter, Allan. "The Role of the CIO; Meet the Hybrid CIO: Well-Paid & Powerful." CIO Insight, 5 April 2005, pp. 65.

  11. What is Success? • 71% say success is measured by increased customer satisfaction • 64% say success is measured by innovation and new development • 58% say success is measured by increased worker productivity Source: Brown, Patricia. "Defining the CIO: An Optimize Reserach Report - CIOs Shift to Playing Offense in 2005." Optimize, 1 June 2005, pp. 29.

  12. IT Budgets • 2005 IT budgets have increased 5% since 2004 to fulfill CIO priorities • Provides greater business flexibility • “…with lousy architecture, security is very expensive. With good architecture, you can beef up your security at a much more reasonable price.” - June Drewey • 63% is spent on maintenance • 37% is used for new technology plans • For 2006, 55% of CIOs say they need to improve security & risk management • 48% say they should improve internal control processes & procedures Source: Brown, Patricia. "Defining the CIO: An Optimize Reserach Report - CIOs Shift to Playing Offense in 2005." Optimize, 1 June 2005, pp. 29.

  13. Executive Relationships • CIO’s main assurance of staying power is from the CEO • Main contacts are top management & business manager clients • Communication gap between IT department & business managers can damage the company even more than CIO’s lack of support Source: Romanczuk, Jeffrey, and Pemberton, Michael. "The Chief Information Officer: Rise & Fall?" ARMA Records Management Quarterly, Vol. 31, 2, April 1997, pp. 14-25.

  14. Executive Relationships • 2 main barriers for consideration of CIO to be on same level as CFO • Fear of one person “controlling the information” • Increasing struggle from all departments about creating another level of management • CIOs bring a lower degree of uncertainty than CEOs • Completely conscious of need for technical standards • More analytical & adjust more often than guide • Resort to open & adaptive problem solving skills Source: Rubenstrunk, Karen. "What Your CEO Wants You to Know." Optimize, 1 June 2005, pp. 51.

  15. Suggestions to Secure Relationship with CEO • Hold your tongue • Talk of only critical facts • Market • Meet face to face with CEO • Bring toys • Introduce new technology to support working style • Deliver • Never make a promise you can’t keep • Share • IT department has impact on relationships • Have fun • Display validity in building relationships Source: Rubensrunk, Karen. "What Your CEO Wants You to Know." Optimize, 1 June 2005, pp. 51.

  16. Dilemmas of CIOs • Money saved by CIOs is from “cost avoidance measures,” which are a one-time savings • “CIOs do not bring in capital, they spend it!” • Globally spend $54 billion/year on reengineering, of which $40 billion goes to IT • Unfamiliar in declaring the value of information management to those who do not give it much thought Source: Romanczuk, Jeffrey, and Pemberton, Michael. "The Chief Information Officer: Rise & Fall?" ARMA Records Managemetn Quarterly, Vol. 31, 2 April 1997, pp. 14-25.

  17. James E. Burdiss Chief Information Officer (Ray Phariss)

  18. James E. Burdiss, CIO • Very personable; no-nonsense, frank communicator • Enjoys high degree of credibility with other executives • Focuses on strategic initiatives in partnership with business leaders • Seeks to reduce costs while adopting new technologies • SAP implementation - $140M • RFID – not yet, but coming

  19. Smurfit-Stone (SSCC: NASDAQ) 2004 Sales: US$8.3 billion CORRUGATED CONTAINERS CONSUMER PACKAGING RECYCLING AND OTHER ACTIVITIES CONTAINERBOARD MILL & FOREST RESOURCES 74% 22% 4% Product Categories

  20. 2005 Data: Total Number of employees = 35,300 Total Number of IT employees in IT headquarters: 300 in-house & 80 contractors IT Spend ~ $100 million (1.1% of revenues) 1 Losses due to increased global competition, rising input costs, and soaring employee benefits costs.

  21. Business Environment “A New Order is Taking Shape” • Ongoing transformation of the manufacturing sector in North America • Emergence of new market realities • Local to national shift: • 2001: 80% local / 20% national • 2005: 60% local / 40% national • August 2005 Press Release: • Closed 3 North American containerboard mills in Florida, Quebec, & New Brunswick; 565 layoffs • “One of the major long-term issues confronting Smurfit-Stone’s packaging operations is the slowing demand for packaging in North America, as manufacturing is being shifted overseas.”

  22. IT Department Supports: • 12,500 customers • 11,917 desktops & laptops • 246 Macintosh computers • 4,143 printers • 604 contracts with suppliers • 1,920 IT orders processed • 3,733 production system changes • 300 phone systems • 1,700 cell phones • 248 personal digital assistants • 2 mainframes • 2 data centers (Alton & Chicago) • 187 midrange computers • 589 routers & 1,778 switches • 84 business applications • 598 databases • 72,000 EDI documents per month

  23. INFO DATA TACTICAL STRATEGIC APPLICATIONS INFRASTRUCTURE Network Hierarchy

  24. Top 3 Priorities • Partner with the Business • Reduce Total Cost of Ownership (TCO) • 80 applications down to 30 applications • Enhance technical/business acumen of IT professionals

  25. Transformation Goals • Bring IT closer to the Business • Reorganize IT to be more aligned with the business • Communicate with customers more • Reengineer the Capital Submission Process • Implement a Program Management Office (PMO) • Measure and track customer satisfaction • Provide proactive solutions • Reduce IT costs • Understand and baseline current costs and efficiencies • Leverage knowledge and resources better • Better management of assets (leases/maintenance agreements/support contracts) • Enhance the skills of the IT staff • Understand business processes • Enhance technical skills • Develop better management skills

  26. IT Management Council User Board of Advisors Business Strategy CIO IT Strategy • Charter: Division IT and corporate IT management focused on cross sharing of ideas and experience. Will be used for issue resolution and enterprise IT strategy formulation. • Charter: Customer voice, strategy formulation, policy review • Comprised of Senior Business Executives from Corporate and Divisions PMO/ Change Management Business Process Automation Infrastructure Customer Support And Finance Business Applications Supply Chain Operations • Charter: Development of common project methodology and tools. Develop project performance metrics. Provide Coaching to projects • Charter: Working closely with the customers, plan, lead and manage mill software applications and projects • Charter: Create Centers of Expertise in areas of knowledge to share across SSCC • Charter: Working closely with customers, plan, lead and manage software application projects • Charter: Manage and ensure uptime of the data center and all information technology infrastructure • Charter: Improve customer satisfaction through problem prevention and timely resolution. Ensure proper fiscal, procurement and human resource operations within ITD. – DBA – Data Management – Data Warehouse/ Architecture – Business Intelligence/ Decision Support – eBusiness – Web Development – EAI • – CAD Eng. (Product Config) • – Business Apps • Development & support: • CRM • Finance • HR/Payroll • CPD Apps • Container Apps • – Business Process Group – Methodology Dev. – Training; Planning, Execution, Coordination – Communications – Performance management and measurement – Project Governance –SOM/SCORE –TMS –Panther –Majiq –CMS Management / Maintenance / Technical Support of: – Mainframe / Data Center – Server – LAN/WAN Network – Desktop Support – Security – Version control – Disaster Recovery – Customer Advocate – Help Desk/Support Center – Finance – HR/Personnel – IT skills enhancement – Procurement/ Technical Acquisition – Asset Management New Organizational Structure

  27. Offshore Initiatives • 7 plants in China • 1 joint venture in Taiwan

  28. Customer Report “Out of 37,000 total Smufit-Stone employees, nearly 19,200 (over half) chose to download a PDF version of last year’s report from the Web.”

  29. Players Coaches/managers Playbook High Level Plays Teamwork Employees Execs/Mgrs/Leaders Business Model Processes Collaboration Sports Analogy “What it takes to be competitive” Sports Business

  30. Mr. Hao Jun CIO, FACRI Corp. China (Yakun Liu)

  31. Flight Control Corp. Company Overview • One of the largest flight automatic control corporations in China. • 4,000 employees • Revenues: $1,900 million • Major product: -- Flight Control Systems -- Inertial Navigation Systems • Major customers: Chinese Army, Air Force, Navy, Police, Aerospace industries Flight Control Corp.

  32. CIO Background Hao Jun: CIO of Information Center • Education -- B.S.: Electrical and Computer Engineering -- Master: Computer Software • Experience -- 20 years at FACRI Corp. -- 4 years as FACRI’s first CIO Flight Control Corp.

  33. Organization Chart Xinguo Zhang CEO Product development Vice president ofFinancial department Administration CIO of Information Center: Hao Jun Labor Union Human Resource Vice president ofR&D Vice president ofManufacture Vice President ofExperiments & Testing Customer service Flight Control Systems Inertial Navigation Systems Electronics & Optics Flight Control Corp.

  34. Experiences that help CIO • After CIO Position -- The management philosophy included in large information systems, such as PDM -- New knowledge acquisition through network • Before CIO Position -- Education -- Work experience on CAD/CAE in the analysis of structural strength and electrical magnetic field Flight Control Corp.

  35. Who Does CIO Report To ? • CEO: major projects (80%) • CFO: minor projects (20%) • What does this mean? -- IT is more like a partner Flight Control Corp.

  36. Development of IT • Culture of company change: new CEO • 2000: established the IT department -- 2001: 60 IT employees $50 million capital investment -- 2002: 80 IT employees $75 million capital investment -- 2003-2005: 100 IT employees $200 million capital investment Flight Control Corp.

  37. CIO Role Perception • Improve and apply IT Strategy • IT alignment with business strategy • Organize a group of IT staff • Software development to customize the available software to meet the company’s needs Flight Control Corp.

  38. Three Priorities • Product development platform construction • R&D management environment construction: PDM • Digitized product manufacturing systems: Computer aided manufacturing programming Flight Control Corp.

  39. IT Governance • IT principles: CEO • IT architecture & infrastructure: -- CEO & CIO • Business application needs: CEO, CIO & business units (Federal) • IT investment: CEO • One of the top three performance patterns Flight Control Corp.

  40. Value of IT • Improve the efficiency of information exchange • Standardize the flow of manufacturing processes, improve monitoring • Expand the R&D alternatives • Sharing of information can assist the decision-making process Flight Control Corp.

  41. IT Budgets • Major investment funds: comes from special fund or technical upgrade fund • Minor improvement funds: comes from the department that uses it • To facilitate the cost control Flight Control Corp.

  42. Attract IT Professionals • Employees’ work satisfaction -- Provide enough opportunities for individuals -- Assign work according to personnel specialties -- Stable job • Financial incentives -- Much higher salary than other companies -- Pension plan and bonus Flight Control Corp.

  43. Relationship with CEO • Formal meeting: 3 months/year (quarterly) • Informal meetings: several times/month -- Occasionally meet at dining room and eat together -- CEO calls CIO to his office • CIO’s perception of CEO’s support -- “Yes!” Example: “The application of MIS can be easily performed by cooperation with related departments under the coordination of the vice president.” Flight Control Corp.

  44. The Biggest Challenge • “Customize management information systems to different departments.” • Leverage information systems to improve management functions Flight Control Corp.

  45. Catch up to world trends • Technology: product R&D platform -- Has already caught up • IT standard: -- Gradually catch up • IT governance: -- Systematically: strengthen data accumulation -- Introducing new management ideas into MIS Flight Control Corp.

  46. Situation in China • Most companies just view IT as support, not as a partner. “Most CEOs (in China) don’t realize the importance of IT in improving efficiency and production procedures. IT in these companies is merely support part, only doing some maintenance job, not important.” Flight Control Corp.

  47. Situation in China • IT department is not well developed • Only a few companies view IT as equal partner or rules • Very few companies see IT as a necessary evil • Most employers value employees who understand and are able to use IT Flight Control Corp.

  48. Dr. Jim Tom Associate Vice Chancellor for Information Technology - UMSL (Farwah Gardezi)

  49. Overview of The Responsibility And Expectations From CIO of Education • Students “Customers” • Internal Staff • Institution

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