The Role of the CIO Mark De Barr

The Role of the CIO Mark De. Barr Kristin Falke Gerry Rohr Carolyn Lum Sue Lynn

What Is A CIO? CIOs (Chief Information Officer) are responsible for all aspects of their companies’ information technology and systems. n They are managers capable of aligning the company’s technology strategy with its business strategy n Source: http: //www. cio. com/summaries/role/description

What Is A CIO’s Role? n As IT leaders, CIOs u Set IT goals to achieve business value u Maximize return for every dollar spent in IT u Convert data and information into knowledge u Empower the organization to meet customers’ demand u Facilitate internal teamwork and external partnerships Source: CIO Insight Magazine, The Role of the CIO, February 14, 2003

TOPICS n n n Demographics Executive Relationships Challenges IT Spending Skills Career Path n n Salary Issues Case study u Anheuser Busch u City of St. Charles u Enterprise Rent-ACar Conclusion

DEMOGRAPHICS Source: http: //www. cio. com/archive/030102/demographics

DEMOGRAPHICS cont’ Source: http: //www. cio. com/archive/030102/demographics

DEMOGRAPHICS cont’ Source: Spending: How Bad is the Bite in Your Budget by Allan E. Alter, January 14, 2003.

DEMOGRAPHICS cont’ Source: http: //www. cio. com/archive/030102/demographics

DEMOGRAPHICS cont’ n Centralized : corporate HQ with in-house application development and support capabilities n Decentralized : independent subsidiaries with application development: support provided locally as well as from central HQ n Distributed : small sites with no local application development or support capabilities that rely heavily on a centralized location or HQ for those services Source: http: //www. cio. com/archive/030102/demographics

DEMOGRAPHICS cont’ Gender 91% of CIOs are male Source: http: //www. cio. com/archive/030102/gender

EXECUTIVE RELATIONSHIPS n Who does the CIO report to? CEO 63% COO 12% CFO 11% Source: National Computing Centre, My. ITAdviser, Who’s be a CIO?

CHALLENGES n CIO’s biggest barriers to effectiveness Shortages – of key staff and skills, of money and time – are CIO’s chief challenges today. Those, along with volatile market conditions, make it tough to be effective.

CHALLENGES cont’ Lack of skill sets, retention ……………. . Inadequate budgets…………. . Lack of time for strategic thinking……. . Volatile markets……………. . Ineffective communication with users… Poor vendor support and quality………. Pace of technology change……………. . Disconnects with executive peers……… Difficulty proving the value of I. T……. . Office politics……………. . Source: http: //www. cio. com/archive/030102/challenges 40% 37% 31% 22% 18% 16% 14% 12% 10% 6%

IT SPENDING n CIO’s top IT spending priorities Integrating systems and processes Implementing new technologies Staff retention/hiring/training External Customer R/ship Management Lowering Costs Enabling E-Commerce Project Management Improvement Source: CIO Insight Magazine, IT Spending by Allan E. Alter, January 14 2003. 36% 25% 24% 22% 21% 18%

IT SPENDING cont’ Aligning IT and business goals Implementing security measures User Training/Education Knowledge management Managing IT globally Automation the supply chain Source: CIO Insight Magazine, IT Spending by Allan E. Alter, January 14 2003. 14% 12% 7% 5% 4%

SKILLS Executive skills are Essential for CIOs today. Technology knowledge, while still necessary, is less important than it was once. Source: http: //www 2. cio. com/research/surveyreport

CAREER PATH n IT has had by far the greatest influence on CIO’s careers, but they also draw from experience in consulting, administration, customer service and sales Source: http: //www. cio. com/archive/030102/careerpath

SALARY $183, 245 on average, including stop options and bonuses. n 4% receive more than $500, 000 in compensation n Most CIOs settled in the $100, 000 to $250, 000 a year range n Source: http: //www. cio. com/archive/030102/salary

ISSUES n Certify the CIO? No standard credentials exist for the CIO. Other occupations involving trust and responsibility certify the credentials of their professionals, giving them both moral authority and legal rights. Certification of CIO will give CIOs the respect they deserve Source: CIO Magazine, Certify the CIO by Joe Gagliardi, January 15, 2002

ISSUES cont’ n Where are the WOMEN IT Leaders? Men outnumber women in IT leadership positions. Why? u Fewer women choose technology as a career. u More women leave corporate to start own businesses. Female CIOs make an average of $109, 000 per year, compared with $122, 000 for their male counterparts Source: CIO Insight Magazine, Leadership: Are Successful Leaders Born or Made? , October 1, 2003.

CASE STUDIES Anheuser-Busch n City of St. Charles n Enterprise Rent-ACar n

Anheuser-Busch Mr. Robert Byrne Chief Information Officer Vice President, MSG

Major Products of A-B n Beer (Domestic and International) n Packaging Group n Entertainment (theme parks)

General Characteristics of A-B’s Customers Adult beverage consumers aged 21 and older n Adventurous people of all ages who enjoy theme parks n

Size of A-B in Terms of Sales 2003 (in millions) Gross Sales: $ 16, 320. 2 n Net Sales (gross sales minus excise taxes): $ 14, 146. 7 n Gross Profit (net sales minus cost of sales): $ 5, 697. 6 n Net Income Overall: $ 2, 075. 9 n

Largest Challenges Fulfilling the mission of the IT organization • • • Delivering business solutions that enable the company to grow sales and reduce operating costs for the company Managing the information technology organization to provide maximum business benefit at the optimized costs Providing standardized business solutions and excellent customer service

An Average Day Meeting with and communicating with customers, vendors, and the IT organization n Meeting with each of his direct reports on a weekly basis to review key projects and strategies (working to focus every part of the A-B organization on the mission of business growth, cost reduction, standardization and service excellence) n

Robert’s Educational Background Undergraduate degree in Mechanical and Industrial Engineering from the University of Notre Dame n MBA from Pepperdine University n

Roberts Work History n n Started at A-B after graduating from Notre Dame in 1980. Has had 11 different positions at A-B including management trainee, industrial engineer, assistant to the vice president of operations, computer systems, manager of bottling operations at a brewery, director of IT procurement, and director of applications development. He spent 17 years in A-B before he went to the IT division 7 years ago. He has relocated 5 times during his career.

A-B CIO’s Reporting Reports directly to W. Randolph Baker, Vice President and Chief Financial Officer

Annual IT Budget Between 1 -2% of A-B sales ($16, 320. 2 million)

Approximate Number of IT Employees 1, 200 (out of a total of 23, 316 full-time employees)

How does Robert view the relative importance of A-B’s business, people, and technical skill to job performance?

Technical skills are an important foundation to successful job performance. Critical to build on the technical foundation with both people skills and business skills. (Robert feels that “you should hire a business professional with a positive attitude and work to build on that individual’s technical foundation”)

Robert’s Relationship with CEO n He also reports to the CEO (Mr. Patrick Stokes) and the Chairman of the Board (Mr. August Busch III) through Mr. Baker. Ø He communicates with them on a weekly basis (on average) by means of memos, meetings, phone calls, presentations, business trips, etc.

The Biggest Success n The replacement of the payroll system for every employee in the corporation Ø It was an extremely large project that touched every part of the company Ø Project went live in a “big bang” fashion Ø Lesson learned: create a cross-functional team to implement the project and give them ownership in its success.

Most Troublesome Projects n Not one in particular to discuss but they did have similarities Ø Poor requirements Ø Lack of business ownership and participation Ø Trying to do too much over a long period of time rather than using a “phased approach”

Extra Comments from Robert n “We like to say there are no IT initiatives in our company. Every thing we do is a business initiative. Our organization is not trying to be an IT company like IBM, Intel, and SAP. We are, and will always be a beer company. Maintaining our business focus is the key to our success. ”

City of Saint Charles, MO Mrs. Edsell Barrios Director of Management Information Systems

About the City of St. Charles n n First MO State Capitol Seventh largest city in MO Employs nearly 1400 people Provides for it’s citizens: u Police, Fire, Public Works, Recreation and more Source: www. stcharlescity. com

More about St. Charles City n n Features a Historic Waterfront Tourism District founded in 1804 Home to Boeing’s Missile Defense System Home to St. Louis Family Arena where many of this year’s NCAA College Basketball tournament games are being played Home to Ameristar Casino, the metropolitan area’s largest casino Source: www. historicsaintcharles. org

Annual Budget $120, 000 for City wide projects and maintenance n Based on projects and replacement of workstations, laptops and printers n

Largest Challenge Keeping Departments form implementing non-compatible IT equipment n Teaching individuals with varying education levels the IT solutions for their business needs; examples: u Police: LEWeb u Public Works: Various Database Uses u Providing Standard Applications n

An Average Day n Responding to daily needs: u Malfunctioning equipment u Education u Working on current projects u Budgeting and planning future projects

Edsell’s History Born in India n Moved to St. Louis and attended Saint Louis University n B. S. in Management Information Systems n Hired by St. Charles City in 1996 n Director of MIS in 2000 n

Executive Relationships Edsell reports directly to the Assistant City Administrator n She meets with him once a week, during any major project he has an open door policy n She is given great freedom in implementing IT solutions and projects n

How does Edsell view the relative importance of the City’s business, people, and technical skill to job performance? n Depends on the user: u Most know just enough to be dangerous, which is the bulk of her daily problems u However, technical skills are important to the success of her department

Biggest Success Implementing a city wide inter/intranet n Challenging because: u Multiple departments at multiple sites u Staying on budget n

Most Troublesome Project n n n Implementing a city wide phone system Due to: u Her lack of expertise in telecommunications u Multiple sites u Budget She is given almost all technology related projects and expected to implement them despite her knowledge of the topic

Extra Comments from Edsell She enjoys the randomness of her job n She enjoys more freedom than many corporate CIO’s, despite the pay n She feels her efforts are important as they directly affect such functions as Police and Fire protection n

Headquarters: St. Louis, MO Core Business: Local Car Rentals Senior VP and C. I. O. : Craig Kennedy

Founded in 1957 as Executive Leasing n Renamed in 1969 in honor of the aircraft carrier USS Enterprise, on which company founder Jack Taylor served during WWII n Largest car rental company in North America n

Key Numbers 2003 Revenue $6. 9 Billion n 2003 Employees: 53, 500 n 1 -Year Sales Growth: 6. 2% n 1 -Year Employee Growth: 7. 0% n Never had an unprofitable year n 90% of U. S. population lives within 15 miles of an Enterprise location n Source: www. hoovers. com

Awards n Ranked #15 “Largest Private Companies in America” – Forbes Magazine n Included in the “ 100 Best Companies To Work For” – Fortune Magazine n Included in the “ 100 Companies Most Likely to Succeed in the Next Millennium” – CIO Magazine Source: www. hoovers. com

Craig Kennedy-CIO n n n n Oversees a department of 1, 200 IT professionals 1989 : Started at Enterprise - Programmer/Analyst 1990 : Promoted to Programmer Supervisor 1991 : Headed new department: “Advanced Technology Group”, responsible for researching new technologies. 1992 : Director of Software Development 1993 : Assistant Vice President of Information Systems 1996 : Vice President of Information Systems 2002 : CIO

Background Development Joined Enterprise as programmer n Directly managed or been a part of building every IS related department n Served under two previous CIO’s who provided mentorship n 13 years with company n

Organization Flow Chart Communications with: Informally/Frequently Formally/Frequently

Corporate Steering Committee n CEO n COO n CIO n CFO n VPs of Corporate Strategy: u North American Operations u European Operations u Human Resources u Chief Administration Officer

Largest Challenges within Enterprise Implementing new technology in rapidly changing environment n Complicated technical solutions n Cost Controls u Legacy Systems u New Infrastructure (Terrestrial from satellite-based network) n

Standard Business Day Meeting with direct reports (subordinates) n Communications n Resource Management n Representing Information Systems n Personnel Matters n Fiscal Management n

Business/People/Technical Skills Relative to CIO Role “All three are vital, since the role of the CIO has little to do with technology!” n “Business skills are important, because that is our reason for being here. ” n “People skills are equally important. …the CIO is insignificant and unable to do anything without a strong team” n

Technical Skills of CIO “Technical skills are probably less important than the other two” n Advantages to strong tech background: u Helps understand concepts better u Helps guide people’s thinking u Break deadlock decisions n However, “technology decisions are made by those creating solutions” n

Biggest Success Guided development of a web-based software product for the insurance industry n Labor- and communication-intensive transaction between rental branch and insurance adjuster u Better customer service/more responsive u Substantial lead over competitors n

Most Troublesome Project New system for writing rental contracts n Problems, first try: u Vision did not extend far enough u Before fully developed, fell short of growing needs n

Most Troublesome Project Problems Second Try: u Too far-reaching u Solution would recreate entire system u Cost and support prohibitive n Final compromise: u Build new capabilities upon proven system n

Lessons Learned Cannot lose sight of proven core technologies n Cannot get enamored with new technology or new capabilities n

Issues Facing CIO’s-Next 5 Years Privacy n Security n Offshoring n Corporate Governance n

Additional Words of Wisdom “No sustainable competitive advantage can be gained from technology” n “Implementing technology itself is not a substitute for a strategy” n “Solid business strategies can be accelerated through the use of technology” n “CIO’s must always be thinking about IT as a business tool and nothing more” n

Summary- “text book definition" n Most CIO’s u Responsible for aligning technology with business strategy. u Work for an organization with a centralized IT department. u Have no standard credentials. u Have varying career paths.

Summary-from our research n Most CIO’s u Have no standard IT initiatives, rather use IT to solve business needs. u Use their people skills more than their technical skills. u Are communicators rather than visionaries.

Summary-Comparing the CIO’s A-B Robert Byrne Greatest Challenge St. Charles Edsell Barrios Enterprise Craig Kennedy Developing solutions to business problems Educating diverse workforce on new technology Balancing old and new Budget $244, 803, 000 $120, 000 $210, 000 Greatest Success New Payroll System Bringing them into 21 st century Communication improvements among branches and adjusters

Summary-Comparing the CIO’s A-B Robert Byrne St. Charles Edsell Barrios Enterprise Craig Kennedy Average Day Communication Thoughts On IT’s Purpose “IT solutions to business initiatives. ” “IT solutions to business problems. ” “Business strategies are accelerated through IT. ”