Transcript The Role of the Chief Information Officer Presentation by

The Role of the
Chief Information Officer
Presentation by
Eliot Lee and Mark Guthrie
November 12, 2005
What Do These People
Have in Common?
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Presentation Overview
Chief Information Officer profile
- Demographics
- Salary data
- Employment information
- Topic relevance
In-depth case studies of 3 CIOs
Best practices: Role of the CIO
Role of the CIO Is Evolving
Quotable quote:
“It is no longer useful or meaningful to talk
about the ‘role of the CIO.’ ”
– Barb Gomolski, senior research director, Gartner, Nov. 27, 2000
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Rationale
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No single “one-size-fits-all” position description
CIOs wear many hats; work in various roles
Different types of CIOs
CIOs are driven by background and interests
Industry and organizational differences affect role
Definition:
Chief Information Officer
Job title is commonly given to the senior executive in charge of
information technology and computer systems that support an
organization’s business goals.
As IT has become increasingly important, the CIO is typically viewed
as a key strategist within the organization.
In many companies, the CIO reports directly to the Chief Executive
Officer (CEO). In some companies, the CIO sits on the Executive
Board.
Usually, a CIO proposes IT strategies to achieve business goals and
works within an established budget.
- SearchCIO.com Definitions 2
CIO Demographics
87% are male
70% moved up through the IT ranks
5 years, 9 months is average time as CIO
4 years, 6 months is average time in current job
40% report to CEO
85% are responsible for enterprise-wide IT
76% do not plan to outsource outside of U.S.
- Source: CIO Magazine
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CIO Regional
Salary Comparison
Percentile
Source
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Midwest:
Chicago
East Coast: West Coast:
New York
Los
Angeles
Southeast:
Miami
25th
Percentile
$173,434
$186,163
$179,640
$157,841
50th
Percentile
$214,922
$230,696
$222,611
$195,598
75th
Percentile
$272,348
$292,337
$282,093
$247,862
CIO in the Government
In 1996, President Clinton
signed what has become
known as the ClingerCohen Act.
This act required major
Federal Agencies to
establish the position
of CIO.
- CSA High Technology Research Database
with Aerospace 2001 5
CIO Employment Turnover
5 Years: Average tenure of a CIO in a single
position – examples:
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Joseph Eckroth, former CIO of Mattel (Toys), left
position after 5 years. Joined New Century Financial
(Real Estate Investment Trust)
Patricia Morrison, former CIO of Office Depot, left
after 3.5 years to join Motorola
Frank Hood, former CIO Krispy Kreme Doughnuts,
left shortly to join Quiznos 6
Some CIOs seek resume-building experiences
rather than a long-term career with a single
employer. 7
CIO Turnover
Rate Comparison
77 business executives surveyed – majority
believe CIO turnover is equal to other senior
positions 8*
8% – “CIO turnover higher than other senior
positions in the company”
62% – “CIO turnover is the same”
31% – “CIO turnover is lower than other senior
executive positions”
* Darwinmagazine.com
CIO Employment Outlook
CIO job search during downturn could last as
long as 12 to 18 months
Recruiting for CIOs increased in 2005
Nationwide
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CIO job listings increased 30% from 2004
Overall IT sector hiring increased 37% from 2004 9
Locally, CIOs are increasing hiring of IT
professionals, according to Robert Half
Technology
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11% of CIOs surveyed in St. Louis planned to add to
staff; 10% surveyed planned to reduce staff
Net 1% of CIOs planned to hire in the third quarter of
2005 – increase of 2 percentage points from second
quarter 10
Chief Information Officer
Corporate Case Studies
Three different companies.
Three unique CIOs.
Three insightful perspectives.
CIO Profile: Centene Corporation
Glendon Schuster 11
Chief Information Officer
Centene Corporation
Joined company in company
June 2005 on an interim basis.
Became permanent in October
2005.
Senior Management Team
Member
B.S., Electrical Engineering
CIO Profile: Glendon Schuster
Professional IT Background
Title
Company
Description
Partner
Accenture Consulting
Provider of programming
consultants
Head of Information
Technology
Gamut Interactive
A start-up company
focusing on electronic
couponing interacting
with TV/Print Media
Development Lead
Deluxe Check
Check production
Various roles (designer,
application architect,
development lead, etc)
Walgreens
Pharmacy
Centene
Organizational Chart
Michael Nierdorf
President and
Chief Executive Officer (CEO)
Glendon Schuster
Chief Information Officer (CIO)
CIO
reports
to the
CEO
Centene Corporate
Overview
Managed care provider for Medicaid
Services: claims processing and client reporting
Operates healthcare plans in Indiana, Kansas, Missouri, New
Jersey, Ohio, Texas and Wisconsin
Contracts with other companies to provider special services
including behavioral health and disease management
288 IT employees – 159 full-time corporate; 79 contractors
Year
Total Company
Revenue
Annual
IT Budget
2004
$1 Billion
Proprietary
2005
$1.5 Billion
Proprietary
IT Culture
at Centene
159 Full-Time Employees
79 Consultants
Dynamic
Expanding
Reorganizing
Very structured
The Biggest IT Challenges
at Centene
Creating more customer-based reporting
Increasing disease management
Development of “trending” systems
Regional Health Information Organizations
Ability to bring fast reliable information to
patients, doctors and hospitals
What Keeps the Centene
CIO Awake at Night?
Balance between controls (security, permissions,
signoffs) and administrative overhead
Giving people more authority to work
on tasks (e.g., migrate code) is
generally more efficient, but can lead
to risks in security, regulatory
procedures, compliance and litigation
Locking down authority tends to tie up the
organization in administrative overhead
CIO Relationship with CEO
Reports directly to the CEO
Weekly senior management meetings
Average CIO communication with CEO
occurs five times per week – “IT rules” at
Centene.
Redefining the role of the
IT department
Major emphasis on teamwork
CIO’s Biggest IT Success
at Centene
Major reorganization of the IT
department.
Aligned the IT groups within
functional areas.
Quotable quote:
“Change by evolution, not revolution.”
– Glen Schuster, CIO
How does IT drive business
at Centene?
IT drives the business at Centene
IT should be reacting to the business
IT should develop systems that
complement the business
Quotable quote:
“IT should support the business
objectives.”
– Glen Schuster, CIO
Trends Impacting Centene in the
Next Five Years
Disease management
 Design systems that do trending analysis
based on the amount and types of claims
received
 Develop software that can help predicate a
patient’s predisposition to a disease
Customer-based reporting
Regional health information systems
The ‘Untold’ Story
from the CIO Perspective
CIO is not a technology expert.
CIO has more “power” than he actually has.
CIO can install and “fix” software problems.
CIO is not involved with the daily activities of the
IT department.
CIO does not run the business; takes direction
from the business.
CIO Profile: Express Scripts Inc.
Patrick McNamee 12
Chief Information Officer
Express Scripts Inc.
Joined company in February
2005
Senior Management Team
Member
Corporate Resource Council
Member
M.S., Electrical and Computer
Engineering and B.S.,
Biomedical Engineering –
Marquette University
CIO Profile: Patrick McNamee
Professional IT Background
Title
Company
Description
President and General
Manager
MISYS Physician
Systems
Provider of information
management software
for physician practices
President and General
Manager
Orthopedic Equipment
Corp. (General Electric)
Surgery X-ray
manufacturing business
(GE Medical Systems)
Chief Information and
Quality Officer
NBC (GE)
Television Network
Chief Information Officer GE Transportation
and General Manager
Systems
eBusiness
Transportation
Chief Information Officer GE Power
Global Power Plants
Express Scripts
Corporate Overview
Leading pharmacy benefits management (PBM) company
Services: claims processing, mail pharmacy, specialty prescription
fulfillment, benefit design consultation, drug utilization review, formulary
management, and drug research
Wide range of corporate and organizational clients including Dell Computer,
United States Department of Defense (DoD), Citigroup
Recognized in Information Week’s “500 Most Technologically Progressive
Companies”
1,030 IT employees – 772 full-time corporate; 258 contract
Year
Total Company
Revenue
Annual
IT Budget
2004
$15.1 Billion
$190.4 Million
2005
$17.1 Billion
Projected
$223.8 Million
Express Scripts
Organizational Chart
George Paz
President and
Chief Executive Officer (CEO)
David Lowenberg
Chief Operating Officer (COO)
Patrick McNamee
Chief Information Officer (CIO)
CIO
reports
to the
COO
A ‘Typical’ Day for the
Express Scripts CIO
4 a.m. – Blackberry buzzes on night stand to alert about
a Severity One “Sev 1” critical systems issue
Joins conference call to discuss troubleshooting and
assess impact on systems and users
Half-hour to get ready for work at the office
Time allocation during the day:
1. Leadership and staff meetings
2. Specific topical meetings (Corporate Resource
Council, Medicare Part D, Strategy/Planning)
3. Dealing directly with employees (on-on-one meetings)
4. External boards: St. Louis CIO Forum, Community
Health and Patient Services (CHPS)
What Keeps the Express Scripts
CIO Awake at Night?
Performance and reliability issues – No. 1
priority of any IT organization
Human resources, staffing – responsibility for
nine direct reports; managing turnover;
developing leadership
Managing change
Communication – ongoing at all levels
Quotable quote: “It’s all about communication
and sharing information.” – Pat McNamee, CIO
CIO Perspective: Business,
People, and Technical Skills
People – Behaviors and values around
leadership and teamwork are paramount.
Business – Express Scripts is in a complicated
business; expertise in healthcare is important.
Technology – Technical skills are very
important; however, technology is a
“commodity.” (Nicholas Carr said this too!)
Quotable quote:
“We have accountability and the creation
of teams that are empowered …
non-bureaucratical.” – Pat McNamee, CIO
CIO Relationship with CEO
Weekly senior management meetings
Weekly meeting with Chief Operating
Officer (COO) – direct reporting line
Average CIO communication with CEO
occurs five times per week – “IT matters”
at Express Scripts.
Single, dedicated operations team
Teamwork underscores everything
CIO’s Biggest IT Success
at Express Scripts
In nine months on the job, reduced…
Severity One “Sev 1” systems alerts – 74%
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Outage minutes – 60%
How success was achieved:
1. Dedicated Sr. Director position created to focus
on supporting systems performance and reliability
2. Changed responsibility of applications team by
reallocating infrastructure ownership/accountability to new
team
2. Heavy investment in performance monitoring – “robots” provide
early alerts
Lessons learned:
Goals from IT strategic plan can be achieved with proper
planning, hard work, appropriate allocation of resources and
team effort. IT teams can cross the “finish line,” although there
are always new goals to attain in IT.

The Biggest IT Challenges
at Express Scripts
Performance and reliability of systems
Express Scripts is an organization built through
acquisition
Not well architected – many diverse applications
make it a challenge to sustain the platform
Aligning IT with key industry initiatives such as HIPAA
(Health Insurance Portability and Accountability Act) and
Medicare Part D (prescription drug benefit)
Huge amount of price pressure in the marketplace for
pharmacy benefit management (PBM) companies
Customers have unique program requirements;
differentiation affects IT
Striving for perfect systems performance
How Does IT Drive Business
at Express Scripts?
Introducing new technologies tied to
industry initiatives – Example: ConsumerDriven Healthcare
Work with technology start-up companies
(third-party vendors) to develop lowestcost, highest-reliability systems
Quotable quote:
“If IT demonstrates that systems are
reliable, customers will choose us.”
– Pat McNamee, CIO
Trends Impacting Express Scripts
in the Next Five Years
Price pressure
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Develop lower-cost solution (impacts IT spend)
Differentiate service (innovation, performance)
Client and patient service group focuses on
technology component (number of calls,
cost-per-call, etc.)
Industry initiatives
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Carve-In Healthcare Programs
Consumer-Driven Healthcare
Transparency
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Requires Express Scripts to develop tools that allow
customers to understand the company’s programs
Evolve Web portals to let customers truly see the
business
CIO’s Most-Important
Lesson Learned
IT is all about service.
Teamwork – goal of collaboration is to
make others successful
Establish trust
Develop priorities
Quotable quote:
“IT is a service organization. It is not of any
value as an independent entity. Many [IT
organizations] fail because they don’t identify
one role … to serve.” – Pat McNamee, CIO
The ‘Untold’ Story
from the CIO Perspective
IT forces people to have a deeper understanding
of business processes (operations, accounting,
strategic planning). It’s not just about technology.
Automating processes takes leadership and
industry acumen.
CIOs are not technology introverts.
Express Scripts’ IT department develops talent.
Goal of CIO is to develop staff and move people
out of IT department and into other areas of the
company. This “spreads expertise” (learned
through IT) among the organization’s key
departments.
CIO Profile: Spartech Corp.
Michael Lane 13
Chief Information Officer
Spartech Corporation
Joined the company in February 2001
General management/auditing career
background
Quotable quote: “I never touch the keyboard, I am surrounded by good people.”
– Michael Lane, CIO
Spartech Corp.
Organizational Chart
George Abd
President and
Chief Executive Officer (CEO)
Randy Martin
Chief Operating Officer (CFO)
Michael Lane
Chief Information Officer (CIO)
CIO
reports
to the
CFO
Spartech Corporate
Overview
Largest plastic-sheet supplier in the U.S.
45 manufacturing plants worldwide
Corporate headquarters in Clayton
25 IT employees
Year
Total Company
Revenue
Annual
IT Budget
2004
$1.1 Billion
N/A
2005
$1.4 Billion
$9 Million
IT Culture at
Spartech Corporation
“Best in St. Louis”
Relaxed
Consultant-like atmosphere
25 full-time employees – small staff
supports large IT program
CIO’s Biggest IT Success
at Spartech
Had upper management recognize IT as
an important department in the
organization
Implementation of VOIP network
through out the company
Implementation of Oracle financial
systems
Provide maximum support with minimum
staff
The Biggest IT Challenges
at Spartech Corporation
Proving IT can deliver on it’s promises
Smooth implementation of the ERP project
Keeping up on cutting-edge technology
How Does IT Drive
Business at Spartech?
IT is “almost” a partner at Spartech.
4 years ago, IT was a “necessary evil.”
CIO Relationship with CEO
Reports to the CFO
Weekly senior management meetings
Average CIO communication with CEO
occurs 2 to 3 times per week
“IT is almost a partner” at Spartech.
Trends Impacting Spartech
in the Next Five Years
Oil Prices
- Largest supplier of plastic sheets in America
Healthcare Costs
- Healthcare costs are rising
China
- China becoming a “major player” in the market
CIO’s Most-Important
Lesson Learned
Don’t over promise.
Don’t jump the gun on technology.
Under promise, over deliver.
Develop an efficient team.
The ‘Untold’ Story
from the CIO Perspective
The leadership the position requires CIO to have
CIO is salesman
CIO has to hire good people
Loyalty is a “two-way street”
CIO Best Practices:
People Skills
IT executives fight image of being too technical,
introverted and tactical
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Santa Clara University study notes that stereotyping
creates “missed organizational opportunities”
Study proposes that IT work “provides the best
possible training ground for senior managers.” 14
Technical skills AND people skills are equally
important
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University of Dayton study found no differences
between CIOs with technical backgrounds and those
with general management backgrounds 15
CIO Best Practices:
Innovation
IT innovation is important for leading companies
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CIO Magazine study found 71% of CIOs stated that innovation
was a key element of their company’s business strategy
80% of respondents stated that the CIO is responsible for
corporate innovation 16
More than half of 83 CIOs in the study said innovative IT ideas
have increased in the past two years 17
65% of CIOs in the study said developing innovative IT ideas is a
“significant or dominant aspect of their roles.” 17
CIO should be committed to lead innovation; CEO should
support optimistically for success 18
CIO should help business units identify IT new solutions 19
Smart companies partner with CIO to develop innovative ebusiness initiatives 20
CIO role defined as “teacher” or “prophet” vs. “technologist” 21
CIO Best Practices:
Communication
Clear communication is key. CIO should avoid
“techno-speak” and jargon 22
Organizational communication has a significant
impact on:
 Employee attitudes
 Employee behavior
 Employee perceptions about managing
change 23
Quotable quote worth quoting again:
“It’s all about communication and sharing information.”
– Pat McNamee, CIO, Express Scripts
Lessons Learned:
Typical CIO Awake at Night
IT project delays
Staffing and user demands
Competition
Management changes
Vendors
Quotable quote:
"IT is like the CIA. Nobody knows our
successes, but the failures are public
knowledge."
– Shawn Schwegman, CIO, Overstock.com 24
Lessons Learned:
Status Impacts CIO Role
CIOs in many organizations are
challenged by internal perceptions
IT is often perceived as having a lower
status than other business functions 25
Status can be defined as “recognition from
the organization of the IT function’s
capabilities and value.” 25
Status does matter for CIOs
Corporate culture affects status
Lessons Learned:
Outsourcing
Room for outsourcing in non-mission
critical IT functions
Outsourcing should only be done on call
center functions
Cognizant Technology Solutions is the
latest offshore services firm to report
blockbuster year-over-year growth.
- Information Weekly 11/1/2005 26
Lessons Learned:
IT Effectiveness
Slow economic recovery created lean IT
organizations
Opportunity to determine IT effectiveness
CIOs should have metrics for determining
IT effectiveness
Consequence of not measuring IT
effectiveness is corporate ambiguity and
perception of the CIO “flying blind” 27
Role of CIO Summary
CIO role is still relevant
Important for general managers to understand this
pivotal senior position
Communication, leadership, and people skills – essential
to CIO success
Closing quote for discussion:
“The role of the CIO could disappear within 10 years…
it’s only a matter of time until every ‘C’ level officer needs
to have the same level of information as the CIO.”
-- J.P. Rangaswami, CIO, Dresdner Kleinwort
Wasserstein, at the 2005 Triple i Convention 28
Reference Sources
1 Gomolski, Barb, “CIOs Face Identity Crisis as the ‘One-Size-Fits-All’ Job Description No Longer Fits” www.infoworld.com, November, 27, 2000.
(www.itworld.com/career/1916/IW001127opgartner/pfindex.html, viewed November 2, 2005).
2 Definitions = SearchCIO.com, http://searchcio.techtarget.com/sDefinition/0,,sid19_gci213620,00.html, viewed November 2005.
3 Demographs = CIO.com http://www.cio.com/archive/100104/survey.html
10/1/2004, viewed November 2005.
4 Hotjobs.com, viewed November 2005.
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m
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6 Levinson, Meridith, “A Strong Job Market For CIOs” CIO Magazine, October 1, 2005.
7 Strassmann, Paul A., “The Cost of Short-Term CIOs” Computerworld, May 5, 2004, article reprint.
8 Darwinmagazine.com, http://64.28.79.73/learn/research/surveyreport.cfm?id=44 Viewed November 7, 2005.
9 Kolbasuk McGee, Marianne, “Help Wanted: CIOs” InformationWeek, October 24, 2005, p. 92.
10 PR Newswire, “St. Louis CIOs Forecast Increase in Third-Quarter Hiring: Survey Measures Employment Optimism Among Local Technology
Executives” June 9, 2005 (Robert Half Technology: Information Technology Hiring Index and Skills Report)
11 Interview with Glendon Schuster, CIO of Centene Corporation, interviewed in person by Eliot Lee, September 30, 2005.
Reference Sources
12 Patrick McNamee, CIO of Express Scripts Inc., interviewed in person by Mark Guthrie, October 31, 2005.
13 Michael Lane, CIO Spartech Corporation, interviewed in person by Eliot Lee, November 4, 2005.
14 DeLisi, Peter S. and Danielson, Ron, “Thinking Styles of IT Executives and Professionals” MIT Sloan Management
Review, Summer 2002, Vol. 43, No. 4, p. 11.
15 Kwak, Mary, “Technical Skills, People Skills: It’s Not Either/Or” MIT Sloan Management Review, Spring 2001, Vol.
42, No. 3, p. 16.
16 CIO Research Reports, “IT Enabled Innovation” CIO.com, April 1, 2005.
(www2.cio.com/research/surveyreport.cfm?id=86, viewed November 3, 2005).
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18 Kuczmarski, Thomas D., “What Is Innovation? And Why Aren’t Companies Doing More of It?” Journal of Consumer
Marketing, Vol., 20, 6, 2003, pp. 536-541.
19 Leidner, Dorothy E.; Beatty, Robert C.; and Mackay, Jane M., “How CIOs Manage IT During Economic Decline:
Surviving and Thriving Amid Uncertainty” MIS Quarterly Executive, Vol 2, No. 1, March, 2003, pp. 1-14.
20 Rifkin, Glenn, and Kurtzman, Joel, “Is Your E-Business Plan Radical Enough?” MIT Sloan Management Review,
Spring 2002, Vol 43, No. 3, pp. 91-95.
21 Nolan Norton Institute, “Say Goodbye to the CIO, Welcome to the Business Prophet” Information Management &
Computer Security, MCB University Press, 9, 2001, pp. 123-125.
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Press, Vol. 3, 5, 1995, pp. 23-24.
23 Schraeder, Mike, “Organizational Assessment in the Midst of Tumultuous Change” The Leadership & Organization
Development Journal, Vol. 25, 4, 2004, pp. 332-348.
24 cioupdate.com, http://www.cioupdate.com/insights/article.php/3561866, viewed November 2005.
25 Kaarst-Brown, Michelle L. “Understanding an Organization’s View of the CIO: The Role of Assumptions About IT”
MIS Quarterly Executive, Vol. 4, No. 2, June 2005, pp. 287-301.
26 Information Weekly http://www.informationweek.com/showArticle.jhtml?articleID=171200304 11/1/2005, viewed
November 2005.
27 Kurien, Priya; Rhaman, Was; and Purushottam, V.S. “The Case for Re-Examining IT Effectiveness” Journal of
Business Strategy, Vol. 25, 2, 2004, pp. 29-36.
28 Riley, John, “Chief Information Officer’s Role Could Disappear ‘Within a Decade’” Computer Weekly, 9, 2005, p. 10.
Photo Credits
Slide 2:
1. Sylvia Steinmann, CIO, Swiss Re
2. Aaron Gibbs, CIO, St. Augustine’s College
3. Dennis Thiebeault, CIO, Curry College
4. Cindy Stoddard, CIO, Neptune Orient Lines
5. Jane Aboyoun, CIO, Reed Business Information
6. Craig Berry, CIO, UGS
7. Beth Brigdon, CIO, Medical College of Georgia
8. Beth Roose, CIO, Pennsylvania Dept. of Transportation
9. Sam Segran, CIO, Texas Tech University
10. Terri Morgan, CIO, Railroad Retirement Board
11. Eric Jackson, CIO, Morehouse School of Medicine
12. Lee Colaw, CIO, Pacific University