Lecture Business management information system - Lecture 5: CIO

In this chapter, the following content will be discussed: Chief Information officer profile: - demographics, - salary data, - employment information, - topic relevance; important for general managers to understand this pivotal senior position; communication, leadership, and people skills – essential to CIO success.

Lecture 5

Today Lecture Summary

n Chief Information Officer profile

- Demographics

- Salary data

- Employment information

- Topic relevance

n Important for general managers to understand this

pivotal senior position

n Communication, leadership, and people skills – essential

to CIO success

CIO

The Office of the CIO?

n Some believe the office of the CIO is so broad it

should be handled by a team

n Four ‘positions’:

1. Chief Information Officer

– Heads IS and works with top management,

customers and suppliers

2. Chief Technology Officer

– Heads IT planning, which involves

architecture and exploration of new technologies

2-3

The Office of the CIO?

3 Chief Operations Officer

– Heads day-to-day IS operations

4 Chief Project Officer

– Oversees all projects and project managers

n IT is so critical to enterprise success and the

know-how needed to run it so deep and wide = management needs to become a team effort

Whither CIOs?

n Different periods of recent history have seen

executives with different backgrounds

“running the show”

¨ Manufacturing = in the early 1900s

¨ Sales and Marketing – 30s to 50s

¨ Finance – 70s to 90s

n Problems and scandals

¨ Future – perhaps now CIOs have the most

appropriate backgrounds to run companies

2-5

Role of the CIO Is Evolving

¨ 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

Chief Information Officer

n Job title is commonly given to the senior executive in

charge of information technology and computer systems

that support an organization’s business goals

n As IT has become increasingly important, the CIO is

typically viewed as a key strategist within the

organization

n In many companies, the CIO reports directly to the Chief

Executive Officer (CEO) In some companies, the CIO

sits on the Executive Board

n Usually, a CIO proposes IT strategies to achieve

business goals and works within an established budget

- 2

CIO

CIO Demographics

n 87% are male

n 70% moved up through the IT ranks

n 5 years, 9 months is average time as CIO

n 4 years, 6 months is average time in current job

n 40% report to CEO

n 85% are responsible for enterprise-wide IT

n 76% do not plan to outsource outside of U.S

- Source: CIO Magazine 3

CIO

CIO Regional Salary Comparison

Southeast: Miami

CIO in the Government

n In 1996, President Clinton signed what has become

known as the Clinger-Cohen Act.

n This act required majorFederal Agencies to

establish the position

of CIO

- CSA High Technology Research Database with

Aerospace 2001 5

CIO

CIO Employment Turnover

n 5 Years: Average tenure of a CIO in a single

position – examples:

¨ 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

n Some CIOs seek resume-building experiences rather than a long-term career with a single

employer 7

CIO Turnover Rate Comparison

n 77 business executives surveyed – majority believe CIO

turnover is equal to other senior positions 8*

n 8% – “CIO turnover higher than other senior positions in

the company”

n 62% – “CIO turnover is the same”

n 31% – “CIO turnover is lower than other senior executive

positions”

* Darwinmagazine.com

CIO

CIO Employment Outlook

n CIO job search during downturn could last as long as 12

to 18 months

n Recruiting for CIOs increased in 2005

n Nationwide

¨ CIO job listings increased 30% from 2004

¨ Overall IT sector hiring increased 37% from 2004 9

n Locally, CIOs are increasing hiring of IT professionals,

according to Robert Half Technology

¨ 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

CIO

Chief Information Officer

Three different companies

Three unique CIOs

Three insightful perspectives. 3 1

CIO Profile: Glendon Schuster Professional IT Background

Title Company Description

Partner Accenture Consulting Provider of programming

Various roles (designer,

application architect,

development lead, etc)

Walgreens Pharmacy

Centene Organizational Chart CIOreports CIO

to the CEO

Centene Corporate

Overview

n Managed care provider for Medicaid

n Services: claims processing and client reporting

n Operates healthcare plans in Indiana, Kansas, Missouri,

New Jersey, Ohio, Texas and Wisconsin

n Contracts with other companies to provide special

services including behavioral health and disease

The Biggest IT Challenges

at Centene

n Creating more customer-based reporting

n Increasing disease management

n Development of “trending” systems

n Regional Health Information Organizations

n Ability to bring fast reliable information to patients,

doctors and hospitals

CIO

What Keeps the Centene

CIO Awake at Night?

n Balance between controls (security, permissions,

signoffs) and administrative overhead

n 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

n Locking down authority tends to tie up the organization in

administrative overhead

CIO

CIO Relationship with CEO

n Reports directly to the CEO

n Weekly senior management meetings

n Average CIO communication with CEO occurs five times per week – “IT rules” at Centene

n Redefining the role of the

IT department

n Major emphasis on teamwork

CIO’s Biggest IT Success

at Centene

n Major reorganization of the IT department

n Aligned the IT groups within

functional areas

Quotable quote:

“Change by evolution, not revolution.”

– Glen Schuster, CIO

CIO

How does IT drive business

at Centene?

n IT drives the business at Centene

n IT should be reacting to the business

n IT should develop systems that complement the business

n Quotable quote:

“IT should support the business objectives.”

– Glen Schuster, CIO

Trends Impacting Centene in the Next

Five Years

n 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

n Customer-based reporting

n Regional health information systems

The ‘Untold’ Story from the CIO Perspective

n CIO is not a technology expert

n CIO has more “power” than he actually has

n CIO can install and “fix” software problems

n CIO is not involved with the daily activities of the IT

department

n CIO does not run the business; takes direction from the

business

CIO Profile: Express Scripts Inc.

n Patrick McNamee 12

n Chief Information Officer

n Express Scripts Inc.

n Joined company in February

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

and General Manager GE Transportation Systems eBusiness Transportation

Chief Information Officer GE Power Global Power Plants

Express Scripts Corporate Overview

n Leading pharmacy benefits management (PBM) company

n Services: claims processing, mail pharmacy, specialty prescription

fulfillment, benefit design consultation, drug utilization review, formulary

management, and drug research

n Wide range of corporate and organizational clients including Dell Computer,

United States Department of Defense (DoD), Citigroup

n Recognized in Information Week’s “500 Most Technologically Progressive

Companies”

n 1,030 IT employees – 772 full-time corporate; 258 contract

Year Total Company

Express Scripts

Organizational Chart reports CIO

to the COO

A ‘Typical’ Day for the Express Scripts CIO

n 4 a.m – Blackberry buzzes on night stand to alert about

a Severity One “Sev 1” critical systems issue

n Joins conference call to discuss troubleshooting and

assess impact on systems and users

n Half-hour to get ready for work at the office

n 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 (one-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?

n Performance and reliability issues – No 1

priority of any IT organization

n Human resources, staffing – responsibility for

nine direct reports; managing turnover;

developing leadership

n Managing change

n 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

n People – Behaviors and values around

leadership and teamwork are paramount.

n Business – Express Scripts is in a complicated

business; expertise in healthcare is important.

n 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

n Weekly senior management meetings

n Weekly meeting with Chief Operating

Officer (COO) – direct reporting line

n Average CIO communication with CEO

occurs five times per week – “IT matters”

at Express Scripts.

n Single, dedicated operations team

n Teamwork underscores everything

CIO’s Biggest IT Success

at Express Scripts

n In nine months on the job, reduced…

¨ Severity One “Sev 1” systems alerts – 74%

¨ Outage minutes – 60%

How success was achieved:

1 Dedicated Sr Director position created to focus

on supporting systems performance and reliability

3 Changed responsibility of applications team by

reallocating infrastructure ownership/accountability to new team

4 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.

CIO

The Biggest IT Challenges

at Express Scripts

n Performance and reliability of systems

n Express Scripts is an organization built through

acquisition

n Not well architected – many diverse applications

make it a challenge to sustain the platform

n Aligning IT with key industry initiatives such as HIPAA

(Health Insurance Portability and Accountability Act) and

Medicare Part D (prescription drug benefit)

n Huge amount of price pressure in the marketplace for

pharmacy benefit management (PBM) companies

n Customers have unique program requirements;

differentiation affects IT

n Striving for perfect systems performance

CIO

How Does IT Drive Business

at Express Scripts?

n Introducing new technologies tied to

industry initiatives – Example: Driven Healthcare

Consumer-n Work with technology start-up companies (third-party vendors) to develop lowest-

cost, highest-reliability systems

n 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

n Price pressure

¨ Develop lower-cost solution (impacts IT spend)

¨ Differentiate service (innovation, performance)

¨ Client and patient service group focuses on

technology component (number of calls,

¨ 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

n IT is all about service.

n Teamwork – goal of collaboration is to

make others successful

n Establish trust

n Develop priorities

n 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

CIO

CIO Profile: Spartech Corp.

n Michael Lane 13

n Chief Information Officer

n Spartech Corporation

n Joined the company in February 2001

n General management/auditing career

background

Quotable quote: “I never touch the keyboard, I am surrounded by good people.”

– Michael Lane, CIO

Spartech Corp

reports

to the CFO

Chief Finance Officer

Spartech Corporate

Overview

n Largest plastic-sheet supplier in the U.S.

n 45 manufacturing plants worldwide

n Corporate headquarters in Clayton

IT Culture at Spartech Corporation

CIO’s Biggest IT Success

at Spartech

n Had upper management recognize IT as

an important department in the

organization

n Implementation of VOIP network

through out the company

n Implementation of Oracle financial

systems

n Provide maximum support with minimum

staff

CIO

The Biggest IT Challenges

at Spartech Corporation

n Proving IT can deliver on it’s promises

n Smooth implementation of the ERP project

n Keeping up on cutting-edge technology

How Does IT Drive Business at Spartech?

n IT is “almost” a partner at Spartech.

n 4 years ago, IT was a “necessary evil.”

CIO Relationship with CEO

n Reports to the CFO

n Weekly senior management meetings

n Average CIO communication with CEO

occurs 2 to 3 times per week

n “IT is almost a partner” at Spartech.

Trends Impacting Spartech

in the Next Five Years

CIO’s Most-Important

Lesson Learned

n Don’t over promise.

n Don’t jump the gun on technology.

n Under promise, over deliver.

n Develop an efficient team.

CIO

The ‘Untold’ Story from the CIO Perspective

n The leadership the position requires CIO to have

n CIO is salesman

n CIO has to hire good people

n Loyalty is a “two-way street”

CIO Best Practices:

People Skills

n IT executives fight image of being too technical,

introverted and tactical

¨ 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

n Technical skills AND people skills are equally

important

¨ University of Dayton study found no differences

between CIOs with technical backgrounds and those

with general management backgrounds 15

CIO

CIO Best Practices:

Innovation

n IT innovation is important for leading companies

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

e-business initiatives 20

¨ CIO role defined as “teacher” or “prophet” vs “technologist” 21

CIO