The Role of the CIO

1
The Role of the CIO
IS 6800 Management Information Systems, Fall 2005

• 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., lt1 yr.)
• Previous experience
• Reporting Structure Has Improved
• 19975 reported to CEO 200555 report to
  CEO/Pres.

5
Gender Age Demographics

• 91 male
• 9 women
• Average age 47 years old

Out of 405 CIOs polled
6
Background Demographics

• 65 have IT background
• 9 have business background
• 26 have both IT and business background

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

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

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

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

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

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

13
Executive Relationships

• CIOs 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 CIOs lack of support

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

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 cant keep
• Share
• IT department has impact on relationships
• Have fun
• Display validity in building relationships

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

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

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Product Categories
21
2004 2003 2002
Annual Revenues 8,291 million 7,722 million 7,483 million
Net Income1 (54) million (208) million 54 million
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.
22
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-Stones packaging operations is the
  slowing demand for packaging in North America, as
  manufacturing is being shifted overseas.

23
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

24
Network Hierarchy
25
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

26
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

27
New Organizational Structure
28
Offshore Initiatives

• 7 plants in China
• 1 joint venture in Taiwan

29
Customer Report
Out of 37,000 total Smufit-Stone employees,
nearly 19,200 (over half) chose to download a PDF
version of last years report from the Web.
30
Sports Analogy
What it takes to be competitive
Sports
Business

• Employees
• Execs/Mgrs/Leaders
• Business Model
• Processes
• Collaboration

• Players
• Coaches/managers
• Playbook
• High Level
• Plays
• Teamwork

31
Mr. Hao Jun

• CIO, FACRI Corp.
• China
• (Yakun Liu)

32
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.
33
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 FACRIs first CIO

Flight Control Corp.
34
Organization Chart
Xinguo Zhang CEO
Vice president of Financial department
Administration
Product development
CIO of Information Center Hao Jun
Labor Union
Human Resource
Vice President of Experiments Testing
Vice president of Manufacture
Vice president of RD
Customer service
Flight Control Systems
Electronics Optics
Inertial Navigation Systems
Flight Control Corp.
35
Experiences that help CIO

• Before CIO Position
• -- Education
• -- Work experience on
• CAD/CAE in the
• analysis of structural
• strength and electrical
• magnetic field

• After CIO Position
• -- The management
• philosophy included in
• large information
• systems, such as PDM
• -- New knowledge
• acquisition through
• network

Flight Control Corp.
36
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.
37
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.
38
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 companys needs

Flight Control Corp.
39
Three Priorities

• Product development platform construction
• RD management environment construction PDM
• Digitized product manufacturing systems Computer
  aided manufacturing programming

Flight Control Corp.
40
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.
41
Value of IT

• Improve the efficiency of information exchange
• Standardize the flow of manufacturing processes,
  improve monitoring
• Expand the RD alternatives
• Sharing of information can assist the
  decision-making process

Flight Control Corp.
42
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.
43
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.
44
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
• CIOs perception of CEOs 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.
45
The Biggest Challenge

• Customize management information systems to
  different departments.
• Leverage information systems to improve
  management functions

Flight Control Corp.
46
Catch up to world trends

• Technology product RD 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.
47
Situation in China

• Most companies just view IT as support, not as a
  partner.
• Most CEOs (in China) dont 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.
48
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.
49
Dr. Jim Tom

• Associate Vice Chancellor for Information
  Technology - UMSL

(Farwah Gardezi)
50
Overview of The Responsibility
And Expectations From
CIO of Education

• Students Customers
• Internal Staff
• Institution

51
UMSL Reporting Chain
Dr. Thomas George Chancellor
Dr. Glen H. Cope Provost/VC for Academic
Affairs
Dr. Jim Krueger VC for Managerial Technological
Services
Dr. Jim Tom Associate VC for Information
Technology (CIO)
52
Corporate Vs. Education

• In Education focus is on kinds of activities and
  technology to bring in
• Financial systems, HR systems
• Charged for technology construction

• In Corporate world CIO focuses on the kinds of
  activities and technology to bring in
• Financial systems, HR systems

53
Three Areas of Organization
(External Responsibilities)

• Teaching (e.g. computers, MyGateway, etc.)
• Research
• Administration

54
His Experiences

• Varied experiences
• Most recent oneDirector in Education
• More satisfaction serving community

55
Budgetary Challenges

• Budget (higher expectations)
• Salary
• Compensation

56
Lessons Learned

• Softer side of management
• ?Leadership, human resources
• ?Applies to subordinates and peers
• Technological Management skills

57
Internal Responsibilities

• To develop the organization
• Develop customer service to help the organization

58
Top Priorities

• Try to get more technology used in the
  organization (school)
• Need to get more and better integrated computer
  systems
• The whole area of technology in Teaching and
  Learningwe are not there yet
• ?e.g. Open Source course material

59
Challenges

• Organizational structures
• Dealing with faculty members
• Technological constraints

60
What Is Different Than Corporate

• Make the people aware of different types of
  technological ways to go forward

61
How The Organization is Funded?

• Teaching and Learning funded by Student
  Technology Fees
• Also funded by the state and tuition
• Overall budget of 8.5 million
• Restricted requests

62
What Keeps Him Up At Night?

• SECURITY!

63
Common Characteristics

• CIO has to balance IT management
• Security

64
Conclusions
65
Summary Comparison of CIOs
Research Smurfit-Stone FACRI Corp. (China) UMSL
Gender 91 male 9 female Male Male Male
Age Average age 47 years old 54 years old 43 years old Early 50 years old
IT budgets Increase 5 (2004-2005) CEO reduce CIO increase Maintain Maintain
66
Summary Comparison of CIOs
Smurfit-Stone FACRI Corp. (China) UMSL
Biggest concerns Align w/Business reduce TCO Align w/Business IT strategy Security IT Staff
Background Business/IT Nearly 4 yrs. IT only 4 yrs. Business/IT lt 1 yr.
Reporting Structure CEO CEO/CFO Vice Chancellor Provost
67
Summary Comparison
Smurfit-Stone FACRI Corp. (China) UMSL
Number of employees 35,300 4,000 3,319
Annual revenues 8,291 million 1,900 million n/a
Number of IT employees 380 100 146
IT Spend 100 million (1.1 of revenue) 200 million (10.5 of revenue) 8.5 million
68
Summary Comparison of CIOsTop 3 Priorities
Smurfit-Stone FACRI Corp. (China) UMSL
Partner with the Business Product development platform construction Try to get more technology used in the organization
Reduce Total Cost of Ownership RD management environment construction PDM Need to get more and better integrated computer systems
Enhance technical/business acumen of IT professionals Digitized product manufacturing systems The whole area of technology in Teaching and Learning
69
Summary Comparison of CIOsChallenges to CIO
Smurfit-Stone FACRI Corp. (China) UMSL
Bring IT close to the business Prepare for the performance of MIS Organizational structures
Reduce IT costs Leverage information systems to improve management functions Dealing with faculty members
Adapt to changing market trends n/a Technological constraints
70
Lessons Learned

• Turnover
• Define of Success
• IT Budgets
• Executive Relationships
• Dilemmas of CIOs

• The CIO Position
• Gender Age
• Background
• Career
• Salary
• Compensation

71
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., lt1 yr.)
• Previous experience
• Reporting Structure Has Improved
• 19975 reported to CEO 200555 report to
  CEO/Pres.

72
QUESTIONS?

• Thank you!