The Future Company The role of the CIO and the IT department Copenhagen , December 2002

1. The Future Company The role of the CIO and the IT departmentCopenhagen, December 2002

2. Is this the status of your present IT department? Constantly having your hands in the dirt trying to maintain adequate velocity

3. Leverage systems toward new business! Trying to gather information in order to obtain an overview but it seems impossible

4. Looking at best pratice! Fierce competition in the marketplace combined with more rapid product cycles Lanell is a part of the WM-data Stratevo network

5. 2. 3. Innovation and the IT organization How to apply innovation in a working organization Agenda 1. Lanell Innovation is a part of a pan European Network

6. ? Virtual Organization Structure Lanell Innovation is a networking company with a virtual organization • What is a Virtual Organization? • Facilitates the workflow of a group of users across multiple domains who share [some of] their resources to solve particular classes of problems • Collates and presents information about these resources in a uniform view • Members configure project teams in order to meet customer needs quickly ? R R R ? R R R R R ? R R R R R R R R R

7. Networks are a reality Technology now allows networks both to become easier and to expand • Networking is basic • Virtual organization stripped of its technological aspect - has always existed • what is new - is technology now allowing such activities both to become easier and to expand; barriers of distance and time are no longer constraints for business in communicating with employees, suppliers, customers, partners • What is new in networking • Barriers of distance and time are no longer constraints for business in communicating with employees, suppliers, customers, partners. • Enabling temporary operational units based on market opportunity • Facilitating that partners contribute only with their strengths (core competencies)

8. Forces feeding the power of networking Ability to respond requires a new flexibility that affects our traditional ideas of organization and management • Effects driving networks • Growth in importance of the individual who values loyalty to a profession above loyalty to one organization - and who values their private and working lives equally • Disappearance of the job for live and of progress up the career ladder • Shift from manufacturing-based to information-based economy • Organizational structures and management concepts of the past are no longer viable in market place of rapid change • Technologies are now converging to support the flexibility demanded by organizations

9. Lanell is a part of a pan European network • Lanell Innovation is the network facilitator that • initiates Virtual Organization, • maintains relationship between the member companies, • facilitates the formation of market and customer driven temporary Virtual Corporation, • Lanell Innovation is based on: • Partner Equality • Boundary Crossing • Geographical Dispersion • Complementary Core Competencies • Pooling of Resources • Changing Participants • Electronic Communication

10. Infinite innovation Sustain constant product development and accelerate product cycles in the organisation • What Lanell Innovation does differently • Share knowledge and add value to corporate knowledge • Based on equality of Partners • Innovative and Flexible with a small core organization “Stripped” to “core competencies • Use of Information and Communication Technology • Focus on the essentials • Outsourcing all non-essential Lanell Infinity model

11. 2. 3. Innovation and the IT organization How to apply innovation in a working organization Agenda 1. Lanell Innovation is a part of a pna European Network

12. Does innovation matter ? Proposed closing the US patent office in the late 1700’s because everything necessary had already been invented John Adams

13. Innovation matters! Arthur D. Little research has shown the explicit link between innovativeness and shareholder return Average annual shareholder return 1986–99 20 % 10 % 0 % –10 % (Sample: 600 U.S. corporations) –20 % Innovativeness

14. Innovation for sustained value creation Leading companies have been able to capture the Innovation Premium by making innovation their main strategic thrust

15. Where do future revenue growth come from? Companies need to recognize that innovation is the key element in closing the growth gap - this involves the CIO. • The CIO play a major role in closing the growth gap. • To do this the CIO needs: • In-depth knowledge of IT and the capacity to apply IT strategically. • Streamline IT department • Along with general business experience outside of IT and the ability to get messages to top management. Illustrative 100 Target 90 ? Growth Gap 80 70 New Products Currently in Pipeline 60 Traditional Mergers and Acquisitions Revenue (MM DKK) 50 40 Market Expansion 30 20 Base Revenue 10 0 Today 2007 Target

16. Profile of typical CIO The CIO needs to stay focused on the big picture while constantly improvising. • The CIO face challenges: • Make the shift from playing a more tactical role, to becoming an integral part of strategic planning and knowledge management. • Make high-stakes decisions and big-ticket expenditures in areas that the company’s top decision-makers may not understand. • Be an effective team player while shaking up the status quo. Profile90 percent are male. 64 percent have IT backgrounds. Of those with non-IT backgrounds, most have experience in finance or operations. Nine percent are expatriates. Contact with CEO15 percent of U.S. CIOs have no interaction with the CEO. 17 percent interact with the CEO less than once a year. 11 percent interact less than once a month. Needed skills 65 percent of U.S. CIOs believe that their successors will have a different skill set than they have. 80 percent think a grounding in business skills or an MBA is important to their success. Most of those who say that their current job is NOT a route to the top cite insufficient business or functional experience.

17. Analyzing the IT organization The traditional IT department has undergone huge evolution – Information technology is on the track to become basic business • The traditional set of tasks for IT department has included: • Managing operations of data centers, remote systems, and networks • Managing corporate data • Performing systems analysis and design, and constructing new systems • Systems planning • Identifying opportunities for new systems Added value Business Requirements Identification Systems and Information Architecture Impact Systems Development And maintenance Computer operations Costefficiency Businessknowledge IT knowledge Balance of expertise required

18. Growing capability of users Growing external services Changes in traditional functions Different forces are pushing the traditional functions • Thefollowing trends are moving their performance out of the IT department: • Distributed systems • More knowledgeable users • Better application packages • Outsourcing Added value Business Requirements Identification Systems and Information Architecture Impact Systems Development And maintenance Computer operations Costefficiency Businessknowledge IT knowledge Balance of expertise required

19. Functional use Management focus • Remain in Business • People SystemsKnowledge control • Make Money • Megadecisions • Marketing, distribution, customer service • Save Money • Financial, manufacturing, services • Administrative • Organizational • Effectiveness • Restructuring the industry • Restructuring the organization • Growth and Increase in market Share • Operational control • Asset management • Process management Tuning management focus towards real application Where do traditional IT functions stop and key business processes start? 5 benefit Reaching the consumer 4 Enhancing executive decision making 3 Enhancing products and services Above the line Below the line 2 Leveraging Investments 1 Reducing costs

20. New Roles in IT Business and Information Architecture Broker Changes in the roles of the IT department CIO’s must start reshaping the way the enterprise and IT department works and competes • IT departments have two missions: maintain today’s systems and work on tomorrow’s systems. • The “Today” operation should concentrate on providing services, while the “Tomorrow” operations need to focus on helping the businesses operate better. • The IT department must keep performing while transforming Added value Business Requirements Identification Systems and Information Architecture Impact Systems Development And maintenance Computer operations Costefficiency Businessknowledge IT knowledge Balance of expertise required

21. Keeping up speed CIO’s are required to bridge the innovative gap between IT optimizing initiatives and business development • The CIO play a major role laying out the playing field. • To do this the CIO needs to: • Have IT performance analysis, indicating problems and need in current operations • Encourage project teams to study the marketplace • They are becoming more “proactive” by helping to create a vision of the firm’s future and its use of IT and selling those ideas to others • Develop a competent business driven IT staff and IT-savvy users • Implement systems that helps leverage information and cross department strategies • Establish close relations between IT executives and general management

22. 2. 3. Innovation and the IT organization How to apply innovation in a working organization Agenda 1. Lanell Innovation is a part of a pna European Network

23. Can your organization become highly innovative? “Normal people can and will innovate of their own initiatives if enabling conditions are present.” A. Van de Ven

24. Initiate a plan for innovation It is imperative that CIO’s and general management articulate the companies’s innovation policy • Creating an organization culture that enables innovation • Vision – Declare the importance of innovation; make it part of the company’s self-image • Foresight – Find out where technologies and markets are going. Identify articulated and unarticulated needs of the customers • Stretch goals – to make quantum improvement • Empowerment – Hire good people, trust them, delegate, provide slack, and get the #$%& out of the way • Communications – Open, extensive exchanges according to ground rules in forums for sharing ideas, and where networking is each person’s responsibility • Rewards and recognition – Innovation is an intensely human activity. Keep good people happy.

25. Occasionally captures and shares knowledge with personal network • Routinely captures and shares knowledge with global network • Occasionally seeks knowledge to fill gaps • Routinely seeks knowledge to increase effectiveness Behavior • Leverages personal network • Leverages institutional networks The right mindset is essential It is vital to nourishthe beliefs and behaviors of the knowledge worker Practitioner Knowledge worker Beliefs

26. The Lanell workflow for applying innovation Before embarking on the innovation mission ensure that you have the right setup in place • Setup the company for innovation • Mentorboard – Establish a mentor board with senior employees from all parts of the organization • Develop Business Case tools – Set a standard for BC’s that enables Value driving decision making • Define hierarchies – Don’t realize too late that ideas are the main business asset • Define rewards – Fuel the idea process

27. Be cautious of harmfull agility “Never time to do it right, always time to do it over!”

28. Lanell Innovator helps accentuate innovation Supporting the process of knowledge and innovation driven organizations

29. Niels Stenfeldt Poulsen Managing Director nipo@lanell.com Lanell Innovation Mosede Højvej 24 DK 2670 Greve Denmark Website: www.lanell.com