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Role of the CIO

Role of the CIO. Project Group Introduction: Stephanie Gurlen Matt Jones Jen LaBarge. What is a CIO?. CIO = Chief Information Officer - Leader of the Information Technology (IT) unit for an organization. - Responsible for supporting business strategy with IT solutions.

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Role of the CIO

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  1. Role of the CIO Project Group Introduction: • Stephanie Gurlen • Matt Jones • Jen LaBarge

  2. What is a CIO? CIO = Chief Information Officer - Leader of the Information Technology (IT) unit for an organization. - Responsible for supporting business strategy with IT solutions. Mission of the CIO: “To provide technology vision and leadership for developing and implementing IT initiatives that create and maintain leadership for the enterprise in a constantly changing and intensely competitive marketplace.” – from the Gartner Group, Inc. Source: http://www.cio.com/executive/edit/gartner_description.html

  3. CIO Reporting Relationship While the reporting structure will vary between organizations, CIOs often report to a senior executive, such as: • Chief Executive Officer (CEO) • Chief Operating Officer (COO) • Chief Financial Officer (CFO) Source: http://www.cio.com/executive/edit/gartner_description.html

  4. Company CIO Title Reports To On Executive Committee Inter-view Date First Banks, Inc. Michael Hickey CIO & Executive Vice President of First Banks, Inc., & President of First Services, L.P. COO Yes 10/04/2001 Edward Jones Rich Malone CIO or Managing Partner in Charge of IS CEO or Managing Partner Yes 10/23/2001 Enterprise Rent-A-Car Bill Snyder CIO, Senior Vice President CEO Yes (Steering Committee) 10/29/2001 CIOs Interviewed

  5. Company CIO Title Reports To On Executive Committee Inter-view Date First Banks, Inc. Michael Hickey CIO & Executive Vice President of First Banks, Inc., & President of First Services, L.P. COO Yes 10/04/2001 Edward Jones Rich Malone CIO or Managing Partner in Charge of IS CEO or Managing Partner Yes 10/23/2001 Enterprise Rent-A-Car Bill Snyder CIO, Senior Vice President CEO Yes (Steering Committee) 10/29/2001 CIOs Interviewed

  6. First Banks, Inc. • Opened 1910 • Privately held • Family owned • Operates in 4 states Source: First Banks, Inc. Business Review 2000

  7. What First Banks, Inc. Does • $56.1 million net income in 2000 • Growing from 6 to 7 billion in assets (16.7 % growth) Source: First Banks, Inc. Business Review 2000

  8. Company CIO Title Reports To On Executive Committee Inter-view Date First Banks, Inc. Michael Hickey CIO & Executive Vice President of First Banks, Inc., & President of First Services, L.P. COO Yes 10/04/2001 Edward Jones Rich Malone CIO or Managing Partner in Charge of IS CEO or Managing Partner Yes 10/23/2001 Enterprise Rent-A-Car Bill Snyder CIO, Senior Vice President CEO Yes (Steering Committee) 10/29/2001 CIOs Interviewed

  9. Edward Jones Investments • Full service brokerage firm based in St Louis MO. • Founded 1871 • $2.2 billion in revenues in 2000 • Offices in the USA, Canada, and UK. • Total employment is approx 20,000 employees world wide • Named by Fortune magazine as the 9th best company to work for • One broker and one assistant per branch office Source: www.Edwardjones.com

  10. Company CIO Title Reports To On Executive Committee Inter-view Date First Banks, Inc. Michael Hickey CIO & Executive Vice President of First Banks, Inc., & President of First Services, L.P. COO Yes 10/04/2001 Edward Jones Rich Malone CIO or Managing Partner in Charge of IS CEO or Managing Partner Yes 10/23/2001 Enterprise Rent-A-Car Bill Snyder CIO, Senior Vice President CEO Yes (Steering Committee) 10/29/2001 CIOs Interviewed

  11. Enterprise Rent-A-Car • One of the largest rental car companies in the U.S. • Nearly 4,800 offices across the U.S., Canada, UK, Germany, & Ireland • Founded 1957 • Fiscal revenue in 2000: $5.6 billion worldwide • Total employees in the IT department 1150 Source: http://www.enterprise.com

  12. Enterprise Rent-A-Car 2000 & 1999 Awards: • Named by CIO Magazine as one of the “100 Companies Most Likely to Succeed in the next Millennium”. • Named by Fortune Magazine as one of the “100 Best Companies to Work For”. Source: http://www.enterprise.com

  13. General Categories CIO First Bank CIO Edward Jones CIO Enterprise Rent-A-Car Applications Development & IT infrastructure & architecture Applications, Data Center Operations, Architecture, purchasing, strategy, support, project management, planning. Anything to do with technology – anything that plugs into the wall. Anything to do with technology – applications, network Provide technologies that enable customers & suppliers to do business Running the service company (technology & back office). Supporting all branch offices & Headquarters worldwide. Support 5,000 branches, statistically measure customer satisfaction Sponsor collaborative business technology planning process Centralized processes Centralized processes Centralized processes Establishing strategic relationships with key IT suppliers and consultants. Working with software vendors to obtain the functionality you want in an architecture you want. Coordinate with multiple vendors & in-house sources to setup a branch in one day “office in a box”. Coordinate with all branches and out-sourcing companies. Responsibilities “Theexecutive committee relies on us heavily for decisions for automation and acquisitions” Michael Hickey Source: http://www.cio.com/executive/edit/gartner_description.html

  14. General Categories CIO First Bank CIO Edward Jones CIO Enterprise Rent-A-Car Strong business orientation Good business understanding & financial background Understand the business & business decisions that are made Understand the business involved in Strong organizational & managerial skills Leadership ability over managing. Put good people in place & give them room. Build a good quality team under you. Surround yourself with good tech people/good team Understand needs of & communicate with non-technical clients. Communication. Conduit to other exec committee members on technology. Good communication both verbal & written. Ability to explain technical concepts in a non-technical way. Excellent communication skills – ability to explain technical to exec committee. Ability to utilize IT to solve business issues. Deliver what is right for the business. Balance between the technical world and business world. Ability to pull business and technology together Advocator Balance business needs over people wanting to implement technology for technologies sake. Have to be tough skinned -- someone is always mad at you. Have to figure out what is real and which projects need priority over others Identify & evaluate new technologies & determine their appropriateness. “Know when someone is pulling your leg” Michael Hickey. “Have to know enough so they can’t blow smoke at you” Rich Malone. “Had over 400 projects two years ago, now we’ve only got 150 – much more manageable” Bill Snyder Ability to conceptualize, launch, & deliver multiple IT projects within budget & on time. Deliver right technology while keeping expenses down. Simultaneously keep existing systems running while building the new architecture. Don’t go beyond your forecast for IT. Skills Needed Source: http://www.cio.com/executive/edit/gartner_description.html

  15. What wakes you up in the middle of the night?

  16. Current Issues Facing CIOs The Issues: • Security • New Technology • New Roles • Cost of Outsourcing

  17. IT SECURITY • Challenge because their non-IT colleagues do not share their sense of urgency • 10 point scale – average of 8 on importance of security • Large companies devote larger portions of budget to security • Companies rating security as a 9 or 10 will spend an average of $425,000 on security • Companies rating security as an 8 or lower only spend $210,000 • Security conscious CIOs are more likely to: • Meet with Senior execs to discuss security issues • Have a dedicated security officer • Perform a formal assessment of security risk • Perform simulated security breaches • Force end users to change passwords more frequently • Consult with vendors regarding their own security precautions Source: CIO Insight Research Study

  18. New Technology • Technology is beginning to play an integral role in every product or service generated by an enterprise • CIOs must lead the hunt for these new technologies • CIOs can’t stand back anymore • CEOs will be relying on CIOs to be fully “cognizant” of the new technologies and the opportunities they present “CIOs Need to Get with the (Future) Program” Glover Ferguson, CIO Magazine, 2000 For years, senior management viewed IT as a necessary expense, and not as a strategic group -- Mike Hickey, First Bank

  19. New Roles • Outsourcing vendors, application service providers, electronic markets are taking over many IT tasks • CIOs are becoming more than just IT department leaders – they are to be the leaders in smoothly incorporating the new functions of IT and the outsourcing parties • CIO must be able to influence and inspire internal and external units to work together toward a common goal in an organized fashion “You have to build a strong team around you that is technical and can keep up on it all” Rich Malone

  20. New Roles • Three steps for a CIO to be leader in transforming the IT organization • 1. Determine how information is processed and managed • 2. Work with a cross section of business and IT representatives to develop a vision for a new IT department • 3. Create an IT “constitution” that defines each groups purpose, role, and relationship with other groups “The CIO has a new role for a new era”. William M. Ulrich, Computerworld 2000

  21. Cost of Outsourcing • Application maintenance: $250,000 to $1 million for a 3 to 5 year contract • Hardware Support: $2,000 to $1 million annually • Call Center: $100,000 to $2 million annually • Web Site Hosting: $20 to $100,000 monthly • Custom Development: $2,000 to $100 million, depending on length of contract Outsourcing IT: What it Costs, Inc. Magazine, Nov 2000

  22. CIO Demographics • Race • 97% White • .6% African American • .3% Asian American • .4% Hispanic American(1) (1) “Workplace Diversity”. Todd Datz, CIO Magazine Jan. 15, 2000 • Gender • 98% Male(2) • Out of 55 responding to one survey only 2 were women(3) (2)”Hail to the Chief (Chief Information Officer Statistics). Brad Edmondson, American Demographics Feb. 1990 V12 n2 p11-12 (3)”Full Lmarket Value”. E.B. Baatz, CIO Magazine Feb 15, 1996.

  23. CIO Bachelors Degree Masters Degree Bill Snyder Rich Malone Michael Hickey First Banks, Inc. ·BS in Industrial Engineering from Georgia Tech - 1979 ·MBA from Wash U ·Masters in Information Management from Wash U - 1984 Enterprise Rent-A-Car Edward Jones ·No College Degree (Did take a number of college classes but no degree) ·BSBA in Accounting from Mizzou ·M.S. in Accounting from Mizzou CIO Education • Education • 94% Have a Bachelors Degree, 47% Have a Graduate Degree “Executive Compensation Survey”. CIO Magazine Feb 15, 1996

  24. Work Experience Average IT experience of a CIO is 19 years “CIO’s 1995 Executive Compensation Survey”. CIO Magazine, Feb 15, 1996

  25. CIO Salary Changes “Salaries Booming for Information-Technology Professionals”. Business/Technology Editors, April 26, 1999 “Behind the Numbers”. CIO Magazine, Feb 7, 2000 “CIO’s 1995 Executive Compensation Survey”. CIO Magazine, Feb 15, 1996 “For What You’re Worth”. Peter Fabris, CIO Magazine, March 1, 1998

  26. Other Compensation for CIOs • Top CIOs received up to a 75% bonus • an example was a CIO made 850,000 with 75% of that in the form of a bonus(1) • Average bonus for CIOs was around 18%(2) (1)”Full Market Value”. E.B. Baatz, CIO Magazine, Feb 15, 1996 (2)”CIO’s 1995 Executive Compensation Survey”. CIO Magazine, Feb 15, 1996

  27. Gender Compensation Gap • Female IS executives make 79 cents for every dollar a Male IS executive makes “Full Market Value”. E.B. Baatz, CIO Magazine, Feb 15, 1996

  28. Other CIO Facts • Average work week for a CIO is 57 Hours • 19 of that 57 is spent in business meetings on average( • Out of all possible job titles for the head of IS at companies, CIO was the highest paid job title • Salary increased as the size of the company the increased “CIO’s 1995 Executive Compensation Survey”. CIO Magazine, Feb 15, 1996

  29. CIO Turnover Due to rapid CIO turnover, it has given rise to the acronym of CIO standing for “Career Is Over”.1 Turnover Statistics: • 48% of CIOs surveyed changed jobs in last 2 years. 2 • 41% of women surveyed changed jobs in the past 2 years 2 • 32% of men changed jobs in the past 2 years 2 • The average tenure tends to be three or four years.1 • CEOs are also having high turnover. • In November 2000, 111 CEOs left their companies, which is 59% more than in November 1999. 1 1 CEO, CIO Turnover is Just Part of E-Transformation, Internetweek; Issue 841, Dec 11, 2000; Robert Preston 2CIO’s 1995 Executive Compensation Survey, CIO Magazine, Feb 15, 1996, No Author

  30. CIO Turnover Turnover Reasons: • CIOs are responsible for everything from e-commerce projects to supply-chain applications and face pressure from executives to justify IT spending. “Labor shortage and resulting lure of job offers contribute.” 2 • The internet appears to be shortening that span. Internet technology changes faster than any technology before it, making it difficult for CIOs to keep up, and introducing completely new business challenges. 1 • Additionally, top IT management is turning over faster than ever, because companies are turning over faster than ever. Successful transformations still have strategic and cultural changes, often the result of changes in leadership 1 1 CEO, CIO Turnover is Just Part of E-Transformation, Internetweek; Issue 841, Dec 11, 2000; Robert Preston 2Can this IT department deliver?, Computerworld, Volume 35 Issue 13, Mar 26, 2001; Dawne Shand

  31. CIO Turnover Interim CIOs • High CIO turnover rates commonly result in a company suddenly being without a CIO. In the current tight labor market, it can potentially takes years to find the right replacement. In the interim, companies are turning to a new kind of top IT executive -- the interim CIO. 3 • The organizations that bring in interim CIOs get top-notch IT professionals for months/years. For the interim CIO, they can achieve flexibility and diversity of consulting work, in addition to the rewards that result with close involvement in an organization during a longer period of time. 3 3 Pinch-hit CIOs, Computerworld; Volume 35 Issue 2; Jan 8, 2001; Zachary Tobias

  32. CIO Turnover Strategies for Retaining CIOs: • CIO as a member of the Management Committee. • Organizations must begin to view their IT department as a contributor to business performance. • Shift from “techie” executive to a versatile, senior member of management • Education programs and professional growth opportunities • Compensation strategies Source: Exclusive research: Competition rises for IT executives, Chain Store Age; Oct 1999; Anonymous

  33. Lessons Learned Via specific examples of how the CIOs are affecting their organizations

  34. First Banks, Inc. Strategic Initiatives of First Bank: • Revenue diversification • Continued expansion/growth • Get a good focus on costs/expense base IT’s Contribution to the Business Strategy: • Critical in delivering the right technology • Acquisitions & New businesses. • Future: • Enabler for improvement of processes in the bank . • Forcing the business unit to plan long term instead of year to year.

  35. First Banks, Inc. Additional Strategic Initiatives Specific to IT: • Improve service levels • Standardize architecture and processes • Initiatives to automate manual processes due to branch growth Size of IT’s Budget

  36. Edward Jones Investments Strategic Initiatives of Edward Jones: • Healthy Growth • Growing the product mix • Technology, redesigning of the system IT’s Contribution to the Business Strategy: • Enabler of the business • Making growth possible

  37. Edward Jones Additional Strategic Initiatives Specific to IT: • Redesigning the entire architecture of IT • Keeping current systems functioning while new system is developed and implemented • Expanding current systems to keep up with the growth of the business Size of IT’s Budget • No set budget for IT • On pace this year to spend $110-$115 million (very similar to 2000) • Have about 1100 internal IT people

  38. Enterprise Rent-A-Car Strategic Initiatives of Enterprise Rent-A-Car: • Controlling projects • IT Steering Committee • Redesigning rental applications • Euro Conversion IT’s Contribution to the Business Strategy: • Making the 20% growth of company possible • Equalize resources to get highest returns • No IT Budget – forecast • 2.5% to 2.9% of revenue

  39. Conclusion While there are a number of issues facing CIOs, and turnover is high, it is the conclusion from our research that the CIO will continue to be a key role in the future. The most effective CIOs will be a member of the executive committee, helping to shape business direction in addition to supplying the right technology to support the business.

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