The Role of the Chief Information Officer

1
The Role of the Chief Information Officer
CIO

• Presentation by
• Eliot Lee and Mark Guthrie
• November 12, 2005

2
What Do These People Have in Common?
CIO
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3
Presentation Overview
CIO

• Chief Information Officer profile
• - Demographics
• - Salary data
• - Employment information
• - Topic relevance
• In-depth case studies of 3 CIOs
• Best practices Role of the CIO

4
Role of the CIO Is Evolving
CIO

• 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 1
• Rationale
• 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

5
Definition Chief Information Officer
CIO

• Job title is commonly given to the senior
  executive in charge of information technology and
  computer systems that support an organizations
  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

6
CIO Demographics
CIO

• 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 3

7
CIO Regional Salary Comparison
CIO
Percentile Source 4 Midwest Chicago East Coast New York West Coast 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
8
CIO in the Government
CIO

• In 1996, President Clinton signed what has become
  known as the Clinger-Cohen Act.
• This act required major
• Federal Agencies to
• establish the position
• of CIO.
• - CSA High Technology Research Database with
  Aerospace 2001 5

9
CIO Employment Turnover
CIO

• 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
• Some CIOs seek resume-building experiences rather
  than a long-term career with a single employer. 7

10
CIO Turnover Rate Comparison
CIO

• 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

11
CIO Employment Outlook
CIO

• CIO job search during downturn could last as long
  as 12 to 18 months
• Recruiting for CIOs increased in 2005
• Nationwide
• 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
• 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

12
Chief Information OfficerCorporate Case Studies
CIO
1
2
3
Three different companies. Three unique CIOs.
Three insightful perspectives.
13
CIO Profile Centene Corporation
CIO

• 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

14
CIO Profile Glendon Schuster Professional IT
Background
CIO
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
15
Centene Organizational Chart
CIO
CIO reports to the CEO
16
Centene Corporate Overview
CIO

• 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
17
IT Culture at Centene
CIO

• 159 Full-Time Employees
• 79 Consultants
• Dynamic
• Expanding
• Reorganizing
• Very structured

18
The Biggest IT Challenges at Centene
CIO

• 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

19
What Keeps the Centene CIO Awake at Night?
CIO

• 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

20
CIO Relationship with CEO
CIO

• 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

21
CIOs Biggest IT Success at Centene
CIO

• Major reorganization of the IT department.
• Aligned the IT groups within
• functional areas.
• Quotable quote
• Change by evolution, not revolution.
• Glen Schuster, CIO

22
How does IT drive business at Centene?
CIO

• 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

23
Trends Impacting Centene in the Next Five Years
CIO

• Disease management
• Design systems that do trending analysis based on
  the amount and types of claims received
• Develop software that can help predicate a
  patients predisposition to a disease
• Customer-based reporting
• Regional health information systems

24
The Untold Story from the CIO Perspective
CIO

• 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.

25
CIO Profile Express Scripts Inc.
CIO

• 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

26
CIO Profile Patrick McNamee Professional IT
Background
CIO
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
27
Express Scripts Corporate Overview
CIO

• 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 Weeks 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
28
Express Scripts Organizational Chart
CIO
CIO reports to the COO
29
A Typical Day for the Express Scripts CIO
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)

30
What Keeps the Express Scripts CIO Awake at Night?
CIO

• 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 Its all about communication
  and sharing information. Pat McNamee, CIO

31
CIO Perspective Business, People, and Technical
Skills
CIO

• 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

32
CIO Relationship with CEO
CIO

• 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

33
CIOs Biggest IT Success at Express Scripts
CIO

• In nine months on the job, reduced
• Severity One Sev 1 systems alerts 74
• Outage minutes 60
• How success was achieved
• Dedicated Sr. Director position created to focus
• on supporting systems performance and
  reliability
• Changed responsibility of applications team by
• reallocating infrastructure ownership/accountabil
  ity to new team
• 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.

34
The Biggest IT Challenges at Express Scripts
CIO

• 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

35
How Does IT Drive Business at Express Scripts?
CIO

• Introducing new technologies tied to industry
  initiatives Example Consumer-Driven Healthcare
• Work with technology start-up companies
  (third-party vendors) to develop lowest-cost,
  highest-reliability systems
• Quotable quote
• If IT demonstrates that systems are reliable,
  customers will choose us.
• Pat McNamee, CIO

36
Trends Impacting Express Scripts in the Next Five
Years
CIO

• 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,
• cost-per-call, etc.)
• Industry initiatives
• Carve-In Healthcare Programs
• Consumer-Driven Healthcare
• Transparency
• Requires Express Scripts to develop tools that
  allow customers to understand the companys
  programs
• Evolve Web portals to let customers truly see the
  business

37
CIOs Most-Important Lesson Learned
CIO

• 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 dont identify
  one role to serve. Pat McNamee, CIO

38
The Untold Story from the CIO Perspective
CIO

• IT forces people to have a deeper understanding
  of business processes (operations, accounting,
  strategic planning). Its 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 organizations key
  departments.

39
CIO Profile Spartech Corp.
CIO

• 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
40
Spartech Corp. Organizational Chart
CIO
CIO reports to the CFO
41
Spartech Corporate Overview
CIO

• 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
42
IT Culture at Spartech Corporation
CIO

• Best in St. Louis
• Relaxed
• Consultant-like atmosphere
• 25 full-time employees small staff supports
  large IT program

43
CIOs Biggest IT Success at Spartech
CIO

• 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

44
The Biggest IT Challenges at Spartech Corporation
CIO

• Proving IT can deliver on its promises
• Smooth implementation of the ERP project
• Keeping up on cutting-edge technology

45
How Does IT Drive Business at Spartech?
CIO

• IT is almost a partner at Spartech.
• 4 years ago, IT was a necessary evil.

46
CIO Relationship with CEO
CIO

• 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.

47
Trends Impacting Spartech in the Next Five Years
CIO

• Oil Prices
• - Largest supplier of plastic sheets in
  America
• Healthcare Costs
• - Healthcare costs are rising
• China
• - China becoming a major player in the
  market

48
CIOs Most-Important Lesson Learned
CIO

• Dont over promise.
• Dont jump the gun on technology.
• Under promise, over deliver.
• Develop an efficient team.

49
The Untold Story from the CIO Perspective
CIO

• The leadership the position requires CIO to have
• CIO is salesman
• CIO has to hire good people
• Loyalty is a two-way street

50
CIO Best PracticesPeople Skills
CIO

• 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
• 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

51
CIO Best PracticesInnovation
CIO

• IT innovation is important for leading companies
• CIO Magazine study found 71 of CIOs stated that
  innovation was a key element of their companys
  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

52
CIO Best PracticesCommunication
CIO

• 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
• Its all about communication and sharing
  information.
• Pat McNamee, CIO, Express Scripts

53
Lessons Learned Typical CIO Awake at Night
CIO

• 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

54
Lessons LearnedStatus Impacts CIO Role
CIO

• 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 functions capabilities
  and value. 25
• Status does matter for CIOs
• Corporate culture affects status

55
Lessons LearnedOutsourcing
CIO

• 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

56
Lessons LearnedIT Effectiveness
CIO

• 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

57
Role of CIO Summary
CIO

• 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 its 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

58
Reference Sources
CIO

• 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/pfi
  ndex.html, viewed November 2, 2005).
• 2 Definitions SearchCIO.com, http//searchcio.te
  chtarget.com/sDefinition/0,,sid19_gci213620,00.htm
  l, 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.
  http//hotjobs.salary.com/salarywizard/layoutscrip
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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/res
  earch/surveyreport.cfm?id44 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.

59
Reference Sources
CIO

• 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
  Its 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/sur
  veyreport.cfm?id86, viewed November 3, 2005).
• 17 Varon, Elana, State of the CIO Reality
  Check CIO Magazine, April 1, 2005.
• 18 Kuczmarski, Thomas D., What Is Innovation?
  And Why Arent 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.
• 22 May, Thornton A., Chief Information Officer
  ABCs Information Management Computer Security,
  MCB University 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,
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• 24 cioupdate.com, http//www.cioupdate.com/insight
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• 25 Kaarst-Brown, Michelle L. Understanding an
  Organizations View of the CIO The Role of
  Assumptions About IT MIS Quarterly Executive,
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  Journal of Business Strategy, Vol. 25, 2, 2004,
  pp. 29-36.
• 28 Riley, John, Chief Information Officers Role
  Could Disappear Within a Decade Computer
  Weekly, 9, 2005, p. 10.

60
Photo Credits
CIO

• Slide 2
• Sylvia Steinmann, CIO, Swiss Re
• Aaron Gibbs, CIO, St. Augustines College
• Dennis Thiebeault, CIO, Curry College
• Cindy Stoddard, CIO, Neptune Orient Lines
• Jane Aboyoun, CIO, Reed Business Information
• Craig Berry, CIO, UGS
• Beth Brigdon, CIO, Medical College of Georgia
• Beth Roose, CIO, Pennsylvania Dept. of
  Transportation
• Sam Segran, CIO, Texas Tech University
• Terri Morgan, CIO, Railroad Retirement Board
• Eric Jackson, CIO, Morehouse School of Medicine
• Lee Colaw, CIO, Pacific University