A New Breed Of CIO

Dec. 21, 2004

A dozen years ago, many companies didn't even have a chief information officer (CIO). Sure, there was a director of management information systems (MIS). But that person, more often than not, was a caretaker, someone who kept an eye on the computer shop. MIS directors were thought to be doing a good job if the checks were processed, the various reports were run and printed, and the MRP system was batch-processed on time. Today the CIO is anyone but a caretaker. These people expect to have a say in top management. What's more, they often are entrepreneurial. They may propose new ventures and help establish and operate them. Don Wenninger, CIO at Vixel Corp., one of GartnerGroup's CIO best-practices group of 30 CIOs who meet regularly to share ideas, says, "That group would not agree that we are caretakers to the organization." To the contrary, adds Wenninger, whose firm, based in Bothell, Wash., manufactures high-speed fiber channel storage interconnect devices, "We see our role as one of the strategic weapons of the company, one of the arrows in its quiver." The CIO's contribution may be as a leader or catalyst to help engender change that will enable the company to operate more efficiently. "The fundamental requirement of the CIO is to provide strategic information that enhances the ability of the business to improve shareholder value," says Wenninger. Of course, that can be accomplished in a number of different ways. The CIO may champion a project aimed at improving response time to customers or bringing far-flung groups of employees together through videoconferencing and the Web. At Pirelli SpA, for example, CIO Arrigo Andreoni has been instrumental in the tire and cable manufacturer's five-year metamorphosis from a federation of loosely related companies with a half-dozen different IT groups to a global firm connected by a single information system. Some benefits from the effort, which includes an integrated ERP system, a central data warehouse, and a global e-mail network, include greater consistency and accuracy of information, standardized documentation and processes, and the creation of a standard external image and identity. What's more, as Pirelli advances with ambitious plans to use technology to get closer to both customers and suppliers, the company will be in a position to realize more fully the benefits of a unified global information base. Says Andreoni, "In my opinion, the value of integration is becoming even more important." Jeffrey P. Smith, director of worldwide information technology and systems at AlliedSignal Turbocharging Systems in Torrance, Calif., championed a similar effort. Not long ago the $1.4 billion manufacturer, one of 10 AlliedSignal operating units, was laboring under the weight of 120 legacy systems, including 14 electronic-data-interchange systems for dealing with suppliers and customers. "We had no global system for logistics, inventory, financials, or procurement," Smith recalls. At the same time, the company, which has plants in a dozen countries and makes turbochargers for automotive engines, was facing annual growth of 25% in its markets. Smith directed the company's move to a single enterprise system, SAP AG's R/3, and a single EDI system, from Sterling Commerce Inc. The Turbocharging Systems unit also has moved to a worldwide standard for bills of materials, the vendor master, customer master, and routings. "We didn't even have a standard chart of accounts before," says Smith, which led, as you might expect, to various data-integrity problems. Revenue at AlliedSignal Turbocharging Systems has increased 20%, and delivery performance has jumped from 65% to 92%. The company has deployed global data standards for its customer, vendor, and material masters, as well as for the bills of material and chart of accounts. In all, some 400 business processes have been standardized worldwide. Of course, not all CIOs have assumed the innovator's mantle. In fact, a case could be made that very few have. "It may be that the role of CIO is not that creative in many cases," offers Buzz Adams, president of Peak Value Consulting Inc., a business-process consulting firm in South Pasadena, Calif. Even so, he believes the potential for creativity on the part of the top IT person in a company is vast. "The CIO could make massive changes and improvements in a company if he or she was a creative thinker." Indeed, some are, and they're doing just that.

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