The Role of the CIO

IS 5800 FS 2006

Andrew Getz Candace James Sarah Tsige Executive Summary

The Chief Information Officer is becoming a key player in the search for companies to find a competitive advantage. With the shift in the past several years from the view of Information Technology as infrastructure to more of a strategic function, the role of the CIO has become more strategic and less operational and supervisory. The focus of this paper is to provide insight into the role of Chief Information Officer. Demographic information of CIOS as well as three case studies of IT leaders at Home Decorators Collection, Boeing and the University of Missouri-St. Louis are included.

As the attitude toward IT changes the topic of the CIO and Information Technology is becoming significantly more important to managers. With increased competition in most industries, companies are seeking any aspect or area of their business that could potentially provide a competitive advantage and offer an edge over competitors. More and more managers are looking to IT as that source of competitive advantage.

To provide an understanding of Chief Information Officers’ roles and challenges, three CIO’s were interviewed. This information in conjunction with research based on recent publications in top technology journals and periodicals, such as CIO Magazine and Computerworld, provided an extensive knowledge base in understanding today’s technology topics and everyday challenges faced by CIOS.

Through extensive research and in speaking to the three interview subjects, it became clear that Chief Information Officers must be excellent communicators and have a business background. CIOS must be able to interact with other executives and clearly communicate the benefits of IT. Furthermore, the CIO must be able to fully understand the business process and creatively construct solutions to enable the business to operate more smoothly. Rich Bradt of Home Decorators Collection, Don Imholz of Boeing, and Jim Tom of UMSL collectively agreed that the three most important skills for a CIO to have are communication skills, leadership skills, and business skills.

From the research on CIOS the following conclusions were reached. Effective CIOS must:  Maintain good relationships with top management  Govern wisely  Assign direct reports to be business unit leaders  Communicate effectively with business leaders at every opportunity  Advertise your technology strategy  Make IT user friendly for everyone The main objective of this paper is to understand the functions Chief Executive Officers or CIOS perform within organizations and explore the attributes of effective ones. In order to do this a number of different topics will be discussed including: the role of the CIO, demographics of CIOS, some current issues CIOS are dealing with, turnover, and the background and profiles of the three companies and CIOS interviewed.

CIOS: Psychopaths in Corporate America?

So what is necessary for a CIO to be effective? An article by Elizabeth Millard approaches this question in a rather interesting way. The article “Does it Take a Psychopath to Make a Good CIO?” describes a study done by a team of researchers from Stanford University, Carnegie Mellon University, and the University of Iowa researching what personality traits are markers for success in high-stress, high-stakes jobs. Based on some previous research, they speculated that those with brain damage, lesions on the area of the brain that controls emotions, would perform better than those with no damage. The results of the study showed that those labeled as “functional psychopaths” outperformed those without the psychopathic brain damage. The main driver of these results was that the lack of fear in psychopaths gives them an advantage over those that are healthier because emotions play such a critical role in decision making. So the questions that arise from this study are:

1) Should CIOS create emotional detachment to succeed in their career? 2) Are some CIOS already fitting the description of a psychopath?

According to the experts the answer to both these questions would be NO!! CIOS need to have exceptional social skills in order to promote the IT organization within the company now and in the future. They actually tend to share personality traits with their fellow executives rather than with the rest of the IT department making them more effective in the IT organization and the entire business organization.

CIOS have become the most dynamic leadership role in the business world and a key executive in most organizations. The CIO has had a steady position within large organizations, but recently even smaller companies are finding a way to create a role for a CIO. The CIOS general responsibility is to oversee many different functions ensuring that systems and structures are reliable, secure, and effective. A recent CIO magazine describes the previous role of the CIO:

“In the early and late 1980s and early 1990s, the CIO position was much more tactical than strategic, and the CIO position was definitely more technical. The executive committee would tell you…Don’t worry, we’ll figure out the strategic direction and you just make it run.”

However, over the past 10 to 15 years the role of the CIO has evolved and changed greatly. Doug Berg, founder of techies.com and chief executive of HotGigs, a talent firm specializing in IT staffing, explains the dynamic role stating that: “Over the past decade, the role of the CIO has changed tremendously, and that’s driven change in what type of person is chosen to take on that job. The good ones have a balanced view of people, process, and technology. They care about how the company meets its goals while embracing technology. They have to be emotionally invested to do that.”

A telephone survey of 340 CIOS from the United States, the United Kingdom, Germany, and France compiled by the Financial Times summarizes key trends involved in the changing role of the CIO and the IT function. The first trend, and perhaps one of the most important, is the CIO role moving from a tactical planning and implementation role to more of a strategic planning role. Previously CIOS were thought to be more tactical rather than strategic. They would focus on specific IT issues and daily “fire fighting” activities, but now are being required to expand their focus towards long-range company strategy. This overall business focus encompasses the next trend of CIOS becoming involved in top levels of corporate planning and decision making. In order for the CIO to know which IT projects and systems to develop and implement they must know what the business is looking to do as a whole and what the goals are. The best way to make the CIO aware of the business growth and development is to keep them involved in the discussions and decision making with other executives. By doing this the CIO will become involved with internal and external customer support. This is the third key trend of CIOS. As knowledge management expands, which is recognized as the central component of strategic planning by CEOs, CIOS will need to include external customers in communications, networking, and technology support as well as internal customers. These three changes in orientation will have significant impact on the future training and recruitment of CIOS.

As the orientation changes will have an impact on recruitment, so will the basic qualifications and skill sets that executives are looking for when hiring. Since IT is becoming more central to business and CIOS are being involved in business decisions, they need to have a background in other areas besides technology/engineering such as finance, marketing, and planning. This is evolving because of the way companies are using CIOS compared to the past. More is expected of them and they will be working alongside other senior officers, therefore requiring more than just a technical background. Henry Eckstein, CIO and VP at York Insurance Services Group, supports this change by describing the changing role of the CIO within his company. He states, “I’ve pretty much stepped back (from technical operations), and now I focus mostly on working with the business community, making sure I have a clear understanding of business processes and needs.” Industrial Research

In order to examine CIOS in more detail, interviews were conducted with three different IT leaders employed at different companies. The three companies were Home Decorators Collection (HDC), Boeing, and the University of Missouri-St. Louis (UMSL). The size of each company is compared by revenues in millions of dollars below:

Figure 1: Relative Size of each company profiled

400 60000 350 50000 300 40000 250 UMSL 200 30000 HDC 150 Boeing 20000 100 10000 50 0 0

* Use scale to the right for Boeing info and the scale to the left for HDC and UMSL.

Company Profile:

The first company interviewed was Home Decorators Collection. Home Decorators Collection is a direct to consumer catalog company, based in St. Louis, Missouri. Home Decorators Collection mailed its first catalog in 1991 and has since become a $300 million company. Currently Home Decorators Collection employs over 420 professionals. Along with its catalogs, Home Decorators Collection operates eight retail stores in Town and Country and Hazelwood Missouri, Kansas City and Overland Park Kansas, Tulsa and Edmund Oklahoma, and finally in Lake Zurich and Chicago, Illinois. Along with the catalog and retail stores, Home Decorators Collection also maintains a website to which customers can go to look for items not included in the catalog and place orders at any time.

Since it began in 1991, HDC has experienced tremendous growth. Revenues have grown from less than $1,000,000 in the first year to an estimated $286,000,000 in revenues for 2006. Figure 2: Home Decorators Collection Revenue Growth

150 Revenues 100 *Figures are in 50 millions of dollars

0 1991 1994 1994 1999 2002 2005

The target customer base for Home Decorators Collection is older upper-class women. HDC has reached that market. According to Home Decorators Collection statistics acquired from customer order information, the average HDC customer is usually a married woman, between the ages of 35 and 64 years. She is savvy and price conscious, but also affluent and has a median annual household income of roughly $100,000.

Home Decorators Collection has aggressive plans for future growth. With Home Depot providing additional capital, the Home Decorators Collection plans to open approximately 30 retail stores a year for the next three years, growing the retail side of the business. The goal is to make Home Decorators Collection a billion dollar company, with $500,000 in revenues generated in Retail and $500,000 generated from the catalog and internet. HDC has the advantage of knowing precisely where each customer is located providing insight on where new retail stores should be located. Along with the above mentioned plans, tests are also being conducted on providing HDC goods within Home Depot stores across the Midwest. If these tests are successful, this program may be rolled out nation wide exponentially increasing HDC’s growth. CIO Profile: Rich Bradt Interviewed September 28, 2006 Home Decorators Collection Director of IT

Our interview subject from Home Decorators Collection was Richard Bradt. Rich Bradt is the Director of IT for Home Decorators Collection. Rich’s IT department consists of 24 people. Rich reports directly to the president of the company, Gil Kemp and the Corporate Chief Information Officer of Home Depot Direct, putting him on the same organizational level as the CFO Chuck Cioffi and VP Kathy Leffler. Rich’s educational background is very diverse and well-rounded. He received a Bachelors Degree in Mathematics and Engineering. After obtaining his Bachelors Degree, Rich went to work for the US Government as a Geologist. After several years in this position Rich realized that he was more interested in the IT side of his job and took a position at Home Decorators Collection in Information Technology. In the early stages of company development, Rich alone was responsible for IT; there were no other employees in the department. As the company grew, Rich’s responsibilities grew as well. Rich also managed to finish a Master’s program in Information Technology at Webster University.

During his tenure, Rich has overseen various IT projects. One of Rich’s most successful projects is the creation of HDC’s website homedecorators.com. Since its creation the website has grown to generate approximately half of the annual revenues of Home Decorators Collection. More recently rich implemented an upgrade to the website that would allow the customer to see any item in all available colors. Prior to the implementation of this upgrade, customers could only see an item in the feature color and swatches of other available colors. Now customers can click on any available color for that particular item and actually see what the item looks like in that color.

On the other hand, Rich’s most challenging project is the inventory forecasting system currently being used. The forecasting system currently in use, Anzio, is outdated and is not comprehensive enough to give the most accurate projections. Anzio uses past sales patterns to project future sales. The problem with Anzio is that it only accounts for catalog and internet sales. This has not caused major problems yet since the retail side of the business is still a relatively small part of the business. However with plans to open so many stores, it could present a problem in the near future in that Anzio may not be able to keep up with the growth plans for Home Decorators Collection.

During the interview, Rich was asked about the acquisition of Home Decorators Collection and how it has impacted his department and job duties. In Rich’s opinion, there are positive and negative aspects of the acquisition. On the positive side, the IT department now has a much larger budget. Along with a larger budget, all of the projects are now on a much larger scale than before. On the other hand, there is more bureaucracy involved in the decision making process. Rich now reports to two superiors. Rich needs approval from both the president of Home Decorators Collection and the CIO of Home Depot Direct before implementing any new projects.

Company Profile:

The second company interviewed was Boeing. With customers in 145 countries, Boeing is the largest aerospace company in the world and the United States' leading exporter. One of the reasons Boeing is so successful is the broad range of products they provide. Some of the major products include commercial jetliners, military aircraft, rotorcraft, missiles, rocket engines, launch vehicles, electronic and defense systems, and advanced information and communication systems. In order to produce the majority of these products Boeing has manufacturing operations in the United States, Canada, and Australia. In the U.S. alone, Boeing employs approximately 156,332 employees with the majority of them being located in Washington, which is Boeing’s Headquarters. California is the next largest state with about 19 percent and Missouri comes in third with around 10 percent. The employment disbursement per state is identified in the chart below.

Figure 3: Boeing Employment Disbursement

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Within Boeing there are a number of different Business groups ”ñØWathat compose the÷ñ entire company. The largest business group making up nearly half of the company is the Integrated Defense Systems (IDS) program. IDS combines weapons and aircraft capabilities, intelligence and surveillance systems, communications architectures and extensive large-scale integration expertise. The IDS strategy includes understanding the art of using current and emerging technologies to improve the capabilities of existing products and delivering new solutions. The second largest business group, making up the next 35 percent of the company is the Commercial business. Boeing Commercial Airplanes offers its full range of models to governments, military organizations, and for specialized commercial operations. Many are provided in partnership with Boeing IDS. The last small portion of the business is divided among the remaining business groups: Boeing Capital, Shared Services, Boeing Technology, and Human Resources and Administration. CIO Profile: Don Imholz Interviewed October 27, 2006 Boeing VP of IT Systems

The subject interviewed within Boeing was the Vice President of Boeing IT Systems, Don Imholz. His current duties include being responsible for the design and support of all Business Systems for Boeing. This includes systems supporting finance, supplier management and procurement, product support, sales and marketing, etc. In addition, Imholz is responsible to the Boeing IDS Business Unit, ensuring the quality and cost- effectiveness of all information technology services. He currently reports to Scott Griffin, who is the Chief Executive Officer over all of Boeing, and is located in Seattle, Washington.

Don began his career with McDonnell Douglas in 1975, advancing through several positions within and outside information technology including systems development, project and program management, and data center management. He has also held some executive positions in finance and manufacturing and has been the director of information management and business management. He has a bachelor's degree in Business Administration from the University of Missouri-St. Louis. From there he went on to get his Masters in Information Systems Management and his Executive MBA both from Washington University. Along with many degrees and different job experiences, Don is a member of a number of boards and teams. He is currently on the board and is a past chairman of the board of directors for the Center for the Application of Information Technology and is a member of the Advisory Board for the Masters of Information Management Program for Washington University. He is also on the executive committee of the board of directors for the Family Resource Center, a non-profit organization, which provides a broad range of social services in the St. Louis area.

Since being promoted to his current position as Vice President of Boeing IT Systems, Don stated that he has over 80 projects that are currently underway, but talked of three major projects he has been focusing on. The first one was a collaboration project or the implementation of share point. The main objective of this project was to allow employees to place large amounts of information on one single website for various users to view and would eliminate the task of sending out numerous emails containing the same information. The second project he mentioned was a system called Total Access. Before the implementation of this system Boeing had many separate information systems with individual usernames and passwords. Now, Web Single Sign On (WSSO) interfaces with many of the systems and consolidates access under one username and password. Total Access consolidates the links to many systems at one website, and with WSSO, eliminates the need to repeat the logon process as long as your web browser remains open. Some of the functions the employees are able to do on this site are update their work information, create and edit their personal profile, view company training records, enroll in health benefits, view their pay, benefits, and tax summaries, and view many other general information links. The third project, which Don referred to as his most troublesome project was dealing with regulatory compliance, mainly the Boeing IT Sarbanes-Oxley Act Initiative or SOX. This initiative was designed to ensure corporations create and maintain internal controls and accurate financial information to investors. With the Boeing Information Technology SOX initiative beginning in 2003 some progress has been made, but Don and Boeing are still working to demonstrate compliance and reach their goals.

Company Profile:

When choosing companies to profile and CIOS to interview, UMSL was chosen to yield a unique research base that would be different than most corporations. UMSL’s annual budget is roughly $167 million which represents about 5.9% of the total budget and is significantly higher than the entire educational industry average. UMSL’s customers are the students that attend class here and are mostly employed full-time or part-time, with very few being traditional students. A big trend for UMSL is that more and more companies are looking to UMSL for tailored specific courses towards the needs of their employees. IT becomes involved here because the companies look to have these courses delivered onsite via the internet.

UMSL is “Using technology to reach into corporations” – Jim Tom

CIO Profile: Jim Tom Interviewed October 30, 2006 University of Missouri-St. Louis Associate Vice Chancellor for IT

Vice Chancellor of Information Technology Dr. Jim Tom was interviewed and was tremendously helpful in sharing information about the role of a CIO in academia and UMSL’s IT department. Dr. Tom started his educational career with a Bachelor’s degree in Physics and followed that up with a Master’s in Systems and Computer Engineering along with his PhD in Engineering Economics. He has worked as a program analyst and economic statistician working with large scale economic models. Overall, Dr. Tom has spent 10 years working in IT with his most recent position being the Director of Networks at the University of British Columbia, Canada. In January of 2007, Dr. Tom will be completing his second full year at UMSL as the CIO.

Current Project: PeopleSoft Implementation

When asked what current projects he was working on, Dr. Tom said the biggest one that came to mind was the on-going PeopleSoft implementation. The implementation was University of Missouri system-wide, but each campus had different completion dates. The University of Missouri – Rolla (UMR) was the first campus to fully implement the software, to be followed by Mizzou, University of Missouri – Kansas City (UMKC) and lastly UMSL. The goals of the software upgrade were to improve access for students and faculty and to create a system that was designed to be self-serving. PeopleSoft will change the way students, staff and faculty register for classes, check and submit grades, and update personal information.

Being the last to complete the implementation gave UMSL an edge that other campuses didn’t get. In meeting with the implementation team at UMR, Dr. Tom explained that they offered several suggestions to make the process flow more smoothly at UMSL. Among those suggestions was to physically separate the staff that was working on the implementation. This would allow the team to focus solely on their duties for the implementation and set aside their normal job responsibilities; separating the team would also allow for easier collaboration with team members. UMSL followed these recommendations and the team has been working together very successfully.

According to Dr. Tom the overall cost to UMSL for the PeopleSoft software would be somewhere around $1.2 million. This figure wouldn’t include any monies that the University System spent to benefit all campuses.

In terms of success, the full implementation at UMR and the partial ones at the other three campuses are seen as successful so far because the system seems to be meeting the expectations of users. To exemplify its success Dr. Tom shared a story about a math professor at UMR. He said that the professor had seen several previous ERP implementations that didn’t measure up to his expectations and therefore probably was the biggest skeptic of the upgrade. However; since the completion of the implementation at UMR, the professor has become its biggest advocate of the system. A cup of sugar, a cup of flour, a cup of fruit cocktail (with the juice)…….The Ingredients of a CIO

In order to provide background information on the characteristics of Chief Information Officers, the group researched the demographics of CIOS. The age, sex, compensation, educational and professional background of CIOS was researched. Figure 4: Pie Chart of CIO Gender

Female Male

Although the number of women CIOS is growing, men continue to dominate the profession. According to a survey conducted by Computerworld in January of 2006 on one hundred premier IT leaders, 83% of CIOS are men while women account for 17%. Also found in this research, the average age of a chief information officer is approximately 47 years old.

Compensation of chief information officers varies according to the size of the firm in which they are employed and ranges from a little under $150,000 for small companies to close to $300,000 for large companies. The following graph compares CIO compensation across companies of different sizes.

Figure 5: CIO Compensation Comparison Chart

Large 300000 Companies 250000 200000 Total Midsize Com pensation 150000 Companies 100000 50000 0 Small Companies Based on a survey conducted by CIO Magazine of 500 IT leaders, the average pay of a CIO at small company is approximately $130,023. For a medium size company, the average compensation for a CIO is close to $193,561. Lastly, chief information officer’s at large companies earn around $283,553. For this study, small companies are characterized with revenues of less than $100 Million. Medium size companies are those with revues ranging from $100 Million to $1 Billion. Finally, large companies are those with revenues of anything more than $1 Billion.

The next area of CIO statistics researched was the professional backgrounds of CIOS. According to the same survey mentioned above of 500 IT leaders, the majority of chief information officers have their primary job experience in Information Technology. Of the 500 people surveyed 71% had their primary job experience in IT. Below is a table listing the percentage of respondents with primary job experience in the areas shown below: Figure 6: Table of CIO Primary Job Experience

Area Percentage IT 71% Business (non-IT) 7% Consulting 7% Engineering 3% Finance and Accounting 3% Administration 2% Logistics 1% Marketing 1% Sales 1% Other 3%

As can be seen from the chart above, the majority of CIOS have their primary work experience in information technology. In addition to primary job experience, we also examined what other areas IT leaders focused on outside of information technology. In the course of our research, it became evident that the areas CIOS focused on other than IT are business, consulting, and administration. The following chart illustrates areas in which CIOS have experience other than in IT:

Figure 7: Table of CIO Experience outside of IT

Other Logistics Manufacturing Marketing Sales Finace/Accting Engineering Administration Consulting

0% 10% 20% 30% 40% 50% Business Which is more important Business or Technical Skills?

CIOS need to have a background rich in technical experience and a thorough understanding of business practices and skills. The three CIO interviews conducted were used to probe into this relationship and quantify which skill set is of higher importance. When interviewed, Rich Bradt stated his opinion that the two most important skills were business and supervisory skills. Rich summed his views up by saying that he believed a CIO’s skills should be 70% business and 30% supervisory. Don Imholz’s views were that a CIO needed to have a technical background in order to know what kind of questions to ask, but that it is more important to excel in business and leadership. During Dr. Tom’s interview he revealed his thoughts that CIOS should work to strike a balance between three different types of skills: business, people and technical. This balance is different for every CIO and for every different company because of the many nuances in company culture.

Along with experience, hierarchy within an organization was also researched. According to the survey conducted by CIO Magazine, the majority of CIOS report directly to the Chief Executive Officer of the organization. The survey revealed that approximately 44% of CIOS report to the CEO, while 23% report to the Chief Financial Officer, 14% report to the Chief Operational Officer, 3% report to their corporate Chief Information Officer, and 16% report to someone other than the people mentioned above. The hierarchy of an organization is a direct reflection of the company culture and its attitude toward IT. Cultures that view IT as a necessary evil tend to have an organizational structure in which the CIO reports to the CFO or the COO. On the other hand, companies in which IT is valued and viewed as a source of competitive advantage, CIOS generally report directly to the CEO of the corporation and are included in all executive decision-making.

Each interviewed CIO was asked about the organizational structure of their respective company. As previously mentioned, Rich of Home Decorators Collection reports to the president of the company as well as the CIO of Home Depot Direct. When asked his opinion on working for a company in which the CIO reports to the CFO or the COO, Rich made it perfectly clear that he would never work for a company in which the CIO did not report directly to the CEO. In Rich’s opinion this not the ideal organizational structure for IT to effectively operate.

For Don Imholz, his direct report is to the CIO for all of Boeing, Scott Griffin. Griffin then reports to the Head of Engineering Technology and Operations who reports to the CEO. Don stated that this line of report is successful for Boeing because they communicate daily and are focused on doing what is best for the company. The Boeing Company employs around 10,000 IT professionals, with approximately 5,000 of them reporting directly to Don.

In comparison, UMSL employs about 80 full time employees from database programmers to senior administrative personnel, which is where Jim Tom fits in. While being interviewed, Dr. Tom described his place within the organizational structure at UMSL. He has four IT professionals that directly report to him, of which he meets with on a weekly basis. In addition to his direct reports, technically he has a dotted line relationship with the Provost of the university. He explained that his direct supervisor is Dr. Jim Krueger, the Vice Chancellor of Managerial and Technical Services. Dr. Tom described Dr. Krueger’s position as best equating to the Chief Financial Officer for the university.

Tom’s view on who the CIO directly reports to within a company is quite different from Rich Bradt’s opinions on this type of relationship. Dr. Tom’s position was intriguing, in that it was almost exactly opposite that of Rich’s. Dr. Tom thought that the biggest factor in whether the reporting relationship worked wasn’t necessarily who the CIO reported to, but depended more on the overall communication level within the organization. He explained that if he had important ideas he wanted the Chancellor (the equivalent of the CEO) to hear that he could easily communicate them. He did not express any of the reservations that Rich did about being a CIO reporting to the CFO in an organization. Dr. Tom stressed that the people in the organization were the key to success and that it mattered more how they communicate with each other rather than where the technical reporting relationship lines were drawn. Attachments 1-3 show the organizational structures for each of the interviewees.

Average IT Investment

The amount a company spends investing in IT will vary based on several factors. Some of the factors that may affect IT investment are the industry in which a business operates, management’s attitude toward IT, and the size of the company. Industry affects IT investments because different types of businesses have different IT needs. For example hi-tech companies such as Microsoft will spend significantly more on IT than a retail company. Corporate culture and management’s attitude toward IT also plays a key role in that if IT is viewed as a necessary evil management will not be willing to invest as much capital in IT as a company that views IT as a source of competitive advantage. Finally, size is also a factor in determining how much a company will spend on IT. Generally larger companies tend to spend more money on IT than smaller ones. For example, Don Imholz although unable to give an exact number on the amount Boeing invests in IT, did say that it was consistent with the manufacturing and aerospace industry averages of about four percent of total revenue or approximately $3 billion. This is significantly larger compared to the $10 million Jim Tom said that UMSL, a medium size company, spent annually on IT. Larger companies have more capital at their disposal and projects that are on a much larger scale making it more allowable to spend money on IT. According to the figures acquired by CIO Magazine in their survey of 500 IT leaders, small companies on average spend $6,762,700 on IT annually, medium size companies spend $40,809,200, and large companies spend $89,025,400. What’s new and challenging in 2006?

Continuing to look at the specific IT areas within the company, there are a number of issues that develop within the IT department alone. To better identify these issues, a Current Issues Survey is conducted each year by the EDUCAUSE Current Issues Committee. It is a web-based survey distributed to primary member representatives, mostly CIOS, in order to compile a list of important IT challenges. They are to focus on which issues are needed for strategic success, increasing in significance, demanding the majority of the CIOS time, and requiring the largest expenditures of resources. From the 2006 survey the top-ten current IT issues are:

1. Security and Identity Management 2. Funding IT 3. Administration/ERP/Information Systems 4. Disaster Recovery/Business Continuity 5. Faculty Development, Support, and Training 6. Infrastructure 7. Strategic Planning 8. Governance, Organization, and Leadership 9. E-Learning/Distributed Teaching and Learning 10. Web Systems and Services

The first interesting fact from this list is that this is the first time ever Security and Identity Management has topped Funding IT as the number one IT related issue. Funding IT is generally a concern because of the difficulty of aligning funding and institutional priorities for the IT department. The funding of IT has been the main concern of top IT leaders, being in the number one spot for the past three years, but since the terrorist attacks on the U.S., Security and Identity Management has been on a steady rise to the top. Institutions face the need to increase protection of information assets from unauthorized users. This is a result from the expanded use of electronic information and the number of break-ins and data theft over the past couple of years. With this continuing to be a problem, Security and Identity Management could remain at the top spot for even a few more years. Another intriguing fact is that this is only the second time that Disaster Recovery/Business has been on the list, most likely prompted by Hurricane Katrina that struck the U.S. in August 2005. The main concern of IT leaders here is not that they do not have Recovery plans in place, but rather do their plans cover enough depth and detail to recover quickly from such a disaster. For example, if a national disaster of this magnitude would occur again would they have in place hardware backup or alternative web site hosting? However, if IT institutions tighten their disaster plans and the events of 2005 lose interest from the public, this issue could very well become a “one-year wonder”. The final fact from this year’s survey was that Enterprise-Level Portals dropped off the list of top concerns for IT leaders. This is due mainly to the increase in vendor supplied ERP systems and that information portals have been implemented at numerous institutions. In addition to the specific IT issues, CIOS face many other challenges in their position as well. Some of the challenges that CIOS face include an overwhelming backlog of request and projects, inadequate budgets to implement these projects and requests, shortage of time for strategic thinking and planning, unrealistic and unknown expectations from the business, lack of technical skill sets and business knowledge within the IT department, overwhelming pace of technology change, lack of business goals and IT efforts, and finally, difficulty proving the value of IT to top management.

Rich Bradt of Home Decorators Collection was asked what his biggest challenge was. Rich’s response was that “making sure IT systems don’t interfere or stop Home Decorators Collection from growing” is his biggest challenge. With the expected growth of HDC within the next several years, it is Rich’s job to make sure IT systems can support the level of expected growth.

According to Don Imholz, the biggest challenge was regulatory compliance and SOX. He described one example of an incident in which Human Resources lost a laptop that put multiply personal identifications at risk. Himself, as well as many other senior IT personnel, Human Resources, and other executives were heavily involved in this issue for many weeks. He said it was very difficult because they were not able to announce to the rest of the company the problem, mainly because they did not know the extent of the problem and were still trying to formulate a good strategy to overcome the issue.

For Dr. Jim Tom his biggest challenges were even different yet. By far Dr. Tom’s biggest challenge as CIO is recruiting and retaining high quality IT professionals. Dr. Tom stressed that point several times during the course of the interview.

Each of the CIOS interviewed are struggling with different problems based on the size and type of company they worked for. However, all of the issues and challenges, if not handled effectively, could contribute to short tenure and high turnover rate among CIOS.

CIO (Career is Over) Turnover Rate

The perception of the CIO turnover rate in industry can be summed by the alternative meaning associated with the acronym: Career Is Over. Research and CIO interviews showed this conclusion to have merit but as with many generalizations, this one is also incomplete. An average turnover rate of 23.8% can be calculated from varying estimates ranging from 15% - 40%. The average tenure of a CIO was found to be roughly 4 years and 11 months, considerably shorter than that of most CEOs, having tenure of about 7 years. While conducting interviews with the three CIOS, the data researched was mostly consistent with our industry findings. Rich Bradt served as CIO the longest at about 14 years, Don Imholz hit the researched value dead on, serving as CIO for 4 years, and Jim Tom came in with the shortest tenure just at 2 years so far in his position. Figure 8: This graph is a breakdown of how long individual CIOS have been in their positions according to a survey of 500 IT leaders.

Less than 2 years

Between 2-5 years Between 5-10 years More than 10 years

Although data on the turnover rate among CIOS was found, it was also found that the data was not always as meaningful as would be expected. As Paul Strassmann pointed out, the CIO turnover rate is notoriously difficult to measure. There have been only two studies done to determine the rate; one being from 1994-1995 and the other from 2002- 2003. Additionally most sources that cite a turnover rate usually make their calculations based on press reports. This could skew the rate because many CIOS that leave their positions on good terms or without a large amount of fanfare may not make it into the media.

Reasons for CIO Turnover

Now that the actual turnover rate has been discussed, it’s important to examine why so many CIOS leave their positions so quickly. Many CIOS tend to be fix-it artists.1 They enter their positions in order to fix the glaring problem(s) that have been plaguing the IT department and once they’ve accomplished those few goals, the want to move on to their next big challenge at a different company. These CIOS specialize in IT departments that are failing big time. They swoop, fix the major problems, but don’t like to stick around for all the mundane tasks of a smooth running IT department.

An emerging trend in today’s corporate structure is increased movement within the company structure. This trend holds true for CIOS and contributes to the high turnover rate.1 A good example of this is Ford Motor Company. Jim Yost had been with Ford for 27 years and was CIO for only 18 months when Marvin Adams was appointed to fill Yost’s position as CIO. Yost wasn’t terminated from Ford, he was promoted within and became Ford’s Vice President of Corporate Strategy. This kind of movement demonstrates that Preston’s point that CIO turnover is a natural part of evolving corporate structure.

High job demand also contributes to the CIO turnover rate. CIOS feel pressure to change positions because of offers of higher pay and more challenging positions. This constant offer of a seemingly better position plays a large role in the high rate of change among CIOS. The rapid pace of change in technology is yet another contributing factor to the industrial CIO turnover rate. When 3Com made the decision to merge 900 of its IT employees with the e-commerce group, CIO David Starr lost his job. Starr was only on the job for 15 months and highlights how changes in technology are pushing the turnover rate higher.

CIOS “generally are being asked to leave because the communication and the expectations that were established between IT groups and business groups have eroded.” – Beverly Lieberman, Halbrecht Lieberman Associates1

There are several other factors that all edge up the turnover rate for CIOS. When business demands overreach IT capabilities, the CIO ends up being the pressure point within companies and is sometimes the first place to crack and move to another position either within the organization or outside.6 Also CIOS are continually on the front line justifying their budgets and spending.1 This role is increasingly difficult for CIOS that face organizational cultures that place IT as a “necessary evil,” “unequal partner” or believe that “business can do it better.” Another reason why CIOS don’t stay in their positions long is not surprisingly because success is so often not defined the same by the IT department and the rest of the organization.6 Finally and sometimes disastrously IT department and their CIOS can become out of step with business interests. 6 CIOS that don’t focus their resources and department around the business needs of the company end up wasting money and hurting the company’s bottom line. It’s easy for CIOS to become swept up in only the technology aspects of their job and lose track of the real reason for they’re position: the overall success of the business, not just the IT department.

Effects of High Turnover

The effects of high CIO turnover at a particular firm are definitely measurable and often significant. Firms with high turnover rates can expect to have increased inefficiencies within IT departments.4 CIOS that have shorter tenures put more of their focus and work into short term problems and goals. This can leave firms open to being left behind when the latest technology is released. As found in interviews with current CIOS, the trend in business today is to find CIOS that spend more of their time on long term and strategic planning, not the opposite. CIOS also can become caught up in doing what will look good on their resume or what their next employer wants versus what is best for the company. 4 All this adds up to additional cost for the firm. Firms should look for dedicated professionals that are interested in not only solving the current crisis but also coming up with innovative solutions for long term problems. Firms shouldn’t be afraid to higher from within, but should look for employees that have sincere interest in the position and that see it as more than just another rung in the corporate ladder.

Time is of the Essence

In order to reduce turnover rate, CIOS need to accommodate their time accordingly. With the transition of the Chief Information Officer’s role to a more strategic position, CIOS are spending more and more time on strategic planning and less time with day to day issues. Based on the responses from the 500 IT professionals surveyed by computer world CIOS spend most of their time on the following activities in order of importance. 1. Interacting with Company Execs 2. Making Strategic System Decisions 3. Strategic Business Planning 4. Leading Projects 5. Designing/Optimizing Business Processes 6. Managing IT Staff and Crises 7. Budgeting 8. Learning about Technologies

Each of the interview subjects was also asked how they spend their time. Rich of Home Decorators Collection informed us that he spends the majority of his time talking to various people. Rich has meetings with department heads to discuss how IT can improve business processes in various departments. Rich also meets with top management for strategic planning on weekly basis. When he’s not meeting with various people, Rich spends his time on making sure all systems are up and running. Don spends a lot of his time meeting with executives and direct reports and also travels about once a week, but stated that “Everyday is different”. For his direct work he said his time is split up with about one-third of it spent on strategic planning (budgets and looking ahead in the company), another third on operational projects (project problems and people issues), and the last third on other miscellaneous tasks such as security issues or IT development. Jim, like both Rich and Don, meets with his directors and other executives on a regular basis, but also stated that he really has “No routine”. He focuses on strategic planning about 15 to 20 percent of the time, but spends the majority of his time dealing with problems that arise on a daily basis or “firefighting”. From each of these responses, it is apparent that the responsibilities for each CIO are not that different and that strategic planning is requiring more of their time.

Management Priorities

The next area CIOS need to focus is on management priorities. From research the most important management task for a CIO is to align the goals of IT with those of the business. The purpose of IT is to manage information and help ensure that the business runs as smoothly as possible. This can only occur when IT and the business as a whole are working toward the same goal. By aligning goals, the CIO ensures that IT is focusing on implementing projects that will benefit the company. Another important priority of CIOS is business continuity and risk management. This is important in order to prevent the disruption of business operations and to protect the company against natural disasters and incidental occurrences. Below are other management priorities CIOS named in order of importance.

. Control IT costs . IT-enabled process improvement . Improve Internal user satisfaction . Develop IT staff leadership/business skills . Improve project management discipline . Ensure privacy of customer and employee data . Enable or enhance knowledge management and leverage intellectual assets . Ensure regulatory compliance “If you sleep like a baby, you wake up crying every 2 hours.” Don Imholz

After discussing the many barriers and challenges of CIOS and their main priorities it is a wonder IT leaders can sleep at all at night. So what issues do keep CIOS awake at night? Of course some issues are more significant than others and a poll was taken to find out what CIOS worry about the most. According to a survey by Society for Information Management (SIM) which polled 139 CIOS, the top CIO concerns for 2006 are alignment of IT and business, developing and retaining IT talent, and security and privacy issues. The alignment of IT and business as stated above is very crucial to the success of a company and is something that IT leaders are always concerned about in the back of their mind. As far as developing and retaining IT talent it is evident that this could keep CIOS awake from the fact that it is one of Jim Tom’s biggest challenges and therefore could be a huge concern for other IT leaders that work in the education industry. The average turnover rate for IT professionals is around 7.2 percent making it very difficult to increase an IT department and recruit employees into the IT profession, which is in high demand right now. “We worry about when baby boomers retire, taking with them years of industry, business, and legacy system expertise.” Jane Drewry, CIO of The Chubb Group of Insurance Companies

Security and privacy issues would obviously be stressful for CIOS because as stated before it is the number one IT concern in 2006 and a top management priority. According to Don Imholz, security issues have been known to keep him up at night and stated that the lost laptop incident was one of the periods of time in which he did go to bed and wake up thinking about that problem. However, he said that for the most part he tries not to take issues home with him. If a CIO does everything they can possibly do during the day and have a stable company, having a good night sleep should not be another problem they have to worry about. What Makes a CIO Successful?

With everything a CIO has to deal with, what do they need to do in order to succeed? Through research it was found that there is a set of personal skills that most successful CIOS have in common. This skill set includes many of the same skills that contribute to the success of all business people. The ability to communicate effectively is essential for CIOS and all leaders. Although not quoted exactly, this sentiment was echoed by all three of the interviewees. Each CIO talked about the different daily and weekly meetings that they conduct with their direct reports and supervisors. As stated previously, this consumes a good portion their time, which is direct evidence to the importance of communication.

Understanding the business operations, processes, strategy and industrial trends is another important factor to the success of any CIO. Rich Bradt talked about his most successful and most challenging projects and how they directly relate to Home Decorator’s Collection. Also the major focus of Dr. Tom’s was the PeopleSoft implementation. This huge piece of software touches nearly every aspect of the university. It will be used by most students, staff, and faculty on almost a daily basis. If these CIOS had not been experienced enough to know the day to day operations or needs of their users, they would not be nearly as successful as they are.

The ability to lead and motivate others does not get any more fundamental for anyone in leadership positions. It may sound repetitive to include it, but its importance is so fundamental to success that it is necessary to include it. From research and the interviews, every CIO talked about the personnel they supervise and their efforts to meet and motivate these individuals. As the CIO is usually a corporate position, motivation skills are required for more than just the direct reports of a CIO. For instance a CIO will constantly be using these skills to get everyone on board for a company-wide upgrade in software, hardware or a complete change in the day-to-day operations.

Technical ability is another subject that nearly goes without saying, but can not be forgotten. CIOS need to have a thorough knowledge of technology options and be proficient in the unique language the IT world uses. You can see that since each of the CIOS interviewed have full backgrounds in IT.

What to take away……

There are many different subjects that CIOS focus on and attributes that they must retain in order to be an effective leader. With the ever changing role CIOS need to focus on maintaining good relationships with top management and communicating effectively with business leaders at every opportunity. This interaction keeps them involved in the business goals and objectives and allows them vision towards what technological strategies need to be addressed. Since CIOS tend to struggle with security, funding, and alignment of business and IT issues, it is important to make sure that no matter what process they are implementing or trying to overcome they make it user friendly for everyone within the business. This in itself will help an average CIO succeed as an effective executive within their company. Appendices

Attachment 1

Home Decorators Collection Organizational Chart

Home Depot Direct

Gil Kemp President

Rich Bradt Kathy Lefler Chuck Cioffi Director of IT Vice President CIO Attachment 2 Boeing Organizational Charts

Boeing IT Leadership Team

Engineering, Operations & Technology | Information Technology

Boeing Information Technology Scott Griffin Vivian Moore

Boeing IT Systems/ Information Protection Computing & Network Enterprise Architecture IDS Business Partner & Assurance Operations and Integration Don Imholz Linda Meeks Radha Radhakrishnan Barb Claitman

IT SOX Program Manager BCA Business Partner Connexion Business Partner Boeing Capital Phantom Works Don Imholz Scott Griffin (acting) Ashlynn Dawson Business Partner Business Partner Leo Eineker Mark Burgess

Finance/ Human Resources Communications Supplier Management Legal Ethics & Business Business Management Pam Simpson Dave Phillips & Procurement Craig Holman Conduct Curtis Walker Greg Farmer Pam Garretson

Business Systems and IDS Business Partners

Engineering, Operations & Technology | Information Technology

Boeing Business Systems/ IDS Business Partner Don Imholz Judy Lewis

Finance Systems Supply Chain and Product Support IDS Engineering HR Systems Internal Services Mary Ann Gates Program Mgmt Systems Systems Cheryl Britton Systems Systems Don Imholz Mike Stothers Curtis Banks Tim Holt “Acting”

IDS Mfg/QA Systems Network & Space Systems Support Systems Computing & Personally Identifiable Chief Architect and Precision Engagement Business Partner Business Partner Network Operations Information Project Ashlynn Dawson & Mobility Systems Frank Tetnowski Don Lang Steve Mercer Dick Metz Business Partner Ellen Jackson

UMSL Organizational Chart

Chancellor

Dr. Jim Krueger, Provost Vice Chancellor of Managerial and Tech Services (CFO)

Dr. Jim Tom, Vice Chancellor of IT

4 Direct Reports Bibliography

1. Alexander, Steve, “As the door turns” Computerworld, 1998; vol 32, 8, 1998, pp. 73 2. 2 Byrnes, Nanette; Kiley, David; Crockett, Roger; Lowry, Tom; and McGregor, Jena, “The Great CEO Exodus” BusinessWeek Online http://www.businessweek.com/magazine/content/06_44/b4007086.htm, viewed on November 1, 2006 3. 3 Edward Prewitt “State of the CIO.” CIO Magazine June 2006. 4. 4 Strassmann, Paul A, “The Cost of Short-Term CIOS” Computerworld, vol 38,18, 2004, pp. 32 5. 5 Preston, Robert, “CEO, CIO Turnover Is Just Part of E-Transformation” InternetWeek, Iss. 841, 2000, pp. 9 6. 6 Shand, Dawne, “Can this IT Department deliver?” Computerworld, vol 35, 13, 2001, pp. 40 7. 7 Kaarst-Brown, M., “Understanding An Organization’s View of the CIO: The Role of Assumptions About IT, MIS Quarterly Executive, Vol. 4, 2, June 2005, pp. 287-301. 8. 8 Jim Tom, Vice Chancellor of Information Technology, interviewed in person by Andrew Getz, Candace James, and Sarah Tsige, October 30, 2006. 9. Millard, Elizabeth, “Does it Take a Psychopath to Make a Good CIO?” CIO Insight Magazine http://www.cioinsight.com/article2/0,1540,1864608,00.asp, viewed on October 26, 2006 10. “The Changing Role of the Chief Information Officer” CIO Magazine http://www.cio.com/executive/edit/kornferry.html 11. Don Imholz, Vice President of Boeing IT Systems, interviewed in person by Candace James and Sarah Tsige, October 27, 2006. 12. Dewey, Barbara I; Debiois, Peter B; and EDUCAUSE Current Issues Committee, “Current IT Issues Survey Report, 2006” Volume 29, Number 2, 2006 http://www.educause.edu/apps/eq/eqm06/eqm0622.asp, viewed on October 16, 2006. 13. Dewey, Barbara I; Debiois, Peter B; and The 2006 EDUCAUSE Current Issues Committee “Top-Ten IT Issues, 2006” Volume 41, Number 3, May/June 2006 http://www.educause.edu/apps/er/erm06/erm0633.asp 14. McGee, Marianne Kolbasuk “What Keeps CIOS Awake At Night? Old And New Worries, Says Survey” Sept. 18, 2006, Information Week, http://www.informationweek.com/news/showArticle.jhtml? articleID=193000377&subSection=All+Stories, viewed on October 18, 2006. 15. Smith, Gregory S., “Straight To The Top, Becoming A World-Class CIO”, Jon Wiley & Sons, Inc, Hoboken, New Jersey, 2006. 16. www.cio.com/archive/010106/JAN1SOC.pdf, viewed on September 12, 2006 17.www.computerworld.com/managementtopics/management/story/0,10801,106841,00.html? source=x10, viewed on September 18, 2006 18. Rich Bradt, Director of IT for Home Decorators Collection, interviewed in person by Sarah Tsige, Candace James, and Andrew Getz, September 8, 2006 19. Weiss, Joseph and Anderson, Don. “CIOs and IT Professionals as Change Agents, Risk and Stakeholder Managers: A Field Study” Engineering Management Journal, Vol. 16, 2, 2004, page 13. 20. Capella, Jaime, “ The CIO’s First 100 Days” Optimize, Vol. 5, 3, 2006, p 46.