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EXECUTIVE COUNSEL - High Technology, High Pressure

EXECUTIVE COUNSEL - High Technology, High Pressure

How much did your business grow last year? The revenues of the top five airlines grew just under 6 percent in 1997; for the top five chemical companies, the figure was just over 2.5 percent; in food service, nearly 5 percent. That's manageable, right? But what if your company is booming like Starbucks Corp., which quadrupled the number of its outlets in the last five years, or Gap Inc., which opened 300 stores last year? Or you could be in an entire industry with afterburners, like high-tech.

How fast is it growing? Cisco Systems Inc. grew 57 percent; Intel Corp. grew 20 percent; Dell Computer Corp. grew 59 percent. How'd you like to be the CIO at a company growing that fast? What kind of mind-numbing treadmill would that be like? Now consider what it would be like if you as CIO were responsible for keeping the money machine oiled. Sound scary?It did to us. Technology companies seem to print money as much as they build PCs or burn chips or manufacture routers. In Silicon Valley, they don't talk about how long a product is viable, they talk about how long a company is viable. This is where the world runs on Internet time.

We've written a lot about how you need to align IT with your business. How the heck do you do that when your industry is flooring its accelerator? How do high-tech CIOs stay sharp without being sliced to ribbons? Amazingly, they do very simple things that you can do just as easily. They create platform standards. They build templates for the things they do over and over again. And by building simplicity into the fundamental technology, they free themselves to focus on the company's business.

Steal This Idea

It was a crucial piece of the company's business that led Louis Burns, Intel's corporate vice president and director of information technology, to a fundamental revelation. Intel has 12 fabrication plants around the world, each one performing the exact same process as the others, depending on the product manufactured at each site, in order to turn out the silicon wafers that are eventually etched into chips for PCs. Process number 86 in Dublin, Ireland, is exactly the same as process number 86 in Jerusalem. "I shamelessly stole that 'copy exactly' concept from manufacturing and put it into IT," says Burns.

Simply put, every desktop PC and server within Intel has the same standards to ease technical support administration. A technical support representative in Santa Clara, Calif., can handle a call whether it's from Des Moines or Dusseldorf.

Standardisation, of course, is part of Intel's corporate culture. Everyone, including Chairman Andy Grove, sits in a cubicle. Burns promises, "We'll put in special stuff [for executives' PCs] when we put in private parking and executive offices."Nonetheless, the results have been dramatic. When Burns measured total cost of ownership (TCO) in 1995, the cost per PC was $9,300, a figure that incorporated the cost of the computer, all the IT and user costs of maintaining that machine and the proportional cost of the network; GartnerGroup Inc. set the average at $10,000. At the end of this year, Burns estimates TCO for desktop PCs at Intel will be US$5,000. In two years the standardisation program had paid for itself.

At the same time, Burns moved from supporting four network operating systems to one and from supporting five e-mail systems to one.

Ditto for Northern Telecom Ltd. Senior Vice President and CIO Keith Powell, who found when he came on board that his company ran eight different e-mail systems (he's knocked it down to three). Powell finds that, even in high-tech, he has to bang on the standards drum. "I have people all over the place who think they know better than I do and think they have a better solution than I have," laments Powell. "These people think in fairly narrow terms. They look for the solution that is going to meet their unique, short-term needs." The problem is, a nimble organisation simply cannot afford to choose technologies the way one puts together a Chinese dinner. Insists Powell, "There is a need for standards.

But that's a bad word in high-tech because what's a standard today is headed for the trash can tomorrow."So what is Powell's answer to the tech-savvy employees who think they've found the answer? It's really quite simple: "Every new thing is not necessarily the answer to the problem of satisfying our customers." Like many other CIOs, he's stuck with legacy systems-some 2,053 of them, in fact-and there's "one of every platform, language and makeup you could think of," complains Powell, noting that the systems don't communicate across every single line of business. Faced with the need for business units to converse "in an agile and responsive way," Powell says, "you ring the bell for standards."There's more to standardisation than just platforms, however. High-tech CIOs use different words to describe it-process, template, methodology-but it all boils down to reusability. Take Pete Solvik, vice president of information systems and CIO of networking powerhouse Cisco Systems. Here's a company that swallows acquisitions as if they were White Castle sliders-25 in the last five years. Even other high-tech CIOs wanted to know how Solvik handles the ongoing integration of computer systems he had nothing to do with building.

"We have a dedicated IS department called acquisition integration," explains Solvik. "Its sole responsibility is to manage technology integration. We have a repeatable process that we enhance with every acquisition. And we bring in and hold responsible IS people from almost every IS function to actually implement the integration." It's a joint project, encompassing staffers from both Cisco Systems and the acquired company.

You may scoff at the idea of having a team devoted solely to integration, especially if your firm doesn't acquire companies at the rate Cisco Systems does. Then again, you're probably integrating something somewhere on a regular basis; devoting a team to those projects would develop an expertise that would come in handy. Even more important is the underlying concept: If you're doing something on a regular basis, codify it. Write it down, preach about it, train for it.

Generally, Cisco System's acquisition integration process works this way: It will set up the acquired company's engineering and product marketing units as a new business unit and then take everything else-customer support, finance, human resources, IS, manufacturing, marketing communications and sales-and merge it into its like function at Cisco Systems. The mistake that CIOs in other companies make, in Solvik's eyes, is that they spend a lot of time arguing whether functions are going to be integrated. At Cisco Systems, many if not most of those decisions are made before the acquisition. Solvik insists that the prevailing mind-set is "win-win" for customers, shareholders and the employees of the acquired company. "We go in with that orientation, and that sets the stage for the integration."Change is inevitable, he insists; otherwise, what's the point of buying a company and letting it sit? Given that, it's better to manage it than be managed. Though it sounds Pollyannaish, you can't argue with success-Cisco Systems has turned mergers and acquisitions into fine dining while other companies simply get indigestion.

Work Is Great, Except for My Coworkers

Have you ever caught yourself daydreaming about what it would be like to have executive colleagues who inherently grasp the value of technology? You wouldn't have to mount an offensive similar to the one on Nor-mandy to explain why you need your budget bumped up by $2 million. Consider the other side of the coin, however: Everybody in your company not only understands technology, they think they understand it better than you do. As one high-tech CIO put it, "Usually, they're not as technical as they think they are." Still, you have to deal with it. "Technology is part of the fabric of the company," acknowledges Dell Computer CIO Jerry Gregoire. "On the other hand, everybody thinks they're the CIO. You spend a lot of time explaining the difference between technology and information technology.""I'm in a company with 2,000 CIOs," chuckles Kathy Cruz, CIO of Aspect Telecommunications Corp., a provider of call centre solutions. "When somebody asks, 'Why don't we have this?,' I try to play the business card," says Cruz.

She asks the employee, "Tell me what you need to do. What are the business opportunities that we need to help you with?" Frequently, she acknowledges, people in high-tech think that if they're not using the latest technology, then they won't be seen as cutting-edge and their careers will cool down. Spinning it around to the business quickly diffuses the request. "They're usually not interested in talking to me after that," Cruz says.

Sometimes the pressure comes from the top. Northern Telecom Vice Chairman and CEO John Roth refers to CIO Keith Powell as his "guinea pig." Roth says, "If we don't have a highly reliable network internally, we can't sell highly reliable networks externally." Powell isn't alone, certainly. Novell Inc. Chairman and CEO Eric Schmidt told Senior Vice President and CIO Sheri Anderson that he wanted to set up an entire engineering building that ran only the IP protocol, not the IPX protocol used in Novell's NetWare products, and yet still have it integrated with the company network. Schmidt wanted to show the world that Novell was moving forward with the protocol that was the backbone of the Internet. Anderson had suggested using the IP protocol to begin with, but only within a department, not within an entire building. Schmidt insisted. "He was being completely unreasonable," she says now, but her department forged ahead, creating utilities "that the public will never see" and completing the project.

Where the experience came in handy was on Anderson's mandated customer visits.

As part of her job, she spends at least one-quarter of her time visiting customers on their premises. "I talk about how I use our products internally. I can say, 'I know that you can manage this transition because we've already done it.' We don't ship any products that we don't use [ourselves]."Intel's Burns insists that, in this regard, being a high-tech CIO is no different from being a CIO anywhere else. When it comes to feedback from customers, you have to pay attention. "Listen to the nuggets," he says.

"They're telling you stuff because they want you to help them to do their job better."Anderson concurs. "The smart people say, 'I would have done it differently.' I want to learn from that [but still be clear] about who's responsible for what." She recommends bringing clarity to both roles and communication. "Somebody has to be the general," she says. "I'm the general. I'm a big fan of managing expectations, too." To that end, in her quarterly objectives report she publishes what she plans in terms of rolling out code.

She also recommends doing some marketing. "I have [IT] marketing campaigns so people understand we're not doing something to them; we're doing it purposefully to model our customers' lives" so that the product will work well for them.

I'm Dancing as Fast as I Can

It all comes down to customers, after all, and these companies have a lot of them. Gregoire estimates that Dell's sales grow by a billion dollars every six to eight weeks. On the one hand, Gregoire doesn't want to be the one to explain to Michael Dell that the system is down. On the other hand, how the heck do you plan for growth like that without making a mistake? Here's where life in high-tech gets a little tricky, best expressed as small chunks and big visions.

To be successful, high-tech CIOs recommend biting off projects in small chunks.

Cisco Systems won't schedule a project for longer than nine months, says Solvik, and most are done in three to six months. (There's an added advantage to that, he notes: "Create small wins to build from rather than taking on megaprojects that cost too much, take too long, don't deliver and make people sceptical.")Gregoire notes that Dell is growing so fast that at the end of an 18-month project, the company would be significantly different from when it began. "A project has to take less than six months [to complete]. That's the only way we can make sure [it stays] with the business," he says.

He also advocates what he believes to be a highly unpopular idea. "The day of the large central IT organisation is over. This'll generate a lot of hate mail, but you have to push IT down as close to the business as you can." If you don't, Gregoire warns, shadow IT organisations pop up to fill needs that a centralised plan doesn't. "Pushing IT into those departments isn't perfect, but it's closer to a model that allows your company to grow. It's time for CIOs to let go."But at the same time, you have to keep an eye on the future. "When you learn to fly," says Gregoire, a weekend pilot, "the instructor lets you stay three mistakes high." That is, you can screw up three different ways and still stay in the air. In Dell's case, that means planning for computer capacity where the sky's the limit. For instance, Dell's inbound 800 lines operate at between 50 percent to 60 percent of their capacity, just to accommodate spikes. "Having someone call and not get an answer is bad, and 70 percent capacity is way too close," says Gregoire, acknowledging that most CIOs don't have that kind of luxury. "But that's part of our success. The only thing that can slow down Dell is IT. I'm laying down track in front of a locomotive going 100 miles per hour."At Intel, Burns is also peering into the future. "We're painting the picture of what we think the company will look like in 2001. How do we make Intel more agile?" he asks, noting that agility is different from speed. "Speed is about doing things fast. Agility is about being nimble. You can get an army to march quickly, but it's hard to get an army to march fluidly to where it needs to be." As an example, he cites a statistic: Within Intel on any given day, employees send and receive two million e-mail messages; most of them are delivered within seconds, and 80 percent of them are delivered within five minutes no matter where on the globe the employee happens to be. "The speed of that information is critical to the agility of our decisions," he says.

Along the way, Intel's culture fosters a concept called "disagree and commit." You can disagree with anything, but when a decision is made, you have to get behind it and push. The result: A concerted effort makes the place run fast.

Burns marvels, "The place just buzzes and cranks."The Alignment Starts HereIf there's an irony about being a high-tech CIO, it's that many of them don't believe in technology for technology's sake. The CIOs we spoke to firmly grasped the alignment between IT and business. Just as Aspect Telecommunications' Kathy Cruz parried outrageous technology requests with a business thrust, many of the other CIOs focus on the bottom line. "We're a supplier of making Intel run faster," says Louis Burns. Adds Jerry Gregoire, "We are the most important resource a company has. If you give up IT as a channel of differentiation, you may have lost the competitive advantage you naturally have."Cisco Systems' Pete Solvik agrees. When asked how he juggles all the IT balls successfully, he cites a number of keys: Focusing on recruiting, retention and staff development and leading how the business uses technology. But he stresses the importance of IT being an integral part of the business. "Move IS away from being a G & A [general and administrative] expense to where it's funded by all the business lines and integrated with every business function. The management of technology should be integrated into the overall investment in the company rather than a black-box steering committee."Imagine being a technology guy (or gal) at a technology company and focusing on the business. They really are in the IT world of the future. And, of course, they love it. Jerry Gregoire, who spent 10 years at PepsiCo Inc. prior to Dell, says, "It was a fabulous experience. I wouldn't trade it, and I wouldn't go back. I wanted to go to a company where technology meant something and I could spend less time explaining its value."(Senior Editor Howard Baldwin can be reached at hbaldwin@cio.com.)

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