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The CIO

The CIO. A look at the evolving role of the CIO. Vicky Hsinyu Bill Keller Nathaniel Laroche Aaron McMurry. For Our Purposes…. CTO Relied upon for IT architecture, infrastructure, etc. 80% IT and 20% Business CIO: Integrates IT into the overall business strategy

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The CIO

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  1. The CIO A look at the evolving role of the CIO. Vicky HsinyuBill KellerNathaniel LarocheAaron McMurry

  2. For Our Purposes… • CTO • Relied upon for IT architecture, infrastructure, etc. • 80% IT and 20% Business • CIO: • Integrates IT into the overall business strategy • Introduces emerging technologies • 80% Business and 20% IT

  3. Introduction Demographics of today’s CIO An interview with Bryan Doerr, CIO/CTO of Savvis Communications An interview with Greg Anstead, CIO of Citi Home Equity The evolving role of the CIO The CIO, Compliance, and Security “The New CIO Leader”

  4. Demographics of the CIO The source of past experience IT/Technology…………………………71% Business Operations (non-IT)………….7% Consulting……………………………….7% Engineering……………………………...3% Finance/Accounting.……………………3% http://www.cio.com/state/, viewed March 21, 2006

  5. Demographics of the CIO Tenure Less than 2 years………………………24% 2-5 years………………………………35% 5-10 years……………….……………..31% More than 10 years……………..………9% Average tenure for a CIO is 4 years 11 months. Contrast that with the average tenure of 28 months for a CFO. http://www.cio.com/state/, viewed March 21, 2006

  6. Demographics of the CIO Salary by industry revenues http://www.cio.com/state/, viewed March 21, 2006

  7. Demographics of the CIO Who CIOs reports to CEO…………………….42% COO…………………….14% CFO……………………..23% Corporate CIO…………..3% Other……………………26% http://www.cio.com/state/, viewed March 21, 2006

  8. Demographics of the CIO How CIOs spend their time http://www.cio.com/state/, viewed March 21, 2006

  9. CIO Interviews • Bryan Doerr, CIO/CTO of Savvis • Greg Anstead, CIO of Citi Home Equity

  10. Founded in 1995 • HQ in St. Louis • ~ 2000 employees • > 5000 enterprise clients • One of the largest IP network and hosting providers in the world • Goal is to become an application infrastructure utility • Security and reliability of a private infrastructure • Cost effectiveness of a shared service • Company has strong technology emphasis due to core service offering and evolution of the company 1http://www.savvis.net/corp/Company+Information/Investor+Relations/

  11. Example of service • Connecting satellite offices and/or customers to headquarters ERP system via an intelligent IP virtual private network (VPN) • -Or- have Savvis also host the ERP system at a Savvis data center • Each site can have own internet access as well as secure access to VPN • VPN (single access circuit) can handle multiple applications, voice, video conference, CRM, etc Savvis IP Network HQ Remote Site A Savvis Data Center Partner Site C Remote Site B Remote Site C Partner Site B 1http://www.savvis.net/corp/Company+Information/Investor+Relations/

  12. Savvis StatisticsRevenue http://www.savvis.net/NR/rdonlyres/1150CCDC-20D1-4CDA-9AA7-E77E21558A69/8782/factsglance2.pdf

  13. Savvis CIO – Bryan Doerr1 • BRYAN DOERR is Chief Technology/Information Officer at SAVVIS Communications • CIO role began in 2003 • Leads product R&D, OSS development, traffic engineering and cost management, customer solutions, and back-office system development. • Mr. Doerr held positions in management, software technology research, and software development at Bridge Information Systems, Boeing, and the Applied Physics Laboratory. • Education • Masters Degree in Electrical Engineering from Johns Hopkins University in Baltimore, Maryland • Masters Degree in Information Management from Washington University in St. Louis, Missouri. 1http://www.savvis.net/corp/Company+Information/Investor+Relations/

  14. Savvis Executive Team IT focused business with ‘Engineering’ focused staff. All Managers above (excluding shaded area) are part of Tier 1 Executive Team. • All have equal access to CEO and equal influence • All have their own budget • Bi-monthly meetings Bryan Doerr, CTO/CIO of Savvis, interviewed in person by Bill Keller, March 29, 2006.

  15. CIO Role at Savvis • Combines CTO and CIO roles • Mr. Doerr had CIO type responsibilities before current role and took on CTO responsibilities when accepting his current role • IT management is centralized • No silos or divisional CTOs • CTO vs CIO focus is business driven • Focus right now is more CIO focused • CIO 65% / CTO 35% • Possible for this to swing back (reverse) Bryan Doerr, CTO/CIO of Savvis, interviewed in person by Bill Keller, March 29, 2006.

  16. Top Priorities for 2006 • Continued Integration of Systems • Internal system integration due largely to acquisitions and providing IT efficiency • Improve position for legislative requirements • SOX • Business Process Efficiency • Automating operational tasks and helping users improve their business metrics Top priorities seem more focused on CTO/Operational goals for this year Non Valued-Added Operational Non Valued-Added Operational Valued-Added Strategic Bryan Doerr, CTO/CIO of Savvis, interviewed in person by Bill Keller, March 29, 2006.

  17. What keeps you up at night? • The right systems architecture • Too slow in getting there • Operational vs. strategic tradeoff • “figuring out how long you can freeze something to fix it is a challenging problem” • Conflicting Tier 1 priorities • Level of short-term sacrifice for long-term benefit • Lesson Learned from Quote/Order System Development: • “if they [user community] can’t draw the process, don’t even start it” Bryan Doerr, CTO/CIO of Savvis, interviewed in person by Bill Keller, March 29, 2006.

  18. CIO Skills • People • Leadership and flat executive structure • Technical • Savvis is highly technology focused • “If I don’t have the vision of what the [technical] structure will be, I can’t lead people” • Business • May be interesting to see if this changes with new CEO Bryan Doerr, CTO/CIO of Savvis, interviewed in person by Bill Keller, March 29, 2006.

  19. How is CIO Evaluated • Subjective, company wide model Bryan Doerr, CTO/CIO of Savvis, interviewed in person by Bill Keller, March 29, 2006.

  20. Citi Home Equity Statistics Citi Home Equity’s $277 MM of Net Income in 2006 would rank number 330 on latest Fortune 1000 list. Greg Anstead, CIO of Citi Home Equity, interviewed in person by Nathaniel Laroche, March 27, 2006.

  21. Citi Home Equity Statistics Revenues

  22. Citi Home Equity Organizational Structure CitiGroup Alternative Investments Global Wealth Management Corporate and Investment Banking Global Consumer Group Each business unit has a CIO that reports to a CEO. All technology is generally left on the SBU level. CitiFinancial Bankcards Consumer Lending Group Auto Loans Student Loans CitiMortgage Citi Home Equity Greg Anstead, CIO of Citi Home Equity, interviewed in person by Nathaniel Laroche, March 27, 2006.

  23. Citi Home Equity CIO: Greg Anstead Education • AA in Computer Science • BS in Computer Science/BS in Management • Masters in Management Recent Experience • CTO with Citigroup Real Estate and Technology for 2 years managing a development group of 400. • CIO of Citi Home Equity for the last 15 months Greg Anstead, CIO of Citi Home Equity, interviewed in person by Nathaniel Laroche, March 27, 2006.

  24. Greg Anstead Interview Notes • How do you see your role in the organization? “To provide technology solutions for the business to be competitive, reduce cost, and increase innovation.” • What keeps you up at night? Control is issue number one at Citigroup as one bad audit could “shut this business down” and compromise the integrity of Citigroup. Greg Anstead, CIO of Citi Home Equity, interviewed in person by Nathaniel Laroche, March 27, 2006.

  25. Greg Anstead Interview Notes • How is your performance evaluated? • Tactically • Strategically • Politically – being able to relate to CEO’s managers. This is actually weighted heavier then the tactical (operational) or strategic portions of his performance. • Current role is more operational then strategic due to tremendous growth. • Role should be 80% strategic and 20% tactical. Greg Anstead, CIO of Citi Home Equity, interviewed in person by Nathaniel Laroche, March 27, 2006.

  26. The re-org of Citigroup’s North American IT! CitiGroup Each SBU has a CIO that reports to a corporate CIO with a dotted line to the SBU’s CEO. North American IT Alternative Investments Global Wealth Management Corporate and Investment Banking Global Consumer Group CitiFinancial Bankcards Consumer Lending Group Auto Loans Student Loans CitiMortgage Citi Home Equity Greg Anstead, CIO of Citi Home Equity, interviewed in person by Nathaniel Laroche, March 27, 2006.

  27. The result of the Citigroup reorg Old model: each SBU has their own CIO New model: each SBU’s CIO reports to a corporate CIO with a dotted line to the SBU’s CEO What do you believe are the goals/benefits of this organization? What do you see as some potential drawbacks?

  28. The result of the Citigroup re-org Greg Anstead noted in his interview that the goal of this centralization is to: • drive down cost • improve consistency • present one face to customers • improve our compliance with regulators. The potential drawback is a lack of focus reporting to a corporate CIO and a dotted line to the SBU’s CEO. Greg Anstead, CIO of Citi Home Equity, interviewed in person by Nathaniel Laroche, March 27, 2006.

  29. Operations Technology Budgeting A/P Billing Finance External Reporting A/R Development of the CIO Early on business functions are silos of excellence. HR Customer Service Supplier MGT Manufacturing Sales Service Delivery

  30. Operations Technology Budgeting A/P Billing Finance External Reporting A/R Development of the CIO Early on business functions are silos of excellence. HR Customer Service Supplier MGT Manufacturing Sales Service Delivery IT is recognized by internal stakeholders as a key tool for operational efficiency. Technology supports functional improvements

  31. Operations Operations COO Technology CTO FinanceCFO Development of the CIO Industry Technology The organization must also respond to external forces. IT becomes more an integral to the business. CIO Customers Regulatory Coordination between silos must increase.

  32. Role of CIO with External and Internal Demands Demands on Business: • Customers (speed, reliability, accuracy, security) • Supply Chain Demands on Business: • Customers (accessibility, integration) • B2B Operations Technology COO CTO CIO Finance CFO Demands on Business: • Shareholders (reporting, planning) • Regulatory (reporting and compliance) • Financial Markets (reporting and compliance)

  33. Role of CIO within Citi Home Equity and the implementation of a new system Demands on Business: The COO needs to understand how the new website will affect workflow and customer care. Demands on Business: The CTO needs help in understanding the business requirements of a new Orginiations website. Operations COO Technology CTO CIO Finance CFO Demands on Business: The CFO needs to be a part of and understand the questions asked in the website to be sure they meet credit standards.

  34. The changing role of the CIO 1986 ranking of top 10 issues* • Facilitating/managing end-user computing • Translating information technology into competitive advantage • Having top management understand needs and perspective of IS • Measuring and improving effectiveness/productivity • Keeping current with changes in technology • Managing information resources • Integration of IS technologies • Data security and control • Impact of new technology • Training and education Passino, Jacque H., Jr., and Severance, Dennis G., “The Changing Role of the Chief Information Officer” Planning Review, Vol. 16, 5, Sep/Oct 1988, pp. 38-42.

  35. The changing role of the CIO 1986 ranking of top 10 issues* • Facilitating/managing end-user computing • Translating information technology into competitive advantage • Having top management understand needs and perspective of IS • Measuring and improving effectiveness/productivity • Keeping current with changes in technology • Managing information resources • Integration of IS technologies • Data security and control • Impact of new technology • Training and education More of an operational focus Passino, Jacque H., Jr., and Severance, Dennis G., “The Changing Role of the Chief Information Officer” Planning Review, Vol. 16, 5, Sep/Oct 1988, pp. 38-42.

  36. The changing role of the CIO 2005 ranking of top 10 issues* • Cost containment • Data security and integrity • Fiscal compliance and data transparency • Revenue and business growth • Innovation of products and services • Stakeholder pressure • Risk Management • Customer data integration • E-business/E-government • Privacy Guptill, Bruce, and Koenig, Mark, “CIOs Budget for Business” Optimize, Vol. 4, 5, May 2005, pp. 77-80.

  37. The changing role of the CIO 2005 ranking of top 10 issues* • Cost containment • Data security and integrity • Fiscal compliance and data transparency • Revenue and business growth • Innovation of products and services • Stakeholder pressure • Risk Management • Customer data integration • E-business/E-government • Privacy Major strategic initiatives 20 years later Guptill, Bruce, and Koenig, Mark, “CIOs Budget for Business” Optimize, Vol. 4, 5, May 2005, pp. 77-80.

  38. The changing role of the CIO 2005 ranking of top 10 issues* • Cost containment • Data security and integrity • Fiscal compliance and data transparency • Revenue and business growth • Innovation of products and services • Stakeholder pressure • Risk Management • Customer data integration • E-business/E-government • Privacy Two relatively new and highly emphasized issues for CIOs! Guptill, Bruce, and Koenig, Mark, “CIOs Budget for Business” Optimize, Vol. 4, 5, May 2005, pp. 77-80.

  39. Demands on Business and CIO: Compliance • Section 404 of Sarbanes-Oxley Act requires management’s assessment and signoff on all internal controls. • “When CIOs began installing ERP systems…they unwittingly took something that used to belong to CFOs: financial controls.”1 • One of Greg Anstead’s biggest objectives was to maintain compliance and meet audit standards for fear what poor audit results could do to the whole corporation! 1http://www.cio.com/archive/070104/sarbox.html, viewed 3/3/2006

  40. Demands on Business and the CIO at Citi Home Equity: Compliance Demands on Business: COO is required to document all processes as part of SOX requiring functional information on IT systems. Demands on Business: CTO must build, improve, and implement systems that meet new regulations. Operations COO Technology CTO CIO Finance CFO Demands on Business: CFO required to with auditors to look at data systems to comply with the Sarbanes-Oxley Act and the Graham-Leach Act.

  41. Demands on Business and the CIO: Security • Identity theft, phishing scams, intellectual property theft are just three examples of the types of information security threats. • “Just 37 percent of respondents reported that they had an information security strategy—and only 24 percent of the rest say that creating one is in the plans for next year.”1 • Going back to the Citi Home Equity interview security was identified as a major component to Citigroup’s success and a major initiative at Citi Home Equity. 1 www.cio.com/archive/091505/global.html, viewed 3/3/2006

  42. Security demands on the Business and the CIO at Citi Home Equity Demands on Business: Entitlement reviews go out across the business checking for unauthorized access. Demands on Business: The CTO must implement technical controls to tighten access to systems and to be sure all systems are relatively hack proof. Operations COO Technology CTO CIO Finance CFO Demands on Business: CFO must work with Technology to be sure systems are secured and access is controlled.

  43. From What to How • Necessities for the leap from CTO to CIO • Leadership • Credibility • Communication & Relationship building • Business Knowledge • Know Your Enterprise • Competitive environment, business fundamentals, etc. • Vision • Where can IT strengthen customer relationships and impact growth? Broadbent, Marianne, and Kitzis, Ellen, The New CIO Leader, Harvard Business School Press, Boston, MA, 2005.

  44. Leadership: Deliver Results that Matter • Credibility • To build credibility with your fellow executives: • Deliver results that matter to them • How does it help executive colleagues meet their goals? Initial Credibility Credibility Results Resources Lost Credibility Outcomes Broadbent, Marianne, and Kitzis, Ellen, The New CIO Leader, Harvard Business School Press, Boston, MA, 2005.

  45. Leadership: Play Politics • Communication is the Key • Push, Prod, Educate & Stimulate • 20% of CIO’s time • Build Relationships • Build “Political Capital” • Know key stakeholders • Convert opponent; Strengthen advocates Broadbent, Marianne, and Kitzis, Ellen, The New CIO Leader, Harvard Business School Press, Boston, MA, 2005.

  46. Business: Know Thy Enterprise • Industry & Competitive Environment • Where does the enterprise stand relative to its competitors? • Lagging, Maintaining or Leading • Business Fundamentals • Competitive Advantage & Strategy • Industry Trends • What developments will impact the firm? • Business maxims IT maxims IT initiatives Broadbent, Marianne, and Kitzis, Ellen, The New CIO Leader, Harvard Business School Press, Boston, MA, 2005.

  47. Vision: Don’t Just Manage, LEAD! • Based On: • Economic model of enterprise • Strategic intent & endeavors • Seize the Opportunity • Generate ITO’s • Choose wisely • Don’t follow the hype • Pilot programs • Testing phase Broadbent, Marianne, and Kitzis, Ellen, The New CIO Leader, Harvard Business School Press, Boston, MA, 2005.

  48. In the Future • No More IT Projects! • IT Projects are Business projects • CIO as an Enterprise Business Leader • Implement strategic initiatives • Create competitive advantage • Capitalize on opportunities (emerging tech.) Broadbent, Marianne, and Kitzis, Ellen, The New CIO Leader, Harvard Business School Press, Boston, MA, 2005.

  49. What questions do you have?

  50. Appendix

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