Strategy Execution and the Role of the CIO/IT

Transcription

1 UVA Center for the Management of Information Technology March 6, 2009 Strategy Execution and the Role of the CIO/IT Jeanne W. Ross Director & Principal Research Scientist MIT Sloan School of Management Phone: (617) , Fax: (617) This research was made possible by the support of CISR sponsors and patrons.

2 MIT CISR gratefully acknowledges the support & contributions of its Research Patrons and Sponsors. Research Patrons Boston Consulting Group BT Group Diamond Management & Technology Consultants Research Sponsors Aetna Inc. Allstate Insurance Co. ANZ Banking Group (Australia) AstraZeneca Pharmaceuticals, LP Banco Bradesco S.A. (Brazil) Banco Itaú S.A. (Brazil) Bank of America BP Campbell Soup Co. Canadian Imperial Bank of Commerce CareFirst BlueCross BlueShield Caterpillar, Inc. Celanese Chevron Corp. CHRISTUS Health Chubb & Son Commonwealth Bank of Australia Credit Suisse (Switzerland) Gartner IBM Corporation Microsoft Corporation Tata Consultancy Services Det Norske Veritas (Norway) DHL Global Management GmbH (Germany) Direct Energy Embraer Empresa Brasileira de Aeronautica S.A. (Brazil) EMC Corp. ExxonMobil Global Services Co. Fidelity Investments Grupo Santander Brasil Guardian Life Insurance Co. of America Johnson & Johnson Hartford Life, Inc. HBOS Australia ING Groep N.V (Netherlands) Intel Corporation Int l Finance Corp. Liberty Mutual Group Marathon Oil Corp. Mars, Incorporated MetLife Mohegan Sun NASA Nissan North America Nomura Research Institute, Ltd. (Japan) Parsons Brinckerhoff PepsiAmericas, Inc. PepsiCo International Pfizer Inc. PNC Global Investment Servicing Procter & Gamble Co. Quest Diagnostics Raytheon Company Renault (France) Standard & Poor s State Street Corp. Sunoco, Inc. TD Bank Time Warner Cable Trinity Health TRW Automotive, Inc. Unibanco S.A. (Brazil) VF Corporation Wal-Mart, Inc. World Bank CISR s Mission Founded in 1974; CISR has a strong track record of practice-based research on how firms manage & generate business value from IT Research is disseminated via electronic research briefings, working papers, research workshops & exec. ed. programs including CISR Research Projects The View from the Top: IT and Business Value Achieving Superior Business Value from IT A Single Framework of What Matters Communicating Effectively about IT Value Maturing and Globalizing IT Governance Building and Leveraging IT s Assets Managing Business Experiments: Web-based Innovations in Collaboration Learning from IT Projects: Effective Post-Implementation Reviews Benchmarks for IT Decision Making Managing Digitized Organizations Leading the Transition to the Digitized Platform Designing and Managing Shared Services Managing the Information Explosion Making Sense of the Cloud Contact Information: 5 Cambridge Center, NE Cambridge, MA MIT Sloan CISR 2009, 20-Feb-09 MIT Sloan CISR - Ross Ph ; Fax [email protected]; 1

3 Agenda Why Firms Need a Digitized Platform Who Will Own the Platform? The SEO Three key SEO responsibilities Two Models of CIOs as SEOs The non-it SEO How the SEO Evolves The Future of the CIO 2

4 The IT landscape at most firms Corporate Data Data Applications Technology Platforms 3

5 The vision for the future systems landscape Data Warehouse Middleware Data Applications Technology Platforms 4

6 Companies build their platforms in stages. Business Silos Standardized Technology Optimized Core Business Modularity Business Agility Standard Interfaces and Business Componentization Enterprise-Wide Technology Standards Standardized Enterprise Processes/Data Locally Optimal Business Solutions 25% 46% 27% 2% % of Firms Source: Enterprise Architecture as Strategy: Creating a Foundation for Business Execution, J. Ross, P. Weill, D. Robertson, HBS Press, Percentage of firms in each stage is updated based on a 2007 survey of 1508 IT executives. 5

7 The strategy execution officer (SEO) owns the platform 3 roles of the SEO: Enterprise IT & Process Governance (11) Ongoing Operations/ Continuous Improvement (4) Project Design & Implementation (10) Designs Platform Builds Platform Components Leverages Platform Numbers reflect how many of 12 SEOS we studied defined each responsibility.

8 Responsibility 1: IT and Process Governance Ensure clarity among senior executives about platform design. Coordinate demands for enterprise change projects, most of which involve IT implementations. Establish priorities for change projects based on multiple criteria: Organizational readiness Contribution to platform Ability to use platform Expected benefits Work with senior executive team which either makes investment decisions or approves SEO recommendations.

9 Responsibility 2: Project Design/Implementation Ensure disciplined, effective project methodology. Engage all key stakeholders early and often. Provide expertise on process design. Provide oversight and/or support of change management.

10 Responsibility 3: Ongoing Operations Provide enterprise services, usually as a shared services organization. Accept accountability for continuous improvement of the platform. Ensure that the enterprise is driving value from the platform.

11 Two Models of CIOs in SEO Roles 1. The all-inclusive SEO Owns all three SEO responsibilities 2. The partnered SEO Owns first two responsibilities and works closely with a COO or other operational leaders

12 Model 1: Dow Chemical s Inclusive SEO The SEO: Dave Kepler, VP of Shared Services and CIO, Dow Chemical Company. SEO background: Started as CIO; role grew as CEO added responsibilities. Core of the platform is an SAP ERP, implemented in early 1990s. Shared services organization includes IT, six sigma team, customer service, supply chain, and purchasing processes. 6,000 7,000 of company s 40,000 employees report to SEO. IT operations outsourced to IBM; Accenture is strategic partner for applications development. Growing responsibilities of the SEO facilitate global integration. Source: Dow Chemical Company. Used with permission. See also: Ross and Beath, The Federated Broker Model at The Dow Chemical Company: Blending World Class Internal and External Capabilities, MIT Sloan CISR Working Paper No. 355, July 2005.

13 Dow Chemical Company Shared Services Unit President and COO The Dow Chemical Company Andrew Liveris Corporate Vice President Shared Services Dave Kepler Customer Service Six Sigma and Work Process Expertise Center Global Purchasing Global Supply Chain Information Systems Dave Kepler, CIO Customer Service Centers E-Business Customer Information Group Order to Cash Work Process Six Sigma Expertise Implementation Work Process Work Process Expertise Center Supply Chain Services & Technology Center Chemicals and Intermediates* Dow AgroSciences* Dow and Accenture Alliance Application Development and Support Chemicals and Plastics* Chemicals and Intermediates Hydrocarbons & Energy Support Services Finance Communications Human Resources Legal *Aligned to Business Leaders Hydrocarbons and Energy* Performance Chemicals and Thermosets* Enterprise IT Operations and Services All IT Operations and Services Management Facilities Management Performance Chemicals and Thermosets Plastics I.T. Strategy and Architecture for Dow Source: Dow Chemical Company. Used with permission. See also: Ross and Beath, The Federated Broker Model at The Dow Chemical Company: Blending World Class Internal and External Capabilities, MIT Sloan CISR Working Paper No. 355, July Plastics* Dow AgroSciences*

14 Model 2: Southwest Airlines Partnered SEO The SEO: Bob Jordan, EVP of Strategy and Technology, Southwest Airlines. SEO background: Previously head of Technology, Corporate Facilities and Procurement; has an IT background and has gradually assumed more responsibility for IT and change management. Platform development focused on ground and customer operations. Coordinates efforts of seven strategy teams (e.g., best place to work, largest domestic carrier, low-cost carrier, best customer experience). Teams comprised of 30 top executives, each is on more than one team so that they acquire cross-functional view of the firm. Investment decisions made by Executive Planning Committee (top eight executives) but guided by strategy teams. Strategy leaders participate in monthly project reviews to ensure progress and eventual business success. SEO heads corporate project management office. Team of 25 includes project and change managers. They lead projects but business heads are accountable. Source: Southwest Airlines. Used with permission. See also: Ross and Beath, Building Business Agility at Southwest Airlines, MIT Sloan CISR Working Paper No. 369, May 2007.

15 Southwest Airlines Senior Executive Team Gary C. Kelly Vice Chairman and CEO Colleen Barrett President & Corporate Secretary Ron Ricks Executive VP - Law, Airports, & Public Affairs Laura H. Wright Sr. VP - Finance & Chief Financial Officer Bob Jordan Executive VP - Strategy & Technology Mike Van de Ven Executive VP & Chief of Operations Ginger Hardage Sr. VP - Corporate Communications Jan Marshall VP - Technology & Chief Information Officer Greg Wells Sr. VP - Operations Jeff Lamb Sr. VP - Chief People & Administration Officer Strategy Daryl Krause Sr. VP - Inflight & Fleet Services Kevin Krone VP - Marketing, Sales, & Distribution Codeshare Business Development Jim Sokol VP - Maintenance & Engineering Joe Harris Labor & Employee Relations Chuck Magill VP - Flight Operations Ellen Torbert VP - Reservations Barry Brown VP - Safety & Security Jim Ruppel Customer Relations & Rapid Rewards Source: Southwest Airlines. Used with permission. See also: Ross and Beath, Building Business Agility at Southwest Airlines, MIT Sloan CISR Working Paper No. 369, May 2007.

16 Campbell Soup's Process Owners The Process Owners: David White, SVP; Global Supply Chain, Bob Schiffner, CFO; Doreen Wright, CIO Process owners' background: each head of one core process David White brought in to Campbell to head new supply chain processes (make to buy) Bob Schiffner created finance shared service to head new account to report process Doreen Wright headed order to cash, but handed off to new VP of customer service Core of platform: SAP supporting 3 core business processes IT and business managers team up on Centers of Excellence to drive new processes and process improvements IT operations outsourced to IBM Carefully designed project governance clarified responsibilities for implementation; then shifted to COEs. 15

17 Roles and responsibilities change as firms transition from transformation to driving value from a digitized platform. Governance Build the Platform: Set priorities and provide focus on critical processes Use the Platform: Establish compliance and exception processes Process Ownership Roles Build the Platform: Create high-powered, full-time team to design and implement transformed processes Use the Platform: Assign high-level process owners; establish centers of excellence and shared services People Development Build the Platform: Provide training required for new roles, new mindset, and unlearning of habits Use the Platform: Develop incentives and accountability for using data and services 18

18 Alternative Futures for the CIO SEO: head of digitized business processes and services CTO: technical leader working closely with IT savvy business leaders Business partner: part of the senior management team designing processes and services Profit center leader: business head of services unit selling business and IT services to organizational entities Change leader: IT split between CIO (change management) and COO (operations) What's the right fit for you?