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The Strategic CIO by Philip Weinzimer

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13
How StrategIc cIoS
focuS on InItIatIveS
to IMprove MargIn
21st-century CIOs have a dual responsibility: driving down costs and
creating new business value. Managing this seeming dichotomy is the
domain of top business executives, and CIOs everywhere are learning
to step it up.
1
Randy Spratt
Executive Vice President and CIO/CTO at McKesson
In the previous chapters, we focused on the rst two transformational
phases: deliver commodity and business services exceptionally well and
understand the business, focus on user experience, and improve IT person-
nel business skill. As a chief information ocer (CIO), if you succeed
at implementing the rst two phases, you and your information tech-
nology (IT) organization are positioned to truly collaborate with the
business and focus on initiatives that drive margin and leverage tech-
nology strategically to innovate value.
Following are the objective, key messages, and examples used in
this chapter:
A. CHAPTER OBJECTIVE
1. Share examples of strategic CIOs whose journey took
them through the rst two phases of the IT Strategic
Transformation Phases and implemented initiatives that
focused on improving margin (phase 3).
2. is chapter will be especially helpful for those of you
who are still in phase one or two of your transformation
274
the strategiC Cio
journey and interested in leveraging examples from
CIOs who have succeeded at stage three.
B. KEY POINTS
1. Strategic CIOs follow a simple but eective process for
transforming their IT organization and implement ini-
tiatives that drive margin in the form of increased rev-
enues and/or reduced costs.
C. EXAMPLES
In this chapter, we highlight six strategic CIOs who focus on
initiatives that drive margin, through improving revenue and/
or reducing costs. Each of these CIOs has broad and deep expe-
rience in business and IT at the executive level. Further, each
applies these skills in a strategic and focused manner.
1. Tom Grooms, CIO at Valspar, joined the chemical coat-
ing company after a long career in IT at Medtronic—
the medical device company. Although Valspar is in
a totally dierent industry, Grooms took a strategic
approach to professionalize the IT organization by
working with the business units to improve processes,
reduce IT support costs, and drive initiatives that
enabled Valspar to move forward with an aggressive
growth strategy.
2. Randy Spratt, chief technology ocer (CTO) and CIO at
McKesson, the multinational health-care services and
IT company, is an example of an executive who is both
left- and right-brain dominant. He thinks strategically
but is just as comfortable at the tactical level designing
company-wide architecture. Customers had diculty
integrating McKesson products, due to incompatible
architecture, until Spratt harnessed a company-wide
team to develop a unied architecture, which improved
customer service and improved sales.
275
HOW STRATEGIC CIOs IMPROVE MARGIN
e objective of this chapter is to provide you with some examples
of strategic CIOs whose journeys took them through the rst two
phases and the initiatives implemented that drove business suc-
cess. is chapter will be especially helpful for those of you who
are still in phase one or two of your transformation journey or ready
to embark on phase 3, and are interested in understanding how to
leverage examples from CIOs who have succeeded at phase three of
the transformation journey.
3. Clif Triplett, while CIO at Baker Hughes, took on some
rather large projects. Baker Hughes is an oil industry
services company. Triplett turned the IT organization
into a world-class organization, developed a common
data platform to optimize customer information, and
developed a product life cycle management system that
reduced development time for products and services.
Improved customer service, reduced IT costs, and a
transformed IT organization make Triplett a true exam-
ple of a strategic CIO.
4. Anne Wilms, former CIO at Rohm and Hass, embarked
on a number of strategic initiatives that increased rev-
enue through an improved pricing system, reduced IT
costs, optimized inventory investment savings millions
of dollars, and a host of other initiatives.
5. Steve Heilenman, CIO at CAI, focused on improving the
value of the IT organization while driving down the cost
of IT. He succeeded. Over a 5-year period, Heilenman
reduced IT costs by about 25% while supporting a busi-
ness that grew by 50%. e net metric of IT costs as a
percentage of revenue is 2%; one-half of the best in class
percentage for IT service companies.
6. Helen Cousins, former CIO at Lincoln Trust, revitalized
and reengineered the major document processes by lever-
aging technology. is positioned the company for a spin-
o of some of its business units and enabled the company
to focus on a core competency for future growth.

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